<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5026
Advantus Bond Fund, Inc.
(Exact name of registrant as specified in charter)
400 Robert Street North
St. Paul, Minnesota 55101-2098
(Address of principal executive offices) (Zip code)
Eric J. Bentley, Esq.
400 Robert Street North
St. Paul, Minnesota 55101-2098
(Name and address of agent for service)
Registrant's telephone number, including area code:
(651) 665-3500
Date of fiscal year end: September 30
Date of reporting period: September 30, 2003
<Page>
ITEM 1. REPORT TO STOCKHOLDERS.
Filed herewith.
<Page>
[GRAPHIC]
[ADVANTUS(TM) CAPITAL MANAGEMENT LOGO]
ADVANTUS FIXED INCOME AND BLENDED FUNDS
ANNUAL REPORT TO SHAREHOLDERS
DATED SEPTEMBER 30, 2003
ADVANTUS BOND FUND, INC.
AN AGGREGATE BOND FUND
ADVANTUS INTERNATIONAL BALANCED FUND, INC.
AN INTERNATIONAL STOCK AND BOND FUND
ADVANTUS MONEY MARKET FUND, INC.
A MONEY MARKET SECURITIES FUND
ADVANTUS MORTGAGE SECURITIES FUND, INC.
A MORTGAGE - RELATED SECURITIES FUND
ADVANTUS SPECTRUM FUND, INC.
AN ASSET ALLOCATION FUND
<Page>
ADVANTUS FIXED INCOME AND BLENDED FUNDS AND ADVANTUS EQUITY FUNDS
PROSPECTUS SUPPLEMENT DATED AUGUST 20, 2003 TO THE ADVANTUS FIXED INCOME AND
BLENDED FUNDS PROSPECTUS DATED JANUARY 31, 2003 AS SUPPLEMENTED APRIL 24, 2003,
JUNE 18, 2003 AND AUGUST 8, 2003 AND TO THE ADVANTUS EQUITY FUNDS PROSPECTUS
DATED NOVEMBER 29, 2002, AS SUPPLEMENTED FEBRUARY 3, 2003, APRIL 24, 2003, JUNE
18, 2003 AND AUGUST 8, 2003
I. The portfolio manager information for the Bond, Money Market and Mortgage
Securities Funds which appears in the table on page 24 of the Advantus
Fixed Income and Blended Funds Prospectus is amended to read as follows:
<Table>
<Caption>
PORTFOLIO MANAGER PRIMARY PORTFOLIO BUSINESS EXPERIENCE DURING
FUND AND TITLE MANAGER SINCE PAST FIVE YEARS
Bond Christopher R. Sebald August 14, 2003 Senior Vice President and Lead Portfolio Manager,
Portfolio Manager Total Return Fixed Income, Advantus Capital, since
August, 2003; Senior Vice President and Portfolio
manager, AEGON USA Investment Management, 2000
through July 2003; Director of Portfolio Management,
GMAC-RFC, January 1998 through July 2000
Money Market Tom Houghton August 18, 2003 Vice President and Portfolio Manager, Total
Portfolio Manager Return Fixed Income, Advantus Capital, since
August 2003; Senior Investment Officer, Advantus
Capital, April 2002 to August 2003; Senior
Securities Analyst, Public Corporate Bonds, Advantus
Capital, July 2001 through March 2002; Senior
Investment Officer, Public Corporate Bonds, Advantus
Capital, July 1999 to June 2001; Head of Fixed
Income Trading, Advantus Capital, January 1998 to
June 1999.
Mortgage Securities Christopher R. Sebald August 14, 2003 Senior Vice President and Lead Portfolio Manager,
Portfolio Manager Total Return Fixed Income, Advantus Capital, since
August, 2003; Senior Vice President and Portfolio
manager, AEGON USA Investment Management, 2000
through July 2003; Director of Portfolio Management,
GMAC-RFC, January 1998 through July 2000
</Table>
II. The portfolio manager information for the Cornerstone Fund which appears on
page 31 of the Advantus Equity Funds Prospectus is amended to read as
follows:
<Table>
<Caption>
PORTFOLIO MANAGER PRIMARY PORTFOLIO BUSINESS EXPERIENCE DURING
FUND AND TITLE MANAGER SINCE PAST FIVE YEARS
Cornerstone Matthew T. Norris July 21, 2003 Portfolio Manager with Waddell & Reed Ivy
Portfolio Manager Investment Company since July 2003; Portfolio
Manager from January 2000 to June 2003, and Analyst
from December 1997 to January 2000, with
Advantus Capital.
</Table>
Investors should retain this supplement for future reference.
F. 59559 8-2003
<Page>
ADVANTUS Fixed Income and Blended Funds
TABLE OF CONTENTS
<Table>
PERFORMANCE UPDATES
Bond Fund 3
International Balanced Fund 9
Money Market Fund 17
Mortgage Securities Fund 20
Spectrum Fund 27
INVESTMENTS IN SECURITIES
Bond Fund 34
International Balanced Fund 41
Money Market Fund 51
Mortgage Securities Fund 54
Spectrum Fund 61
FINANCIAL STATEMENTS
Statements of Assets and Liabilities 70
Statements of Operations 72
Statements of Changes in Net Assets 74
Notes to Financial Statements 78
INDEPENDENT AUDITORS' REPORT 103
FEDERAL INCOME TAX INFORMATION (UNAUDITED) 104
DIRECTORS AND EXECUTIVE OFFICERS 108
SHAREHOLDER VOTING RESULTS 110
SHAREHOLDER SERVICES 111
</Table>
<Page>
Letter from the President
[PHOTO]
Dear Shareholders:
The economy is finally stirring. Economic growth is just now becoming evident,
with the help of external assistance, after dropping below trend nearly three
years ago. The Federal Reserve has pumped an unprecedented amount of monetary
stimulus into the economy by easing interest rates thirteen times over 2-1/2
years. The federal government has also done its part to pump some fiscal octane
into the country's economic engine. The latest federal tax package was the Jobs
and Growth Tax Relief Reconciliation Act of 2003, signed into law on May 28,
2003. The gross domestic product for third quarter 2003 is expected to be
particularly strong.
Over this reporting period, October 1, 2002 through September 30, 2003, the S&P
500 Index* returned 24.39 percent. The NASDAQ Composite Index**, including many
small and mid-cap stocks, returned 52.47 percent for the same period. Equity
market performance has been favorable due to visible growth in the economy,
particularly driven by consumer spending and productivity gains, better market
psychology and lower interest rates.
In the fixed income market, the yield curve has become steeper with low interest
rates on the short end and the long end reflecting signs of growth in the
improving economy. For the year ended September 30, corporate bonds
significantly outperformed both Treasuries and mortgage securities. (Lehman
Brothers Credit Corporate Securities Index*** 11.13 percent, Lehman Brothers
Treasury Securities Index+ 3.25 percent and Lehman Brothers Mortgage-backed
Securities Index++ 3.50 percent).
We expect the Federal Reserve to remain accommodative until consistent
improvements in growth and employment are reported. We expect moderate growth
and continued improving equity market performance. With a growing economy, fixed
income performance may become more challenging.
In April 2003, Advantus Capital Management, Inc. (Advantus Capital) and certain
companies affiliated with Advantus Capital entered into a Strategic Alliance
Agreement and a related Purchase Agreement with Waddell & Reed Financial, Inc.
(W&R), a leading U.S. mutual fund firm, its affiliate, Waddell & Reed Ivy
Investment Company (WRIICO), and certain other companies affiliated with W&R.
Under these agreements, Advantus Capital agreed to sell to WRIICO its assets
related to the Advantus Funds. Advantus Capital has also recommended to the
Board of Directors of the Advantus Funds that each Advantus Fund be merged into
an existing or newly formed mutual fund managed by WRIICO in either Ivy Funds,
Inc. (a Maryland corporation) or Ivy Funds (a Massachusetts business trust), and
the Board of Directors has
1
<Page>
approved each Fund's merger subject to approval of the shareholders of the Fund.
Shareholders received a proxy statement/prospectus with detailed information
regarding this proposal in early October. If you have any questions regarding
the proxy, please call your financial advisor. Your response to the proxy is
important, so please vote.
Sincerely,
/s/ Dianne Orbison
Dianne Orbison
President, Advantus Fixed Income and Blended Funds
*The S&P 500 Index is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall.
**The NASDAQ Composite Index is a broad based capitalization-weighted index of
all NASDAQ National Market and Small-Cap stocks.
***The Lehman Brothers Credit Corporate Securities Index is a broad index of
publicly issued U.S. corporate and specified foreign debentures and secured
notes that meet the specified maturity, liquidity, and quality requirements. To
qualify, bonds must be SEC registered.
+The Lehman Brothers Treasury Securities Index is a broad index of public
obligations of the U.S. Treasury with a remaining maturity of one year or more.
++The Lehman Brothers Mortgage-Backed Securities Index is an unmanaged benchmark
composite which includes all fixed-rate securities backed by mortgage pools of
the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC) and Federal National Mortgage Association (FNMA).
2
<Page>
Advantus Bond Fund, Inc.
PERFORMANCE UPDATE
CHRISTOPHER R. SEBALD, PORTFOLIO MANAGER
ADVANTUS CAPITAL MANAGEMENT, INC.
PERFORMANCE
The Fund's performance for the year ended September 30, 2003, for each class of
shares outstanding was as follows:
<Table>
Class A 5.84 percent*
Class B 5.06 percent*
Class C 4.87 percent*
</Table>
The Fund's benchmark, the Lehman Brothers Aggregate Bond Index,** returned 5.41
percent for the same period.
PERFORMANCE ANALYSIS
Over the last twelve months, the U.S. bond market experienced extremes in
performance. Interest rates fell to generational lows, as the Federal Reserve
warned the market about the perils of deflation, only to rise sharply in the
last quarter of the period. Corporate bonds put in an incredible performance,
coming off one of the worst periods in history for credit performance last year.
Mortgage-backed securities underperformed corporate bonds and treasuries, as
prepayments of mortgage loans rose very rapidly exceeding prior records and all
expectations. Today, both corporate and mortgage-backed bonds appear more
reasonably valued, yet the yield curve is very steep by historical standards.
The steep yield curve reflects the markets' nervousness about the potential
outcomes and timing surrounding the economic recovery and the impact this may
have on future interest rates. This could be the largest risk to the bond market
going forward.
The Fund's performance is attributed to an overweight in corporate bonds and to
investments in mortgage-backed securities that outperformed the segment.
Corporate bond spreads narrowed versus treasuries by more than 100 basis points
over the year. The Fund benefited significantly from an overweight in corporate
bonds versus treasury and agency securities. In the mortgage-backed market, we
chose segments of the market that offered better prepayment protection, better
yield and greater diversification. In general, these sectors included low loan
balance mortgage-backed pools, housing-related asset-backed securities and
credit classes of residential mortgage-backed securities and commercial
mortgage-backed securities. Altogether, these investments generated a very
attractive return versus our benchmark, providing investors with an extremely
good year in their fixed income portfolios.
3
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OUTLOOK
As we look forward into the last quarter of 2003 and beyond, we expect that the
huge monetary and fiscal policy stimuli, along with the decline in the
trade-weighted dollar, will continue to have a positive effect on the economy.
We believe the business environment will continue to improve over the next two
quarters with better corporate earnings, real GDP growth and perhaps even jobs
growth. We expect the US growth trajectory, however, to remain lower than prior
business cycles. As a consequence, we feel that the Federal Reserve will
maintain its target interest rate at a low level for some time to come. When the
economy begins to show stronger growth, we expect longer-term interest rates to
rise and the yield curve to become even steeper.
In the near term, we are positioning the portfolios to outperform should
interest rates rise. Additionally, we remain positive on corporate credit and
believe that corporate bonds will continue to outperform treasuries, albeit at a
slower rate than this year. Currently, we are adding to our corporate bond
holdings securities that will benefit most from an improvement in business
fundamentals as the economy improves. We continue to see attractive
opportunities to add to our mortgage-backed securities holdings, including
securities that will benefit from the improving economy.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 4.5 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 Lehman Brothers Aggregate Bond Index is an unmanaged benchmark which
includes all publicly issued fixed rate, nonconvertible domestic corporate debt.
4
<Page>
COMPARISON OF CHANGE IN VALUE OF
A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS BOND FUND,
LEHMAN BROTHERS AGGREGATE BOND INDEX AND CONSUMER PRICE INDEX
On the following charts you can see how the total return for each of the three
classes of shares of the Advantus Bond Fund compared to the 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 September 30, 1993 through September 30, 2003. The lines in the Class B
and Class C graphs 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 Bond Fund (August 19, 1994 and March 1, 1995 for Class B and C,
respectively) through September 30, 2003.
[CHART]
CLASS A
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 1.08%
Five year 4.86%
Ten year 5.56%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS
AGGREGATE
CLASS A BOND INDEX CPI
9/30/93 10 10 10
10/31/93 9.61043 10.03737 10.04135
9/30/94 8.98689 9.67756 10.29635
9/30/95 10.31898 11.03833 10.55824
9/30/96 10.73451 11.57922 10.87526
9/30/97 11.86944 12.70395 11.10958
9/30/98 12.94325 14.16634 11.27498
9/30/99 12.60192 14.11443 11.57133
9/30/2000 13.23740 15.10103 11.97105
9/30/2001 15.04777 17.05713 12.28808
9/30/2002 16.23723 18.52341 12.47416
9/30/2003 17.18583 21.34700 12.76361
</Table>
5
<Page>
[CHART]
CLASS B
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 0.06%
Five year 4.86%
Since inception (8/19/94) 6.43%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS
AGGREGATE
CLASS B BOND INDEX CPI
8/19/94 10 10 10
9/30/94 9.87581 9.86504 10.06739
9/30/95 11.25057 11.25218 10.32345
9/30/96 11.60247 11.80355 10.63342
9/30/97 12.72984 12.95007 10.86253
9/30/98 13.81045 14.44079 11.02426
9/30/99 13.34899 14.38787 11.31402
9/30/2000 13.90378 15.39358 11.70485
9/30/2001 15.70564 17.38758 12.01482
9/30/2002 16.94710 18.88226 12.19677
9/30/2003 17.65200 19.90382 12.47978
</Table>
6
<Page>
[CHART]
CLASS C
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 4.87%
Five year 5.07%
Since inception (3/1/95) 6.42%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS
AGGREGATE
CLASS C BOND INDEX CPI
3/1/95 10 10 10
9/30/95 10.925 10.884 10.152
9/30/96 11.265 11.417 10.457
9/30/97 12.348 12.526 10.683
9/30/98 13.372 13.968 10.842
9/30/99 12.909 13.917 11.127
9/30/2000 13.459 14.890 11.511
9/30/2001 15.187 16.819 11.816
9/30/2002 16.266 18.264 11.995
9/30/2003 17.163 19.039 12.273
</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 4.5 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.
The graphs and tables do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
7
<Page>
TEN LARGEST BOND HOLDINGS
<Table>
<Caption>
MARKET % OF BOND
SECURITY DESCRIPTION VALUE PORTFOLIO
- -------------------- ------------ ------------
U.S. Treasury Bond -
6.000%, 02/15/26 $ 683,930 3.0%
U.S. Treasury Inflationary Index Bond -
1.875%, 07/15/13 597,559 2.6%
Federal Home Loan Mortgage Corporation
(FHLMC) -
6.500%, 09/01/32 572,498 2.5%
Anheuser-Busch Companies, Inc. -
7.100%, 06/15/07 520,155 2.3%
U.S. Treasury Bond -
7.500%, 11/15/16 456,887 2.0%
Metropolitan Asset Funding, Inc. - 144A Issue -
7.525%, 04/20/27 429,722 1.9%
The National Collegiate Trust
7.240%, 09/20/14 374,155 1.6%
277 Park Avenue Finance Corporation -
144A Issue -
7.680%, 05/12/12 345,768 1.5%
Federal National Mortgage Association (FNMA) -
7.500%, 05/01/31 339,288 1.5%
Vulcan Materials Company -
6.400%, 02/01/06 329,860 1.4%
------------ ------------
$ 4,649,822 20.3%
============ ============
</Table>
[CHART]
<Table>
U.S. Treasury 9.1%
U.S. Government Agencies 32.8%
AAA Rated 5.2%
AA Rated 14.9%
A Rated 15.6%
BBB Rated 19.1%
D Rated 0.1%
Cash and Other Assets/Liabilities 3.2%
</Table>
8
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Advantus International Balanced Fund, Inc.
PERFORMANCE UPDATE
GARY CLEMONS AND TUCKER SCOTT III, CFA, PORTFOLIO MANAGERS
TEMPLETON INVESTMENT COUNSEL, INC.
ALEXANDER CALVO, PORTFOLIO MANAGER
FRANKLIN ADVISORS, INC.
PERFORMANCE
The Advantus International Balanced Fund's performance for the year ended
September 30, 2003 for each class of shares outstanding was as follows:
<Table>
Class A 29.93 percent*
Class B 28.97 percent*
Class C 28.98 percent*
</Table>
By comparison, an international equity index, the MSCI EAFE Index,** returned
26.52 percent, an international bond index, the J.P. Morgan Non-U.S. Government
Bond Index+ returned 17.85 percent, and a blended index comprised of 60 percent
MSCI EAFE Index and 40 percent J.P. Morgan Non-U.S. Government Bond Index
returned 23.44 percent for the same period.
PERFORMANCE ANALYSIS
In the belief that tomorrow should be better than yesterday, optimistic
investors propelled global stock prices to a 16-month high by the end of
September 2003. Most local stock market indices delivered double-digit gains
since the rally in global equities began in March of this year. Global bond
markets also posted strong gains during the period, benefiting from continued
monetary easing by major central banks given economic and geopolitical
uncertainty over the course of the year amid continued global deflation.
Additionally, global bond markets benefited from the appreciation of most major
currencies against the U.S. dollar as structural imbalances in the U.S. current
account deficit facilitated the depreciation of the U.S. dollar.
The global fixed income portion of the Fund benefited from an overweight
position in Euroland, peripheral Europe, Australia and New Zealand and the
respective strong currency gains in each market. Additionally, the Fund
benefited from an underweight exposure to Japan and the United Kingdom, which
significantly underperformed the benchmark.
During the period, the Federal Reserve Board reduced the Fed funds rate by 75
basis points from 1.75 percent to 1.00 percent given the uncertainty of economic
growth, geopolitical uncertainty and potential deflationary risks in the first
part of the reporting period. The U.S. Treasury curve steepened, as short-term
interest rates declined reflecting Fed easing while the long-end of the U.S.
curve twisted
9
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upwards as economic indicators exhibited some improvement in the second half of
the period. This improvement, however, was accompanied by continued deflation in
core consumer prices, facilitated by cyclical productivity gains and excess
capacity in capital and labor markets. Meanwhile, the Euroland benchmark yield
curve shifted down during the period as low growth and inflations expectations
prompted the European Central Bank to lower its reference interest rate by 125
basis points from 3.25 percent to 2.00 percent. The continuation of the global
monetary easing cycle was even more pronounced in peripheral Europe where both
growth and inflation slowed more rapidly than core Europe. The central bank of
Norway eased interest rates 450 basis points to 2.50 percent over the course of
the year and the central bank of Sweden eased interest rates 150 basis points to
2.75 percent.
From an equity perspective, confidence has continued to emerge over the last
year. The main factors have been the improved geopolitical situation, control of
the SARS epidemic in Asia, and more positive economic data from around the
world. Many investors have interpreted this as a sign that a global economic
upturn is currently underway. In the United States, industrial production as
well as consumer and corporate spending have improved.
On the negative side, layoffs have continued and there has not been any
indication as to when companies will begin hiring again. Increases in
productivity and low capacity utilization--still hovering around 20-year lows
for many industries--have hindered job creation. This has eroded consumer
confidence, which is vital for sustaining the recovery. On balance, however, the
news flow has been positive; enough to create momentum in the equity markets of
other industrialized countries, where economies have yet to turn or show more
vitality.
Many of these countries are in the euro zone, where economic growth has been
slow at best, and where consensus estimates signal only marginal improvement in
the second half of the year. Corporate cost cutting in Europe has been
restrained, as strict labor laws have limited the ability of companies to lay
off workers. This has limited many companies' ability to rationalize their
operations, hindering the competitiveness of those European firms. However, in
Germany, the bloc's largest economy, there has been some recent strengthening in
the business sentiment and in the outlook for corporate profits.
10
<Page>
Encouragingly, the Japanese economy appears to be moving forward. Many global
investors seem convinced that the country's decade-plus slump is now in the
past. With GDP and industrial production improving, and manufacturers
anticipating an increase in demand over the next few months, it is not
surprising that Japanese equities have risen. Consider, however, that the Nikkei
Index rose 45 percent between April and September, and you might conclude that
investor optimism might have been overdone, particularly if corporate earnings
fall short of recently increased analysts' expectations.
Critical for delivering those earnings will be the performance of Japan's export
sector, which has accounted for most of the good news in the economy. Japan's
exports--as those from other countries in Asia and Europe--depend dually on
growth abroad and currency movements. In September, the latter showed its
potential to create disruption, after the yen rose sharply against the U.S.
dollar.
We have continued to believe that a broad valuation case cannot currently be
made for Japanese equities. However, our analysts have found a handful of these
equities that appear undervalued to us. In short, we believe that the global
recovery is still fragile--prudent, long-term investors should disregard
momentum and focus instead on the prospects for individual companies.
Within the Fund, the markets' sector rotation contributed to the strong bounce
in industrials (Vestas Wind Systems AS, Rolls-Royce, Deutsche Post, Volvo, among
others), information technology (Nortel, Alcatel, SAP, among others), and
materials (BHP Billiton PLC, Pechiney SA, Stora Enso, among others). The
portfolio was overweight its MSCI benchmark in all three of these sectors, which
amplified these holdings' effect on the portfolio's positive performance.
On balance, each of the ten major global sectors contributed positively to the
portfolio's performance during the period. On a relative basis, one area where
we underperformed was the weaker performing consumer staples sector, again, an
outcome consistent with the markets' migration toward higher risk stocks.
Excluding the U.S. market, the total return for consumer staples in the MSCI
benchmark was 10.31 percent (in U.S. dollars), the weakest of any sector over
the reported period. Within the Fund, the shares of food manufacturer Unilever
reflected this sector's weak performance.
11
<Page>
OUTLOOK
Looking forward, our investment strategy for the fixed income portion of the
Fund remains focused on global macroeconomic fundamentals. In the medium-term,
we are positioned for continued depreciation of the U.S. dollar that will
largely be determined by structural adjustment of the balance of payment
position. The Fund's positioning reflects two central points of our global
outlook. First, with regard to currencies, we hold a defensive view on the USD
and yen, in contrast to our positive outlook on the Euro, peripheral Europe,
Asia ex-Japan, Australian dollar and New Zealand dollar. Second, we maintain a
positive long-term outlook for the prospects for yield curve compression to the
U.S. Treasury curve within core Europe, peripheral Europe, Australia and New
Zealand.
Going forward, our global equity strategy remains unchanged. We will continue to
look for value stocks globally, perform our research around global sectors, and
build and maintain our portfolios from the bottom up. The prospect of a
synchronized global economic recovery can potentially create opportunities for
the long-term investor. We are committed to working diligently to pursue those
opportunities as they arise.
*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 MSCI EAFE Index is an unmanaged index of common stocks from European,
Australian, and Far Eastern markets.
+The J.P. Morgan Non-U.S. Government Bond Index includes all liquid foreign
government issues of Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden and United Kingdom.
The risks associated with international investing include, but are not limited
to: currency fluctuations, differences in accounting standards and political and
economic instability.
