<PAGE>
[LOGO]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS CORNERSTONE FUND
MARCH 31, 1995
<PAGE>
ADVANTUS CORNERSTONE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 5
STATEMENT OF ASSETS AND
LIABILITIES 7
STATEMENT OF OPERATIONS 8
STATEMENT OF CHANGES IN NET
ASSETS 9
NOTES TO FINANCIAL STATEMENTS 10
SHAREHOLDER VOTING RESULTS 15
SHAREHOLDER SERVICES 16
<PAGE>
May 15, 1995
[PHOTO]
Dear Shareholders:
Practically everyone would like to annualize the first quarter results. Both
bonds and equities provided excellent returns for investors according to
Ibbotson Associates. For now, investors seem to have positive expectations on
interest rates and are enjoying the benefits on earnings attributed to the
declining dollar. Additionally, they have become increasingly confident in the
ability of the Federal Reserve to engineer a soft landing (i.e., low inflation
without a recession) for the economy.
For the last six months there was even more good news for the markets. The
November election results combined with two additional Federal Reserve moves to
raise short term interest rates and good news on inflation amid signs of slower
economic growth all helped restore investor confidence.
What can be confusing is that a soft landing and a recession often look very
much the same. The economy is on an unpredictable course, and experts seem to be
particularly divided in their opinions. (Opinions always seem to get farther
apart when markets set new highs.) Bulls argue that earnings are excellent and
will remain healthy because of stringent cost controls and improving overseas
operations. Bears believe the Dow is at its peak for the cycle. Also, the
consensus of a soft landing can be shaken badly if the Fed has to raise interest
rates to protect the dollar. Finally, all signs do not indicate inflation can
remain under control.
There is much evidence that we have entered a period where interest rates,
whether increasing or decreasing, are likely to trade in a narrower range.
Slower but steady economic growth, coupled with a moderate inflationary
environment should prove to be positive for fixed income investments. The
uncertainty in the economy over whether we are heading toward a recession or a
soft landing should create buying opportunities in the equity markets.
The saga of the dollar reaffirms the fact that most events are neither totally
positive nor totally negative. The dollar will buy less in Europe and Japan, but
will buy more in Mexico and Canada than a year ago. However, determining which
investments benefit and which suffer from any event is very difficult and
requires experienced professionals to make the best decisions.
Finally, as always, it is important to remember not to vary from your investment
plan and that diversification across asset types and geographic regions is
important because asset classes tend to perform differently from each other in
different market conditions.
Sincerely,
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS CORNERSTONE FUND
PERFORMANCE UPDATE
[PHOTO]
MATTHEW D. FINN, CFA
PORTFOLIO MANAGER
The Advantus Cornerstone
Fund is a mutual fund designed for
investors seeking long-term accumulation
of capital. In pursuit of this objective,
the Fund will invest primarily in equity
securities of companies which, in the
opinion of the Adviser, have market
values which appear low relative to their
underlying value or future growth
potential.
-Dividends paid quarterly
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Cornerstone Fund Class A increased 5.66 percent during the 6 month
period ending March 31, 1995 (Class B increased 5.02 percent over the same
period)* versus 5.74 percent for Lipper's Growth and Income Index.**
PORTFOLIO RECAP
Areas that contributed the most to the relative performance of the Fund
included:
AIR TRANSPORTATION The shares of Northwest Airlines appreciated 60% during
the quarter; this position has been sold due to valuation considerations.
TECHNOLOGY Integrated Device Technologies (SRAM chip manufacturer) and
Xerox both performed well and remain in the portfolio.
DRUGS AND MEDICINE The portfolio had an equal weight versus the S&P 500 in
this sector; the portfolio's positions--RightCHOICE (HMO) and Mallinkrodt
Group (diversified medical related)--significantly outperformed the market.
BASIC INDUSTRIES Positions in paper companies--Bowater (newsprint) and
Stone Container (linerboard)--helped performance while positions in the
chemical industry hurt performance. Positions in the commodity chemical area
have been reduced but not eliminated. Industry fundamentals remain good. It
may be difficult, however, for companies to exceed current earnings
estimates.
OUTLOOK
Relative to the S&P 500, the portfolio is overweighted in financial services,
basic industries and capital goods related companies. Within financial services
the emphasis is on savings and loans and niche insurance companies. Portfolio
weights in the basic industries area are expected to continue to decline as
shares in the paper and chemical groups are approaching price targets. In my
view, the capital goods sector remains an area of opportunity.
