<PAGE>
CORNERSTONE
ADVANTUS CORNERSTONE FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS DATED SEPTEMBER 30, 1999
[LOGO]
ADVANTUS-TM-
FAMILY OF FUNDS
[GRAPHIC]
EQUITY
<PAGE>
ADVANTUS CORNERSTONE FUND
TABLE OF CONTENTS
<TABLE>
<S> <C>
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET
ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
INDEPENDENT AUDITORS' REPORT 18
FEDERAL INCOME TAX INFORMATION 19
SHAREHOLDER SERVICES 20
</TABLE>
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Growth has been the economic story throughout this fiscal year. The domestic
growth story continues, albeit growth is slower than in the past. The Federal
Reserve's proactive stance (i.e., raising rates BEFORE reported inflation)
demonstrates the Fed's continuing resolve to control inflation by reigning in
domestic growth. So far, the Fed has achieved this delicate economic balance.
World growth is slowly accelerating. The global economic picture is vastly
different than it was one year ago. Japan has worked its way back from a
devastating recession and financial crisis. Emerging markets are surging and
international markets, overall, are strong. The world's central banks have
played critical roles in getting their respective countries back on track. Like
the Fed, the world's central banks plotted a course of action, and like the Fed,
these banks espoused an expansionary bias. Relative to conditions, each bank
aggressively used its monetary policy to lower interest rates. These actions
have contributed to global economic recovery, country by country.
As the rest of the world rallies, the conditions in the U.S. will likely put
more pressures on our economic systems. The fixed income market may feel some
pressure too due to higher commodity prices, global economic growth, a weaker
dollar, tight labor market, and a Fed poised to tighten. Conditions may also
bode poorly for the stock market. After several years of good equity markets -
driven by both robust growth and higher valuation levels - investors are acutely
aware that the environment is changing. The markets will continue under pressure
if interest rates move higher and valuations peak, challenging the long-running
bull market. On a brighter note, the loss of price momentum in the U.S. equity
market will allow earnings growth to catch up with multiples, thus building the
base for the next leg up in the secular bull market for equities.
If at any time you have questions about your Advantus mutual fund investments, I
encourage you to contact your financial professional or call Advantus
Shareholders Services at 1-800-665-6005. This number allows you 24-hour access,
seven days a week, to your mutual fund account information via an automated
voice-response system. Or you can speak directly to an Advantus Shareholder
Services Representative during business hours, 8 A.M. to 4:45 P.M. (Central
Time) any day that the New York Stock Exchange is open for business.
We appreciate your continued patronage of Advantus Funds. Helping you move
closer to your investment goals is important to us, and we look forward to
working long-term with you and your financial professional. Thank you for
investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS CORNERSTONE FUND
PERFORMANCE UPDATE
[PHOTO]
GARY ASTER
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 mid and large
capitalization companies
(i.e., companies with a
market capitalization of at
least $1.5 billion) at the
time of purchase. In
selecting equity securities,
the Fund invests in
securities that the
investment adviser believes
are undervalued relative to
other securities, earn low
returns with a potential for
higher returns or are
undervalued relative to their
potential for improved
operating performance and
financial strength.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
The Cornerstone Fund's performance for the year ended September 30, 1999 for
each class of shares offered is as follows:
<TABLE>
<S> <C>
Class A.............................. 10.13 percent*
Class B.............................. 9.26 percent*
Class C.............................. 9.35 percent*
</TABLE>
The Fund's benchmark, the Russell 1000 Value Index,** earned 18.71 percent for
the same period.
PERFORMANCE ANALYSIS
The most significant event affecting financial markets over the reporting period
was the rise in interest rates. The U.S. Government 30-year Treasury Bond (the
"Long Bond") hit a low yield of 4.72 percent on October 5, 1998 and proceeded to
rise steadily from that time. The long bond hit a peak of 6.28 percent on
August 12, 1999 and has mostly stayed above 6.0 percent since then. Interest
rates affect many areas of the economy, including consumer spending and
corporate borrowing.
The Asian economies, which had experienced a dramatic slowdown last fall, began
to show signs of life. This provided demand for many basic materials such as
paper or steel. As the demand drove prices for these commodities higher, the
Federal Reserve Board became worried about inflation, and instituted a series of
interest rate hikes. These higher interest rates affected most sectors of the
Fund.