12
<Page>
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN ADVANTUS INTERNATIONAL BALANCED FUND,
MSCI EAFE INDEX, J.P. MORGAN NON-U.S. GOVERNMENT BOND INDEX,
BLENDED INDEX, AND CONSUMER PRICE INDEX
On the following charts you can see how the total return for each of the three
classes of shares of the Advantus International Balanced Fund compared to the
MSCI EAFE Index, the J.P. Morgan Non-U.S. Government Bond Index, a blended Index
of 60 percent MSCI EAFE Index and 40 percent J.P. Morgan Non-U.S. Government
Bond Index and the Consumer Price Index. The five lines in each graph represent
the cumulative total return of a hypothetical $10,000 investment made on the
inception date of each class of shares of the Advantus International Balanced
Fund (September 16, 1994 for Class A, January 31, 1997 for Class B, and March 1,
1995 for Class C) through September 30, 2003.
[CHART]
CLASS A
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 22.79%
Five year 5.36%
Since Inception (9/16/94) 5.50%
</Table>
(Thousands)
<Table>
<Caption>
J.P. MORGAN
MSCI EAFE NON-U.S. GOVERNMENT
CLASS A BLENDED INDEX INDEX BOND INDEX CPI
9/16/94 $ 10 $ 10 $ 10 $ 10 $ 10
9/30/94 $ 9.27068 $ 9.94444 $ 9.84500 $ 10.09360 $ 10.02685
9/30/95 $ 9.57470 $ 11.05588 $ 10.46014 $ 11.97166 $ 10.28188
9/30/96 $ 11.02631 $ 11.88972 $ 11.39905 $ 12.60545 $ 10.59060
9/30/97 $ 13.57212 $ 12.78279 $ 12.81920 $ 12.63891 $ 10.81879
9/30/98 $ 11.80544 $ 12.78345 $ 11.78213 $ 14.13275 $ 10.97987
9/30/99 $ 13.77116 $ 15.18884 $ 15.47211 $ 14.25637 $ 11.26846
9/30/2000 $ 14.63459 $ 15.30393 $ 16.46591 $ 13.08661 $ 11.65772
9/30/2001 $ 13.08812 $ 13.69300 $ 11.80937 $ 13.69266 $ 11.96644
9/30/2002 $ 12.48394 $ 12.97275 $ 9.37900 $ 15.12763 $ 12.14765
9/30/2003 $ 16.22054 $ 16.01383 $ 11.86635 $ 17.82690 $ 12.32200
</Table>
13
<Page>
[CHART]
CLASS B
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 23.97%
Five year 5.48%
Since inception (1/31/97) 3.79%
</Table>
(Thousands)
<Table>
<Caption>
J.P. MORGAN
MSCI EAFE NON-U.S. GOVERNMENT
CLASS B BLENDED INDEX INDEX BOND INDEX CPI
1/31/97 $ 10 $ 10 $ 10 $ 10 $ 10
9/30/97 $ 11.23044 $ 10.75112 $ 11.24584 $ 10.02654 $ 10.13199
9/30/98 $ 9.70028 $ 10.75168 $ 10.33605 $ 11.21162 $ 10.28284
9/30/99 $ 11.23701 $ 12.77476 $ 13.57315 $ 11.30969 $ 10.55311
9/30/2000 $ 11.83903 $ 12.87156 $ 14.44498 $ 10.38171 $ 10.91766
9/30/2001 $ 10.50273 $ 10.86200 $ 10.35996 $ 10.86250 $ 11.20679
9/30/2002 $ 9.93446 $ 10.29066 $ 9.78400 $ 12.00087 $ 11.37649
9/30/2003 $ 12.81254 $ 12.70301 $ 10.80900 $ 14.14222 $ 11.64048
</Table>
14
<Page>
[CHART]
CLASS C
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 28.98%
Five year 5.70%
Since inception (3/1/95) 6.24%
</Table>
(Thousands)
<Table>
<Caption>
J.P. MORGAN
MSCI EAFE NON-U.S. GOVERNMENT
CLASS C BLENDED INDEX INDEX BOND INDEX CPI
3/1/95 $ 10 $ 10 $ 10 $ 10 $ 10
9/30/95 $ 11.02560 $ 11.19156 $ 11.17543 $ 11.19774 $ 10.15242
9/30/96 $ 12.12008 $ 12.03564 $ 12.17856 $ 11.79056 $ 10.45726
9/30/97 $ 14.77999 $ 12.93966 $ 13.69582 $ 11.82185 $ 10.68257
9/30/98 $ 12.75918 $ 12.94033 $ 12.58783 $ 13.21913 $ 10.84162
9/30/99 $ 14.76345 $ 15.37524 $ 16.53014 $ 13.33476 $ 11.12657
9/30/2000 $ 15.55488 $ 15.49174 $ 17.59190 $ 12.24062 $ 11.51093
9/30/2001 $ 13.80131 $ 12.80700 $ 12.61693 $ 12.80749 $ 11.81577
9/30/2002 $ 12.79675 $ 12.13335 $ 10.40600 $ 14.14970 $ 11.99470
9/30/2003 $ 16.81800 $ 14.97767 $ 13.16571 $ 16.67447 $ 12.27303
</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.
The graphs and tables do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
15
<Page>
FIVE LARGEST STOCK HOLDINGS
<Table>
<Caption>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------- ------------ ------------ ------------
Vestas Wind Systems A/S 50,460 $ 842,992 2.8%
Nippon Telegraph & Telephone
Corporation 158 715,162 2.4%
Deutsche Post AG 40,040 678,504 2.2%
Barrick Gold Corporation 35,800 674,491 2.2%
BHP Billiton PLC 100,220 664,613 2.2%
------------ ------------
$ 3,575,762 11.8%
============ ============
</Table>
FIVE LARGEST BOND HOLDINGS
<Table>
<Caption>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- ------- ------------ ------------
Netherlands Government Bond
5.750%, 02/15/07 $ 1,259,913 7.1%
New Zealand Government Bond
7.000%, 07/15/09 1,234,123 7.0%
Sweden Government Bond
5.500%, 10/08/12 1,002,651 5.7%
France Government Bond
4.000%, 04/25/13 919,401 5.2%
France Government Bond
4.000%, 10/25/09 853,158 4.8%
------------ ------------
$ 5,269,246 29.8%
============ ============
</Table>
[CHART]
<Table>
Health Care 3.4%
Consumer Staples 3.5%
Capital Goods 5.0%
Utilities 5.1%
Energy 5.4%
Technology 5.5%
Basic Materials 6.1%
Communication Services 7.0%
Consumer Cyclical 7.1%
Financial 13.6%
Foreign Government Bonds 35.7%
Cash and Other Assets/Liabilities 2.6%
</Table>
16
<Page>
Advantus Money Market Fund, Inc.
PERFORMANCE UPDATE
TOM HOUGHTON, PORTFOLIO MANAGER
ADVANTUS CAPITAL MANAGEMENT, INC.
PERFORMANCE
For the year ended September 30, 2003, the Advantus Money Market Fund earned a
total return of 0.50 percent.* This compares to the three-month U.S. Treasury
Bill, which earned 1.31 percent for the same period.
PERFORMANCE ANALYSIS
The year ended September 30, 2003 was a tale of two bond markets. The first nine
months of the period saw a continuation of one of the longest bull markets in
bonds in history. At June 30, 2003, rates across the entire curve were .15 to
..30 percentage points lower than they were at September 30, 2002, as investors
worried about a weak economy and an impending war with Iraq. These worries eased
in the third quarter and interest rates across the curve moved substantially
higher. These rate increases wiped out most of the declines for the first nine
months of the year, with rates in the long end of the curve -- 5 years and
longer -- ending the period higher. Rates in the short end, however, remained
stubbornly low as the Federal Reserve showed no signs of increasing the Fed
Funds rate above 1.00 percent anytime soon. Over the past year, the yield on the
three-month T-bill declined .61 percentage points to .94 percent, while the
yield on the six-month T-bill declined by .50 percentage points to 1.00 percent.
These rate decreases compared to an increase in yield for the past year on the
ten-year treasury note of .34 percentage points. Yields offered in the
commercial paper market also declined substantially over the year to about 1.13
percent, and remain quite low on an absolute basis. The Fund's holdings continue
to be well diversified over a variety of stable industries and companies.
OUTLOOK
As we look forward into the last quarter of 2003 and beyond, we expect that the
huge monetary and fiscal policy stimuli, along with the decline in the
trade-weighted dollar, will continue to have a positive affect on the economy.
We believe the business environment will continue to improve over the next two
quarters with better corporate earnings, real GDP growth and perhaps even jobs
growth. We expect the US growth trajectory, however, to remain lower than prior
business cycles. As a consequence, we feel that the Federal Reserve will
maintain its target interest rate at a low level for some time to come. When the
17
<Page>
economy begins to show stronger growth, we expect longer-term interest rates to
rise and the yield curve to become even steeper. We expect money market returns,
however, to remain low for the remainder of 2003 and well into 2004 and we have
positioned the portfolio accordingly.
*Historical performance is not an indication of future performance. Investment
returns will fluctuate.
[CHART]
AVERAGE DAYS TO MATURITY
<Table>
<Caption>
NUMBER OF DAYS
1-Oct-2002 48
8-Oct-2002 44
15-Oct-2002 41
22-Oct-2002 39
29-Oct-2002 37
5-Nov-2002 32
12-Nov-2002 55
19-Nov-2002 60
26-Nov-2002 59
3-Dec-2002 52
10-Dec-2002 56
17-Dec-2002 56
24-Dec-2002 58
31-Dec-2002 52
7-Jan-2003 46
14-Jan-2003 46
21-Jan-2003 40
28-Jan-2003 42
4-Feb-2003 43
11-Feb-2003 41
18-Feb-2003 40
25-Feb-2003 39
4-Mar-2003 42
11-Mar-2003 39
18-Mar-2003 36
25-Mar-2003 40
1-Apr-2003 36
8-Apr-2003 35
15-Apr-2003 37
22-Apr-2003 35
29-Apr-2003 37
6-May-2003 39
13-May-2003 39
20-May-2003 37
27-May-2003 37
3-Jun-2003 37
10-Jun-2003 37
17-Jun-2003 35
24-Jun-2003 36
1-Jul-2003 38
8-Jul-2003 36
15-Jul-2003 34
22-Jul-2003 33
29-Jul-2003 32
5-Aug-2003 32
12-Aug-2003 32
19-Aug-2003 32
26-Aug-2003 35
2-Sep-2003 34
9-Sep-2003 45
16-Sep-2003 47
23-Sep-2003 53
30-Sep-2003 60
</Table>
18
<Page>
[CHART]
SEVEN-DAY COMPOUND YIELD*
<Table>
<Caption>
PERCENTAGE
1-Oct-2002 0.91%
8-Oct-2002 1.03%
15-Oct-2002 0.95%
22-Oct-2002 0.97%
29-Oct-2002 0.96%
5-Nov-2002 0.95%
12-Nov-2002 0.88%
19-Nov-2002 0.99%
26-Nov-2002 0.79%
3-Dec-2002 0.73%
10-Dec-2002 0.66%
17-Dec-2002 0.56%
24-Dec-2002 0.65%
31-Dec-2002 0.57%
7-Jan-2003 0.63%
14-Jan-2003 0.53%
21-Jan-2003 0.49%
28-Jan-2003 0.55%
4-Feb-2003 0.47%
11-Feb-2003 0.47%
18-Feb-2003 0.40%
25-Feb-2003 0.49%
4-Mar-2003 0.47%
11-Mar-2003 0.48%
18-Mar-2003 0.46%
25-Mar-2003 0.51%
1-Apr-2003 0.55%
8-Apr-2003 0.55%
15-Apr-2003 0.54%
22-Apr-2003 0.55%
29-Apr-2003 0.55%
6-May-2003 0.56%
13-May-2003 0.54%
20-May-2003 0.54%
27-May-2003 0.53%
3-Jun-2003 0.33%
10-Jun-2003 0.31%
17-Jun-2003 0.30%
24-Jun-2003 0.26%
1-Jul-2003 0.21%
8-Jul-2003 0.18%
15-Jul-2003 0.17%
22-Jul-2003 0.16%
29-Jul-2003 0.14%
5-Aug-2003 0.14%
12-Aug-2003 0.14%
19-Aug-2003 0.14%
26-Aug-2003 0.15%
2-Sep-2003 0.25%
9-Sep-2003 0.25%
16-Sep-2003 0.30%
23-Sep-2003 0.28%
30-Sep-2003 0.28%
</Table>
The yield quotation more closely represents the current earnings of the Money
Market Fund than the total return quotation.
The seven-day compound yield is computed by determining the net change in the
value of a hypothetical account having a balance of one share at the beginning
of a seven calendar day period, dividing that change by seven, adding one to the
quotient, raising the sum to the 365th power and subtracting one from the
result.
The graphs and tables do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
Investments in the Money Market Fund are neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
19
<Page>
Advantus Mortgage Securities Fund, Inc.
PERFORMANCE UPDATE
CHRISTOPHER R. SEBALD, PORTFOLIO MANAGER
ADVANTUS CAPITAL MANAGEMENT, INC.
PERFORMANCE
The performance of the Fund for the year ended September 30, 2003 was as follows
for the three classes of shares currently outstanding:
<Table>
Class A 4.19 percent*
Class B 3.41 percent*
Class C 3.51 percent*
</Table>
The Fund's benchmark, the Lehman Brothers Mortgage-Backed Securities Index**,
returned 3.50 percent for the same period.
PERFORMANCE ANALYSIS
The Mortgage Securities markets experienced one of the most tumultuous years on
record, with very volatile interest rates and skyrocketing prepayment rates.
Interest rates fell to generational lows, as the Federal Reserve warned the
market about the perils of deflation, only to rise sharply in the last quarter
of the period. The Lehman Brothers Mortgage-Backed Securities Index
underperformed treasuries over the last year due to this volatility, and the
duration of the Lehman Brothers Mortgage-Backed Securities Index extended from
0.9 years to 2.5 years at the end of September.
While today mortgage securities appear attractively valued, the yield curve
(difference between long and short interest rates) remains very steep by
historical standards. The steep yield curve reflects the markets' nervousness
about the potential outcomes of and timing surrounding the economic recovery and
the impact this may have on future interest rates. This could be the largest
risk to the bond market going forward.
Performance was attributed to the Fund's holdings in sectors of the mortgage
securities markets that offered better prepayment protection, better yield and
greater diversification. In general, these sectors included low loan balance
mortgage-backed pools, housing-related asset-backed securities and credit
classes of residential mortgage-backed securities and commercial mortgage-backed
securities. While much of the mortgage securities market prepaid very rapidly
last year, these securities demonstrated superior stability, as well as
providing attractive yields versus alternatives.
20
<Page>
OUTLOOK
As we look forward into the last quarter of 2003 and beyond, we expect that the
huge monetary and fiscal policy stimuli, along with the decline of the
trade-weighted dollar, will continue to have a positive affect on the economy.
We believe the business environment will continue to improve over the next two
quarters, with improved earnings, real GDP growth and perhaps even jobs growth.
We expect the US growth trajectory, however, to remain lower than prior business
cycles. As a consequence, we feel that the Federal Reserve will maintain its
target interest rate at a low level for some time to come. When the economy
begins to show stronger growth, we expect longer-term interest rates to rise and
generate an even steeper yield curve. Should interest rates rise as we expect,
total returns will be composed mainly of income.
Given our portfolio structure, with high current income and interest rate
exposure near the benchmark, we believe we are positioned well for this change.
We believe the mortgage market continues to offer some compelling values versus
other sectors of the fixed income market. Our positive outlook on the sector
remains.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 4.5 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 Lehman Brothers Mortgage-Backed Securities Index is an unmanaged benchmark
composite which includes all fixed-rate securities backed by mortgage pools of
the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC) and Federal National Mortgage Association (FNMA).
The risks incurred by mortgage securities include but are not limited to,
reinvestment of prepaid loans or lower rates of return. In addition, the net
asset value of mortgage securities may fluctuate in response to changes in
interest rates and are not guaranteed.
21
<Page>
COMPARISON OF CHANGE IN VALUE OF
A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS MORTGAGE SECURITIES FUND,
LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES 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 Mortgage Securities Fund compared to the
Lehman Brothers Mortgage-Backed Securities 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 September 30, 1993 through September 30,
2003. The lines in the Class B and Class C graphs represent the cumulative total
return of a hypothetical $10,000 investment made on the inception date of Class
B and Class C shares (August 19, 1994 and March 1, 1995, respectively) through
September 30, 2003.
[CHART]
CLASS A
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year -0.50%
Five year 6.07%
Ten year 6.36%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS MORTGAGE-BACKED
CLASS A SECURITIES INDEX CPI
9/30/93 $ 10 $ 10 $ 10
10/31/93 $ 9.61930 $ 10.02891 $ 10.04135
9/30/94 $ 9.20180 $ 9.88569 $ 10.29635
9/30/95 $ 10.44679 $ 11.22365 $ 10.55824
9/30/96 $ 10.95099 $ 11.87443 $ 10.87526
9/30/97 $ 12.08647 $ 13.06701 $ 11.10958
9/30/98 $ 13.17846 $ 14.19396 $ 11.27498
9/30/99 $ 13.43884 $ 14.51644 $ 11.57133
9/30/2000 $ 14.47292 $ 15.59388 $ 11.97105
9/30/2001 $ 16.48498 $ 17.51865 $ 12.28808
9/30/2002 $ 17.78454 $ 18.80859 $ 12.47416
9/30/2003 $ 18.52940 $ 20.71800 $ 12.76361
</Table>
22
<Page>
[CHART]
CLASS B
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year -1.59%
Five year 6.02%
Since inception (8/19/94) 7.11%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS MORTGAGE-BACKED
CLASS B SECURITIES INDEX CPI
8/19/94 $ 10 $ 10 $ 10
9/30/94 $ 9.92760 $ 9.88882 $ 10.06739
9/30/95 $ 11.19243 $ 11.22719 $ 10.32345
9/30/96 $ 11.64666 $ 11.87818 $ 10.63342
9/30/97 $ 12.77089 $ 13.07113 $ 10.86253
9/30/98 $ 13.82070 $ 14.19844 $ 11.02426
9/30/99 $ 13.99003 $ 14.52102 $ 11.31402
9/30/2000 $ 14.95463 $ 15.59880 $ 11.70485
9/30/2001 $ 16.94225 $ 17.52418 $ 12.01482
9/30/2002 $ 18.27786 $ 18.81453 $ 12.19677
9/30/2003 $ 18.70700 $ 19.47299 $ 12.47978
</Table>
23
<Page>
[CHART]
CLASS C
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 3.51%
Five year 6.31%
Since inception (3/1/95) 7.12%
</Table>
(Thousands)
<Table>
<Caption>
LEHMAN BROTHERS MORTGAGE-BACKED
CLASS C SECURITIES INDEX CPI
3/1/95 $ 10 $ 10 $ 10
9/30/95 $ 10.79065 $ 10.79293 $ 10.15242
9/30/96 $ 11.22981 $ 11.41873 $ 10.45726
9/30/97 $ 12.31401 $ 12.56554 $ 10.68257
9/30/98 $ 13.33875 $ 13.64925 $ 10.84162
9/30/99 $ 13.48916 $ 13.95936 $ 11.12657
9/30/2000 $ 14.41910 $ 14.99545 $ 11.51093
9/30/2001 $ 16.30089 $ 16.84635 $ 11.81577
9/30/2002 $ 17.43974 $ 18.08679 $ 11.99470
9/30/2003 $ 18.05200 $ 18.71978 $ 12.27303
</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 4.5 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.
The graphs and tables do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
24
<Page>
TEN LARGEST BOND HOLDINGS
<Table>
<Caption>
MARKET % OF BOND
SECURITY DESCRIPTION VALUE PORTFOLIO
- -------------------- ------------ -----------
Federal National Mortgage Association -
6.000%, 03/01/33 $ 7,275,305 5.3%
Federal National Mortgage Association -
6.000%, 10/01/32 6,143,348 4.5%
Federal National Mortgage Association -
6.500%, 09/01/32 5,522,640 4.0%
Federal National Mortgage Association -
5.000%, 10/01/33 5,000,000 3.6%
Federal Home Loan Mortgage Corporation -
6.500%, 09/01/32 4,171,059 3.1%
Federal National Mortgage Association -
5.000%, 06/01/18 3,489,372 2.5%
Federal National Mortgage Association -
6.500%, 08/01/32 3,291,323 2.4%
Federal National Mortgage Association -
5.500%, 04/01/33 3,235,365 2.4%
Federal National Mortgage Association -
5.500%, 02/01/18 3,204,002 2.3%
Federal National Mortgage Association -
6.500%, 07/01/32 2,809,698 2.1%
------------ ------------
$ 44,142,112 32.2%
============ ============
</Table>
25
<Page>
[CHART]
<Table>
Cash and Other Assets/Liabilities 3.6%
FHLMC 6.5%
FNMA 41.2%
GNMA 1.7%
Asset Backed Securities 23.5%
Collateralized Mtg. Obligation/ Mtg Rev. Bonds 14.3%
Non-Agency Commercial Mtg-Backed Securities 7.2%
Vendee Mortgage Trust 0.6%
State and Local Government Obligations 0.5%
Health Care 0.9%
</Table>
[CHART]
<Table>
Public Issues 81.0%
Liquid 144A Issues 11.0%
Illiquid 144A Issues and Other Private
Placement Illiquid Issues 4.4%
Cash and Other Assets/Liabilities 3.6%
</Table>
[CHART]
<Table>
AAA Rated 64.1%
AA Rated 12.3%
A Rated 7.7%
BBB Rated 9.4%
BB Rated 2.8%
D Rated 0.1%
Cash and Other Assets/Liabilities 3.6%
</Table>
26
<Page>
Advantus Spectrum Fund, Inc.
PERFORMANCE UPDATE
PERFORMANCE
The Fund's performance for the year ended September 30, 2003, for each class of
shares outstanding was as follows:
<Table>
Class A 17.17 percent*
Class B 16.20 percent*
Class C 16.24 percent*
</Table>
This compares to the Fund's benchmark, a blend of 60 percent S&P 500 Index** and
40 percent Lehman Brothers Aggregate Bond Index+, which returned 16.84 percent
over the same period. The S&P 500 Index and the Lehman Brothers Aggregate Bond
Index returned 24.39 percent and 5.41 percent, respectively, for the same
period.
DURING THE PERIOD OCTOBER 1, 2002 THROUGH APRIL 30, 2003, THE FUND WAS MANAGED
BY ADVANTUS CAPITAL MANAGEMENT, INC. DURING THE BALANCE OF THE YEAR COVERED BY
THIS REPORT, FROM MAY 1, 2003 THROUGH SEPTEMBER 30, 2003, THE FUND WAS MANAGED
BY WADDELL & REED IVY INVESTMENT COMPANY. SEPARATE DISCUSSIONS OF THE FUND'S
PERFORMANCE DURING EACH PERIOD ARE PROVIDED BELOW.
PERFORMANCE ANALYSIS
October 1, 2002--April 30, 2003
Discussion by Advantus Capital Management, Inc.
Our disciplined stock selection approach and a focus on sustainable growth
allowed the Advantus portfolio management team to select attractive securities
for the stock segment of the portfolio and avoid or minimize some of the worst
hit securities in the market over the period October 1, 2002 through April 30,
2003. Sectors where value was added by avoiding downside risk included Hospital
Management, Aerospace, and Oil Services. Underweighting Telecommunications,
which modestly worked against us, was offset by gains in Consumer Staples.
Notably, Advantus' security selection ability resulted in the overall
out-performance of the Fund. Strong performers for the period included Symbol
Technologies, Wachovia, St Jude Medical, and Nabors Industries. Our strong
performers outweighed our underperformers, including underweights in Merck, JP
Morgan, and AOL, and overweights in Hewlett Packard, Michaels Stores, and LSI
Logic.