The portfolio remains underweighted in high technology and consumer staples
because valuations do not permit the consideration of most of these companies.
2
<PAGE>
ADVANTUS CORNERSTONE FUND
MARCH 31, 1995
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS CORNERSTONE FUND, S&P 500 BARRA
VALUE INDEX AND CONSUMER PRICE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN SINCE
CLASS A CLASS B S&P 500 BARRA INDEX CPI INCEPTION:
<S> <C> <C> <C> <C> <C> <C>
09/16/94 10,000.00 10,000.00 10,000.00 10,000.00 Class A -0.93%
09/30/94 9,376.51 9,870.01 9,824.00 10,053.66 Class B -1.34%
03/31/95 9,907.40 9,865.49 10,721.20 10,154.26
</TABLE>
On the chart above you can see how the Advantus Cornerstone Fund's Class A and
Class B shares' total return compared to the S&P 500 Barra Index+ and the
Consumer Price Index. The four lines represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of the Advantus
Cornerstone Fund Class A and Class B shares (September 16, 1994) through March
31, 1995.
The above chart is useful because it provides you with more information about
your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum 5 percent
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical results are not an indication of future performance.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Class C commenced operations March 1, 1995, accordingly, performance is
not presented.
**Average return of 40 growth and income funds according to Lipper Analytical
Services, Inc.
+The S&P 500 Barra Value Index contains approximately one-half of the common
stocks from the S&P 500. The Index contains those stocks with a higher
book-to-price ratio.
3
<PAGE>
ADVANTUS CORNERSTONE FUND
MARCH 31, 1995
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- - ------------------------------ ------ ---------- ----------
<S> <C> <C> <C>
Case Equipment Corporation.... 18,700 $ 467,500 4.4%
USX--Marathon Group........... 25,600 448,000 4.2%
Eastman Kodak Company......... 7,500 398,438 3.7%
Deluxe Corp................... 13,600 387,600 3.6%
Hanson PLC.................... 20,500 386,938 3.6%
RightCHOICE Managed Care,
Inc.......................... 20,500 369,000 3.5%
YPF Sociedad Anonima.......... 19,100 362,900 3.4%
Pennzoil Company.............. 6,900 326,888 3.1%
Ethyl Corporation............. 31,600 323,900 3.0%
Kellwood Company.............. 17,100 318,488 3.0%
---------- ---
$3,789,652 35.5%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 9.8%
Consumer Goods and Services 27.4%
Credit Sensitive 18.9%
Intermediate Goods and Services 20.4%
Technology 8.5%
Cash and Other
Assets/Liabbilities 15.0%
</TABLE>
4
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1995
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- - --------- ------------
<C> <S> <C>
COMMON STOCKS (85.0%)
CAPITAL GOODS (9.8%)
Machinery (9.8%)
6,900 Avnet Inc............ $ 278,588
18,700 Case Equipment
Corporation......... 467,500
4,400 General Electric
Company............. 238,150
6,100 Raychem Corporation.. 247,813
------------
1,232,051
------------
CONSUMER GOODS AND SERVICES (27.4%)
Consumer Goods (12.9%)
7,300 Columbia/HCA
Healthcare
Corporation......... 313,900
20,500 Hanson PLC (c)....... 386,937
9,000 Mallinckrodt Group
Inc................. 303,750
20,500 RightCHOICE Managed
Care, Inc. (b)...... 369,000
7,800 The Seagram Company
Ltd. (c)............ 247,650
------------
1,621,237
------------
Consumer Services (6.3%)
13,600 Deluxe Corp.......... 387,600
7,500 Eastman Kodak
Company............. 398,437
------------
786,037
------------
Retail (5.7%)
13,900 Federated Department
Stores (b).......... 307,537
7,000 Heilig-Meyers
Corporation......... 153,125
<CAPTION>
MARKET
SHARES VALUE(A)
- - --------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
4,800 Sears, Roebuck and
Co.................. $ 256,200
------------
716,862
------------
Consumer Cyclicals (2.5%)
17,100 Kellwood Company..... 318,487
------------
CREDIT SENSITIVE (18.9%)
Finance (15.0%)
12,600 GP Financial
Corporation......... 291,375
2,500 Loews Corporation.... 246,875
4,000 MBIA Inc............. 251,500
7,800 RLI Corporation...... 182,325
18,900 Roosevelt Financial
Group, Inc.......... 297,675
14,000 TIG Holdings Inc..... 315,000
14,900 Washington Mutual
Incorporated........ 298,931
------------
1,883,681
------------
Utilities (3.9%)
8,900 GTE Corporation...... 295,925
6,100 New England Electric
System.............. 188,338
------------
484,263
------------
INTERMEDIATE GOODS AND SERVICES (20.4%)
Energy (10.7%)
6,900 Pennzoil Company..... 326,887
6,600 Tosco Corporation.... 204,600
25,600 USX--Marathon Group.. 448,000
19,100 YPF Sociedad Anonima
(c)................. 362,900
------------
1,342,387
------------
</TABLE>
See accompanying notes to investments in securities.