For the 12 months ending September 30, 1999, the best performing sectors in the
Russell 1000 Value Index** were Technology and Other Energy, a collection of
non-traditional energy companies. The worst performing market sectors were
Consumer Staples and Health Care.
The rise in crude oil prices during this reporting period benefited integrated
oil companies. Higher oil prices translate to higher earnings for major oil
companies, so selected energy companies also did well. The rise in oil and gas
prices helped the energy sector, as did the wave of deregulation that is
sweeping the energy business. Moving away from government rate of return
regulation to open markets has converted some sleepy, slow growth utilities into
high growth dynamic companies.
The Fund obtained relative outperformance from the Integrated Oil and the
Consumer Staples sectors. For both of these sectors, outperformance was obtained
from superior stock selection rather than over or underweighting our exposure to
the group. Much of the Fund's underperformance came from the Consumer Cyclical
and Utility sectors.
2
<PAGE>
Over the course of the year, substantial changes were made to the portfolio. The
Fund has reduced the number of names it holds, and has placed a greater emphasis
on larger companies. These changes position the Fund well for a period of
economic and interest rate uncertainty. The benefits of this change were seen in
much improved performance during the second and third calendar quarters of 1999.
OUTLOOK
The market will likely continue to take its lead from the economy and the future
direction of interest rates. The Fund will, no doubt, experience further changes
in the future, although less dramatic than those described above. In our value
stock selection process, we look for companies that we believe have experienced
a temporary decline in their stock price. The recent market decline has greatly
expanded the list of possible additions to the portfolio, and we are always
watchful for good investment opportunities. We continually research each
prospective company and judge whether its prospects are superior to one of our
existing holdings.
While it is not possible to predict the direction of the stock market, it
appears to us that a "doomsday" scenario is not appropriate at this time. The
recent declines were mostly the result of a growing number of earnings
disappointments. This was exacerbated by very high valuations by almost any
traditional measure. With most of these excesses now wrung out of prices, future
market declines due to earnings shortfalls will likely be modest and within the
boundaries of normal cyclical adjustments.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The Russell 1000 Value Index contains those stocks from the Russell 1000 with
low book to price ratio. The Russell 1000 is the 1,000 largest companies in the
Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common stocks,
which represents approximately 98 percent of the U.S. market.
3
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS CORNERSTONE FUND, RUSSELL 1000 VALUE 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 Cornerstone Fund compared to the Russell 1000
Value Index, and the Consumer Price Index. The 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 Cornerstone Fund
(September 16, 1994 for Class A and Class B and March 1, 1995 for Class C)
through September 30, 1999.
CLASS A AND B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C>
Class A:
One year 4.07%
Five year 13.25%
Since inception (9/16/94) 12.84%
Class B:
One year 4.26%
Five year 13.43%
Since inception (9/16/94) 13.02%
(Thousands)
Class A Class B Russell 1000 CPI
Value Index
9/16/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,325 9,870 9,743 10,054
9/30/95 11,598 11,708 12,441 10,275
9/30/96 14,441 14,649 14,673 10,570
9/30/97 19,980 20,400 20,880 10,818
9/30/98 16,694 16,947 21,629 10,973
9/30/99 18,384 18,531 25,678 11,261
</TABLE>
4
<PAGE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year 9.35%
Since inception (3/1/95) 14.23%
(Thousands)
Class C Russell 1000 CPI
Value Index
03/01/95 $10,000 $10,000 $10,000
9/30/95 12,013 12,107 10,146
9/30/96 14,846 14,280 10,437
9/30/97 20,354 20,320 10,682
9/30/98 16,838 21,049 10,834
9/30/99 18,411 24,989 11,119
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index without incurring some charges
and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------- -------- ------------ ----------
<S> <C> <C> <C>
GTE Corporation............................ 69,695 $ 5,357,803 5.0%
SBC Communications, Inc.................... 98,742 5,042,013 4.7%
Exxon Corporation.......................... 63,885 4,851,267 4.5%
American International Group............... 55,218 4,800,515 4.5%
Citigroup, Inc............................. 93,060 4,094,640 3.8%
Federal National Mortgage Association...... 63,800 3,999,462 3.7%
Bellsouth Corporation...................... 73,300 3,298,500 3.1%
MCI Worldcom, Inc.......................... 42,755 3,073,016 2.9%
Mobil Corporation.......................... 29,555 2,977,666 2.8%
Duke Energy Corporation.................... 51,200 2,822,400 2.6%
----------- ----
$40,317,282 37.6%
=========== ====
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other Assets/Liabilities 4.6%
Depository Receipts 0.6%
Health Care 1.0%
Transportation 1.5%
Technology 2.6%
Capital Goods 2.8%
Basic Materials 3.5%
Utilities 8.2%
Energy 11.0%
Consumer Cyclical 11.4%
Consumer Staples 11.5%
Communication Services 19.6%
Financial 21.7%
</TABLE>
6
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1999