The strong performance of the fixed income portion of the Fund for the period
October 1, 2002 through April 30, 2003, was attributed to a very strong
performance in corporate bonds and the portfolio's overweight to this sector.
27
<Page>
Corporate bonds substantially outperformed the other investment grade fixed
income sectors on a relative basis as spreads narrowed versus treasuries. For
the period, corporate bonds returned 13.03 percent, compared to 6.08 percent for
treasuries and 4.03 percent for mortgage-backed securities. Lower corporate
leverage, lower liquidity/funding risk, improved earnings and corporate
governance all contributed to a much improved fundamental picture for corporate
credit. As with equities, individual security selection was a key contributor to
performance. Select positions in property & casualty insurance, utilities, and
services helped drive performance.
PERFORMANCE ANALYSIS
May 1, 2003--September 30, 2003
Discussion by Waddell & Reed Ivy Investment Company
Cynthia Prince-Fox
Portfolio Manager
The stock market came to life during the last five months. Most of the market
movement since mid-May has been reflective of massive monetary and fiscal
stimulus policies and the unfolding of a better profit picture. These very
forceful policies began to affect the equity market as pressure to obtain yield
and investment returns intensified. Consumer, business and Federal government
spending have accelerated. The pace of real domestic final demand improved after
the war with Iraq, and aided by new fiscal stimulus, final demand has continued
that acceleration.
The equity portion of the Fund underperformed the S&P 500 Index during the past
five months. Over the past several months, we have moved out of cash in an
attempt to position the fund for an improving economy. Overall performance was
significantly helped by current holdings in technology and basic industry,
which, combined, represents approximately 35 percent of our equity holdings. Our
energy holdings created one of the most significant drags to performance,
despite the fact that the price of the commodity remains at historically high
levels. Currently, the Fund is overweighted in basic industry and technology and
underweighted in financials.
Regarding the fixed income portion, interest rates moved considerably higher
during this period. A variety of factors contributed to the bond market sell
off, including clear signs of a pick-up in economic activity, confusion over Fed
statements at the June FOMC meeting, and increased Treasury issuance as a result
of the budget deficit. The move higher in rates was also exacerbated by hedge
related selling from mortgage investors.
The fixed income portion of the fund outperformed the Lehman Brothers Aggregate
Bond Index for the last five months. Since May we have reduced exposure in
longer maturity securities while moving into the short to
28
<Page>
intermediate part of the curve. In the third quarter of the calendar year,
mortgage-backed securities were the best performing sector of the market
followed by corporate bonds and then treasuries. Corporate credit spreads
continued to tighten relative to Government securities signaling that corporate
credit fundamentals are improving. We feel that this is a very positive sign for
the economy moving forward. Currently, our fixed income holdings are being
maintained at our minimum levels of 25 percent focusing on short duration while
emphasizing intermediate corporate bonds and mortgage-backed securities.
OUTLOOK
We have positioned the Fund to be slightly biased towards equity with
approximately 74 percent weight in equities vs. 25 percent weight in bonds and 1
percent in cash. We do believe the market is at a crossroad with the
sustainability of the recovery and what is already being priced into the
markets. We have experienced a significant recovery off the March lows and the
case can be made that many stocks look overvalued. We do not want to overlook
the fact that most companies have yet to reinvest back into their business
beyond general maintenance and depreciation needs. We think this is the next
important catalyst for the markets. At this time we are willing to maintain our
holdings in anticipation of a sustainable earnings recovery.
*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 S&P 500 Index is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall.
+The Lehman Brothers Aggregate Bond Index is an unmanaged benchmark which
includes all publicly issued fixed rate, non convertible domestic corporate
debt.
29
<Page>
COMPARISON OF CHANGE IN VALUE OF
A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS SPECTRUM FUND,
S&P 500 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 Lehman
Brothers Aggregate Bond Index, the S & P 500 Index, blended index of 60 percent
S & P 500 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 September 30, 1993
through September 30, 2003. 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 September 30, 2003.
[CHART]
CLASS A
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 10.72%
Five year -1.00%
Ten year 5.05%
</Table>
(Thousands)
<Table>
<Caption>
BLENDED S & P 500 LEHMAN BROTHERS
CLASS A CPI INDEX INDEX AGGREGATE BOND INDEX
9/30/93 $ 10 $ 10 $ 10 $ 10 $ 10
10/31/93 $ 9.49091 $ 10.04135 $ 10.14500 $ 10.20681 $ 10.03737
9/30/94 $ 9.30884 $ 10.29635 $ 10.09176 $ 10.36938 $ 9.67756
9/30/95 $ 11.02002 $ 10.55824 $ 12.44471 $ 13.45327 $ 11.03833
9/30/96 $ 12.53167 $ 10.87526 $ 14.18375 $ 16.18870 $ 11.57922
9/30/97 $ 14.61889 $ 11.10958 $ 18.08879 $ 22.73701 $ 12.70395
9/30/98 $ 16.27275 $ 11.27498 $ 20.00103 $ 24.79413 $ 14.16634
9/30/99 $ 18.88898 $ 11.57133 $ 23.19950 $ 31.68986 $ 14.11443
9/30/2000 $ 21.95090 $ 11.97105 $ 25.76860 $ 35.89248 $ 15.10103
9/30/2001 $ 14.85041 $ 12.28808 $ 22.60466 $ 26.33839 $ 17.05713
9/30/2002 $ 13.97352 $ 12.47416 $ 20.49263 $ 20.94313 $ 18.52341
9/30/2003 $ 16.37215 $ 12.76361 $ 23.94528 $ 26.05242 $ 23.82400
</Table>
30
<Page>
[CHART]
CLASS B
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 11.20%
Five year -0.89%
Since inception (8/19/94) 5.68%
</Table>
(Thousands)
<Table>
<Caption>
BLENDED S & P 500 LEHMAN BROTHERS
CLASS B CPI INDEX INDEX AGGREGATE BOND INDEX
8/19/94 $ 10 $ 10 $ 10 $ 10 $ 10
9/30/94 $ 10.00507 $ 10.06739 $ 9.79300 $ 10.01286 $ 9.86504
9/30/95 $ 11.76802 $ 10.32345 $ 12.07630 $ 12.99073 $ 11.25218
9/30/96 $ 13.30582 $ 10.63342 $ 13.76385 $ 15.63211 $ 11.80355
9/30/97 $ 15.43686 $ 10.86253 $ 17.55329 $ 21.95529 $ 12.95007
9/30/98 $ 17.06589 $ 11.02426 $ 19.40892 $ 23.94168 $ 14.44079
9/30/99 $ 19.67781 $ 11.31402 $ 22.51270 $ 30.60032 $ 14.38787
9/30/2000 $ 22.69261 $ 11.70485 $ 25.00575 $ 34.65845 $ 15.39358
9/30/2001 $ 15.26185 $ 12.01482 $ 21.92864 $ 25.43285 $ 17.38758
9/30/2002 $ 14.36066 $ 12.19677 $ 19.87977 $ 20.22307 $ 18.88226
9/30/2003 $ 16.55700 $ 12.47978 $ 22.61200 $ 22.22100 $ 22.04200
</Table>
31
<Page>
[CHART]
CLASS C
AVERAGE ANNUAL TOTAL RETURN:
<Table>
One year 16.24%
Five year -0.62%
Since inception (3/1/95) 5.46%
</Table>
(Thousands)
<Table>
<Caption>
BLENDED S & P 500 LEHMAN BROTHERS
CLASS C CPI INDEX INDEX AGGREGATE BOND INDEX
3/1/95 $ 10 $ 10 $ 10 $ 10 $ 10
9/30/95 $ 11.26309 $ 10.15242 $ 11.64774 $ 12.21424 $ 10.88393
9/30/96 $ 12.71292 $ 10.45726 $ 13.27541 $ 14.69774 $ 11.41726
9/30/97 $ 14.73097 $ 10.68257 $ 16.93037 $ 20.64296 $ 12.52626
9/30/98 $ 16.28844 $ 10.84162 $ 18.72015 $ 22.51062 $ 13.96819
9/30/99 $ 18.77823 $ 11.12657 $ 21.71379 $ 28.77126 $ 13.91701
9/30/2000 $ 21.64946 $ 11.51093 $ 24.11836 $ 32.58682 $ 14.88980
9/30/2001 $ 14.53366 $ 11.81577 $ 21.15045 $ 23.91266 $ 16.81855
9/30/2002 $ 13.58337 $ 11.94470 $ 19.17429 $ 19.01429 $ 18.26431
9/30/2003 $ 15.79200 $ 12.27303 $ 22.40482 $ 23.18900 $ 21.02300
</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.
The graphs and tables do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
32
<Page>
BOND PORTFOLIO CHARACTERISTICS-QUALITY BREAKDOWN
<Table>
<Caption>
% OF BOND
RATING PORTFOLIO
- ------ ---------
U.S. Treasury 14.8%
U.S. Government Agencies 47.1%
AAA rated 8.1%
A rated 15.2%
BBB rated 14.2%
D rated 0.6%
---------
100.0%
---------
</Table>
FIVE LARGEST STOCK HOLDINGS
<Table>
<Caption>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------- ------ ------------ ----------
Microsoft Corporation 41,576 $ 1,155,397 3.2%
Pfizer, Inc 34,725 1,054,946 2.9%
General Electric Company 31,056 925,779 2.5%
Chubb Corporation 12,800 830,464 2.3%
Kohl's Corporation 14,000 749,000 2.1%
------------ ----------
$ 4,715,586 13.0%
============ ==========
</Table>
[CHART]
<Table>
Common Stock 72.6%
Bonds 26.3%
Cash and Other Assets/Liabilities 1.1%
</Table>
33
<Page>
Advantus Bond Fund
Investments in Securities
SEPTEMBER 30, 2003
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
LONG-TERM DEBT SECURITIES (96.7%)
GOVERNMENT OBLIGATIONS (43.8%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (42.7%)
Federal Home Loan Mortgage Corporation (FHLMC) (5.8%)
$ 150,000 2.500% 07/28/05 $ 150,646
250,000 2.500% 12/04/06 251,308
250,000 2.750% 12/30/05 250,902
150,000 4.375% 02/04/10 152,521
543,591 6.500% 09/01/32 572,498
------------
1,377,875
------------
Federal National Mortgage Association (FNMA) (25.7%)
250,000 2.650% 02/13/06 251,014
250,000 2.750% 05/04/05 250,358
300,000 3.500% 01/28/08 302,720
257,310 5.000% 07/01/18 264,816
250,000(h) 5.000% 10/01/33 250,000
291,654 5.500% 04/01/33 298,649
197,911 5.500% 05/01/33 202,659
254,712 6.000% 09/01/17 267,902
287,740 6.000% 10/01/32 298,689
249,957 6.000% 11/01/32 259,469
189,521 6.000% 03/01/33 196,257
145,831 6.437% 01/01/08 161,168
146,374 6.500% 12/01/31 153,964
63,777 6.500% 04/01/32 66,988
67,338 6.500% 05/01/32 70,728
163,815 6.500% 07/01/32 172,065
299,845 6.500% 08/01/32 315,253
306,889 6.500% 09/01/32 322,556
284,378 6.500% 10/01/32 296,434
112,151 7.000% 09/01/31 119,484
268,648 7.000% 11/01/31 286,214
282,132 7.000% 02/01/32 300,900
249,975 7.000% 03/01/32 266,606
153,709 7.000% 06/01/32 163,940
194,874 7.000% 07/01/32 207,849
315,178 7.500% 05/01/31 339,288
------------
6,085,970
------------
Other Agency Obligations (1.3%)
300,000 Federal Home Loan Bank
System (c) 1.720% 09/11/06 299,952
------------
State and Local Government Obligations (.8%)
180,000 City of Eden Prairie, Minnesota 7.350% 02/20/09 198,468
------------
</Table>
See accompanying notes to investments in securities.
34
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS--CONTINUED
U.S. Treasury (9.1%)
$ 300,000 Bond 5.375% 02/15/31 $ 321,938
600,000 Bond 6.000% 02/15/26 683,930
350,000 Bond 7.500% 11/15/16 456,887
600,750 Inflationary Index Bond (g) 1.875% 07/15/13 597,559
100,000 Note 3.625% 05/15/13 98,152
------------
2,158,466
------------
Total U.S. government and agencies obligations (cost: $9,897,075) 10,120,731
------------
OTHER GOVERNMENT OBLIGATIONS (1.1%)
Provincial or Local Government Obligations (1.1%)
250,000 Province of Manitoba (b) 4.250% 11/20/06 263,816
------------
Total other government obligations (cost: $268,700) 263,816
------------
Total government obligations (cost: $10,165,775) 10,384,547
------------
CORPORATE OBLIGATIONS (52.9%)
BASIC MATERIALS (3.0%)
Agriculture Products (.9%)
200,000 Cargill, Inc. -- 144A Issue (e) 6.375% 06/01/12 224,503
------------
Aluminum (.7%)
150,000 Alcoa, Inc. 4.250% 08/15/07 157,514
------------
Construction (1.4%)
300,000 Vulcan Materials Company 6.400% 02/01/06 329,860
------------
CONSUMER CYCLICAL (2.4%)
Consumer Finance (.6%)
150,000 Ford Motor Credit Company 5.625% 10/01/08 151,718
------------
Home Builders (.9%)
100,000 CRH America, Inc. 5.300% 10/15/13 102,261
100,000 CRH America, Inc. 6.400% 10/15/33 103,540
------------
205,801
------------
Service (.9%)
200,000 PHH Corporation 7.125% 03/01/13 223,615
------------
CONSUMER STAPLES (6.1%)
Beverage (4.2%)
500,000 Anheuser-Busch
Companies, Inc. 7.100% 06/15/07 520,155
250,000 Diageo Capital PLC (b) 3.500% 11/19/07 254,479
200,000 Miller Brewing
Company -- 144A Issue (e) 5.500% 08/15/13 208,968
------------
983,602
------------
</Table>
See accompanying notes to investments in securities.
35
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
CONSUMER STAPLES--CONTINUED
Broadcasting (1.5%)
$ 250,000 Comcast Corporation 5.300% 01/15/14 $ 252,348
100,000 Cox Communications, Inc. 5.500% 10/01/15 102,200
------------
354,548
------------
Food (.4%)
100,000 Unilever Capital Corporation 5.900% 11/15/32 102,001
------------
ENERGY (1.6%)
Oil (.7%)
150,000 Husky Energy, Inc. (b) 6.250% 06/15/12 164,525
------------
Oil & Gas (.9%)
200,000 Valero Logistics Operations 6.050% 03/15/13 208,954
------------
FINANCIAL (32.6%)
Asset-Backed Securities (8.1%)
200,000 Associates Manufactured
Housing 7.725% 06/15/28 210,298
250,000 Fortress CBO Investments I,
Ltd. -- 144A Issue (b) (d) 7.850% 07/25/38 284,447
196,622 Green Tree Financial
Corporation 6.400% 10/15/18 203,181
96,909 Green Tree Financial
Corporation 6.850% 10/15/18 93,662
210,787 Green Tree Financial
Corporation 8.300% 05/15/19 227,256
97,605 Green Tree Financial
Corporation 8.900% 04/15/25 103,589
400,000 Metropolitan Asset Funding,
Inc. -- 144A Issue (e) 7.525% 04/20/27 429,722
362,409 The National Collegiate Trust 7.240% 09/20/14 374,155
------------
1,926,310
------------
Auto Finance (.6%)
125,000 General Motors Acceptance
Corporation 6.125% 08/28/07 132,158
------------
Banks (1.9%)
200,000 St. George Funding Company
LLC -- 144A Issue (b) (c) (d) 8.485% 12/29/49 217,091
200,000 Wells Fargo Bank NA 7.550% 06/21/10 240,616
------------
457,707
------------
</Table>
See accompanying notes to investments in securities.
36
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
FINANCIAL--CONTINUED
Collateralized Mortgage Obligations/Mortgage Revenue Bonds (1.9%)
$ 34,833 Banco Hipotecario Nacional --
144A Issue (b) (d) (i) 7.916% 07/25/09 $ 11,147
203,834 Chase Mortgage Finance
Corporation 6.500% 09/25/13 206,550
232,168 Mellon Residential Funding
Corporation 6.750% 06/26/28 232,002
8,221 Prudential Home Mortgage
Securities -- 144A Issue (c) (e) 6.627% 04/28/24 8,221
------------
457,920
------------
Commercial Finance (.9%)
200,000 International Lease Finance
Corporation 4.350% 09/15/08 206,252
------------
Commercial Mortgage-Backed Securities (6.0%)
190,785 277 Park Avenue Finance
Corporation -- 144A Issue (e) 7.580% 05/12/12 215,576
300,000 277 Park Avenue Finance
Corporation -- 144A Issue (e) 7.680% 05/12/12 345,768
-- Asset Securitization
Corporation (c) (f) 9.266% 04/14/29 147,840
-- Asset Securitization
Corporation -- 144A
Issue (c) (e) (f) 9.530% 10/13/26 148,694
250,000 GS Mortgage Securities
Corporation II (c) 7.289% 07/13/30 283,512
250,000 Paine Webber Mortgage
Acceptance Corporation --
144A Issue (e) 7.655% 01/02/12 286,034
------------
1,427,424
------------
Consumer Finance (.9%)
200,000 Household Finance
Corporation (c) 2.640% 12/16/04 203,391
------------
Finance -- Diversified (.4%)
100,000 Eastview Credit
Corporation -- 144A Issue (e) 6.950% 06/15/04 100,865
------------
Insurance (4.9%)
250,000 Fund American Companies, Inc. 5.875% 05/15/13 254,392
150,000 Principal Life Global Funding I --
144A Issue (e) 6.250% 02/15/12 166,602
250,000 Stancorp Financial Group, Inc. 6.875% 10/01/12 277,882
250,000 Travelers Property Casualty
Corporation 6.375% 03/15/33 265,757
</Table>
See accompanying notes to investments in securities.
37
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
FINANCIAL--CONTINUED
$ 200,000 Western & Southern Finance
Group, Inc. -- 144A Issue (e) 5.750% 07/15/33 $ 192,172
------------
1,156,805
------------
Investment Bankers/Brokers (1.8%)
250,000 Goldman Sachs Group, Inc. 6.125% 02/15/33 254,004
150,000 Morgan Stanley 6.750% 04/15/11 171,378
------------
425,382
------------
Real Estate Investment Trust (3.6%)
150,000 New Plan Excel Realty Trust 5.875% 06/15/07 163,291
200,000 Prologis 6.700% 04/15/04 205,976
300,000 Vornado Realty Trust 5.625% 06/15/07 320,121
150,000 Weingarten Realty Investors 7.220% 06/01/05 162,853
------------
852,241
------------
Real Estate Investment Trust -- Shopping Centers (.4%)
100,000 Pan Pacific Retail
Properties, Inc. 4.700% 06/01/13 97,070
------------
Savings and Loans (1.2%)
250,000 Washington Mutual Financial
Corporation 6.875% 05/15/11 286,808
------------
HEALTH CARE (1.1%)
Insurance (1.1%)
250,000 New York Life Global
Funding -- 144A Issue (e) 5.375% 09/15/13 262,095
------------
RESIDENTIAL CMOs (2.0%)
Collateralized Mortgage Obligations/Mortgage Revenue Bonds (2.0%)
238,058 BlackRock Capital Finance
LP -- 144A Issue (e) 7.750% 09/25/26 259,926
217,153 Sequoia Mortgage Funding
Company -- 144A Issue (e) 6.380% 08/28/31 217,213
------------
477,139
------------
UTILITIES (4.1%)
Electric Companies (4.1%)
250,000 Centerpoint Energy
Houston -- 144A Issue (e) 5.750% 01/15/14 263,092
200,000 Ohio Power Company 6.375% 07/15/33 203,119
250,000 Oncor Electric Delivery
Company -- 144A Issue (e) 7.250% 01/15/33 286,343
200,000 Public Service Electric & Gas 5.375% 09/01/13 210,146
------------
962,700
------------
Total corporate obligations (cost: $11,977,327) 12,538,908
------------
Total long-term debt securities (cost: $22,143,102) 22,923,455
------------
</Table>
See accompanying notes to investments in securities.
38
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ --------
SHORT-TERM SECURITIES (2.4%)
1,089 Federated Money Market Obligation Trust --
Prime Obligations Fund, current rate 0.998% $ 1,089
552,826 One Group Institutional Prime Money Market Fund,
current rate 1.010% 552,826
------------
Total short-term securities
(cost: $553,915) 553,915
------------
Total investments in securities
(cost: $22,697,017) (j) $ 23,477,370
============
</Table>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 5.0% of net assets in foreign securities at September 30,
2003.
(c) Floating rate bond. The rate disclosed represents the rate in effect at
September 30, 2003.
(d) Represents ownership in an illiquid security. (See note 7 to the financial
statements.) Information concerning the illiquid securities held at
September 30, 2003, which includes acquisition date and cost, is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATE COST
-------- ------------ ------------
Fortress CBO Investments I, Ltd. 144A Issue* 01/16/01 $ 247,823
Banco Hipotecario Nacional 144A Issue* 1/08/01 47,754
St. George Funding Company LLC 144A Issue* 6/12/97 200,000
------------
$ 495,577
============
</Table>
* A 144A Issue represents a security which has not been registered with the
Securities and Exchange Commission under the Securities Act of 1933.
(e) Long-term debt security sold within terms of a private placement memorandum
exempt from registration under Section 144A of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors. In aggregate such
securities represent 15.3% of the Fund's net assets as of September 30,
2003.
(f) Interest-only security that entitles holders to receive only interest on
the underlying mortgages. The principal amount of the underlying pool
represents the notional amount on which current interest is calculated. The
yield to maturity of an interest-only security is sensitive to the rate of
principal payments on the underlying mortgage assets. The rate disclosed
represents the market yield based upon the current cost basis and estimated
timing and amount of future cash flows.
(g) U.S. Treasury inflation-protection securities (TIPS) are securities in
which the principal amount is adjusted for inflation and the semi-annual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
See accompanying notes to investments in securities.
39
<Page>
(h) At September 30, 2003 the total cost of investments purchased on a
when-issued or forward commitment basis is $245,838.
(i) Security is in default. Income is not being accrued on this security and
any payments received are treated as a reduction of principal. This
security is being fair-valued according to procedures approved by the Board
of Directors.
(j) At September 30, 2003 the cost of securities for federal income tax
purposes was $22,697,017. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<Table>
Gross unrealized appreciation $ 968,360
Gross unrealized depreciation (188,007)
-----------
Net unrealized appreciation $ 780,353
===========
</Table>
See accompanying notes to financial statements.
40
<Page>
Advantus International Balanced Fund
Investments in Securities
SEPTEMBER 30, 2003
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
COMMON STOCK (61.2%)
AUSTRALIA (1.9%)
Mining (1.1%)
190,260 Iluka Resources, Ltd. $ 551,424
Printing and Publishing (.8%)
178,850 John Fairfax Holdings, Ltd. 389,676
------------
941,100
------------
BERMUDA (1.1%)
Insurance (1.1%)
7,600 ACE, Ltd. 251,408
3,500 XL Capital, Ltd. 271,040
------------
522,448
------------
CANADA (2.9%)
Electrical Equipment (.7%)
17,000 BCE, Inc. 367,142
Mining (1.4%)
35,800 Barrick Gold Corporation 674,491
Oil & Gas (.8%)
26,750 Husky Energy, Inc. 406,279
------------
1,447,912
------------
DENMARK (2.4%)
Photography/Imagery (1.7%)
50,460 Vestas Wind Systems A/S 842,992
Telecommunication (.7%)
11,000 TDC A/S 338,201
------------
1,181,193
------------
FINLAND (2.0%)
Insurance (.7%)
40,525 Sampo Oyj 328,022
Paper and Forest (.9%)
35,050 Stora Enso Oyj 433,927
Telecommunication (.4%)
21,000 Metso Oyj 207,890
------------
969,839
------------
FRANCE (3.7%)
Chemicals (.8%)
7,498 Aventis SA 389,035
Investment Bankers/Brokers (1.1%)
33,130 AXA 558,323
</Table>
See accompanying notes to investments in securities.