5
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- - --------- ------------
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
<C> <S> <C>
Materials (9.7%)
7,700 Bowater
Incorporated........ $ 275,275
6,300 Cytec Industries Inc.
(b)................. 229,163
3,600 The Dow Chemical
Company............. 262,800
31,600 Ethyl Corporation.... 323,900
10,200 Fort Howard
Corporation (b)..... 128,775
------------
1,219,913
------------
<CAPTION>
MARKET
SHARES VALUE(A)
- - --------- ------------
<C> <S> <C>
TECHNOLOGY (8.5%)
6,900 The B.F. Goodrich
Company............. $ 306,188
14,100 EMC Corporation (b).. 236,175
4,100 Integrated Device
Technology, Inc.
(b)................. 151,700
12,000 Rohr Incorporated
(b)................. 126,000
2,100 Xerox Corporation.... 246,488
------------
1,066,551
------------
Total common stocks
(cost:
$9,868,981)......... 10,671,469
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- - ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (13.8%)
$ 85,000 U.S. Treasury Bill.......................... 5.660% 04/06/95 84,918
755,000 U.S. Treasury Bill.......................... 5.740%-5.940% 05/11/95 750,099
900,000 U.S. Treasury Bill.......................... 5.830%-5.940% 06/01/95 891,142
------------
Total short-term securities (cost: $1,726,188)........................ 1,726,159
------------
Total investments in securities (cost: $11,595,169) (d)............... $ 12,397,628
------------
------------
<FN>
Notes to Investments in Securities
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 7.3% of net assets in foreign securities as of March 31,
1995.
(d) At March 31, 1995 the cost of securities for federal income tax purposes
was $11,595,169. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation......................................................................... $ 859,746
Gross unrealized depreciation......................................................................... (57,287)
---------
Net unrealized appreciation........................................................................... $ 802,459
---------
---------
</TABLE>
6
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for
detailed listing (identified cost: $11,595,169)................................ $12,397,628
Cash in bank on demand deposit.................................................. 12,027
Receivable for Fund shares sold................................................. 785
Receivable for investment securities sold....................................... 126,057
Accrued interest and dividends receivable....................................... 40,867
Organizational costs............................................................ 49,021
-----------
Total assets................................................................ 12,626,385
-----------
LIABILITIES
Payable for investment securities purchased..................................... 15,188
Payable for Fund shares repurchased............................................. 5
Payable to Adviser.............................................................. 63,453
-----------
Total liabilities........................................................... 78,646
-----------
Net assets applicable to outstanding capital stock.............................. $12,547,739
-----------
-----------
Represented by:
Capital stock--$.01 par value (note 1)........................................ $ 11,350
Additional paid-in capital.................................................... 11,481,827
Distributions in excess of net investment income.............................. (308)
Accumulated net realized gains from investments............................... 252,411
Unrealized appreciation of investments........................................ 802,459
-----------
Total--representing net assets applicable to outstanding capital stock...... $12,547,739
-----------
-----------
Net assets applicable to outstanding Class A Shares............................. $11,899,929
-----------
-----------
Net assets applicable to outstanding Class B Shares............................. $ 637,599
-----------
-----------
Net assets applicable to outstanding Class C Shares............................. $ 10,211
-----------
-----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,076,260......................................... $ 11.06
-----------
-----------
Class B--Shares outstanding 57,781............................................ $ 11.03
-----------
-----------
Class C--Shares outstanding 925............................................... $ 11.04
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENTS OF OPERATIONS
PERIOD FROM OCTOBER 1, 1994 TO MARCH 31, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.......................................................................... $ 34,355
Dividends......................................................................... 116,325
---------
150,680
---------
Expenses (note 4):
Investment advisory fee........................................................... 45,012
Distribution fees--Class A........................................................ 16,396
Distribution fees--Class B........................................................ 1,604
Distribution fees--Class C........................................................ 8
Administrative services fee....................................................... 19,200
Custodian fees.................................................................... 1,680
Auditing and accounting services.................................................. 3,583
Legal fees........................................................................ 3,835
Amortization of organizational costs.............................................. 5,549
Directors' fees................................................................... 139
Registration fees................................................................. 19,588
Printing and shareholder reports.................................................. 3,168
Insurance......................................................................... 2,980
Other............................................................................. 3,242
---------
Total expenses.................................................................. 125,984
Less fees and expenses waived or absorbed:
Class A distribution fees....................................................... (10,930)
Other fund expenses............................................................. (37,645)
---------
Total fees and expenses waived or absorbed.................................... (48,575)
---------
Total net expenses............................................................ 77,409
