<PAGE>
CORNERSTONE
ADVANTUS CORNERSTONE FUND, INC.
SEMI-ANNUAL REPORT DATED MARCH 31, 2000
[LOGO]
EQUITY
[COVER ART]
<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
SHAREHOLDER SERVICES 18
</TABLE>
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Americans are enjoying the longest period of economic expansion in U.S. history.
This period of growth, which began in March of 1992, recorded its ninth year of
uninterrupted growth in March. To date, the Federal Reserve's actions to slow
the nation's growth engine have not dramatically impacted the upward trend.
Despite the run-up in interest rates over the past year, housing starts and auto
sales, indicators of a robust economy, remain strong.
Around the globe we are seeing economic growth accelerate, albeit at a modest
pace. Asia is rapidly recovering from the economic debacle of the late 90s. The
Bank of Japan has kept interest rates near zero to further assist that country's
recovery. In Europe, the Central Bank raised rates to support a weak euro and
guard against inflation. Latin American economies, such as Brazil, are showing
signs of increasing strength (e.g., lower inflation, job creation). No country
comes close to the sustained economic vigor of the U.S., but many of the world's
economies are growing.
Volatility in the stock market was frequent and dramatic throughout the
six-months, with the wildest of the ride coming in early April, shortly after
this reporting period ended. The first calendar quarter of the new millennium
was a time of contrasts. For the first two months, the broad market was slightly
down, with the growth sector of technology rising and the value sectors of the
market falling. March was a reversal, with a strong rally in traditional value
stocks and a pullback in the technology arena, adding to the market tumult.
Technology, however, continues to drive the increased spending in businesses. As
tech spending increases, so does productivity.
Interest rates also showed a mixed picture. The Federal Reserve raised the Fed
Funds rate five times between June 1999 and March 2000. Each time only .25
percent, a cumulative increase of 1.25 percent over this 10-month period.
However, longer maturity Treasury bond prices rose and their yields declined as
the U.S. Treasury used some of the budget surplus to begin buying back Treasury
bonds. Meanwhile, corporate bond yields increased.
In the pages that follow, your Fund's portfolio manager will give you his
insight on the Fund's performance for this reporting period. Also, we are
pleased to announce that you can now access your Advantus Funds data online
through the Advantus web site: www.advantusfunds.com. To learn how you can
access your Advantus Fund information through our internet site, call Advantus
Shareholder Services at 1-800-665-6005.
We value your business and want to make doing business with us as easy for you
as possible. Thank you for investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS CORNERSTONE FUND
PERFORMANCE UPDATE
[PHOTO]
MATTHEW NORRIS, 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 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 six-month period ended March 31, 2000
for each class of shares offered is as follows:
<TABLE>
<S> <C>
CLASS A.......................... 3.86 PERCENT*
CLASS B.......................... 3.42 PERCENT*
CLASS C.......................... 3.43 PERCENT*
</TABLE>
The Fund's benchmark, the Russell 1000 Value Index,** earned 5.94 percent for
the same period.
PERFORMANCE ANALYSIS
The last six months in the equity markets have been a time of contrasts. Toward
year end 1999, the realization struck that the Y2K problem was not going to
surface, and technology stocks rallied strongly all the way to mid-February.
During this time, the broad market was mixed to slightly up, with the growth
sector of technology rising and the value sectors of the market falling.
March was a reversal, with a strong rally in traditional value stocks and a
pullback in the technology arena. Financial stocks had become very inexpensive,
and had a tremendous move upward beginning in mid-March. This took the value
indices back to positive territory for the year, and narrowed the gap with the
growth indices.
Short-term interest rates rose throughout the period, while longer-term rates
were stable to declining. The rally in financial stocks is the collective wisdom
of the market speaking; and they are saying that the Federal Reserve Board is
done, or nearly done, with raising short-term rates. The Cornerstone Fund has
been underweight in financials for some time. However, our thesis is based
largely on the fundamentals of the banking and insurance industries, rather than
a macro call on interest rates.
In a continuation of recent history, the Technology sector was the best
performer for the period. Financials and Health Care were next, although each
experienced five months of poor performance, and were rescued by short-term
upward moves. Transportation and Capital Goods were the worst performing
sectors.
The Fund's best relative performance came from the Utilities sector due to
strong individual stock selection. Our long-term holdings in Enron Corporation
and AES Corporation continue to do well. Both of these companies are benefiting
from the deregulation of electricity markets, a trend we feel will continue for
some time. Other positive sectors were Capital Goods and Financials, again due
to strong stock selection.