41
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
FRANCE--CONTINUED
Manufacturing (.6%)
7,400 Michelin (C.G.D.E.) $ 275,186
Oil & Gas (.9%)
3,110 Total SA 469,419
Water Utilities (.3%)
8,800 Suez SA 139,693
------------
1,831,656
------------
GERMANY (3.3%)
Chemicals (.6%)
15,000 Bayer AG 323,190
Electric Companies (.7%)
6,860 E.ON AG 334,760
Manufacturing (.6%)
3,600 Adidas-Salomon AG 312,359
Transport Services (1.4%)
40,040 Deutsche Post AG 678,504
------------
1,648,813
------------
HONG KONG (3.8%)
Banks (.6%)
121,800 The Bank of East Asia, Ltd. 313,022
Electric Companies (.7%)
72,500 CLP Holdings, Ltd. 318,340
Investment Bankers/Brokers (--)
28,000 Peregrine Investment Holdings (b) -
Real Estate (1.4%)
47,000 Cheung Kong Holdings, Ltd. 371,773
46,000 Hutchison Whampoa, Ltd. 335,645
Telecommunication (1.1%)
26,210 China Mobile, Ltd. ADR* 341,516
205,900 Swire Pacific, Ltd. 186,135
------------
1,866,431
------------
INDIA (.5%)
Office Equipment (.5%)
17,800 Satyam Computer Services, Ltd. ADR* 229,620
------------
ISRAEL (1.1%)
Technology (1.1%)
33,700 Check Point Software Technologies (b) 566,160
------------
ITALY (1.4%)
Banks (.5%)
25,000 Sanpaolo IMI SpA 249,235
</Table>
See accompanying notes to investments in securities.
42
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
ITALY--CONTINUED
Oil & Gas (.9%)
30,300 ENI-Ente Nazionale Idrocarburi SpA $ 462,990
------------
712,225
------------
JAPAN (5.3%)
Drugs (1.0%)
14,000 Ono Pharmaceutical Company, Ltd. 500,939
Electrical Equipment (2.0%)
34,000 Hitachi, Ltd. 188,568
37,000 NEC Corporation (b) 278,021
14,300 Sony Corporation 498,882
Entertainment (.9%)
5,200 Nintendo Company, Ltd. 435,388
Telecommunication (1.4%)
158 Nippon Telegraph & Telephone Corporation 715,162
------------
2,616,960
------------
MEXICO (1.2%)
Mining (.5%)
86,560 Grupo Carso SA de CV 269,042
Telecommunication (.7%)
10,400 Telefonos de Mexico SA de CV ADR* 317,720
------------
586,762
------------
NETHERLANDS (2.8%)
Chemicals (.8%)
12,180 Akzo Nobel NV 379,744
Electronics (1.0%)
21,100 Koninklijke Philips Electronics NV 478,212
Investment Bankers/Brokers (1.0%)
27,960 ING Groep NV 512,226
------------
1,370,182
------------
NEW ZEALAND (.5%)
Telecommunication (.5%)
87,000 Telecom Corporation of New Zealand, Ltd. 266,771
------------
NORWAY (.9%)
Medical Products/Supplies (.9%)
52,350 Amersham PLC 456,298
------------
SINGAPORE (.5%)
Banks (.5%)
33,000 DBS Group Holdings, Ltd. 246,276
------------
</Table>
See accompanying notes to investments in securities.
43
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
SOUTH KOREA (2.6%)
Electric Companies (.7%)
33,550 Korea Electric Power Corporation ADR* $ 352,946
Electrical Equipment (1.0%)
3,000 Samsung Electronics Company, Ltd.-144A Issue (d) 511,238
Technology (.9%)
21,900 KT Corporation ADR* 436,467
------------
1,300,651
------------
SPAIN (1.6%)
Electric Companies (.9%)
26,772 Iberdrola SA 450,551
Oil & Gas (.7%)
20,550 Repsol YPF SA 337,702
Telecommunication (--)
548 Telefonica SA BDR 6,401
------------
794,654
------------
SWEDEN (5.2%)
Banks (2.4%)
35,600 ForeningsSparbanken AB 527,203
113,190 Nordea AB 647,269
Machinery (.9%)
14,600 Atlas Copco AB 428,648
Service (.2%)
8,500 Securitas AB 103,340
Trucks and Parts (1.7%)
17,200 Autoliv, Inc. 518,924
14,800 Volvo AB 342,639
------------
2,568,023
------------
SWITZERLAND (2.3%)
Banks (.5%)
4,300 UBS AG 241,286
Food (1.1%)
2,400 Nestle SA 553,406
Insurance (.7%)
5,350 Swiss Reinsurance 339,908
------------
1,134,600
------------
TAIWAN (.6%)
Telecommunication (.6%)
20,700 Chunghwa Telecom Company, Ltd. ADR* 290,007
------------
</Table>
See accompanying notes to investments in securities.
44
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
UNITED KINGDOM (13.6%)
Banks (1.0%)
74,800 Lloyds TSB Group PLC $ 514,365
Chemicals (.7%)
44,000 Shire Pharmaceuticals PLC (b) 318,646
Electric Companies (.8%)
63,700 National Grid Transco PLC 408,146
Electrical Equipment (1.2%)
126,910 BAE Systems PLC 354,667
137,200 Kidde PLC (b) 233,587
Food (.8%)
90,400 J Sainsbury PLC 408,795
Food & Health (.7%)
42,200 Unilever PLC 360,635
Investment Bankers/Brokers (.7%)
43,500 Abbey National PLC 358,016
Manufacturing (1.7%)
218,600 Rolls-Royce Group PLC 584,582
25,000 Smiths Group PLC (b) 278,218
Mining (1.4%)
100,220 BHP Billiton PLC 664,613
Oil & Gas (2.0%)
82,800 BP PLC 567,658
69,300 Shell Transport & Trading Company PLC 427,911
Printing and Publishing (.5%)
24,900 Pearson PLC 236,676
Retail (.8%)
75,544 Marks & Spencer Group PLC 383,965
Service (.5%)
80,000 Brambles Industries PLC 225,564
Telecommunication (.8%)
218,990 Cable & Wireless PLC 413,757
------------
6,739,801
------------
Total common stock (cost: $30,081,574) 30,288,382
------------
</Table>
See accompanying notes to investments in securities.
45
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
CONVERTIBLE PREFERRED STOCKS (.6%)
GERMANY (.6%)
Trucks and Parts (.6%)
9,430 Volkswagen AG $ 286,757
------------
Total convertible preferred stocks (cost: $247,426) 286,757
------------
RIGHTS (--)
FRANCE (--)
Investment Bankers/Brokers (--)
33,130 AXA Right Issue (b) 1,543
------------
Total rights (cost: $5,704) 1,543
------------
</Table>
See accompanying notes to investments in securities.
46
<Page>
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
LONG-TERM DEBT SECURITIES (35.7%) (c)
AUSTRALIA (2.5%)
Government (2.5%)
550,000 New South Wales Treasury
Corporation
(Australian Dollar) 6.500% 05/01/06 $ 385,190
1,200,000 Queensland Treasury
Corporation
(Australian Dollar) 6.000% 08/14/13 842,694
14,000 Queensland Treasury
Corporation
(Australian Dollar) 6.500% 06/14/05 9,705
------------
1,237,589
------------
AUSTRIA (1.9%)
Government (1.9%)
70,000 Republic of Austria (Euro) 4.000% 07/15/09 83,865
300,000 Republic of Austria (Euro) 5.000% 07/15/12 376,846
360,000 Republic of Austria (Euro) 5.500% 10/20/07 458,726
------------
919,437
------------
BELGIUM (1.6%)
Government (1.6%)
100,000 Belgium Government Bond
(Euro) 4.750% 09/28/06 123,300
100,000 Belgium Government Bond
(Euro) 5.000% 09/28/12 125,568
405,000 Belgium Government Bond
(Euro) 7.500% 07/29/08 560,824
------------
809,692
------------
CANADA (1.2%)
Government (1.2%)
748,000 Canadian Government Bond
(Canadian Dollar) 6.000% 06/01/11 612,193
------------
DENMARK (1.4%)
Government (1.4%)
2,864,000 Denmark Government Bond
(Danish Krona) 5.000% 08/15/05 469,870
1,400,000 Denmark Government Bond
(Danish Krona) 5.000% 11/15/13 234,084
------------
703,954
------------
</Table>
See accompanying notes to investments in securities.
47
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
FINLAND (1.8%)
Government (1.8%)
400,000 Finland Government Bond
(Euro) 3.000% 07/04/08 $ 462,112
60,000 Finland Government Bond
(Euro) 5.000% 04/25/09 75,655
280,000 Finland Government Bond
(Euro) 5.750% 02/23/11 368,573
------------
906,340
------------
FRANCE (3.6%)
Government (3.6%)
712,000 France Government Bond
OAT (Euro) 4.000% 10/25/09 853,158
790,000 France Government Bond
OAT (Euro) 4.000% 04/25/13 919,401
------------
1,772,559
------------
GERMANY (1.8%)
Government (1.8%)
170,000 Deutsche Bundesrepublik
(Euro) 5.000% 07/04/11 214,150
531,000 Deutsche Bundesrepublik
(Euro) 6.000% 07/04/07 684,272
------------
898,422
------------
IRELAND (1.4%)
Government (1.4%)
540,000 Ireland Government Bond
(Euro) 5.000% 04/18/13 678,070
------------
ITALY (2.4%)
Government (2.4%)
447,000 Italy Buoni Poliennali Del
Tesoro (Euro) 5.500% 11/01/10 577,647
479,001 Italy Buoni Poliennali Del
Tesoro (Euro) 7.750% 11/01/06 639,863
------------
1,217,510
------------
NETHERLANDS (2.5%)
Government (2.5%)
990,000 Netherlands Government Bond
(Euro) 5.750% 02/15/07 1,259,913
------------
</Table>
See accompanying notes to investments in securities.
48
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
NEW ZEALAND (3.6%)
Government (3.6%)
900,000 New Zealand Government Bond
(New Zealand Dollar) 6.000% 11/15/11 $ 542,672
1,950,000 New Zealand Government Bond
(New Zealand Dollar) 7.000% 07/15/09 1,234,123
------------
1,776,795
------------
NORWAY (1.4%)
Government (1.4%)
3,000,000 Norway Government Bond
(Norwegian Krone) 6.000% 05/16/11 462,601
1,400,000 Norway Government Bond
(Norwegian Krone) 6.500% 05/15/13 225,008
------------
687,609
------------
SPAIN (3.6%)
Government (3.6%)
100,000 Spain Government Bond
(Euro) 4.800% 10/31/06 123,775
630,000 Spain Government Bond
(Euro) 5.000% 07/30/12 792,354
350,000 Spain Government Bond
(Euro) 6.000% 01/31/08 455,844
294,000 Spain Government Bond
(Euro) 10.150% 01/31/06 401,253
------------
1,773,226
------------
SWEDEN (3.7%)
Government (3.7%)
7,180,000 Sweden Government Bond
(Swedish Krona) 5.500% 10/08/12 1,002,651
1,800,000 Sweden Government Bond
(Swedish Krona) 6.500% 05/05/08 259,067
3,600,000 Swedish Government Bond
(Swedish Krona) 6.750% 05/05/14 551,332
------------
1,813,050
------------
UNITED KINGDOM (1.3%)
Government (1.3%)
343,000 United Kingdom Gilt (British
Sterling Pound) 7.500% 12/07/06 624,872
------------
Total long-term debt securities (cost: $14,722,734) 17,691,231
------------
</Table>
See accompanying notes to investments in securities.
49
<Page>
<Table>
<Caption>
MARKET
SHARES/PRINCIPAL COUPON MATURITY VALUE(a)
- ---------------- ------ -------- ------------
SHORT-TERM SECURITIES (2.4%)
900,107 Bankers Trust Institutional Liquid
Asset Fund, current rate 1.000% $ 900,107
200,000 U.S. Treasury Bill 0.960% 11/20/03 199,733
100,000 U.S. Treasury Bill 0.920% 12/04/03 99,772
------------
Total short-term securities
(cost: $1,199,676) 1,199,612
------------
Total investments in securities
(cost: $46,257,114) (e) $ 49,467,525
============
</Table>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Non-income producing.
(c) Principal amounts for foreign debt securities are denominated in the
currencies indicted paranthetically.
(d) Equity security sold within terms of a private placement memorandum exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors".
(e) At September 30, 2003 the cost of securities for federal income tax
purposes was $46,274,682. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<Table>
Gross unrealized appreciation $ 6,669,976
Gross unrealized depreciation (3,477,133)
------------
Net unrealized appreciation $ 3,192,843
============
</Table>
* American Depository Receipt.
See accompanying notes to financial statements.
50
<Page>
Advantus Money Market Fund
Investments in Securities
SEPTEMBER 30, 2003
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
PRINCIPAL RATE MATURITY VALUE(a)
- --------- ---------- ---------- --------------
COMMERCIAL PAPER (45.5%)
BASIC MATERIALS (5.9%)
Agriculture Products (2.9%)
$ 1,000,000 Archer-Daniels-Midland
Company (c) 1.100% 02/20/04 $ 995,661
--------------
Chemicals (3.0%)
1,000,000 E I Du Pont De Nemours
and Company 1.010% 10/07/03 999,831
--------------
CONSUMER CYCLICAL (4.4%)
Hardware and Tools (1.5%)
500,000 The Stanley Works (c) 1.060% 12/01/03 499,102
--------------
Household Products (2.9%)
1,000,000 Procter & Gamble
Company (c) 1.020% 11/06/03 998,980
--------------
CONSUMER STAPLES (9.4%)
Beverage (2.8%)
450,000 The Coca-Cola Company 1.050% 10/03/03 449,974
500,000 The Coca-Cola Company 1.030% 12/01/03 499,127
--------------
949,101
--------------
Food (6.6%)
1,000,000 Cargill, Inc. (c) 1.060% 01/23/04 996,643
1,250,000 Nestle SA (c) 1.070% 02/05/04 1,245,282
--------------
2,241,925
--------------
FINANCIAL (14.7%)
Banks (1.5%)
500,000 Citigroup, Inc. 1.040% 10/14/03 499,812
--------------
Commercial Finance (2.9%)
1,000,000 General Electric Capital
Corporation 1.060% 10/10/03 999,735
--------------
Consumer Finance (7.4%)
1,000,000 AIG Sunamerica Global
Financing II 1.010% 10/27/03 999,271
1,500,000 American General Finance
Corporation 1.040% 11/19/03 1,497,877
--------------
2,497,148
--------------
Finance -- Diversified (2.9%)
1,000,000 Verizon Net Fund 1.020% 10/23/03 999,377
--------------
</Table>
See accompanying notes to investments in securities.
51
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL RATE MATURITY VALUE(a)
- --------- ---------- ---------- --------------
HEALTH CARE (11.1%)
Drugs (8.1%)
$ 750,000 Abbott Laboratories (c) 1.000% 10/16/03 $ 749,688
500,000 Pfizer, Inc. 1.020% 10/01/03 500,000
497,000 Pfizer, Inc. (c) 1.020% 11/03/03 496,535
1,000,000 Schering-Plough Corporation 1.090% 11/17/03 998,577
--------------
2,744,800
--------------
Health Care -- Diversified (3.0%)
1,000,000 Johnson & Johnson, Inc. (c) 0.860% 10/03/03 999,952
--------------
Total commercial paper (cost: $15,425,424) 15,425,424
--------------
U.S. GOVERNMENT OBLIGATIONS (41.5%)
Federal Home Loan Mortgage
Corporation (41.5%)
1,200,000 1.010% 11/03/03 1,198,889
750,000 1.045% 12/22/03 748,215
800,000 1.050% 11/13/03 798,997
1,250,000 1.050% 12/11/03 1,247,411
625,000 1.060% 11/05/03 624,356
1,000,000 1.065% 01/26/04 996,539
1,250,000 1.070% 01/05/04 1,246,433
1,000,000 1.075% 02/04/04 996,237
1,000,000 1.080% 12/11/03 997,870
1,000,000 1.080% 01/09/04 997,000
1,200,000 1.080% 02/02/04 1,195,536
1,000,000 1.090% 12/10/03 997,881
1,000,000 1.090% 12/12/03 997,820
1,000,000 1.116% 12/01/03 998,109
--------------
Total U.S. government obligations (cost: $14,041,293) 14,041,293
--------------
OTHER SHORT-TERM INVESTMENTS (10.4%)
FOOD (5.9%)
$ 2,000,000 HJ Heinz Company
144A Issue (b)(d) 6.561% 11/15/03 2,010,600
FINANCE-DIVERSIFIED (4.5%)
1,500,000 Associates Corporation
of North America 5.750% 11/01/03 1,505,623
--------------
Total other short-term investments (cost: $3,516,223) 3,516,223
--------------
</Table>
See accompanying notes to investments in securities.
52
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ --------------
MONEY MARKET FUNDS (2.5%)
500,386 Federated Money Market Obligation Trust --
Prime Obligation Fund, current rate 0.998% $ 500,386
341,940 One Group Institutional Prime Money Market Fund,
current rate 1.010% 341,940
--------------
Total short-term securities
(cost: $842,326) 842,326
--------------
Total investments in securities
(cost: $33,825,266) (e) $ 33,825,266
==============
</Table>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Floating rate bond.
(c) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Board of Directors. In the aggregate
such securities represent 19.2% of the Fund's net assets as of September
30, 2003.
(d) Debt security sold within terms of a private placement memorandum exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Board of Directors.
(e) Also represents the cost of securities for federal income tax purposes at
September 30, 2003.
See accompanying notes to financial statements.
53
<Page>
Advantus Mortgage Securities Fund
Investments in Securities
SEPTEMBER 30, 2003
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- --------------
LONG-TERM DEBT SECURITIES (96.4%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (50.5%)
Federal Home Loan Mortgage Corporation (FHLMC) (6.5%)
$ 1,681,118 5.500% 12/01/17 $ 1,746,836
2,156,323 6.000% 09/01/32 2,240,979
998,855 6.500% 03/01/32 1,054,913
3,960,451 6.500% 09/01/32 4,171,059
--------------
9,213,787
--------------
Federal National Mortgage Association (FNMA) (41.2%)
2,669,453 5.000% 05/01/18 2,748,197
3,395,209 5.000% 06/01/18 3,489,372
2,127,754 5.000% 07/01/18 2,189,826
5,000,000 (h) 5.000% 10/01/33 5,000,000
3,083,436 5.500% 02/01/18 3,204,002
3,159,580 5.500% 04/01/33 3,235,365
494,778 5.500% 05/01/33 506,648
353,228 6.000% 09/01/32 366,672
5,918,153 6.000% 10/01/32 6,143,348
2,691,635 6.000% 11/01/32 2,794,064
7,014,366 6.000% 03/01/33 7,275,305
952,026 6.500% 12/01/31 1,001,395
1,250,772 6.500% 02/01/32 1,313,734
218,185 6.500% 04/01/32 229,171
404,026 6.500% 05/01/32 424,366
2,674,099 6.500% 07/01/32 2,809,698
3,130,066 6.500% 08/01/32 3,291,323
5,255,797 6.500% 09/01/32 5,522,640
172,350 6.500% 10/01/32 179,657
547,639 7.000% 06/01/31 584,405
208,554 7.000% 09/01/31 222,555
671,620 7.000% 11/01/31 715,536
1,368,627 7.000% 02/01/32 1,459,679
1,069,513 7.000% 03/01/32 1,140,669
2,582,982 7.000% 06/01/32 2,754,908
--------------
58,602,535
--------------
Government National Mortgage Association (GNMA) (1.7%)
-- (c) (g) (i) 6.000% 03/16/42 910,887
-- (c) (g) 9.280% 07/16/40 611,433
764,642 7.875% 05/15/17 858,562
--------------
2,380,882
--------------
State and Local Government Obligations (.5%)
708,000 Pleasant Hill California 7.950% 09/20/15 756,271
--------------
</Table>
See accompanying notes to investments in securities.
54
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- --------------
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS--CONTINUED
Vendee Mortgage Trust (.6%)
$ 559,772 Vendee Mortgage Trust (j) 7.216% 02/15/25 $ 615,791
233,379 Vendee Mortgage Trust (j) 7.793% 02/15/25 252,269
--------------
868,060
--------------
Total U.S. government and agencies obligations
(cost: $71,127,094) 71,821,535
--------------
ASSET-BACKED SECURITIES (23.5%)
1,800,000 Associates Manufactured
Housing 7.900% 03/15/27 1,902,880
1,365,000 BankAmerica Manufactured
Housing Contract Trust 7.015% 01/10/28 1,445,398
2,000,000 BankAmerica Manufactured
Housing Contract Trust 7.800% 10/10/26 2,165,902
1,200,000 Conseco Finance 6.981% 06/15/32 1,250,373
1,600,000 Fortress CBO Investments I,
Ltd. -- 144A Issue (b) (d) 7.850% 07/25/38 1,820,464
1,690,946 Green Tree Financial
Corporation 6.400% 10/15/18 1,747,359
1,124,140 Green Tree Financial
Corporation 6.850% 10/15/18 1,086,477
815,492 Green Tree Financial
Corporation 7.650% 04/15/19 858,029
1,686,296 Green Tree Financial
Corporation 8.300% 05/15/19 1,818,045
506,150 Green Tree Financial
Corporation 8.300% 11/15/19 542,317
1,074,747 Green Tree Financial
Corporation 9.100% 04/15/25 1,110,117
1,500,000 GRMT Fairbanks Trust -- 144A
Issue (c) (d) 3.220% 06/20/32 1,479,294
1,339,479 Lehman ABS Manufactured
Housing Contract 5.873% 05/15/22 1,392,948
332,014 Metropolitan Asset Funding,
Inc. -- 144A Issue (e) 6.980% 05/20/12 339,870
2,299,208 Mid-State Trust 7.340% 07/01/35 2,489,570
2,170,075 Mid-State Trust 7.400% 07/01/35 2,316,948
924,291 Mid-State Trust 7.790% 07/01/35 987,853
1,069,583 Mid-State Trust 8.330% 04/01/30 1,174,278
1,015,379 Oakwood Mortgage Investors, Inc. 7.375% 08/15/27 1,073,464
1,169,092 Oakwood Mortgage
Investors, Inc. -- 144A issue (e) 8.100% 10/15/21 1,231,100
1,096,764 Vanderbilt Mortgage Finance 7.070% 12/07/14 1,120,288
435,198 Vanderbilt Mortgage Finance 7.525% 07/07/14 446,076
915,383 Vanderbilt Mortgage Finance 7.525% 11/07/26 972,072
</Table>
See accompanying notes to investments in securities.