---------
Investment income--net........................................................ 73,271
---------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)........................................ 307,641
Net change in unrealized appreciation or depreciation on investments.............. 299,906
---------
Net gains on investments........................................................ 607,547
---------
Net increase in net assets resulting from operations................................ $ 680,818
---------
---------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1994 TO MARCH 31, 1995 AND
PERIOD FROM JUNE 20, 1994 TO SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Operations:
Investment income--net.............................................. $ 73,271 $ 41,786
Net realized gains (losses) on investments.......................... 307,641 (3,672)
Net change in unrealized appreciation or depreciation of
investments........................................................ 299,906 502,553
----------- -----------
Increase in net assets resulting from operations.................. 680,818 540,667
----------- -----------
Distributions to shareholders from:
Investment income--net:
Class A........................................................... (118,864) --
Class B........................................................... (2,650) --
Class C........................................................... (17) --
Excess of net investment income:
Class A........................................................... (300) --
Class B........................................................... (8) --
Net realized gains on investments:
Class A........................................................... (50,262) --
Class B........................................................... (1,296) --
----------- -----------
Total distributions............................................. (173,397) --
----------- -----------
Capital share transactions (notes 5 and 7):
Proceeds from sales:
Class A........................................................... 829,415 10,080,240
Class B........................................................... 511,220 88,098
Class C........................................................... 10,000 --
Shares issued as a result of reinvested dividends:
Class A........................................................... 9,583 --
Class B........................................................... 3,954 --
Class C........................................................... 18 --
Payments for redemption of shares:
Class A........................................................... (32,733) --
Class B........................................................... (139) (5)
----------- -----------
Increase in net assets from capital share transactions............ 1,331,318 10,168,333
----------- -----------
Total increase in net assets...................................... 1,838,739 10,709,000
Net assets at beginning of period..................................... 10,709,000 --
----------- -----------
Net assets at end of period [including (distributions in excess of)
undistributed net investment income of ($308) and $42,711,
respectively]........................................................ $12,547,739 $10,709,000
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
(1) ORGANIZATION
Advantus Cornerstone Fund, Inc. (the Fund) was incorporated on January 27,
1994. The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. On February
14, 1995 shareholders of the Fund approved a name change to Advantus Cornerstone
Fund, Inc. (effective March 1, 1995). Prior to March 1, 1995 the Fund was known
as MIMLIC Value Fund, Inc.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding period
declines as the amount of the purchase increases and ranges from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
On June 20, 1994, MIMLIC Asset Management Company (MIMLIC Management)
purchased 7,500 Class A shares and 7,500 Class B shares. Operations of the Fund
did not formally commence until September 16, 1994 when the shares became
effectively registered under the Securities Exchange Act of 1933. Prior to
commencement of operations, The Minnesota Mutual Life Insurance Company
(Minnesota Mutual), the parent of MIMLIC Management, purchased 990,644 Class A
shares for $10 million.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
distributions in excess of net investment income and decrease additional paid-in
capital by $5,549.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1994 to March 31, 1995, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $9,119,760 and $8,891,273, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
On February 14, 1995 shareholders of the Fund approved a new investment
advisory agreement with Advantus Capital Management, Inc. (Advantus Capital or
the Adviser). Advantus Capital is a wholly-owned subsidiary of MIMLIC Management
which, prior to March 1, 1995, served as investment adviser to the Fund. Under
the agreement, Advantus Captital manages the Fund's assets and provides
research, statistical and advisory services and pays related office rental and
executive expenses and salaries. In addition, as part of the advisory fee,
Advantus Capital pays the expenses of the Fund's transfer, dividend disbursing
and redemption agent (Minnesota Mutual). The fee for investment management and
advisory services is based on the average daily net assets of the Fund at the
annual rate of .80 percent, which is the same as under the old agreement with
MIMLIC Management.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund, to be used to pay certain expenses
incurred in the distribution, promotion and servicing of the Fund's shares. The
Class A Plan provides for a fee up to .30 percent of average daily net assets of
Class A shares. The Class B Plan provides for a fee up to 1.00 percent of
average daily net assets of Class B shares. The Class B 1.00 percent fee is
comprised of a .75 percent distribution fee and a .25 percent service fee. The
Class C Plan provides for a fee of up to 1.00 percent of average daily net
assets of Class C shares. The Class C 1.00 percent fee is comprised of a .75
percent distribution fee and a .25 percent service fee. MIMLIC Sales is
currently waiving that portion of Class A distribution fees which exceeds, as a
percentage of average daily net assets, .10 percent.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administra tive services which Minnesota
Mutual provides. Prior to February 1, 1995, the administrative service fee for
the Fund was $3,250 per month. Effective February 1, 1995, the administrative
service fee is $3,100 per month.