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------ ---------------
<C> <S> <C>
COMMON STOCK (94.8%)
BASIC MATERIALS (3.5%)
Chemicals (1.0%)
19,372 E.I. DuPont de Nemours and Company............... $ 1,179,271
------------
Paper and Forest (2.5%)
28,700 International Paper Company...................... 1,379,394
42,750 Mead Corporation................................. 1,469,531
------------
2,848,925
------------
CAPITAL GOODS (2.8%)
Electrical Equipment (.8%)
13,850 Emerson Electric Company......................... 875,147
------------
Machinery (2.0%)
46,500 Case Corporation................................. 2,316,281
------------
COMMUNICATION SERVICES (19.6%)
Telecommunication (2.7%)
42,755 MCI Worldcom, Inc. (b).......................... 3,073,016
------------
Telephone (16.9%)
64,068 AT&T Corporation................................. 2,786,958
73,300 Bellsouth Corporation............................ 3,298,500
69,695 GTE Corporation.................................. 5,357,803
38,300 Mediaone, Inc. (b).............................. 2,616,369
98,742 SBC Communications, Inc. ........................ 5,042,013
------------
19,101,643
------------
CONSUMER CYCLICAL (11.4%)
Auto (3.4%)
48,710 Ford Motor Company............................... 2,444,633
85,550 Spellout Corporation............................. 1,374,147
------------
3,818,780
------------
Publishing (1.2%)
45,145 Reader's Digest Association...................... 1,320,491
------------
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
Retail (3.3%)
112,810 Consolidated Stores Corporation (b)............. $ 2,488,871
29,200 Federated Department Stores (b)................. 1,275,675
------------
3,764,546
------------
Service (3.5%)
87,325 Cendant Corporation (b)......................... 1,550,019
55,700 H & R Block, Inc. ............................... 2,419,469
------------
3,969,488
------------
CONSUMER STAPLES (11.5%)
Beverage (1.0%)
16,300 Anheuser-Busch Companies, Inc. .................. 1,142,019
------------
Entertainment (1.2%)
50,800 Walt Disney Company.............................. 1,314,450
------------
Food (2.5%)
18,600 Flowers Industries............................... 252,262
62,100 Hormel Foods Corporation......................... 2,565,506
------------
2,817,768
------------
Household Products (2.2%)
87,500 Newell Rubbermaid, Inc. ......................... 2,499,219
------------
Service (2.4%)
80,200 Deluxe Corporation............................... 2,726,800
------------
Tobacco (2.2%)
72,200 Philip Morris Companies, Inc. ................... 2,468,337
------------
ENERGY (11.0%)
Oil (9.6%)
22,185 Chevron Corporation.............................. 1,968,919
39,946 Conoco, Inc. .................................... 1,093,522
63,885 Exxon Corporation................................ 4,851,267
29,555 Mobil Corporation................................ 2,977,666
------------
10,891,374
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
ENERGY--CONTINUED
<C> <S> <C>
Oil & Gas (1.4%)
17,700 Atlantic Richfield Company....................... $ 1,568,662
------------
FINANCIAL (21.7%)
Banks (5.9%)
50,200 Bank of America Corporation...................... 2,795,512
23,600 Bank of New York Company, Inc. .................. 789,125
20,690 Chase Manhattan Corporation...................... 1,559,509
28,800 PNC Bank Corporation............................. 1,517,400
------------
6,661,546
------------
Consumer Finance (2.5%)
20,625 American Express Company......................... 2,776,641
------------
Finance-Diversified (3.5%)
63,800 Federal National Mortgage Association............ 3,999,462
------------
Insurance (7.9%)
55,218 American International Group..................... 4,800,515
93,060 Citigroup, Inc. ................................. 4,094,640
------------
8,895,155
------------
Investment Bankers/Brokers (1.6%)
20,820 Morgan Stanley Dean Witter & Company............. 1,856,884
------------
Savings and Loans (.3%)
12,500 Washington Mutual, Inc. ......................... 365,625
------------
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
HEALTH CARE (1.0%)
<C> <S> <C>
Drugs (1.0%)
23,400 Pharmacia & Upjohn, Inc. ........................ $ 1,161,225
------------
TECHNOLOGY (2.6%)
8,790 International Business Machines.................. 1,066,886
73,400 Nova Corporation (b)............................ 1,835,000
------------
2,901,886
------------
TRANSPORTATION (1.5%)
Railroads (1.5%)
34,320 Union Pacific Corporation........................ 1,649,505
------------
UTILITIES (8.2%)
Electric Companies (6.3%)
30,300 AES Corporation (b)............................. 1,787,700
51,200 Duke Energy Corporation.......................... 2,822,400
69,100 Texas Utilities Company.......................... 2,578,294
------------
7,188,394
------------
Natural Gas (1.9%)
53,500 Enron Corporation................................ 2,206,875
------------
Total common stock (cost: $101,119,849)....................... 107,359,415
------------
</TABLE>
<TABLE>
<C> <S> <C>
DEPOSITORY RECEIPT (.6%)
5,700 S&P Depository Receipts.......................... 731,916
------------
Total depository receipt (cost: $768,463)..................... 731,916
------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- --------- ---------------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (2.8%)
$ 170,104 Federated Prime Obligation Fund, current rate 5.220%............... $ 170,104
3,050,000 U.S. Treasury Bill............................... 4.801% 11/04/99 3,037,095
------------
Total short-term securities (cost: $3,206,564)..................... 3,207,199
------------