55
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- --------------
ASSET-BACKED SECURITIES--CONTINUED
$ 1,000,000 Vanderbilt Mortgage Finance 7.955% 12/07/24 $ 1,125,262
1,548,277 Whole Auto Loan Trust -- 144A
Issue (d) 6.000% 04/15/09 1,544,629
--------------
Total asset-backed securities (cost: $32,547,682) 33,441,013
--------------
OTHER MORTGAGE-BACKED SECURITIES (21.5%)
Collateralized Mortgage Obligations/Mortgage
Revenue Bonds (14.3%)
1,158,982 ABN Amro Mortgage
Corporation (b) (c) 6.920% 11/25/31 1,164,704
50,995 Banco Hipotecario
Nacional -- 144A Issue (b) (d) (f) (i) 2.560% 03/25/11 13,769
377,746 Banco Hipotecario
Nacional -- 144A Issue (b) (d) (f) (i) 7.540% 05/31/17 113,324
110,029 Banco Hipotecario
Nacional -- 144A Issue (b) (d) (f) (i) 7.916% 07/25/09 35,209
1,040,713 Bear Stearns Mortgage
Securities, Inc. 8.000% 11/25/29 1,137,741
1,269,641 BlackRock Capital Finance
LP -- 144A Issue (e) 7.750% 09/25/26 1,386,273
350,873 Chase Mortgage Finance
Corporation 6.750% 11/25/24 350,593
359,673 Chase Mortgage Finance
Corporation 6.750% 02/25/25 359,416
169,640 Chase Mortgage Finance
Corporation -- 144A Issue (c) (e) 6.618% 03/28/25 169,614
1,174,259 Chase Mortgage Finance
Corporation -- 144A Issue (e) 6.750% 09/25/31 1,190,772
501,154 Citicorp Mortgage Securities,
Inc. -- 144A Issue (c) (e) 6.394% 09/25/14 528,099
557,073 Citicorp Mortgage Securities,
Inc. -- 144A Issue (e) 7.250% 08/25/27 556,662
94,542 Collateralized Mortgage
Obligation Trust 5.000% 07/01/18 94,811
130,317 Countrywide Funding
Corporation 6.625% 02/25/24 130,214
241,884 DLJ Mortgage Acceptance
Corporation 6.750% 01/25/24 245,634
372,592 EF Hutton Trust II 9.950% 10/20/18 373,656
274,282 First Union Residential
Securitization Trans, Inc. (c) 6.886% 09/25/26 278,990
400,876 Franchise Finance
Corporation of America -- 144A
Issue (d) 7.800% 07/25/11 428,385
</Table>
See accompanying notes to investments in securities.
56
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- --------------
OTHER MORTGAGE-BACKED SECURITIES--CONTINUED
$1,250,000 Franchise Finance
Corporation of America -- 144A
Issue (e) 8.910% 06/25/14 $ 1,342,745
530,123 GE Capital Mortgage
Services, Inc. 6.250% 04/25/14 532,402
1,339,657 JP Morgan Residential
Mortgage Acceptance
Corporation -- 144A Issue (e) 5.250% 08/28/30 1,336,371
593,049 Norwest Asset Securities
Corporation 6.250% 04/25/14 592,616
1,000,282 Norwest Asset Securities
Corporation 6.750% 08/25/29 1,003,887
24,369 Paine Webber Mortgage
Acceptance
Corporation -- 144A Issue (e) 6.460% 04/29/24 24,369
41,623 Paine Webber Mortgage
Acceptance Corporation (c) 6.816% 02/25/24 41,568
404,825 Paine Webber Mortgage
Acceptance Corporation 8.125% 07/25/09 404,380
287,014 Prudential Home Mortgage
Securities 6.050% 04/25/24 286,808
220,722 Prudential Home Mortgage
Securities -- 144A Issue (c) (e) 6.759% 09/28/08 220,791
244,111 Prudential Home Mortgage
Securities -- 144A Issue (c) (d) 6.591% 04/28/24 245,596
161,380 Prudential Home Mortgage
Securities -- 144A Issue (c) (e) 7.377% 09/28/24 161,380
124,259 Residential Funding
Mortgage Securities 6.500% 11/25/23 129,974
306,540 Residential Funding
Mortgage Securities 6.500% 03/25/24 313,938
552,899 Residential Funding
Mortgage Securities 6.500% 12/25/28 552,457
375,251 Residential Funding
Mortgage Securities 7.000% 05/25/12 374,982
1,078,134 Residential Funding
Mortgage Securities 7.000% 10/25/27 1,077,369
618,001 Residential Funding
Mortgage Securities 7.000% 08/25/29 617,511
226,885 Residential Funding
Mortgage Securities 7.250% 07/25/11 229,948
61,514 Securitized Asset Sales,
Inc. -- 144A Issue (c) (e) 6.095% 11/28/23 61,431
1,520,073 Sequoia Mortgage Funding
Company -- 144A Issue (e) 6.380% 08/28/31 1,520,491
</Table>
See accompanying notes to investments in securities.
57
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ---------- ---------- --------------
OTHER MORTGAGE-BACKED SECURITIES--CONTINUED
$ 690,395 Structured Asset Mortgage
Investments, Inc. 6.750% 04/30/30 $ 692,309
--------------
20,321,189
--------------
Non-Agency Commercial Mortgage-Backed Securities (7.2%)
194,844 277 Park Avenue Finance
Corporation -- 144A Issue (e) 7.580% 05/12/12 220,163
1,700,000 277 Park Avenue Finance
Corporation -- 144A Issue (e) 7.680% 05/12/12 1,959,355
-- Asset Securitization
Corporation (c) (g) 9.150% 01/13/15 991,301
-- Asset Securitization
Corporation (c) (g) 9.266% 04/14/29 776,233
-- Asset Securitization
Corporation -- 144A
Issue (c) (e) (g) 9.000% 10/13/26 643,498
1,500,000 FFCA Secured Lending
Corporation (c) 2.220% 02/18/22 1,328,642
1,000,000 FFCA Secured Lending
Corporation (c) 2.470% 02/18/22 884,856
34,239 FFCA Secured Lending
Corporation -- 144A Issue (d) 7.450% 02/18/22 34,409
590,299 GMAC Commercial Mortgage
Securities (d) (i) 5.940% 07/01/13 592,328
2,450,000 Paine Webber Mortgage
Acceptance Corporation -- 144A
Issue (e) 7.655% 01/02/12 2,803,139
--------------
10,233,924
--------------
Total other mortgage-backed securities (cost: $30,127,473) 30,555,113
--------------
CORPORATE OBLIGATIONS (.9%)
HEALTH CARE (.9%)
Managed Care (.9%)
500,000 Covenant Retirement
Communities, Inc. (c) 6.750% 06/01/04 505,075
750,000 Covenant Retirement
Communities, Inc. (c) 7.000% 06/01/06 801,730
--------------
Total corporate obligations (cost: $1,250,000) 1,306,805
--------------
Total long-term debt securities (cost: $135,052,249) 137,124,466
--------------
</Table>
See accompanying notes to investments in securities.
58
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ --------------
SHORT-TERM SECURITIES (6.2%)
4,190,743 American AAdvantage Money Market Fund,
current rate 0.970% $ 4,190,743
4,665,824 One Group Institutional Prime Money Market Fund,
current rate 1.010% 4,665,824
--------------
Total short-term securities
(cost: $8,856,567) 8,856,567
--------------
Total investments in securities
(cost: $143,908,816) (k) $ 145,981,033
==============
</Table>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 2.3% of net assets in foreign securities at September 30,
2003.
(c) Floating rate bond. The rate disclosed represents the rate in effect at
September 30, 2003.
(d) Represents ownership in an illiquid security. (See note 7 to the financial
statements.) Information concerning the illiquid securities held at
September 30, 2003, which includes acquisition date and cost, is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY: DATE COST
--------- ----------- --------------
Fortress CBO Investments I, Ltd.-- 144A Issue* various $ 1,545,117
Whole Auto Loan Trust -- 144A Issue* various 1,537,365
Banco Hipotecario Nacional -- 144A Issue* 09/06/02 5,543
Banco Hipotecario Nacional -- 144A Issue* 05/18/00 319,234
Banco Hipotecario Nacional -- 144A Issue* various 140,395
GRMT Fairbanks Trust -- 144A Issue* 7/15/03 1,463,595
Prudential Home Mortgage Securities -- 144A Issue* 08/24/00 227,682
FFCA Secured Lending Corporation -- 144A Issue* 11/26/02 34,796
Franchise Finance Corporation of America -- 144A
Issue* 9/07/01 411,163
GMAC Commercial Mortgage Securities various 568,574
--------------
$ 6,253,464
==============
</Table>
* A 144A Issue represents a security which has not been registered with the
Securities and Exchange Commission under the Securities Act of 1933.
(e) Long-term debt security sold within terms of a private placement memorandum
exempt from registration under Section 144A of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors. In aggregate such
securities represent 11.0% of the Fund's net assets as of September 30,
2003.
(f) Security is in default. Income is not being accrued on this security and
any payments received are treated as a reduction of principal.
See accompanying notes to investments in securities.
59
<Page>
(g) Interest-only security that entitles holders to receive only interest on
the underlying mortgages. The principal amount of the underlying pool
represents the notional amount on which current interest is calculated. The
yield to maturity of an interest-only security is sensitive to the rate of
principal payments on the underlying mortgage assets. The rate disclosed
represents the market yield based upon the current cost basis and estimated
timing and amount of future cash flows.
(h) At September 30, 2003 the total cost of investments purchased on a
when-issued or forward commitment basis is $4,907,032.
(i) This security is being fair-valued according to procedures approved by the
Board of Directors.
(j) Represents a debt security with a weighted average net pass-through rate
which varies based on the interest rates of the securities in the pool of
underlying collateral. The rate disclosed is the rate in effect at
September 30, 2003.
(k) At September, 2003 the cost of securities for federal income tax purposes
was $143,908,959. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<Table>
Gross unrealized appreciation $ 3,291,142
Gross unrealized depreciation (1,219,068)
-------------
Net unrealized appreciation $ 2,072,074
=============
</Table>
See accompanying notes to financial statements.
60
<Page>
Advantus Spectrum Fund
Investments in Securities
SEPTEMBER 30, 2003
(Percentages of each investment category relate to total net assets.)
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
COMMON STOCK (72.6%)
BASIC MATERIALS (5.0%)
Aluminum (1.1%)
20,900 Alcoa, Inc. $ 546,744
------------
Chemicals (2.7%)
13,600 Air Products and Chemicals, Inc. 613,360
9,600 El Du Pont de Nemours & Company 384,096
11,700 The Dow Chemical Company 380,718
------------
1,378,174
------------
Paper and Forest (1.2%)
10,000 Weyerhaeuser Company 584,500
------------
CAPITAL GOODS (7.9%)
Aerospace/Defense (1.4%)
15,000 Lockheed Martin Corporation 692,250
------------
Electrical Equipment (2.5%)
5,800 Emerson Electric Company 305,370
31,056 General Electric Company 925,779
------------
1,231,149
------------
Machinery (2.3%)
9,900 Cooper Cameron Corporation (b) 457,479
12,900 Ingersoll-Rand Company (c) 689,376
------------
1,146,855
------------
Manufacturing (1.7%)
5,000 3M Company 345,350
11,000 Sealed Air Corporation (b) 519,530
------------
864,880
------------
COMMUNICATION SERVICES (1.6%)
Telecommunication (.9%)
30,000 Nokia OYJ ADR* (c) 468,000
------------
Telephone (.7%)
15,800 BellSouth Corporation 374,144
------------
CONSUMER CYCLICAL (6.0%)
Auto (1.1%)
6,100 Eaton Corporation 540,582
------------
Leisure (1.1%)
20,900 Brunswick Corporation 536,712
------------
</Table>
See accompanying notes to investments in securities.
61
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
CONSUMER CYCLICAL--CONTINUED
Publishing (1.2%)
7,000 New York Times Company $ 304,220
6,700 Tribune Company 307,530
------------
611,750
------------
Retail (2.6%)
17,500 Costco Wholesale Corporation (b) 543,900
14,000 Kohl's Corporation (b) 749,000
------------
1,292,900
------------
CONSUMER STAPLES (9.0%)
Beverage (1.6%)
6,700 PepsiCo, Inc. 307,061
11,400 The Coca-Cola Company 489,744
------------
796,805
------------
Broadcasting (1.7%)
18,000 Clear Channel Communications, Inc. 689,400
5,467 Comcast Corporation (b) 168,821
------------
858,221
------------
Entertainment (1.1%)
26,500 Walt Disney Company 534,505
------------
Food (1.3%)
31,100 ConAgra Foods, Inc. 660,564
------------
Household Products (1.4%)
15,500 Clorox Company 710,985
------------
Personal Care (1.1%)
16,100 The Estee Lauder Companies, Inc. 549,010
------------
Service (.8%)
10,500 Manpower, Inc. 389,550
------------
ENERGY (2.1%)
Oil & Gas (2.1%)
13,656 Nabors Industries, Ltd. (b) (c) 508,823
5,500 Schlumberger, Ltd. 266,200
8,200 Smith International, Inc. (b) 295,036
------------
1,070,059
------------
</Table>
See accompanying notes to investments in securities.
62
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
FINANCIAL (14.6%)
Banks (4.3%)
6,000 Bank of America Corporation $ 468,240
8,600 Charter One Financial, Inc. 263,160
28,200 U.S. Bancorp 676,518
9,900 Wells Fargo & Company 509,850
3,700 Zions Bancorporation 206,645
------------
2,124,413
------------
Consumer Finance (1.4%)
15,500 American Express Company 698,430
------------
Insurance (4.4%)
200 Berkshire Hathaway, Inc. (b) 499,200
12,800 Chubb Corporation 830,464
7,000 Hartford Financial Services Group, Inc. 368,410
14,700 Lincoln National Corporation 520,086
------------
2,218,160
------------
Investment Bankers/Brokers (3.8%)
15,000 Citigroup, Inc. 682,650
2,600 Goldman Sachs Group, Inc. 218,140
7,100 Merrill Lynch & Company, Inc. 380,063
12,500 Morgan Stanley 630,750
------------
1,911,603
------------
Real Estate Investment Trust -- Warehouse/Industrial (.7%)
10,900 Prologis 329,725
------------
HEALTH CARE (9.5%)
Biotechnology (1.2%)
8,900 Amgen, Inc. (b) 574,673
------------
Drugs (3.2%)
34,725 Pfizer, Inc. 1,054,946
12,300 Wyeth 567,030
------------
1,621,976
------------
Health Care -- Diversified (2.2%)
14,100 Abbott Laboratories 599,955
10,000 Johnson & Johnson 495,200
------------
1,095,155
------------
Medical Products/Supplies (2.9%)
21,800 Biomet, Inc. 732,698
14,900 Medtronic, Inc. 699,108
------------
1,431,806
------------
</Table>
See accompanying notes to investments in securities.
63
<Page>
<Table>
<Caption>
MARKET
SHARES VALUE(a)
- ------ ------------
TECHNOLOGY (13.6%)
Computer Hardware (1.2%)
17,060 Dell, Inc. (b) $ 569,633
------------
Computer Networking (.9%)
23,185 Cisco Systems, Inc. (b) 453,035
------------
Computer Peripherals (1.4%)
56,700 EMC Corporation (b) 716,121
------------
Computer Services & Software (3.7%)
41,576 Microsoft Corporation (b) 1,155,397
21,900 SAP AG ADR* (c) 665,979
------------
1,821,376
------------
Electrical Semiconductor (4.7%)
16,200 Analog Devices, Inc. (b) 615,924
20,000 Applied Materials, Inc. (b) 362,800
26,800 Intel Corporation 737,268
28,186 Texas Instruments, Inc. 642,641
------------
2,358,633
------------
Electronics -- Computer Distribution (.7%)
7,300 WW Grainger, Inc. 347,115
------------
Technology (1.0%)
30,300 Check Point Software Technologies (b) (c) 509,040
------------
UTILITIES (3.3%)
Electric Companies (3.3%)
8,800 Dominion Resources, Inc. 544,720
9,300 Exelon Corporation 590,550
16,900 The Southern Company 495,508
------------
1,630,778
------------
Total common stock (cost: $32,751,741) 36,250,011
------------
</Table>
See accompanying notes to investments in securities.
64
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- -----------
LONG-TERM DEBT SECURITIES (26.2%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (16.2%)
Federal National Mortgage Association (FNMA) (11.7%)
$ 879,255 5.000% 01/01/18 $ 900,518
421,763 5.500% 04/01/18 436,637
671,569 5.500% 05/01/33 685,525
326,860 5.500% 06/01/33 333,653
407,539 6.000% 09/01/17 428,642
704,489 6.000% 09/01/32 727,067
194,442 6.437% 01/01/08 214,891
182,756 6.500% 10/01/28 193,018
120,548 6.500% 02/01/29 127,317
250,341 6.500% 02/01/32 262,942
52,569 6.500% 03/01/32 54,798
144,996 6.500% 09/01/32 152,445
57,932 7.000% 09/01/31 61,821
295,513 7.000% 11/01/31 314,836
435,844 7.000% 02/01/32 464,839
148,719 7.000% 03/01/32 158,614
93,562 7.000% 06/01/32 99,790
233,849 7.000% 07/01/32 249,419
-----------
5,866,772
-----------
Government National Mortgage Association (GNMA) (.6%)
287,767 7.375% 11/15/11 315,268
-----------
U.S. Treasury (3.9%)
250,000 Bond 7.500% 11/15/16 326,348
400,000 Note 3.000% 02/15/08 406,906
250,000 Note 3.625% 05/15/13 245,381
550,000 Note 3.875% 02/15/13 549,742
400,000 Note 4.250% 08/15/13 410,047
-----------
1,938,424
-----------
Total U.S. government and agencies obligations (cost: $7,984,410) 8,120,464
-----------
CORPORATE OBLIGATIONS (10.0%)
BASIC MATERIALS (2.2%)
Agriculture Products (1.4%)
450,000 Archer-Daniels-Midland Company 7.000% 02/01/31 527,691
150,000 Cargill, Inc.-- 144A Issue (f) 6.375% 06/01/12 168,377
-----------
696,068
-----------
Construction (.8%)
350,000 Vulcan Materials Company 6.400% 02/01/06 384,836
-----------
</Table>
See accompanying notes to investments in securities.
65
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- -----------
CONSUMER CYCLICAL (.3%)
Service (.3%)
$ 150,000 PHH Corporation 7.125% 03/01/13 $ 167,711
-----------
CONSUMER STAPLES (1.2%)
Beverage (.2%)
100,000 Diageo Capital PLC (c) 3.500% 11/19/07 101,792
-----------
Broadcasting (.8%)
400,000 Clear Channel Communications, Inc. 4.250% 05/15/09 404,730
-----------
Food (.2%)
100,000 Unilever Capital Corporation 5.900% 11/15/32 102,001
-----------
FINANCIAL (4.8%)
Auto Finance (.2%)
100,000 General Motors Acceptance Corporation 6.125% 08/28/07 105,727
-----------
Collateralized Mortgage Obligations/Mortgage Revenue
Bonds (.5%)
11,816 Banco Hipotecario
Nacional -- 144A
Issue (c) (e) (g) 7.916% 07/25/09 3,781
261,427 Banco Hipotecario
Nacional -- 144A
Issue (c) (e) (g) 8.000% 03/31/11 70,585
86,071 Chase Mortgage Finance
Corporation -- 144A
Issue (d) (f) 6.618% 03/28/25 86,058
8,221 Prudential Home Mortgage
Securities -- 144A
Issue (d) (f) 6.627% 04/28/24 8,220
57,287 Residential Funding Mortgage
Securities 7.000% 10/25/23 57,247
-----------
225,891
-----------
Commercial Mortgage-Backed Securities (.6%)
250,000 First Union-Lehman
Brothers-- Bank of America 6.560% 11/18/35 283,268
-----------
Finance Diversified (1.0%)
500,000 General Electric Capital Corporation 2.850% 01/30/06 510,034
-----------
</Table>
See accompanying notes to investments in securities.
66
<Page>
<Table>
<Caption>
MARKET
PRINCIPAL COUPON MATURITY VALUE(a)
- --------- ------ -------- ------------
FINANCIAL--CONTINUED
Insurance (1.8%)
$ 200,000 ASIF Global Financing -- 144A
Issue (f) 3.850% 11/26/07 $ 204,983
400,000 Prudential Funding
LLC-- 144A Issue (f) 6.600% 05/15/08 453,742
200,000 Stancorp Financial Group, Inc. 6.875% 10/01/12 222,306
------------
881,031
------------
Real Estate Investment Trust (.7%)
350,000 Vornado Realty Trust 5.625% 06/15/07 373,475
------------
UTILITIES (1.5%)
Electric Companies (1.5%)
450,000 Dominion Resources, Inc. 7.625% 07/15/05 493,907
200,000 Hydro Quebec (c) 8.000% 02/01/13 254,758
------------
748,665
------------
Total corporate obligations (cost: $4,824,957) 4,985,229
------------
Total long-term debt securities (cost: $12,809,367) 13,105,693
------------
<Caption>
SHARES
- ------
SHORT-TERM SECURITIES (1.1%)
533,189 Federated Money Market Obligation Trust -- Prime Obligation Fund,
current rate 0.998% 533,189
------------
Total short-term securities
(cost: $533,189) 533,189
------------
Total investments in securities
(cost: $46,094,297) (h) $ 49,888,893
============
</Table>
See accompanying notes to investments in securities.
67
<Page>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Non-income producing.
(c) The Fund held 6.6% of net assets in foreign securities at September 30,
2003.
(d) Floating rate bond. The rate disclosed represents the rate in effect at
September 30, 2003.
(e) Represents ownership in an illiquid security. (See note 7 to the financial
statements.) Information concerning the illiquid securities held at
September 30, 2003, which includes acquisition date and cost, is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY: DATE COST
--------- ----------- -----------
Banco Hipotecario Nacional 144A Issue* 04/01/99 $ 15,136
Banco Hipotecario Nacional 144A Issue* 03/07/00 223,694
-----------
$ 238,830
===========
</Table>
* A 144A Issue represents a security which has not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
(f) Long-term debt security sold within terms of a private placement memorandum
exempt from registration under Section 144A of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(g) Security is in default. Income is not being accrued on this security and
any payments received are treated as a reduction of principal. This
security is being fair-valued according to procedures approved by the Board
of Directors. In aggregate such securities represent 1.8% of the Fund's net
assets as of September 30, 2003.
(h) At September 30, 2003 the cost of securities for federal income tax
purposes was $46,291,890. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<Table>
Gross unrealized appreciation $ 4,267,301
Gross unrealized depreciation (670,298)
-----------
Net unrealized appreciation $ 3,597,003
===========
</Table>
* American Depository Receipt.
See accompanying notes to investments in securities.
68
<Page>
This Page Intentionally Left Blank
69
<Page>
Advantus Fixed Income and Blended Funds
Statements of Assets and Liabilities
<Table>
ASSETS
Investments in securities, at market value - see accompanying
schedule for detailed listing*
Cash in bank on demand deposit
Foreign currency on deposit (identified cost: $137,282)
Receivable for Fund shares sold
Receivable for investment securities sold (including paydowns)
Dividends and accrued interest receivable
Receivable for refundable foreign income taxes withheld
Receivable from Adviser
Total Assets
LIABILITIES
Bank overdraft
Payable for Fund shares repurchased
Payable for investment securities purchased
Dividends payable to shareholders
Payable to Adviser
Accrued expenses
Total Liabilities
Net assets applicable to outstanding capital stock
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
Additional paid-in capital
Undistributed (distributions in excess of) net investment income
Accumulated net realized gains (losses) from investments
and foreign currency transactions
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies
Total - representing net assets applicable to outstanding capital stock
Net assets applicable to outstanding Class A shares
Net assets applicable to outstanding Class B shares
Net assets applicable to outstanding Class C shares
Net asset value per share:
Class A
Class B
Class C
Shares outstanding:
Class A
Class B
Class C
* Identified cost
</Table>
See accompanying notes to financial statements.