Advantus Capital (MIMLIC Management prior to March 1, 1995) directly incurs
and pays the above operating expenses and the Fund in turn reimburses Advantus
Capital. During the period from October 1, 1994 to March 31, 1995, Advantus
Capital and MIMLIC Management voluntarily agreed to absorb $37,645 in expenses
that were otherwise payable by the Fund.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $25,350.
As of March 31, 1995, Minnesota Mutual and subsidiaries and the directors
and officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
---------------- ----------------
<S> <C> <C>
Class A..................................................... 998,261 92.8%
Class B..................................................... 7,591 13.1%
Class C..................................................... 925 100.0%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $3,451.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial regstiration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) ORGANIZATIONAL COSTS--(CONTINUED)
operations. If any or all of the shares held by MIMLIC Management, or any other
holder, representing initial capital of the Fund are redeemed during the
amortization period, the redemption proceeds will be reduced by the pro rata
portion (based on the ratio that the number of initial shares redeemed bears to
the total number of outstanding initial shares of the Fund at the date of
redemption) of the unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1994 to March 31, 1995
and the period from June 20, 1994 to September 30, 1994 for Class A shares and
Class B shares, and the period from March 1, 1995 to March 31, 1995 for Class C
shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- -----------
1995 1994 1995 1994 1995
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Sold................................................................ 79,872 998,637 48,675 8,734 923
Issued for reinvested distributions................................. 915 -- 380 -- 2
Redeemed............................................................ (3,164) -- (7) (1) --
--------- --------- --------- --------- ---
77,623 998,637 49,048 8,733 925
--------- --------- --------- --------- ---
--------- --------- --------- --------- ---
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------------- ----------------------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
OCTOBER 1, SEPTEMBER 16, OCTOBER 1, SEPTEMBER 16, MARCH 1,
1994 TO 1994 (A) TO 1994 TO 1994 (A) TO 1995 (A) TO
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
1995 1994 1995 1994 1995
----------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 10.63 $ 10.77 $ 10.63 $ 10.77 $ 10.79
----------- ------------- ------------- ------ -------------
Income from investment operations:
Net investment income (loss).......... (.02) .01 (.01) (.01) .01
Net gains or losses on securities
(both realized and unrealized)....... .61 (.15) .53 (.13) .26
----------- ------------- ------------- ------ -------------
Total from investment operations.... .59 (.14) .52 (.14) .27
----------- ------------- ------------- ------ -------------
Less distributions:
Dividends from net investment
income............................... (.11) -- (.07) -- (.02)
Distributions from capital gains...... (.05) -- (.05) -- --
----------- ------------- ------------- ------ -------------
Total distributions................. (.16) -- (.12) -- (.02)
----------- ------------- ------------- ------ -------------
Net asset value, end of period.......... $ 11.06 $ 10.63 $ 11.03 $ 10.63 $ 11.04
----------- ------------- ------------- ------ -------------
----------- ------------- ------------- ------ -------------
Total return (b)........................ 5.66%(c) (1.30)%(d) 4.53%(c) (1.30)%(d) 2.12%(e)
Net assets, end of period (in
thousands)............................. $11,900 $10,616 $ 638 $ 93 $ 10
Ratio of expenses to average daily net
assets (f)............................. 1.35%(g) .05%(h) 2.25%(g) .09%(h) .19%(h)
Ratio of net investment income (loss) to
average daily net assets (f)........... 1.32%(g) .07%(h) .69%(g) .03%(h) .10%(h)
Portfolio turnover rate (excluding
short-term securities)................. 88.20% 8.10% 88.20% 8.10% 88.20%
<FN>
- - ----------
(a) Commencement of operations.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of sales charges.