Total investments in securities (cost: $105,094,876) (c)........... $111,298,530
============
</TABLE>
Notes to Investments in Securities
- -----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) At September 30, 1999 the cost of securities for federal income tax purposes
was $105,527,321. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $11,577,132
Gross unrealized depreciation.......... (5,805,923)
----------
Net unrealized appreciation............ $5,771,209
==========
</TABLE>
9
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value -- see
accompanying schedule for detailed listing
(identified cost: $105,094,876)............................ $111,298,530
Cash in bank on demand deposit.............................. 91,612
Receivable for Fund shares sold............................. 3,305
Receivable for investment securities sold................... 2,608,310
Accrued interest receivable................................. 7,044
Dividends receivable........................................ 186,937
Other receivables........................................... 4,702
------------
Total assets............................................ 114,200,440
------------
LIABILITIES
Payable for investment securities purchased................. 367,486
Payable for Fund shares redeemed............................ 68,576
Payable to Adviser.......................................... 126,701
Payable to Minnesota Life................................... 355,000
------------
Total liabilities....................................... 917,763
------------
Net assets applicable to outstanding capital stock.......... $113,282,677
============
Represented by:
Capital stock - authorized 10 billion shares (Class A -
2 billion shares, Class B - 2 billion shares, Class C -
2 billion shares and 4 billion shares unallocated) of $.01
par value (note 1)........................................ $ 74,977
Additional paid-in capital................................ 106,065,845
Undistributed net investment income....................... 10,353
Accumulated net realized gains from investments........... 927,848
Unrealized appreciation on investments.................... 6,203,654
------------
Total - representing net assets applicable to
outstanding capital stock............................... $113,282,677
============
Net assets applicable to outstanding Class A shares......... $ 92,657,418
============
Net assets applicable to outstanding Class B shares......... $ 18,610,671
============
Net assets applicable to outstanding Class C shares......... $ 2,014,588
============
Shares outstanding and net asset value per share:
Class A - Shares outstanding 6,119,445.................... $ 15.14
============
Class B - Shares outstanding 1,243,291.................... $ 14.97
============
Class C - Shares outstanding 134,939...................... $ 14.93
============
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 248,102
Dividends................................................. 2,457,820
-----------
Total investment income............................... 2,705,922
-----------
Expenses (notes 4 and 5):
Investment advisory fee................................... 1,005,217
Rule 12b-1 fees - Class A................................. 270,308
Rule 12b-1 fees - Class B................................. 214,827
Rule 12b-1 fees - Class C................................. 28,187
Administrative services fee............................... 61,400
Amortization of organizational costs...................... 10,174
Custodian fees............................................ 4,014
Auditing and accounting services.......................... 15,395
Legal fees................................................ 11,984
Directors' fees........................................... 2,502
Registration fees......................................... 43,486
Printing and shareholder reports.......................... 42,648
Insurance................................................. 3,912
Other..................................................... 10,487
-----------
Total expenses........................................ 1,724,541
Less fees and expenses waived or absorbed:
Class A Rule 12b-1 fees................................. (16,931)
-----------
Total net expenses.................................... 1,707,610
-----------
Investment income -- net.............................. 998,312
-----------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)................ 5,320,674
Net change in unrealized appreciation or depreciation on
investments............................................. 5,693,886
-----------
Net gains on investments.............................. 11,014,560
-----------
Net increase in net assets resulting from operations........ $12,012,872
===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Operations:
Investment income - net................................... $ 998,312 $ 1,114,681
Net realized gain (loss) on investments................... 5,320,674 (957,360)
Net change in unrealized appreciation or depreciation on
investments............................................. 5,693,886 (23,581,265)
------------ ------------
Increase (decrease) in net assets resulting from
operations.......................................... 12,012,872 (23,423,944)
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A................................................. (954,423) (1,055,429)
Class B................................................. (46,968) (55,277)
Class C................................................. (5,609) (7,294)
Net realized gains on investments:........................