70
<Page>
SEPTEMBER 30, 2003
<Table>
<Caption>
INTERNATIONAL
BOND BALANCED
FUND FUND
--------------- ---------------
ASSETS
Investments in securities, at market value - see accompanying
schedule for detailed listing* $ 23,477,370 $ 49,467,525
Cash in bank on demand deposit 3,665 7,836
Foreign currency on deposit (identified cost: $137,282) - 141,744
Receivable for Fund shares sold 279,880 3,485
Receivable for investment securities sold (including paydowns) 65,611 107,316
Dividends and accrued interest receivable 203,992 477,387
Receivable for refundable foreign income taxes withheld - 18,745
Receivable from Adviser - -
--------------- ---------------
Total Assets 24,030,518 50,224,038
--------------- ---------------
LIABILITIES
Bank overdraft - -
Payable for Fund shares repurchased 3,807 343,114
Payable for investment securities purchased 245,838 212,862
Dividends payable to shareholders 24,023 -
Payable to Adviser 4,660 66,992
Accrued expenses 50,860 60,899
--------------- ---------------
Total Liabilities 329,188 683,867
--------------- ---------------
Net assets applicable to outstanding capital stock $ 23,701,330 $ 49,540,171
=============== ===============
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 $ 22,086 $ 43,820
Additional paid-in capital 23,419,943 47,229,773
Undistributed (distributions in excess of) net investment income (11,589) 638,747
Accumulated net realized gains (losses) from investments
and foreign currency transactions (509,463) (1,608,607)
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 780,353 3,236,438
--------------- ---------------
Total - representing net assets applicable to outstanding capital stock $ 23,701,330 $ 49,540,171
=============== ===============
Net assets applicable to outstanding Class A shares $ 17,767,510 $ 45,741,925
=============== ===============
Net assets applicable to outstanding Class B shares $ 4,834,321 $ 2,955,562
=============== ===============
Net assets applicable to outstanding Class C shares $ 1,099,499 $ 842,684
=============== ===============
Net asset value per share:
Class A $ 10.73 $ 11.33
=============== ===============
Class B $ 10.75 $ 11.03
=============== ===============
Class C $ 10.70 $ 11.04
=============== ===============
Shares outstanding:
Class A 1,656,183 4,037,772
=============== ===============
Class B 449,716 267,886
=============== ===============
Class C 102,710 76,315
=============== ===============
* Identified cost $ 22,697,017 $ 46,257,114
<Caption>
MONEY MORTGAGE
MARKET SECURITIES
FUND FUND
--------------- ---------------
ASSETS
Investments in securities, at market value - see accompanying
schedule for detailed listing* $ 33,825,266 $ 145,981,033
Cash in bank on demand deposit 608 -
Foreign currency on deposit (identified cost: $137,282) - -
Receivable for Fund shares sold 64,470 699,606
Receivable for investment securities sold (including paydowns) - 1,445,983
Dividends and accrued interest receivable 153,171 700,550
Receivable for refundable foreign income taxes withheld - -
Receivable from Adviser 2,301 -
--------------- ---------------
Total Assets 34,045,816 148,827,172
--------------- ---------------
LIABILITIES
Bank overdraft - 84,751
Payable for Fund shares repurchased 123,314 330,238
Payable for investment securities purchased - 5,900,105
Dividends payable to shareholders 110 136,695
Payable to Adviser - 27,976
Accrued expenses 66,276 49,418
--------------- ---------------
Total Liabilities 189,700 6,529,183
--------------- ---------------
Net assets applicable to outstanding capital stock $ 33,856,116 $ 142,297,989
=============== ===============
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 $ 338,551 $ 129,644
Additional paid-in capital 33,516,506 139,661,313
Undistributed (distributions in excess of) net investment income 1,059 4,253
Accumulated net realized gains (losses) from investments
and foreign currency transactions - 430,562
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies - 2,072,217
--------------- ---------------
Total - representing net assets applicable to outstanding capital stock $ 33,856,116 $ 142,297,989
=============== ===============
Net assets applicable to outstanding Class A shares $ 33,856,116 $ 91,283,354
=============== ===============
Net assets applicable to outstanding Class B shares $ - $ 36,401,482
=============== ===============
Net assets applicable to outstanding Class C shares $ - $ 14,613,153
=============== ===============
Net asset value per share:
Class A $ 1.00 $ 10.97
=============== ===============
Class B $ - $ 10.99
=============== ===============
Class C $ - $ 10.98
=============== ===============
Shares outstanding:
Class A 33,855,057 8,320,560
=============== ===============
Class B - 3,312,358
=============== ===============
Class C - 1,331,477
=============== ===============
* Identified cost $ 33,825,266 $ 143,908,816
<Caption>
SPECTRUM
FUND
---------------
ASSETS
Investments in securities, at market value - see accompanying
schedule for detailed listing* $ 49,888,893
Cash in bank on demand deposit 3,128
Foreign currency on deposit (identified cost: $137,282) -
Receivable for Fund shares sold 4,772
Receivable for investment securities sold (including paydowns) 50,426
Dividends and accrued interest receivable 142,435
Receivable for refundable foreign income taxes withheld -
Receivable from Adviser 2,415
---------------
Total Assets 50,092,069
---------------
LIABILITIES
Bank overdraft -
Payable for Fund shares repurchased 69,300
Payable for investment securities purchased -
Dividends payable to shareholders -
Payable to Adviser -
Accrued expenses 90,768
---------------
Total Liabilities 160,068
---------------
Net assets applicable to outstanding capital stock $ 49,932,001
===============
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 $ 41,079
Additional paid-in capital 58,969,135
Undistributed (distributions in excess of) net investment income 30,984
Accumulated net realized gains (losses) from investments
and foreign currency transactions (12,903,793)
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 3,794,596
---------------
Total - representing net assets applicable to outstanding capital stock $ 49,932,001
===============
Net assets applicable to outstanding Class A shares $ 37,818,641
===============
Net assets applicable to outstanding Class B shares $ 9,965,525
===============
Net assets applicable to outstanding Class C shares $ 2,147,835
===============
Net asset value per share:
Class A $ 12.18
===============
Class B $ 12.10
===============
Class C $ 12.01
===============
Shares outstanding:
Class A 3,105,442
===============
Class B 823,580
===============
Class C 178,873
===============
* Identified cost $ 46,094,297
</Table>
71
<Page>
Statements of Operations
<Table>
Investment Income:
Interest
Dividends (net of foreign withholding taxes of $98,509 for
International Balanced Fund)
Income from securities lending activities
Commission reimbursement income (note 8)
Total investment income
Expenses (note 4):
Investment advisory fee
Rule 12b-1 fees - Class A
Rule 12b-1 fees - Class B
Rule 12b-1 fees - Class C
Administrative services fee
Transfer agent and shareholder service fee
Custodian fees
Audit and accounting services
Legal fees
Registration fees
Printing and shareholder reports
Directors' fees
Insurance
Other
Total expenses
Less fees and expenses waived or absorbed by Adviser and Distributor:
Class A Rule 12b-1 fees
Other waived fees
Total net expenses
Investment income - net
Realized and unrealized gains (losses) on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3)
Foreign currency transactions
Net increase from payments by affiliates (note 4)
Net change in unrealized appreciation or depreciation on:
Investments
Translation of assets and liabilities in foreign currency
Net gains (losses) on investments
Net increase (decrease) in net assets resulting from operations
</Table>
See accompanying notes to financial statements.
72
<Page>
YEAR ENDED SEPTEMBER 30, 2003
<Table>
<Caption>
INTERNATIONAL MONEY
BOND BALANCED MARKET
FUND FUND FUND
------------ ------------- ------------
Investment Income:
Interest $ 1,339,343 $ 824,175 $ 535,178
Dividends (net of foreign withholding taxes of $98,509 for
International Balanced Fund) - 801,134 -
Income from securities lending activities 1,044 28,294 -
Commission reimbursement income (note 8) - 3,957 -
------------ ------------- ------------
Total investment income 1,340,387 1,657,560 535,178
------------ ------------- ------------
Expenses (note 4):
Investment advisory fee 149,153 311,290 197,455
Rule 12b-1 fees - Class A 45,060 101,851 98,727
Rule 12b-1 fees - Class B 57,074 28,664 -
Rule 12b-1 fees - Class C 11,273 8,631 -
Administrative services fee 54,064 55,282 48,564
Transfer agent and shareholder service fee 87,874 100,530 159,558
Custodian fees 11,031 34,200 7,348
Audit and accounting services 53,611 73,182 42,314
Legal fees 10,551 8,390 9,564
Registration fees 44,322 33,365 23,182
Printing and shareholder reports 18,493 21,780 23,749
Directors' fees 628 1,150 1,163
Insurance 2,396 2,709 2,574
Other 4,882 6,259 5,785
------------ ------------- ------------
Total expenses 550,412 787,283 619,983
Less fees and expenses waived or absorbed by Adviser and Distributor:
Class A Rule 12b-1 fees - - (98,727)
Other waived fees (213,276) (16,714) (185,583)
------------ ------------- ------------
Total net expenses 337,136 770,569 335,673
------------ ------------- ------------
Investment income - net 1,003,251 886,991 199,505
Realized and unrealized gains (losses) on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3) 600,376 269,734 -
Foreign currency transactions - 594,479 -
Net increase from payments by affiliates (note 4) 1,261 - -
Net change in unrealized appreciation or depreciation on:
Investments (267,890) 9,879,575 -
Translation of assets and liabilities in foreign currency - 55,913 -
------------ ------------- ------------
Net gains (losses) on investments 333,747 10,799,701 -
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations $ 1,336,998 $ 11,686,692 $ 199,505
============ ============= ============
<Caption>
MORTGAGE
SECURITIES SPECTRUM
FUND FUND
------------ -------------
Investment Income:
Interest $ 8,126,691 $ 824,521
Dividends (net of foreign withholding taxes of $98,509 for
International Balanced Fund) - 546,807
Income from securities lending activities 2,745 2,855
Commission reimbursement income (note 8) - -
------------ -------------
Total investment income 8,129,436 1,374,183
------------ -------------
Expenses (note 4):
Investment advisory fee 618,850 255,575
Rule 12b-1 fees - Class A 203,970 95,104
Rule 12b-1 fees - Class B 351,069 107,149
Rule 12b-1 fees - Class C 135,890 23,586
Administrative services fee 54,064 54,064
Transfer agent and shareholder service fee 246,264 228,104
Custodian fees 9,971 13,975
Audit and accounting services 56,874 54,491
Legal fees 15,805 10,487
Registration fees 68,641 39,362
Printing and shareholder reports 39,695 29,487
Directors' fees 2,840 1,346
Insurance 3,195 2,751
Other 12,726 8,832
------------ -------------
Total expenses 1,819,854 924,313
Less fees and expenses waived or absorbed by Adviser and Distributor:
Class A Rule 12b-1 fees - -
Other waived fees (194,163) (169,047)
------------ -------------
Total net expenses 1,625,691 755,266
------------ -------------
Investment income - net 6,503,745 618,917
Realized and unrealized gains (losses) on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3) 374,714 915,444
Foreign currency transactions - -
Net increase from payments by affiliates (note 4) 89,178 21,661
Net change in unrealized appreciation or depreciation on:
Investments (1,863,846) 6,415,182
Translation of assets and liabilities in foreign currency - -
------------ -------------
Net gains (losses) on investments (1,399,954) 7,352,287
------------ -------------
Net increase (decrease) in net assets resulting from operations $ 5,103,791 $ 7,971,204
============ =============
</Table>
73
<Page>
Statements of Changes in Net Assets
<Table>
Operations:
Investment income - net
Net realized gains (losses) on investments
Net change in unrealized appreciation or depreciation of investments
Net increase (decrease) in net assets resulting from operations
Distributions to shareholders from:
Investment income - net:
Class A
Class B
Class C
Net realized gains on investments:
Class A
Class B
Class C
Tax return of capital:
Class A
Class B
Class C
Total distributions
Capital share transactions (note 5):
Proceeds from sales:
Class A
Class B
Class C
Shares issued as a result of reinvested distributions:
Class A
Class B
Class C
Payments for redemptions of shares:
Class A
Class B
Class C
Increase (decrease) in net assets from capital share transactions
Total increase (decrease) in net assets
Net assets at beginning of year
Net assets at end of year*
* including undistributed (distributions in excess of) net investment income
</Table>
See accompanying notes to financial statements.
74
<Page>
YEARS ENDED SEPTEMBER 30, 2003 AND 2002
<Table>
<Caption>
BOND FUND
------------------------------
2003 2002
------------- -------------
Operations:
Investment income - net $ 1,003,251 $ 1,130,165
Net realized gains (losses) on investments 601,637 293,831
Net change in unrealized appreciation or depreciation of investments (267,890) 316,770
------------- -------------
Net increase (decrease) in net assets resulting from operations 1,336,998 1,740,766
------------- -------------
Distributions to shareholders from:
Investment income - net:
Class A (754,654) (807,857)
Class B (197,728) (271,659)
Class C (38,701) (44,247)
Net realized gains on investments:
Class A - -
Class B - -
Class C - -
Tax return of capital:
Class A - -
Class B - -
Class C - -
------------- -------------
Total distributions (991,083) (1,123,763)
------------- -------------
Capital share transactions (note 5):
Proceeds from sales:
Class A 5,036,324 8,060,173
Class B 1,122,851 1,095,698
Class C 340,008 377,877
Shares issued as a result of reinvested distributions:
Class A 468,713 482,580
Class B 173,553 232,831
Class C 32,851 38,135
Payments for redemptions of shares:
Class A (5,304,317) (7,411,405)
Class B (2,849,211) (1,753,551)
Class C (392,681) (361,952)
------------- -------------
Increase (decrease) in net assets from capital share transactions (1,371,909) 760,386
------------- -------------
Total increase (decrease) in net assets (1,025,994) 1,377,389
Net assets at beginning of year 24,727,324 23,349,935
------------- -------------
Net assets at end of year* $ 23,701,330 $ 24,727,324
============= =============
* including undistributed (distributions in excess of) net investment income $ (11,589) $ (23,757)
<Caption>
INTERNATIONAL BALANCED
FUND
------------------------------
2003 2002
------------- -------------
Operations:
Investment income - net $ 886,991 $ 797,017
Net realized gains (losses) on investments 864,213 (2,661,697)
Net change in unrealized appreciation or depreciation of investments 9,935,488 3,591
------------- -------------
Net increase (decrease) in net assets resulting from operations 11,686,692 (1,861,089)
------------- -------------
Distributions to shareholders from:
Investment income - net:
Class A - (13,409)
Class B - -
Class C - -
Net realized gains on investments:
Class A - (538,381)
Class B - (46,854)
Class C - (13,595)
Tax return of capital:
Class A - (58,591)
Class B - -
Class C - -
------------- -------------
Total distributions - (670,830)
------------- -------------
Capital share transactions (note 5):
Proceeds from sales:
Class A 11,909,044 9,885,446
Class B 419,050 231,246
Class C 1,502,344 103,193
Shares issued as a result of reinvested distributions:
Class A - 547,656
Class B - 45,527
Class C - 13,545
Payments for redemptions of shares:
Class A (13,380,958) (11,684,865)
Class B (996,642) (820,242)
Class C (1,776,754) (222,867)
------------- -------------
Increase (decrease) in net assets from capital share transactions (2,323,916) (1,901,361)
------------- -------------
Total increase (decrease) in net assets 9,362,776 (4,433,280)
Net assets at beginning of year 40,177,395 44,610,675
------------- -------------
Net assets at end of year* $ 49,540,171 $ 40,177,395
============= =============
* including undistributed (distributions in excess of) net investment income $ 638,747 $ (595,730)
<Caption>
MONEY MARKET
FUND
------------------------------
2003 2002
------------- -------------
Operations:
Investment income - net $ 199,505 $ 516,889
Net realized gains (losses) on investments - -
Net change in unrealized appreciation or depreciation of investments - -
------------- -------------
Net increase (decrease) in net assets resulting from operations 199,505 516,889
------------- -------------
Distributions to shareholders from:
Investment income - net:
Class A (198,446) (516,889)
Class B - -
Class C - -
Net realized gains on investments:
Class A - -
Class B - -
Class C - -
Tax return of capital:
Class A - -
Class B - -
Class C - -
------------- -------------
Total distributions (198,446) (516,889)
------------- -------------
Capital share transactions (note 5):
Proceeds from sales:
Class A 34,771,929 49,808,401
Class B - -
Class C - -
Shares issued as a result of reinvested distributions:
Class A 195,754 514,260
Class B - -
Class C - -
Payments for redemptions of shares:
Class A (43,040,448) (50,878,207)
Class B - -
Class C - -
------------- -------------
Increase (decrease) in net assets from capital share transactions (8,072,765) (555,546)
------------- -------------
Total increase (decrease) in net assets (8,071,706) (555,546)
Net assets at beginning of year 41,927,822 42,483,368
------------- -------------
Net assets at end of year* $ 33,856,116 $ 41,927,822
============= =============
* including undistributed (distributions in excess of) net investment income $ 1,059 $ -
</Table>
75
<Page>
<Table>
Operations:
Investment income - net
Net realized gains on investments
Net change in unrealized appreciation or depreciation of investments
Net increase (decrease) in net assets resulting from operations
Distributions to shareholders from:
Investment income - net:
Class A
Class B
Class C
Net realized gains on investments:
Class A
Class B
Class C
Tax return of capital:
Class A
Class B
Class C
Total distributions
Capital share transactions (note 5):
Proceeds from sales:
Class A
Class B
Class C
Shares issued as a result of reinvested distributions:
Class A
Class B
Class C
Payments for redemptions of shares:
Class A
Class B
Class C
Increase (decrease) in net assets from capital share transactions
Total increase (decrease) in net assets
Net assets at beginning of year
Net assets at end of year*
* including undistributed (distributions in excess of) net investment income
</Table>
See accompanying notes to financial statements.
76
<Page>
<Table>
<Caption>
MORTGAGE SECURITIES
FUND
----------------------------------
2003 2002
--------------- ---------------
Operations:
Investment income - net $ 6,503,745 $ 4,983,164
Net realized gains on investments 463,892 2,061,759
Net change in unrealized appreciation or depreciation of investments (1,863,846) (946,746)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations 5,103,791 6,098,177
--------------- ---------------
Distributions to shareholders from:
Investment income - net:
Class A (4,222,920) (3,454,050)
Class B (1,558,235) (1,427,914)
Class C (599,806) (410,303)
Net realized gains on investments:
Class A - -
Class B - -
Class C - -
Tax return of capital:
Class A - (50,986)
Class B - (21,078)
Class C - (6,056)
--------------- ---------------
Total distributions (6,380,961) (5,370,387)
--------------- ---------------
Capital share transactions (note 5):
Proceeds from sales:
Class A 52,795,091 40,374,981
Class B 13,136,581 11,113,864
Class C 9,730,918 6,746,433
Shares issued as a result of reinvested distributions:
Class A 3,044,736 2,487,059
Class B 1,246,591 1,191,985
Class C 484,675 352,089
Payments for redemptions of shares:
Class A (31,177,804) (18,385,514)
Class B (7,525,984) (3,844,743)
Class C (5,845,653) (1,977,904)
--------------- ---------------
Increase (decrease) in net assets from capital share transactions 35,889,151 38,058,250
--------------- ---------------
Total increase (decrease) in net assets 34,611,981 38,786,040
Net assets at beginning of year 107,686,008 68,899,968
--------------- ---------------
Net assets at end of year* $ 142,297,989 $ 107,686,008
=============== ===============
* including undistributed (distributions in excess of) net investment income $ 4,253 $ (118,531)
<Caption>
SPECTRUM FUND
----------------------------------
2003 2002
--------------- ---------------
Operations:
Investment income - net $ 618,917 $ 1,003,193
Net realized gains on investments 937,105 795,011
Net change in unrealized appreciation or depreciation of investments 6,415,182 (4,590,027)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations 7,971,204 (2,791,823)
--------------- ---------------
Distributions to shareholders from:
Investment income - net:
Class A (510,435) (931,366)
Class B (66,899) (193,939)
Class C (14,953) (41,695)
Net realized gains on investments:
Class A - (61,065)
Class B - (20,461)
Class C - (4,456)
Tax return of capital:
Class A - -
Class B - -
Class C - -
--------------- ---------------
Total distributions (592,287) (1,252,982)
--------------- ---------------
Capital share transactions (note 5):
Proceeds from sales:
Class A 4,361,633 3,242,717
Class B 494,338 732,968
Class C 89,720 265,270
Shares issued as a result of reinvested distributions:
Class A 475,616 915,287
Class B 63,413 203,782
Class C 13,270 42,941
Payments for redemptions of shares:
Class A (9,475,506) (9,234,283)
Class B (3,363,516) (4,082,012)
Class C (676,676) (955,048)
--------------- ---------------
Increase (decrease) in net assets from capital share transactions (8,017,708) (8,868,378)
--------------- ---------------
Total increase (decrease) in net assets (638,791) (12,913,183)
Net assets at beginning of year 50,570,792 63,483,975
--------------- ---------------
Net assets at end of year* $ 49,932,001 $ 50,570,792
=============== ===============
* including undistributed (distributions in excess of) net investment income $ 30,984 $ 5,170
</Table>
77
<Page>
Advantus Fixed Income and Blended Funds
Notes to Financial Statements
SEPTEMBER 30, 2003
(1) ORGANIZATION
The Advantus Bond Fund, Inc., the Advantus International Balanced Fund,
Inc., the Advantus Money Market Fund, Inc., the Advantus Mortgage Securities
Fund, Inc., and the Advantus Spectrum Fund, Inc. (the Funds) are registered
under the Investment Company Act of 1940 (as amended) as diversified, open-end
management investment companies. The Funds' prospectus provides a detailed
description of each Fund's investment objective, policies and strategies.
The Funds currently issue three classes of shares: Class A, Class B and
Class C shares, except for the Money Market Fund which does not issue Class B or
C shares. Effective July 25, 2003, however, all sales of Class B and Class C
shares in the Funds were suspended, except for sales occurring in connection
with the reinvestment of dividend and capital gains distributions, if any, and
exchanges of Class B and Class C shares of a fund for Class B and Class C shares
of another fund, respectively. Class A shares are sold subject to a front-end
sales charge except for the Money Market Fund which does not have any sales
charges. 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
their relative net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities, including disclosure of contingent
78
<Page>
assets and liabilities, as of the balance sheet date and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
INVESTMENTS IN SECURITIES
Each 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.
The pricing service may use models that price securities based on current yields
and relative security characteristics, such as coupon rate, maturity date,
issuer credit quality and prepayment speeds, as applicable. 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. For the Money Market Fund, pursuant
to Rule 2a-7 of the Investment Company Act of 1940 (as amended), all securities
are valued at amortized cost which approximates market value, in order to
maintain a constant net asset value (NAV) of $1. However, there is no assurance
that the Fund will maintain a $1 NAV.
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, or
upon dividend notification for certain foreign securities. Interest income,
including amortization of bond premium and discount computed on a level yield
basis, is accrued daily.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities, income and expenses are translated at the exchange rate on the
transaction date. The Funds do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with net realized and unrealized gains or losses from
investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
79
<Page>
or losses realized between trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Funds' books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities, resulting from changes in the
exchange rate.
The International Balanced Fund also may enter into forward foreign
currency exchange contracts for operational purposes and to protect against
adverse exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the International
Balanced Fund and the resulting unrealized appreciation and depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The International Balanced Fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
FEDERAL TAXES
Each Funds' 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. Also, each Funds' policy is to make required minimum distributions
prior to December 31, in order to avoid federal excise tax.
For federal income tax purposes, the following Funds had capital loss
carryovers and/or post October losses at September 30, 2003 which, if not offset
by subsequent capital gains, will expire September 30, 2011. It is unlikely the
Board of Directors will authorize a distribution of any net realized capital
gains until available capital loss carryovers have been offset or expire:
<Table>
Bond Fund $ 509,463
International Balanced Fund 1,548,124
Spectrum Fund 12,706,200
</Table>
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 may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains were recorded by the
Funds.