(c) Total return is presented for the period from October 1, 1994 to March 31,
1995.
(d) Total return is presented for the period from September 16, 1994,
commencement of operations, to September 30, 1994.
(e) Total return is presented for the period from March 1, 1995, commencement
of operations, to March 31, 1995.
(f) The Fund's Distributor and Adviser voluntarily waived or absorbed $48,575
and $1,872 in expenses for the periods ended March 31, 1995 and September
30, 1994, respectively. If the Fund had been charged for theses expenses,
the ratio of expenses to average daily net assets would have been 2.22% and
.07% for Class A shares, respectively, 2.87% and .10% for Class B shares,
respectively and .22% for Class C shares. The ratio of net investment
income to average daily net assets would have been .45% and .05% for Class
A shares, respectively, .07% and .02% for Class B shares, respectively and
.07% for Class C shares.
(g) Adjusted to an annual basis.
(h) Ratios presented for the periods from March 1, 1995 to March 31, 1995 and
September 16, 1994 to September 30, 1994 are not annualized as they are not
indicative of anticipated results.
</TABLE>
14
<PAGE>
SHAREHOLDER VOTING RESULTS
On February 14, 1995, a regular shareholder meeting was held. Shareholders
of record on December 19, 1994 were entitled to vote on the proposals described
below. All classes of shares (only Class A and Class B were in existence on
December 19, 1994) of the Fund were entitled to vote on each proposal, and all
shares were voted in the aggregate for each proposal and not by class.
(1) To elect a Board of Directors as follows:
<TABLE>
<CAPTION>
VOTES VOTES
DIRECTOR FOR WITHHELD
---------------------- --------- ---------
<S> <C> <C>
Paul H. Gooding.......................................................... 1,037,416 --
Frederick P. Feuerherm................................................... 1,037,416 --
Ralph D. Ebbott.......................................................... 1,037,416 --
Ellen S. Berscheid....................................................... 1,037,416 --
Charles E. Arner......................................................... 1,037,416 1,496
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES VOTING
-------------------------------
FOR AGAINST ABSTAIN
--------- --------- ---------
<C> <S> <C> <C> <C>
(2) To ratify or reject the selection by the Board of
Directors of KPMG Peat Marwick LLP as the independent
public accountant for the Fund for the fiscal year
ending September 30, 1995.............................. 1,037,363 53 --
(3) To approve or reject the proposal to amend the Fund's
Articles of Incorporation to change the name of the
Fund from MIMLIC Value Fund, Inc. to Advantus
Cornerstone Fund, Inc.................................. 1,035,834 1,153 429
(4) To approve or disapprove a new Investment Advisory
Agreement with Advantus Capital Management, Inc., a
wholly-owned subsidiary of MIMLIC Asset Management
Company, the previous investment adviser of the
Fund................................................... 1,036,688 725 3
</TABLE>
15
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund:
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value. (Exchanges from the Money Market Fund will incur the
applicable sales charge, if not previously subjected to the charge.)
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from you fund account--subject to minimum guidelines.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of an Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or saving account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPs, profit
sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
16
<PAGE>
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. Amounts
over $1,000 will be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Amounts for less
than $1,000 will be mailed to your bank on your behalf. To set this up, please
send a voided check from your bank.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual 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 MIMLIC Sales Corporation, call 1-800-443-3677. Our
voice response system is available from 7 a.m. to 3 a.m. Monday through Friday,
and 8 a.m. to 5 p.m. on Saturday. This system allows you to access current net
asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the eight Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc.'s six portfolio managers manage eight
mutual funds containing $215 million in assets in addition to $1.8 billion in
assets for other clients. Advantus Capital's seasoned portfolio managers average
more than 10 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
17
<PAGE>
This report has been prepared for shareholders and may be distributed
to others only if preceded or accompanied by a current prospectus.
[LOGO]
MIMLIC SALES CORPORATION
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-443-3677
<PAGE>
MIMLIC SALES CORPORATION BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48648 5-95