Class A................................................. -- (10,892,809)
Class B................................................. -- (2,297,711)
Class C................................................. -- (378,519)
------------ ------------
Total distributions................................... (1,007,000) (14,687,039)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A................................................. 8,232,673 29,714,273
Class B................................................. 2,198,168 11,465,827
Class C................................................. 324,824 2,734,418
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 610,577 8,864,188
Class B................................................. 46,818 2,275,526
Class C................................................. 5,520 364,701
Payments for redemption of shares:
Class A................................................. (18,614,760) (21,641,291)
Class B................................................. (6,881,002) (7,290,091)
Class C................................................. (1,749,088) (2,399,684)
------------ ------------
Increase (decrease) in net assets from capital share
transactions........................................ (15,826,270) 24,087,867
------------ ------------
Total decrease in net assets.......................... (4,820,398) (14,023,116)
Net assets at beginning of year............................. 118,103,075 132,126,191
------------ ------------
Net assets at end of year (including undistributed net
investment income of $10,353 and $18,879, respectively)... $113,282,677 $118,103,075
============ ============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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. The Fund's
investment objective is to seek long-term accumulation of capital.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
Investments in securities traded on a national exchange are valued at the last
sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
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.
13
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
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
undistributed net investment income by $162, increase accumulated net realized
gains from investments by $10,012 and decrease additional paid-in capital by
$10,174.
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 year ended September 30, 1999, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$94,538,806 and $110,938,016, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
Minnesota Life Insurance Company (Minnesota Life). Under the agreement, Advantus
Capital manages the Fund's assets and provides research, statistical and
advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the advisory fee, Advantus Capital pays the
expenses of the Fund's transfer, dividend disbursing and redemption agent (First
Data Investor Services Group). Prior to October 26, 1998, the Fund's transfer
agent was Minnesota Life. The fee for investment management and advisory
services is based on the average daily net assets of the Fund at the annual rate
of .80 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in the distribution, promotion and
servicing of the Fund's shares. The Class A Plan provides for a service fee up
to .25 percent of average daily net assets of Class A shares. Prior to
February 1, 1999, the Class A Plan provided for a distribution fee up to
.30 percent of average daily net assets of Class A shares. The Class B and
Class C Plans provide for a fee up to 1.00 percent of average daily net assets
of Class B and Class C shares, respectively. The Class B and Class C
1.00 percent fee is comprised of a .75 percent distribution fee and a
.25 percent service fee. Prior to February 1, 1999, Ascend waived that portion
of Class A Rule 12b-1 fees which exceeded, as a percentage of average daily net
assets, .25 percent. For the period from October 1, 1998 to January 31, 1999,
Ascend waived Class A Rule 12b-1 fees in the amount of $16,931.
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.
14
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee to Minnesota Life for accounting,
auditing, legal and other administrative services which Minnesota Life provides.
Prior to February 1, 1999, the administrative services fee was $3,700 per month.