80
<Page>
The Funds may elect to utilize equalization debits by which a portion of
the costs of redemptions, which occurred during the year ended September 30,
2003, would reduce net realized gain for tax purposes.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, reclassification adjustments were made as follows:
<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED ADDITIONAL
NET INVESTMENT REALIZED PAID IN
FUND INCOME GAIN (LOSS) CAPITAL
- ---- --------------- -------------- ------------
International Balanced 347,486 (347,486) -
Spectrum (816) 987,185 (986,369)
</Table>
The tax character of distributions paid for the years indicated is as
follows:
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
------------------------------------
FUND 2003 2002
- ---- --------------- -----------------
BOND
DISTRIBUTIONS PAID FROM:
Ordinary income $ 991,083 $ 1,123,763
INTERNATIONAL BALANCED
DISTRIBUTIONS PAID FROM:
Ordinary income - 13,409
Long-term capital gain - 598,830
Return of capital - 58,591
MONEY MARKET
DISTRIBUTIONS PAID FROM:
Ordinary income 198,446 516,889
MORTGAGE SECURITIES
DISTRIBUTIONS PAID FROM:
Ordinary income 6,380,961 5,013,609
Long-term capital gain - 278,658
Return of capital - 78,120
SPECTRUM
DISTRIBUTIONS PAID FROM:
Ordinary income 592,287 1,167,000
Long-term capital gain - 85,982
</Table>
81
<Page>
As of September 30, 2003, the components of distributable earnings on a tax
basis for each Fund are as follows:
<Table>
<Caption>
ACCUMULATED UNREALIZED
UNDISTRIBUTED LONG-TERM APPRECIATION
FUND ORDINARY INCOME GAIN (LOSS) (DEPRECIATION)
- ---- ----------------- --------------- --------------
Bond (11,589) (509,463) 780,353
International Balanced 638,747 (1,548,124) 3,175,955
Money Market 1,059 - -
Mortgage Securities 83,605 351,353 2,072,074
Spectrum 30,984 (12,706,200) 3,597,003
</Table>
DISTRIBUTIONS TO SHAREHOLDERS
For the International Balanced Fund and the Spectrum Fund dividends from
net investment income are declared and paid quarterly. Realized gains, if any,
are paid annually.
For the Bond Fund, Money Market Fund and Mortgage Securities Fund dividends
from net investment income are declared daily and paid monthly in cash or
reinvested in additional shares. Capital gains, if any, are paid annually.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by a 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 September 30, 2003, the Bond Fund and the Mortgage
Securities Fund had entered into outstanding, when-issued or forward commitments
of $245,838 and $4,907,032, respectively. The Fund has segregated assets to
cover such when-issued and forward commitments.
(3) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 2003, the cost of purchases and proceeds
from sales of investment securities aggregated $543,368,541 and $552,050,252
respectively for the Money Market Fund. For the other Funds, the cost of
purchases and proceeds from sales of investment securities, other than temporary
investments in short-term securities, for the year ended September 30, 2003 were
as follows:
<Table>
<Caption>
FUND PURCHASES SALES
- ---- ------------- -------------
Bond $ 28,522,701 $ 30,017,619
International Balanced 16,838,238 17,934,418
Mortgage Securities 137,840,912 105,019,179
Spectrum 54,561,690 61,665,161
</Table>
82
<Page>
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
Bond Fund, International Balanced Fund, Money Market Fund and Mortgage
Securities Fund each have an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital), a wholly-owned subsidiary of Securian
Financial Group. Under the agreement, Advantus Capital manages the Funds' assets
and provides research, statistical and advisory services and pays related office
rental and executive expenses and salaries.
In April, 2003, Advantus Capital and certain companies affiliated with
Advantus Capital entered into a Strategic Alliance Agreement and a related
Purchase Agreement with Waddell and Reed Financial, Inc. (W&R), a leading U.S.
mutual fund firm, its affiliate, Waddell & Reed Ivy Investment Company (WRIICO),
and certain other companies affiliated with W&R. Under these agreements,
Advantus Capital agreed to sell to WRIICO its assets related to the Advantus
Funds. Advantus Capital has also recommended to the Board of Directors of the
Advantus Funds that each Advantus Fund be merged into an existing or newly
formed mutual fund managed by WRIICO in either Ivy Funds, Inc. (a Maryland
corporation) or Ivy Funds (a Massachusetts business trust), and the Board of
Directors has approved each Fund's merger subject to approval of the
shareholders of the Fund. Shareholders were presented with a merger proposal in
early October, 2003. In connection with the agreements discussed above, and
effective May 1, 2003, the Board of Directors of Spectrum Fund appointed WRIICO
to act as the investment adviser to the Fund on an interim basis prior to the
mergers. On August 20, 2003, shareholders of Spectrum Fund approved a definitive
investment advisory agreement with WRIICO. WRIICO provides services to Spectrum
Fund that are similar to the services provided by Advantus Capital to the other
Funds.
83
<Page>
Each of the Funds pays Advantus Capital Management, or WRIICO in the case
of Spectrum Fund, an annual fee, based on average net assets in the following
amounts (the fees paid to WRIICO are the same as the fees formerly paid to
Advantus Capital):
<Table>
<Caption>
FUND ANNUAL FEE
- ----------------------------------------------------------------------------------------------------------------
Bond .60% of assets to $250 million; and .55% of assets exceeding $250 million to
$500 million; and .50% of assets exceeding $500 million to $1 billion; and .45%
of assets exceeding $1 billion
International Balanced .70% of assets to $250 million; and .65% of assets exceeding $250 million to
$500 million; and .60% of assets exceeding $500 million to $1 billion; and .55%
of assets exceeding $1 billion
Money Market .50% of assets to $500 million; and .45% of assets exceeding $500 million to $1
billion; and .425% of assets exceeding $1 billion to $2 billion; and .40% of
assets exceeding $2 billion
Mortgage Securities .475% of assets to $1 billion; and .46% of assets exceeding $1 billion to $2
billion; and .45% of assets exceeding $2 billion
Spectrum .50% of assets to $1 billion; and .48% of assets exceeding $1 billion to $2
billion; and .46% of assets exceeding $2 billion.
</Table>
Advantus Capital has a sub-advisory agreement with the following registered
investment adviser. Under the sub-advisory agreement, Advantus Capital pays the
sub-adviser an annual fee based on average daily net assets, in the following
amounts:
<Table>
<Caption>
FUND SUB ADVISOR ANNUAL FEE
- ----------------- ------------------- -----------------------------------------------------------------
International Templeton .70% of assets to $25 million; and .55% of assets exceeding $25
Balanced Investment Counsel million to $50 million; and .50% of assets exceeding $50 million
to $100 million; and .40% of assets exceeding $100 million
</Table>
The Funds have 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 Funds pay fees to Securian Financial Services, Inc. (Securian),
the underwriter of the Funds and a wholly-owned subsidiary of Securian Financial
Group, to be used to pay certain expenses incurred in the distribution,
promotion and servicing of the Funds shares. The Class A Plan provides for a
service fee up to .25 percent of average daily net assets of Class A shares. The
Class B and Class C Plans provide for a fee up to
84
<Page>
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. Securian is currently
waiving the entire 12b-1 fee for the Money Market Fund. Securian waived Class A
12b-1 fees in the amounts of $98,727 for the Money Market Fund for the year
ended September 30, 2003.
Prior to November 8, 2003, the Funds engaged PFPC Global Fund Services to
act as their transfer agent, dividend disbursing agent and redemption agent and
bear the expenses of such services. Effective November 8, 2003, the Funds
engaged Waddell & Reed Services Company to act as their transfer agent and
shareholder services agent. The Funds bear the expense of such services.
The Funds also bear certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, outside legal, auditing and accounting services, and other
miscellaneous expenses.
The Funds have entered into a shareholder and administrative services
agreement with Securian Financial Group. Under this agreement, the Funds paid a
shareholder services fee, equal to $7 per shareholder account annually, to
Securian Financial Group for shareholder services which Securian Financial Group
provided prior to November 8, 2003. The Funds also pay Securian Financial Group
an administrative services fee for accounting, auditing, legal and other
administrative services provided. From October 2002 through February 2003 the
fee was equal to $6,200 per month for the Bond Fund, the Mortgage Securities
Fund and the Spectrum Fund, $5,100 per month for Money Market Fund and $5,300
per month for International Balanced Fund through April 2003; thereafter the
administrative services fees for the above Funds is $3,300 per month.
VOLUNTARY FEE ABSORPTION
Advantus Capital has voluntarily agreed to absorb all Fund costs and
expenses that exceed 1.15% of Class A average daily net assets and 1.90% of
Class B and C average daily net assets for the Bond Fund, all Fund costs and
expenses that exceed 1.67% (1.62% prior to October 1, 2002) of Class A average
daily net assets and 2.42% of Class B and C average daily net assets for the
International Balanced Fund, all Fund costs and expenses that exceed .85% of
Class A average daily net for the Money Market Fund, all Fund costs and expenses
which exceed .975% (.95% prior to December 2, 2002) of Class A average daily net
assets and 1.725% (1.70% prior to December 2, 2002) of Class B and C average
daily net assets for the Mortgage Securities Fund and all Fund costs and
expenses that exceed 1.32% (1.22% prior to
85
<Page>
February 1, 2003) of Class A average daily net assets and 2.07% (1.97% prior to
February 1, 2003) of Class B and C average daily net assets for the Spectrum
Fund. During the year ended September 30, 2003, Advantus Capital voluntarily
agreed to absorb $213,276, $16,714, $185,583, $194,163 and $169,047,
respectively, in expenses which were otherwise payable by the Funds.
ACCOUNTING SERVICES
The Funds have an agreement with State Street whereby State Street provides
daily fund accounting and administrative services. Under this agreement, the
annual fee for the Funds is equal to .02% of the first $2.5 billion in net
assets, .015% of net assets from $2.5 billion to $5.0 billion, and .01% of net
assets in excess of $5 billion.
For the year ended September 30, 2003, sales charges retained by Securian
for distributing the Funds' three classes of shares for Bond, International
Balanced, Mortgage Securities and Spectrum are $13,571, $4,287, $198,610 and
$15,947, respectively.
As of September 30, 2003 the ownership of shares by Minnesota Life and
subsidiaries and the directors and officers of the Funds as a whole was as
follows:
<Table>
<Caption>
PERCENT
NUMBER OF OWNED
FUND SHARES OF CLASS
- ---- ----------- ----------
Bond
Class A 341,589 20.6%
International Balanced
Class A 3,222,851 79.8%
Money Market
Class A 4,115,960 12.2%
Mortgage Securities
Class A 755,837 9.1%
Spectrum
Class A 1,937 0.1%
</Table>
Legal fees were paid to a law firm of which the Funds' secretary is a
partner by the Bond Fund, International Balanced Fund, Money Market Fund,
Mortgage Securities Fund and the Spectrum Fund in the amount of $5,270, $5,495,
$5,270, $4,845 and $5,270, respectively.
PAYMENTS BY AFFILIATES
For the year ended September 30, 2003, Advantus Capital reimbursed the Bond
Fund, Mortgage Securities Fund and the Spectrum Fund $1,261, $89,178 and
$21,661, respectively, for losses related to certain investment trades.
86
<Page>
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 2003 and 2002,
were as follows:
<Table>
<Caption>
BOND FUND
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------- ---------------------------- ----------------------------
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
Sold 472,658 793,620 105,992 106,141 31,906 36,666
Issued for
reinvested
distributions 44,137 47,082 16,312 22,664 3,098 3,726
Redeemed (499,057) (729,969) (268,034) (170,786) (37,072) (35,651)
------------ ------------ ------------ ------------ ------------ ------------
17,738 110,733 (145,730) (41,981) (2,068) 4,741
============ ============ ============ ============ ============ ============
<Caption>
INTERNATIONAL BALANCED FUND
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------- ---------------------------- ----------------------------
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
Sold 1,231,228 1,005,733 45,095 24,615 167,153 10,844
Issued for
reinvested
distributions - 57,082 - 4,795 - 1,426
Redeemed (1,379,404) (1,188,610) (104,367) (87,172) (195,005) (23,558)
------------ ------------ ------------ ------------ ------------ ------------
(148,176) (125,795) (59,272) (57,762) (27,852) (11,288)
============ ============ ============ ============ ============ ============
<Caption>
MONEY MARKET FUND
-------------------------
CLASS A
-------------------------
2003 2002
----------- -----------
Sold 34,771,918 49,808,396
Issued for
reinvested
distributions 195,765 514,265
Redeemed (43,040,448) (50,878,207)
----------- -----------
(8,072,765) (555,546)
=========== ===========
</Table>
87
<Page>
<Table>
<Caption>
MORTGAGE SECURITIES FUND
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------- ---------------------------- ----------------------------
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
Sold 4,792,614 3,700,516 1,188,819 1,016,397 880,773 617,004
Issued for
reinvested
distributions 276,954 228,004 113,140 109,077 44,069 32,255
Redeemed (2,835,246) (1,707,279) (682,954) (360,354) (533,225) (183,912)
------------ ------------ ------------ ------------ ------------ ------------
2,234,322 2,221,241 619,005 765,120 391,617 465,347
============ ============ ============ ============ ============ ============
<Caption>
SPECTRUM FUND
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------- ---------------------------- ----------------------------
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
Sold 385,365 270,707 44,028 61,696 7,867 23,078
Issued for
reinvested
distributions 42,063 77,674 5,773 17,367 1,217 3,684
Redeemed (831,018) (775,059) (297,701) (344,138) (59,315) (81,875)
------------ ------------ ------------ ------------ ------------ ------------
(403,590) (426,678) (247,900) (265,075) (50,231) (55,113)
============ ============ ============ ============ ============ ============
</Table>
(6) SECURITIES LENDING CONTRACTS
To enhance returns, the Funds loan securities to brokers in exchange for
collateral. The Funds receive a fee from the brokers measured as a percent of
the loaned securities. The risk to the Funds is that the borrower may not
provide additional collateral when required or return the securities when due.
At September 30, 2003, no securities were on loan.
Gain or loss in the market price of the securities loaned that may occur
during the term of the loan is reflected in the value of the Fund. Wells Fargo
Funds Management, LLC receives 25% of income on securities lending activities
and covers the expenses associated with securities lending activities.
(7) ILLIQUID SECURITIES
The Funds' investments in illiquid securities are limited to 10% of net
assets at the time of purchase. At September 30, 2003 investments in securities
of the Bond Fund, the Mortgage Securities Fund and the Spectrum Fund include
issues that are illiquid. The aggregate value of illiquid securities held by the
Funds were $512,685, $6,307,407 and $74,366, respectively, which represents
2.1%, 4.4% and .1% of net assets, respectively. Pursuant to guidelines adopted
by the Funds' Board of Directors, certain unregistered securities are determined
to be liquid and are not included within the percent limitations specified
above.
88
<Page>
(8) COMMISSION RECAPTURE
The International Balanced Fund participates in commission recapture
agreements with certain brokers whereby a portion of brokerage commissions on
fund trades are refunded. The commission recapture is reported as commission
reimbursement income on the statements of operations.
For the year ended September 30, 2003, the International Balanced Fund had
participated in such agreements and recaptured $3,957 in brokerage commissions.
89
<Page>
(10) FINANCIAL HIGHLIGHTS
ADVANTUS BOND FUND
Per share data for a share of capital stock and selected information for each
period are as follows:
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.57 $ 10.30 $ 9.60 $ 9.71 $ 10.69
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .45 .52 .58 .58 .54
Net gains (losses) on securities
(both realized and unrealized) .15 .27 .70 (.11) (.79)
---------- ---------- ---------- ---------- ----------
Total from investment operations .60 .79 1.28 .47 (.25)
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.44) (.52) (.58) (.58) (.54)
Distributions from net realized gains - - - - (.19)
---------- ---------- ---------- ---------- ----------
Total distributions (.44) (.52) (.58) (.58) (.73)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.73 $ 10.57 $ 10.30 $ 9.60 $ 9.71
========== ========== ========== ========== ==========
Total return (a) 5.84% 7.90% 13.68% 5.04% (2.36)%
Net assets, end of year (in thousands) $ 17,768 $ 17,313 $ 15,737 $ 15,002 $ 17,846
Ratios to average net assets:
Expenses 1.15% 1.15% 1.15% 1.15% 1.15%
Net investment income 4.25% 5.07% 5.77% 6.08% 5.41%
Expenses without waiver 2.01% 1.92% 1.99% 1.84% 1.55%
Net investment income without waiver 3.39% 4.30% 4.93% 5.39% 5.01%
Portfolio turnover rate
(excluding short-term securities) 118.6% 148.3% 251.9% 191.4% 211.9%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
90
<Page>
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.59 $ 10.33 $ 9.62 $ 9.74 $ 10.71
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .37 .44 .50 .51 .47
Net gains (losses) on securities
(both realized and unrealized) .16 .26 .72 (.12) (.78)
---------- ---------- ---------- ---------- ----------
Total from investment operations .53 .70 1.22 .39 (.31)
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.37) (.44) (.51) (.51) (.47)
Distributions from net realized gains - - - - (.19)
---------- ---------- ---------- ---------- ----------
Total distributions (.37) (.44) (.51) (.51) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.75 $ 10.59 $ 10.33 $ 9.62 $ 9.74
========== ========== ========== ========== ==========
Total return (a) 5.06% 6.99% 12.93% 4.16% (2.98)%
Net assets, end of year (in thousands) $ 4,834 $ 6,308 $ 6,582 $ 6,755 $ 8,171
Ratios to average net assets:
Expenses 1.90% 1.90% 1.90% 1.90% 1.90%
Net investment income 3.50% 4.32% 5.03% 5.33% 4.64%
Expenses without waiver 2.76% 2.67% 2.74% 2.59% 2.28%
Net investment income without waiver 2.64% 3.55% 4.19% 4.64% 4.26%
Portfolio turnover rate
(excluding short-term securities) 118.6% 148.3% 251.9% 191.4% 211.9%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
91
<Page>
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.56 $ 10.29 $ 9.59 $ 9.70 $ 10.68
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .37 .44 .50 .51 .47
Net gains (losses) on securities
(both realized and unrealized) .13 .27 .70 (.11) (.79)
---------- ---------- ---------- ---------- ----------
Total from investment operations .50 .71 1.20 .40 (.32)
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.36) (.44) (.50) (.51) (.47)
Distributions from net realized gains - - - - (.19)
---------- ---------- ---------- ---------- ----------
Total distributions (.36) (.44) (.50) (.51) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.70 $ 10.56 $ 10.29 $ 9.59 $ 9.70
========== ========== ========== ========== ==========
Total return (a) 4.87% 7.11% 12.84% 4.26% (3.10)%
Net assets, end of year (in thousands) $ 1,099 $ 1,106 $ 1,029 $ 1,112 $ 1,594
Ratios to average net assets:
Expenses 1.90% 1.90% 1.90% 1.91% 1.90%
Net investment income 3.50% 4.32% 5.03% 5.32% 4.64%
Expenses without waiver 2.76% 2.67% 2.74% 2.59% 2.28%
Net investment income without waiver 2.64% 3.55% 4.19% 4.68% 4.26%
Portfolio turnover rate
(excluding short-term securities) 118.6% 148.3% 251.9% 191.4% 211.9%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
92
<Page>
ADVANTUS INTERNATIONAL BALANCED FUND
Per share data for a share of capital stock and selected information for each
period are as follows:
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 8.72 $ 9.28 $ 11.59 $ 11.80 $ 10.56
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .21 .18 .18 .23 .21
Net gains (losses) on securities
(both realized and unrealized) 2.40 (.59) (1.28) .50 1.52
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.61 (.41) (1.10) .73 1.73
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - (.11) (.36) (.11)
Distributions from net realized gains - (.13) (1.10) (.58) (.38)
Tax return of capital - (.02) - - -
---------- ---------- ---------- ---------- ----------
Total distributions - (.15) (1.21) (.94) (.49)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 11.33 $ 8.72 $ 9.28 $ 11.59 $ 11.80
========== ========== ========== ========== ==========
Total return (a) 29.93% (4.62)% (10.57)% 6.26% 16.65%
Net assets, end of year (in thousands) $ 45,742 $ 36,488 $ 40,021 $ 47,693 $ 49,502
Ratios to average net assets:
Expenses 1.67% 1.62% 1.62% 1.52% 1.63%
Net investment income 2.06% 1.84% 1.60% 1.92% 1.77%
Expenses without waiver 1.71% 1.72% 1.73% 1.65% 1.70%
Net investment income without waiver 2.02% 1.74% 1.49% 1.79% 1.70%
Portfolio turnover rate
(excluding short-term securities) 39.4% 47.8% 35.6% 44.2% 73.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
93
<Page>
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 8.55 $ 9.17 $ 11.49 $ 11.66 $ 10.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .09 .10 .11 .11 .12
Net gains (losses) on securities
(both realized and unrealized) 2.39 (.59) (1.28) .51 1.51
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.48 (.49) (1.17) .62 1.63
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - (.05) (.21) (.06)
Distributions from net realized gains - (.13) (1.10) (.58) (.38)
---------- ---------- ---------- ---------- ----------
Total distributions - (.13) (1.15) (.79) (.44)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 11.03 $ 8.55 $ 9.17 $ 11.49 $ 11.66
========== ========== ========== ========== ==========
Total return (a) 28.97% (5.52)% (11.29)% 5.32% 15.84%
Net assets, end of year (in thousands) $ 2,956 $ 2,798 $ 3,530 $ 4,647 $ 5,293
Ratios to average net assets:
Expenses 2.42% 2.42% 2.42% 2.32% 2.43%
Net investment income 1.31% 1.04% .79% 1.12% .94%
Expenses without waiver 2.46% 2.47% 2.48% 2.42% 2.43%
Net investment income without waiver 1.27% .99% .74% 1.02% .94%
Portfolio turnover rate
(excluding short-term securities) 39.4% 47.8% 35.6% 44.2% 73.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
94
<Page>
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 8.56 $ 9.18 $ 11.50 $ 11.66 $ 10.48
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .09 .08 .11 .11 .10
Net gains (losses) on securities
(both realized and unrealized) 2.39 (.57) (1.28) .51 1.52
---------- ---------- ---------- ---------- ----------
Total from investment operations 2.48 (.49) (1.17) .62 1.62
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - (.05) (.20) (.06)
Distributions from net realized gains - (.13) (1.10) (.58) (.38)
---------- ---------- ---------- ---------- ----------
Total distributions - (.13) (1.15) (.78) (.44)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 11.04 $ 8.56 $ 9.18 $ 11.50 $ 11.66
========== ========== ========== ========== ==========
Total return (a) 28.98% (5.52)% (11.27)% 5.36% 15.71%
Net assets, end of year (in thousands) $ 843 $ 892 $ 1,060 $ 1,728 $ 2,510
Ratios to average net assets:
Expenses 2.42% 2.42% 2.42% 2.33% 2.44%
Net investment income 1.31% 1.04% .78% 1.09% .94%
Expenses without waiver 2.46% 2.47% 2.48% 2.43% 2.44%
Net investment income (loss) without waiver 1.27% .99% .73% .99% .94%
Portfolio turnover rate
(excluding short-term securities) 39.4% 47.8% 35.6% 44.2% 73.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
95
<Page>
ADVANTUS MONEY MARKET FUND
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income -(b) .01 .04 .05 .04
---------- ---------- ---------- ---------- ----------
Total from investment operations - .01 .04 .05 .04
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income -(b) (.01) (.04) (.05) (.04)
---------- ---------- ---------- ---------- ----------
Total distributions - (.01) (.04) (.05) (.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return (a) .50% 1.27% 4.56% 5.33% 4.24%
Net assets, end of year (in thousands) $ 33,856 $ 41,928 $ 42,483 $ 42,188 $ 41,203
Ratios to average net assets:
Expenses .85% .85% .85% .85% .85%
Net investment income .50% 1.26% 4.45% 5.21% 4.17%
Expenses without waivers 1.57% 1.56% 1.66% 1.78% 1.56%
Net investment income (loss) without waivers (.22)% .55% 3.64% 4.28% 3.46%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions.