The Communication sector provided the worst relative performance for the Fund.
The Fund's holdings in large, established communication stocks such as AT&T
Corporation and the regional bell companies have done poorly. Many of these
companies are investing heavily for the future at the expense of near-term
earnings. We remain invested in this area, as earnings will begin to re-emerge
at the end of this year and throughout 2001. The second worst
2
<PAGE>
relative sector returns came from Technology, which was not a function of our
stock picking skills, but rather an underweight in the sector. The Technology
sector is full of successful, growing companies which have recently been
over-valued by the market. However, the sector also has high volatility. Any
negative announcement by a technology company often results in the market
sending its stock price down notably. The Fund is looking to seize upon these
opportunities, and has raised the technology weight over the period.
As always, during the quarter the complexion of the portfolio experienced
changes. A new portfolio management team was placed in charge earlier in the
year, as your prospectus supplement stated. This team is now larger and brings
more experience to the process. A slight change in philosophy was also
implemented at this time. Previously, the Fund was run with a deep-value,
contrarian approach. While this approach has proven itself over long periods of
time, it also has periods of lagging performance. The focus going forward will
be somewhat broader in nature, best described as growth at a reasonable price.
We seek to purchase successful companies at prices that are undervalued relative
to their prospects. This should allow the Fund to have more of an "all-weather"
performance record, while aiming to reduce the swings of the past. This change
in approach does NOT affect the investment objective and policies of the
Cornerstone Fund, which continues to seek long-term accumulation of capital by
investing in mid-to-large capitalization companies deemed by Advantus to be
undervalued relative to their future earnings and growth potential.
OUTLOOK
The current market focus centers on the action of interest rates and the Federal
Reserve. We feel that any additional rate increases will likely dampen equity
market performance, while a change to stable or falling rates would be a
positive. While the Fund watches these changes, we will remain focused on
company fundamentals, choosing to invest in companies whose stock prices are
below the value of the company. We select successful companies with strong
management teams that will perform well through any interest or economic
scenario.
The Cornerstone Fund will always stick to a long-term focus of investing. We
anticipate recent higher turnover in holdings will cease, and this is usually a
positive for fund performance. As always, we wish to provide a superior return
to your invested dollar by utilizing a value approach to investing.
We would also like to repeat the cautionary statement we have offered a number
of times in the past year. While it is not possible to predict the direction of
the stock market, we caution against an automatic belief in continuation of
current trends. Some sectors of the market have returned greater than 25% per
year since 1995. Just about the time investors come to expect that sort of
return, is usually the time when things return to normalcy. We foresee neither a
boom nor bust market for the year 2000, but simply a year of average returns.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. If these charges were reflected, performance would be reduced.
Investment returns and principal values will fluctuate so that shares upon
redemption may be worth more or less than their original cost.
**The Russell 1000 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 March 31, 2000.
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 -1.99%
Five year 12.86%
Since inception (9/16/94) 12.38%
Class B:
One year -2.04%
Five year 13.08%
Since inception (9/16/94) 12.46%
(Thousands)
Class A Class B Russell 1000 CPI
Value Index
9/16/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,374 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
3/31/00 19,093 19,170 27,203 11,482
</TABLE>
4
<PAGE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
Class C:
One year 2.96%
Five year 13.19%
Since inception (3/1/95) 13.90%
(Thousands)
Class C Russell 1000 CPI
Value Index
3/01/95 $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
3/31/00 19,042 26,473 11,338
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. Sales charges
pay for your financial professional's investment advice. Individuals cannot
invest in the index itself, nor can they invest in any fund which seeks to track
the performance of the index without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
------- -------- ------------ ----------
<S> <C> <C> <C>
Exxon Corporation........................ 78,203 $ 6,085,169 5.8%
MediaOne, Inc............................ 60,600 4,908,600 4.7%