For the period from February 1, 1999 to July 31, 1999, the administrative
services fee was $5,700 per month. Effective August 1, 1999, the administrative
services fee is $6,200 per month. In addition, for shareholder services
performed by Minnesota Life, the Adviser will pay Minnesota Life an annual
account servicing fee as agreed by the Adviser and Minnesota Life.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $81,278.
As of September 30, 1999, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 2,264,450 Class A shares which
represents 37.0 percent of the total outstanding Class A shares.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $11,104.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by Advantus Capital, 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. The amortization of organizational
costs was completed during the year.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1999 and 1998 were
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold.................................. 519,547 1,800,201 142,407 705,598 21,022 169,067
Issued for reinvested distributions... 39,130 554,502 2,964 144,152 364 23,295
Redeemed.............................. (1,197,618) (1,342,646) (444,700) (463,039) (112,523) (150,239)
---------- ---------- -------- -------- -------- --------
(638,941) 1,012,057 (299,329) 386,711 (91,137) 42,123
========== ========== ======== ======== ======== ========
</TABLE>
(7) YEAR 2000 (UNAUDITED)
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $12 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
15
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------
1999 1998 1997 1996 1995(A)
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $ 13.88 $ 18.68 $ 15.06 $ 12.96 $ 10.63
------- ------- -------- ------- -------
Income from investment operations:
Net investment income (loss)......... .15 .16 .14 .09 .12
Net gains (losses) on securities
(both realized and unrealized)..... 1.26 (3.04) 5.19 2.91 2.42
------- ------- -------- ------- -------
Total from investment operations... 1.39 (2.88) 5.33 3.00 2.54
------- ------- -------- ------- -------
Less distributions:
Dividends from net investment
income............................. (.15) (.16) (.14) (.08) (.16)
Distributions from net realized
gains.............................. -- (1.76) (1.57) (.82) (.05)
------- ------- -------- ------- -------
Total distributions................ (.15) (1.92) (1.71) (.90) (.21)
------- ------- -------- ------- -------
Net asset value, end of year........... $ 15.14 $ 13.88 $ 18.68 $ 15.06 $ 12.96
======= ======= ======== ======= =======
Total return(c)........................ 10.13% (16.45)% 38.35% 24.52% 24.38%
Net assets, end of year
(in thousands)....................... $92,657 $93,833 $107,322 $48,383 $29,520
Ratio of expenses to average daily net
assets(d)(e)......................... 1.21% 1.16% 1.08% 1.26% 1.35%
Ratio of net investment income (loss)
to average daily net assets(d)(e).... .94% .98% .85% .70% 1.01%
Portfolio turnover rate (excluding
short-term securities)............... 78.7% 114.4% 87.7% 128.0% 160.1%
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995,
the Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end and contingent deferred
sales charges. For periods less than one year, total return presented has
not been annualized.
(d) The Fund's Distributor voluntarily waived $16,931, $107,096, $149,466 and
$74,454 in Class A Rule 12b-1 fees for the years ended September 30, 1999,
1998, 1997 and 1996, respectively. If the Class A had been charged for
these fees, the ratio of expenses to average daily net assets would have
been 1.23%, 1.25%, 1.28% and 1.46%, respectively, and the ratio of net
investment income to average daily net assets would have been .92%, .89%,
.65% and .50%, respectively.
(e) The Fund's Distributor and Adviser voluntarily waived or absorbed $83,746
in expenses for the year ended September 30, 1995. If the Fund had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 1.81% for Class A shares, 2.45% for Class B shares
and 2.34% for Class C shares, and the ratio of net investment income (loss)
to average daily net assets would have been .56% for Class A shares, (.15)%
for Class B shares and (.16)% for Class C shares.
(f) Adjusted to an annual basis.