(b) Amount is less than $.01.
96
<Page>
ADVANTUS MORTGAGE SECURITIES FUND
Per share data for a share of capital stock and selected information for each
period are as follows:
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 11.07 $ 10.99 $ 10.37 $ 10.30 $ 10.75
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .59 .70 .73 .69 .69
Net gains (losses) on securities
(both realized and unrealized) (.12) .11 .65 .09 (.45)
---------- ---------- ---------- ---------- ----------
Total from investment operations .47 .81 1.38 .78 .24
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.57) (.72) (.72) (.70) (.68)
Tax return of capital - (.01) (.04) (.01) (.01)
---------- ---------- ---------- ---------- ----------
Total distributions (.57) (.73) (.76) (.71) (.69)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.97 $ 11.07 $ 10.99 $ 10.37 $ 10.30
========== ========== ========== ========== ==========
Total return (a) 4.19%(b) 7.88% 13.90% 7.70% 2.26%
Net assets, end of year (in thousands) $ 91,283 $ 67,395 $ 42,458 $ 31,814 $ 33,617
Ratios to average net assets:
Expenses .97% .95% .95% .95% .95%
Net investment income 5.27% 6.24% 6.75% 6.81% 6.29%
Expenses without waiver 1.12% 1.21% 1.31% 1.32% 1.21%
Net investment income without waiver 5.12% 5.98% 6.39% 6.44% 6.03%
Portfolio turnover rate
(excluding short-term securities) 82.7% 98.5% 55.2% 64.7% 127.1%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class A, for
the year ended September 30, 2003 would have been 4.28%.
97
<Page>
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 11.09 $ 11.01 $ 10.39 $ 10.33 $ 10.77
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .51 .61 .65 .61 .61
Net gains (losses) on securities
(both realized and unrealized) (.12) .12 .65 .08 (.44)
---------- ---------- ---------- ---------- ----------
Total from investment operations .39 .73 1.30 .69 .17
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.49) (.64) (.64) (.62) (.60)
Tax return of capital - (.01) (.04) (.01) (.01)
---------- ---------- ---------- ---------- ----------
Total distributions (.49) (.65) (.68) (.63) (.61)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.99 $ 11.09 $ 11.01 $ 10.39 $ 10.33
========== ========== ========== ========== ==========
Total return (a) 3.41%(b) 6.99% 13.05% 6.90% 1.51%
Net assets, end of year (in thousands) $ 36,401 $ 29,879 $ 21,227 $ 14,436 $ 14,057
Ratios to average net assets:
Expenses 1.72% 1.70% 1.70% 1.70% 1.70%
Net investment income 4.52% 5.49% 6.00% 6.06% 5.57%
Expenses without waiver 1.87% 1.96% 2.06% 2.07% 1.94%
Net investment income without waiver 4.37% 5.23% 5.64% 5.69% 5.33%
Portfolio turnover rate
(excluding short-term securities) 82.7% 98.5% 55.2% 64.7% 127.1%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class B, for
the year ended September 30, 2003 would have been 3.50%.
98
<Page>
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 11.08 $ 10.99 $ 10.37 $ 10.31 $ 10.76
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .51 .62 .66 .61 .61
Net gains (losses) on securities
(both realized and unrealized) (.12) .12 .64 .08 (.45)
---------- ---------- ---------- ---------- ----------
Total from investment operations .39 .74 1.30 .69 .16
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.49) (.64) (.64) (.62) (.60)
Tax return of capital - (.01) (.04) (.01) (.01)
---------- ---------- ---------- ---------- ----------
Total distributions (.49) (.65) (.68) (.63) (.61)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.98 $ 11.08 $ 10.99 $ 10.37 $ 10.31
========== ========== ========== ========== ==========
Total return (a) 3.51%(b) 6.99% 13.05% 6.89% 1.50%
Net assets, end of year (in thousands) $ 14,613 $ 10,411 $ 5,216 $ 3,259 $ 5,126
Ratios to average net assets:
Expenses 1.72% 1.70% 1.70% 1.70% 1.70%
Net investment income 4.52% 5.49% 6.00% 6.06% 5.58%
Expenses without waiver 1.87% 1.96% 2.06% 2.07% 1.94%
Net investment income without waiver 4.37% 5.23% 5.64% 5.69% 5.34%
Portfolio turnover rate
(excluding short-term securities) 82.7% 98.5% 55.2% 64.7% 127.1%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class C, for
the year ended September 30, 2003 would have been 3.60%.
99
<Page>
ADVANTUS SPECTRUM FUND
Per share data for a share of capital stock and selected information for each
period are as follows:
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.54 $ 11.45 $ 19.73 $ 17.88 $ 16.50
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .16 .23 .22 .31 .31
Net gains (losses) on securities
(both realized and unrealized) 1.64 (.89) (6.08) 2.55 2.30
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.80 (.66) (5.86) 2.86 2.61
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.16) (.25) (.20) (.30) (.31)
Distributions from net realized gains - - (2.22) (.71) (.92)
---------- ---------- ---------- ---------- ----------
Total distributions (.16) (.25) (2.42) (1.01) (1.23)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 12.18 $ 10.54 $ 11.45 $ 19.73 $ 17.88
========== ========== ========== ========== ==========
Total return (a) 17.17%(b) (5.91)% (32.35)% 16.22% 16.08%
Net assets, end of year (in thousands) $ 37,819 $ 36,974 $ 45,066 $ 77,964 $ 73,613
Ratios to average net assets:
Expenses 1.29% 1.22% 1.12% 1.11% 1.10%
Net investment income 1.41% 1.84% 1.57% 1.58% 1.77%
Expenses without waiver 1.62% 1.52% 1.40% 1.20% 1.10%
Net investment income without waiver 1.08% 1.54% 1.29% 1.49% 1.77%
Portfolio turnover rate
(excluding short-term securities) 110.0% 129.0% 158.4% 132.0% 100.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class A, for
the year ended September 30, 2003 would have been 17.26%.
100
<Page>
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.47 $ 11.38 $ 19.61 $ 17.79 $ 16.43
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .09 .12 .11 .17 .19
Net gains (losses) on securities
(both realized and unrealized) 1.61 (.87) (6.03) 2.53 2.28
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.70 (.75) (5.92) 2.70 2.47
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.07) (.16) (.09) (.17) (.19)
Distributions from net realized gains - - (2.22) (.71) (.92)
---------- ---------- ---------- ---------- ----------
Total distributions (.07) (.16) (2.31) (.88) (1.11)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 12.10 $ 10.47 $ 11.38 $ 19.61 $ 17.79
========== ========== ========== ========== ==========
Total return (a) 16.20%(b) (6.56)% (32.82)% 15.51% 15.31%
Net assets, end of year (in thousands) $ 9,966 $ 11,216 $ 15,207 $ 26,838 $ 24,420
Ratios to average net assets:
Expenses 2.04% 1.97% 1.87% 1.86% 1.82%
Net investment income .66% 1.09% .82% .83% 1.06%
Expenses without waiver 2.37% 2.27% 2.15% 1.95% 1.82%
Net investment income without waiver .33% .79% .54% .72% 1.06%
Portfolio turnover rate
(excluding short-term securities) 110.0% 129.0% 158.4% 132.0% 100.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class B, for
the year ended September 30, 2003 would have been 16.30%.
101
<Page>
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 10.39 $ 11.29 $ 19.49 $ 17.69 $ 16.34
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .08 .12 .11 .17 .19
Net gains (losses) on securities
(both realized and unrealized) 1.61 (.86) (6.00) 2.51 2.27
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.69 (.74) (5.89) 2.68 2.46
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (.07) (.16) (.09) (.17) (.19)
Distributions from net realized gains - - (2.22) (.71) (.92)
---------- ---------- ---------- ---------- ----------
Total distributions (.07) (.16) (2.31) (.88) (1.11)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 12.01 $ 10.39 $ 11.29 $ 19.49 $ 17.69
========== ========== ========== ========== ==========
Total return (a) 16.24%(b) (6.54)% (32.87)% 15.38% 15.29%
Net assets, end of year (in thousands) $ 2,148 $ 2,381 $ 3,210 $ 5,928 $ 5,659
Ratios to average net assets:
Expenses 2.04% 1.97% 1.87% 1.86% 1.82%
Net investment income .66% 1.09% .82% .83% 1.07%
Expenses without waiver 2.37% 2.27% 2.15% 1.95% 1.82%
Net investment income without waiver .33% .79% .54% .72% 1.07%
Portfolio turnover rate
(excluding short-term securities) 110.0% 129.0% 158.4% 132.0% 100.8%
</Table>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred sales
charges.
(b) Advantus Capital reimbursed the Fund for losses related to certain
investment trades. With reimbursed losses, the total return for Class C for
the year ended September 30, 2003 would have been 16.34%.
102
<Page>
Independent Auditors' Report
The Board of Directors and Shareholders
Advantus Bond Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Money Market Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Spectrum Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities, of Advantus Bond Fund,
Inc., Advantus International Balanced Fund, Inc., Advantus Money Market Fund,
Inc., Advantus Mortgage Securities Fund, Inc., and Advantus Spectrum Fund, Inc.
as of September 30, 2003, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2003, by correspondence with the custodian
or by other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Advantus Bond Fund, Inc., Advantus International Balanced Fund, Inc., Advantus
Money Market Fund, Inc., Advantus Mortgage Securities Fund, Inc. and Advantus
Spectrum Fund, Inc. as of September 30, 2003, the results of their operations
for the year then ended, the changes in their net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, MN
November 7, 2003
103
<Page>
Federal Income Tax Information
(UNAUDITED)
The following information for federal income tax purposes is presented as
an aid to shareholders in reporting the distributions paid by the Fund in the
fiscal period ended September 30, 2003. Dividends for the 2003 calendar year
will be reported to you on Form 1099-Div in late January 2004. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.
For the fiscal year ended September 30, 2003 up to 100% of dividends paid
by the Funds may be designated as qualified dividend income and subject to a
maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief
Reconciliation Act of 2003. Complete information will be reported in conjunction
with your 2003 Form 1099-DIV.
Advantus Bond Fund
INCOME DISTRIBUTION - TAXABLE AS DIVIDEND INCOME, NONE QUALIFYING FOR DEDUCTION
BY CORPORATIONS.
CLASS A
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0399
November 30, 2002 .0358
December 31, 2002 .0396
January 31, 2003 .0431
February 28, 2003 .0379
March 31, 2003 .0379
April 30, 2003 .0363
May 31, 2003 .0339
June 30, 2003 .0350
July 31, 2003 .0342
August 31, 2003 .0332
September 30, 2003 .0379
--------
$ .4447
========
</Table>
CLASS B
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0333
November 30, 2002 .0296
December 31, 2002 .0328
January 31, 2003 .0365
February 28, 2003 .0319
March 31, 2003 .0312
April 30, 2003 .0298
May 31, 2003 .0273
June 30, 2003 .0282
July 31, 2003 .0275
August 31, 2003 .0269
September 30, 2003 .0310
--------
$ .3660
========
</Table>
104
<Page>
CLASS C
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0332
November 30, 2002 .0295
December 31, 2002 .0326
January 31, 2003 .0364
February 28, 2003 .0318
March 31, 2003 .0311
April 30, 2003 .0297
May 31, 2003 .0272
June 30, 2003 .0280
July 31, 2003 .0275
August 31, 2003 .0268
September 30, 2003 .0309
--------
$ .3647
========
</Table>
Advantus Money Market Fund
INCOME DISTRIBUTIONS - TAXABLE AS DIVIDEND INCOME, NONE QUALIFYING FOR
DEDUCTIONS BY CORPORATIONS.
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0008
November 30, 2002 .0007
December 31, 2002 .0005
January 31, 2003 .0005
February 28, 2003 .0004
March 31, 2003 .0004
April 30, 2003 .0004
May 31, 2003 .0004
June 30, 2003 .0002
July 31, 2003 .0001
August 31, 2003 .0001
September 30, 2003 .0003
--------
$ .0048
========
</Table>
105
<Page>
Advantus Mortgage Securities Fund
INCOME DISTRIBUTIONS - TAXABLE AS DIVIDEND INCOME, NONE QUALIFYING FOR DEDUCTION
BY CORPORATIONS.
CLASS A
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0377
November 30, 2002 .0436
December 31, 2002 .0549
January 31, 2003 .0563
February 28, 2003 .0631
March 31, 2003 .0500
April 30, 2003 .0500
May 31, 2003 .0419
June 30, 2003 .0425
July 31, 2003 .0392
August 31, 2003 .0440
September 30, 2003 .0491
--------
$ .5723
========
</Table>
CLASS B
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0307
November 30, 2002 .0371
December 31, 2002 .0478
January 31, 2003 .0494
February 28, 2003 .0569
March 31, 2003 .0448
April 30, 2003 .0414
May 31, 2003 .0351
June 30, 2003 .0354
July 31, 2003 .0323
August 31, 2003 .0376
September 30, 2003 .0421
--------
$ .4906
========
</Table>
106
<Page>
CLASS C
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
October 31, 2002 $ .0307
November 30, 2002 .0370
December 31, 2002 .0477
January 31, 2003 .0493
February 28, 2003 .0568
March 31, 2003 .0447
April 30, 2003 .0412
May 31, 2003 .0350
June 30, 2003 .0354
July 31, 2003 .0323
August 31, 2003 .0376
September 30, 2003 .0420
--------
$ .4897
========
</Table>
Advantus Spectrum Fund
INCOME DISTRIBUTION - TAXABLE AS DIVIDEND INCOME, 81.8% QUALIFYING FOR DEDUCTION
BY CORPORATIONS
CLASS A
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
December 27, 2002 $ .0524
March 28, 2003 .0567
June 27, 2003 .0200
September 26, 2003 .0261
--------
$ .1552
========
</Table>
CLASS B
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
December 27, 2002 $ .0310
March 28, 2003 .0361
September 26, 2003 .0023
--------
$ .0694
========
</Table>
CLASS C
<Table>
<Caption>
PER
PAYABLE DATE SHARE
- ------------ --------
December 27, 2002 $ .0315
March 28, 2003 .0369
September 26, 2003 .0021
--------
$ .0705
========
</Table>
107
<Page>
Advantus Funds
Directors and Executive Officers
Under Minnesota law, the Board of Directors of each Fund has overall
responsibility for managing the Fund in good faith and in a manner reasonably
believed to be in the best interests of the Fund. The directors meet
periodically throughout the year to oversee the Fund's activities, review
contractual arrangements with companies that provide services to the Fund, and
review the performance of the Fund. Certain of the directors are considered
"interested persons" (as defined in the Investment Company Act of 1940) of the
Fund primarily by reason of their engagement as officers of the Fund's
investment adviser, Advantus Capital Management, Inc. ("Advantus Capital") or
Waddell & Reed Ivy Investment Company ("WRIICO"), or as officers of companies
affiliated with Advantus Capital or WRIICO, including Minnesota Life Insurance
Company ("Minnesota Life"). The remaining directors, because they are not
interested persons of the Fund, are considered independent ("Independent
Directors") and are not employees or officers of, and have no financial interest
in, Advantus Capital, WRIICO, Minnesota Life or their other affiliates. A
majority of the Board of Directors is comprised of Independent Directors.
The individuals listed in the table below serve as directors and officers of
each Fund, and also serve in the same capacity for each of the other six
Advantus Funds (the Advantus Funds are the twelve registered investment
companies bearing the Advantus name, consisting of 29 portfolios, for which
Advantus Capital, WRIICO or an affiliate of WRIICO serves as the investment
adviser). Only executive officers and other officers who perform policy-making
functions with the Fund are listed. None of the directors is a director of any
public company (a company required to file reports under the Securities Exchange
Act of 1934) or of any registered investment companies other than the Advantus
Funds. Each director serves for an indefinite term, until his or her
resignation, death or removal.
<Table>
<Caption>
POSITION WITH FUND
NAME, ADDRESS(1) AND LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED DURING PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS
William N. Westhoff Director since Retired since July 2002, prior thereto President, Treasurer
Age: 56 July 23, 1998 and Director, Advantus Capital Management, Inc.; Senior Vice
President and Treasurer, Minnesota Life Insurance Company
since April 1998; Senior Vice President, Global Investments,
American Express Financial Corporation, Minneapolis,
Minnesota, from August 1994 to October 1997
INDEPENDENT DIRECTORS
Ralph D. Ebbott Director since Retired, Vice President and Treasure of Minnesota
Age: 76 February 25, 1985 Mining and Manufacturing Company (industrial and consumer
products) through June 1989
William C. Melton Director since Founder and President of Melton Research Inc. since 1997;
Age: 55 April 25, 2002 member of the Advisory Board of Macroeconomic Advisors LLC
since 1998; member, Minneapolis StarTribune Board of
Economists since 1986; member, State of Minnesota Council of
Economic Advisors from 1988 to 1994; various senior
positions at American Express Financial Advisors (formerly
Investors Diversified Services and, thereafter, IDS/American
Express) from 1982 through 1997, including Chief Economist
and, thereafter, Chief International Economist
Ellen S. Berscheid Director since Regents' Professor of Psychology at the University of
Age: 66 October 22, 1985 Minnesota
</Table>
108
<Page>
<Table>
OTHER EXECUTIVE OFFICERS
Dianne M. Orbison President since President and Treasurer, Advantus Capital Management, Inc.;
Age: 51 July 25, 2002 Senior Vice President and Treasurer, Minnesota Life
Insurance Company; Vice President and Treasurer, Minnesota
Mutual Companies, Inc.; Vice President and Treasurer,
Securian Financial Group, Inc.; Vice President and
Treasurer, Securian Holding Company; President, MIMLIC
Funding, Inc. (entity holding legal title to bonds
beneficially owned by certain clients of Advantus Capital);
President and Treasurer, MCM Funding 1997-1, Inc. and MCM
Funding 1998-1, Inc. (entities holding legal title to
mortgages beneficially owned by certain clients of Advantus
Capital); Treasurer, MIMLIC Life Insurance Company;
Treasurer, Securian Life Insurance Company.
Gary M. Kleist Vice President and Vice President - Chief Operations Officer, Advantus Capital
Age: 43 Treasurer since Management, Inc.; Second Vice President, Minnesota Life
July 24, 2003 Insurance Company; Vice President and Secretary/Treasurer,
MIMLIC Funding, Inc. (entity holding legal title to bonds
beneficially owned by certain clients of Advantus Capital);
Financial Vice President, MCM Funding 1997-1, Inc. and MCM
Funding 1998-1, Inc. (entities holding legal title to
mortgages beneficially owned by certain clients of Advantus
Capital); Vice President and Secretary, MMLIC Imperial
Corporation.
Michael J. Radmer Secretary since Partner with the law firm of Dorsey & Whitney LLP
Dorsey & Whitney LLP February 25, 1985
50 South Sixth Street
Minneapolis,
Minnesota 55402
Age: 58
</Table>
- -------
(1) Unless otherwise noted, the address of each director and officer is the
address of the Funds: 400 Robert Street North, St. Paul, Minnesota 55101.
The Fund's Statement of Additional Information (SAI) includes additional
information about Fund directors, and is available, without charge, upon
request. You may request a copy of the current SAI by telephoning Waddell & Reed
Services Company, toll free, at (800) 777-6472.
109
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Shareholder Voting Results
On August 20, 2003, a special joint meeting of shareholders of Advantus
Spectrum Fund, as well as, Advantus Cornerstone Fund and Advantus Horizon Fund
was held. Shareholders of record on June 23, 2003, were entitled to vote on the
proposal described below.
(1) To approve a definitive investment advisory agreement for Advantus Spectrum
Fund, Inc. with Waddell & Reed Ivy Investment Co.
<Table>
<Caption>
VOTES VOTES VOTES
FOR AGAINST WITHHELD
------------- ---------- -----------
Advantus Spectrum Fund, Inc. 2,205,005.856 41,924.384 126,141.460
</Table>
110
<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.
111
<Page>
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables you to open an
Advantus Fund account for as little as $500 when you agree to make investments
of not less than $50 under the plan 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 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 Waddell & Reed Services Company, call 1-800-777-6472.
Advantus Account Representatives are available Monday through Friday from 8:00
a.m. to 6:30 p.m. Central Time.
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 Securian Financial Services, Inc., distributor of
the Funds. Contact your representative for information and a prospectus
containing
112
<Page>
more complete information including charges and expenses, for any of the
Advantus Funds you are interested in. Read the prospectus carefully before
investing.
MINIMUM INVESTMENTS: Minimum lump-sum initial investment is $1,000 ($500 for
qualified accounts and accounts covered by an automatic investment plan).
Minimum subsequent investment is $50.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to each of the Funds
except Advantus Cornerstone Fund, Inc., Advantus Horizon Fund, Inc. and Advantus
Spectrum Fund, Inc., 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., Advantus Enterprise Fund, Inc., and Advantus
Venture Fund, Inc., the sub-adviser, Templeton Investment Counsel, Inc., Credit
Suisse Asset Management, LLC, and State Street Research & Management Company,
respectively, selects the Fund's investments.) WRIICO serves as the investment
adviser to each of Advantus Cornerstone Fund, Inc., Advantus Horizon Fund, Inc.
and Advantus Spectrum Fund, Inc., and selects and reviews the investments for
each of those Funds.
Advantus Capital Management, Inc. manages nine mutual funds containing $1.6
billion in assets in addition to $12.7 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 15 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
113
<Page>
This Page Intentionally Left Blank
114
<Page>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS(TM) CAPITAL MANAGEMENT LOGO]
Distributed by:
SECURIAN FINANCIAL SERVICES, INC.
Securities Dealer, Member NASD/SIPC.
Registered Investment Advisor
400 Robert Street North, St. Paul, MN 55101-2098
1.888.237.1838
3010-2003-9765
<Page>
SECURIAN FINANCIAL SERVICES, INC. PRESORTED STANDARD
U.S. POSTAGE PAID
400 ROBERT STREET NORTH ST. PAUL, MN
ST. PAUL, MN 55101-2098 PERMIT NO. 3547
CHANGE SERVICE REQUESTED
F. 58525 Rev. 11-2003
<Page>
ITEM 2. CODE OF ETHICS.
Filed herewith as Exhibit 10(a)(1)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the Fund has determined that Ralph D. Ebbott, a member
of the Board's Audit Committee, possesses the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as an "audit committee
financial expert," and has designated Mr. Ebbott as the Audit Committee's
financial expert. Mr. Ebbott is an "independent" Director pursuant to paragraph
(a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time. Applicable for annual reports filed for the first
fiscal year ending after December 15, 2003.
<Page>
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's principal financial officer and principal
executive officer have concluded that those disclosure controls and
procedures provide reasonable assurance that the material information
required to be disclosed by the registrant on this report is recorded,
processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit:
Exhibit 99.CODE ETH attached hereto.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940 (17 CFR 270.30a-2):
Exhibit 99.CERT attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, provide the certifications required by Rule 30a-2(b) under
the Investment Company Act of 1940 (17 CFR 270.30a-2(b)), Rule 13a-14(b) or
Rule 15d-14 under the Securities Exchange Act of
<Page>
1934 (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A
certification furnished pursuant to this paragraph will not be deemed "filed"
for the purposes of Section 18 of the Securities Exchange Act of 1934 (15 U.S.C.
78r), or otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the registrant specifically incorporates it by reference:
Exhibit 99.906 Cert attached hereto
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Advantus Bond Fund, Inc.
By (Signature and Title) /s/Dianne M. Orbison
------------------
Dianne M. Orbison, President
Date: December 2, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/Dianne M. Orbison
------------------
Dianne M. Orbison, President (Principal Executive
Officer)
By (Signature and Title) /s/Gary M. Kleist
---------------
Gary M. Kleist, Treasurer (Principal Financial
Officer and Accounting
Officer)
Date: December 2, 2003