16
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1999 1998 1997 1996 1995(A)
-------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $ 13.73 $ 18.52 $ 14.92 $12.90 $10.63
------- ------- ------- ------ ------
Income from investment operations:
Net investment income (loss)......... .03 .03 -- (.01) .02
Net gains (losses) on securities
(both realized and unrealized)..... 1.24 (3.02) 5.18 2.86 2.41
------- ------- ------- ------ ------
Total from investment operations... 1.25 (2.99) 5.18 2.85 2.43
------- ------- ------- ------ ------
Less distributions:
Dividends from net investment
income............................. (.03) (.04) (.01) (.01) (.11)
Distributions from net realized
gains.............................. -- (1.76) (1.57) (.82) (.05)
------- ------- ------- ------ ------
Total distributions................ (.03) (1.80) (1.58) (.83) (.16)
------- ------- ------- ------ ------
Net asset value, end of year........... $ 14.97 $ 13.73 $ 18.52 $14.92 $12.90
======= ======= ======= ====== ======
Total return(c)........................ 9.26% (17.21)% 37.68% 23.37% 23.18%
Net assets, end of year
(in thousands)....................... $18,611 $21,176 $21,405 $7,095 $1,635
Ratio of expenses to average daily net
assets(d)(e)......................... 1.96% 1.95% 1.98% 2.15% 2.25%
Ratio of net investment income (loss)
to average daily net assets(d)(e).... .20% .18% (.05)% (.11)% .05%
Portfolio turnover rate (excluding
short-term securities)............... 78.7% 114.4% 87.7% 128.0% 160.1%
<CAPTION>
CLASS C
-------------------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, 1995(B) TO
----------------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995
-------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $13.68 $18.48 $14.94 $12.90 $10.79
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)......... .03 .03 -- -- .02
Net gains (losses) on securities
(both realized and unrealized)..... 1.25 (3.04) 5.12 2.88 2.14
------ ------ ------ ------ ------
Total from investment operations... 1.26 (3.01) 5.12 2.88 2.16
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income............................. (.03) (.03) (.01) (.02) (.05)
Distributions from net realized
gains.............................. -- (1.76) (1.57) (.82) --
------ ------ ------ ------ ------
Total distributions................ (.03) (1.79) (1.58) (.84) (.05)
------ ------ ------ ------ ------
Net asset value, end of year........... $14.93 $13.68 $18.48 $14.94 $12.90
====== ====== ====== ====== ======
Total return(c)........................ 9.35% (17.28)% 37.10% 23.59% 20.13%
Net assets, end of year
(in thousands)....................... $2,015 $3,094 $3,399 $1,156 $ 47
Ratio of expenses to average daily net
assets(d)(e)......................... 1.96% 1.95% 1.98% 2.13% 2.25%(f)
Ratio of net investment income (loss)
to average daily net assets(d)(e).... .21% .18% (.05)% (.01)% (.07)%(f)
Portfolio turnover rate (excluding
short-term securities)............... 78.7% 114.4% 87.7% 128.0% 160.1%
</TABLE>
- ------------
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Cornerstone Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Cornerstone
Fund, Inc. (the Fund) as of September 30, 1999 and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two year period then ended and the financial highlights
for each of the years in the five year period then ended. These financial
statements and the financial highlights are the responsibility of the Fund's
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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1999, by correspondence with the custodian and brokers. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1999 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG LLP
Minneapolis, Minnesota
November 5, 1999
18
<PAGE>
ADVANTUS CORNERSTONE FUND
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, 1999. Dividends for the 1999 calendar year
will be reported to you on Form 1099-Div in late January 2000. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.
CLASS A
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions-taxable as dividend income, 100%
qualifying for deduction by corporations.
December 22, 1998........................................... $.0453
March 19, 1999.............................................. .0425
June 24, 1999............................................... .0340
September 23, 1999.......................................... .0275
------
$.1493
======
</TABLE>
CLASS B
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions-taxable as dividend income, 100%
qualifying for deduction by corporations.
December 22, 1998........................................... $.0171
March 19, 1999.............................................. .0128
June 24, 1999............................................... .0029
------
$.0328
======
</TABLE>
CLASS C
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions-taxable as dividend income, 100%
qualifying for deduction by corporations.
December 22, 1998........................................... $.0154
March 19, 1999.............................................. .0116
June 24, 1999............................................... .0023
------
$.0293
======
</TABLE>
19
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that may apply.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account -- subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.
TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of "dollar-cost averaging".
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) The Automatic Investment
Plan allows you to invest automatically monthly, semi-monthly or quarterly from
your checking or savings account.
IRAS, OTHER QUALIFIED PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase
or Defined Benefit plans.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account Application. Telephone Redemption may
be changed (added/deleted) at any time by submitting a request in writing. To
have the redemption automatically deposited into your checking account, please
send a voided check
20
<PAGE>
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages twelve mutual funds containing $3.2
billion in assets in addition to $10.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
21
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
<TABLE>
<S> <C>
ASCEND FINANCIAL SERVICES, INC. PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
</TABLE>
F.48649 Rev. 11-1999