Citigroup, Inc........................... 78,160 4,635,865 4.4%
GTE Corporation.......................... 47,495 3,372,145 3.2%
Microsoft Corporation.................... 28,600 3,038,750 2.9%
General Electric Company................. 18,700 2,902,006 2.8%
American International Group............. 26,418 2,892,771 2.8%
Federal National Mortgage Association.... 49,500 2,793,656 2.7%
SBC Communications, Inc.................. 63,942 2,685,564 2.6%
Intel Corporation........................ 20,200 2,665,138 2.6%
----------- ----
$35,979,664 34.5%
=========== ====
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other Assets/Liabilities 2.0%
Health Care 3.4%
Capital Goods 4.5%
Utilities 4.5%
Basic Materials 4.6%
Consumer Cyclical 7.4%
Consumer Staples 9.1%
Energy 10.7%
Communication Services 14.0%
Financial 18.9%
Technology 20.9%
</TABLE>
6
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES
MARCH 31, 2000
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
------ ------------
<C> <S> <C>
COMMON STOCK (98.0%)
BASIC MATERIALS (4.6%)
Aluminum (.9%)
13,600 Reynolds Metals Company.......................... $ 909,500
------------
Chemicals (.9%)
18,872 E.I. DuPont de Nemours and Company............... 997,857
------------
Paper and Forest (2.8%)
34,900 International Paper Company...................... 1,491,975
43,550 Mead Corporation................................. 1,521,528
------------
3,013,503
------------
CAPITAL GOODS (4.5%)
Electrical Equipment (3.6%)
16,300 CBS Corporation (b).............................. 922,987
18,700 General Electric Company......................... 2,902,006
------------
3,824,993
------------
Machinery (.5%)
14,400 Deere & Company.................................. 547,200
------------
Office Equipment (.4%)
4,200 Lexmark International Group, Inc. (b)............ 444,150
------------
COMMUNICATION SERVICES (14.0%)
Telecommunication (3.8%)
4,200 Adelphia Business Solutions (b).................. 258,825
38,500 Sprint Corporation............................... 2,425,500
11,200 Sprint Corporation (b)........................... 731,500
8,000 Time Warner Telecom, Inc. (b).................... 636,000
------------
4,051,825
------------
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------------------
COMMUNICATION SERVICES--CONTINUED
<C> <S> <C>
Telephone (10.2%)
14,400 AT&T Corporation - Liberty Media Group (b)....... $ 853,200
38,700 Bellsouth Corporation............................ 1,818,900
47,495 GTE Corporation.................................. 3,372,145
5,600 Nextlink Communications, Inc. (b)................ 692,650
63,942 SBC Communications, Inc.......................... 2,685,564
19,800 US West, Inc..................................... 1,437,975
------------
10,860,434
------------
CONSUMER CYCLICAL (7.4%)
Auto (3.1%)
70,850 Delphi Automotive Systems Corporation............ 1,133,600
24,110 Ford Motor Company............................... 1,107,553
13,200 General Motors Corporation....................... 1,093,125
------------
3,334,278
------------
Publishing (1.1%)
32,945 Reader's Digest Association...................... 1,165,429
------------
Retail (2.0%)
9,500 Home Depot, Inc.................................. 612,750
27,500 Wal-Mart Stores, Inc............................. 1,526,250
------------
2,139,000
------------
Service (1.2%)
66,425 Cendant Corporation (b).......................... 1,228,862
------------
CONSUMER STAPLES (9.1%)
Beverage (.5%)
16,600 PepsiCo, Inc..................................... 573,737
------------
Broadcasting (4.6%)
60,600 MediaOne, Inc. (b)............................... 4,908,600
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
<C> <S> <C>
Entertainment (3.3%)
17,300 Time Warner, Inc................................. $ 1,730,000
41,900 Walt Disney Company.............................. 1,733,612
------------
3,463,612
------------
Household Products (.7%)
8,400 Minnesota Mining and Manufacturing Company....... 743,925
------------
ENERGY (10.7%)
Oil (8.0%)
13,885 Chevron Corporation.............................. 1,283,495
9,300 Diamond Offshore Drilling........................ 371,419
78,203 Exxon Corporation................................ 6,085,169
14,200 Royal Dutch Petroleum Company (c)................ 817,387
------------
8,557,470
------------
Oil & Gas (2.7%)
9,700 Atlantic Richfield Company....................... 824,500
50,900 Baker Hughes, Inc................................ 1,539,725
4,400 Global Marine (b)................................ 111,650
7,600 Nabors Industries (b)............................ 294,975
2,400 Transocean Sedco Forex, Inc...................... 123,150
------------
2,894,000
------------
FINANCIAL (18.9%)
Banks (4.9%)
39,800 Bank of America Corporation...................... 2,087,012
19,090 Chase Manhattan Corporation...................... 1,664,409
34,700 Wells Fargo Company.............................. 1,420,531
------------
5,171,952
------------
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------------------
FINANCIAL--CONTINUED
<C> <S> <C>
Consumer Finance (1.4%)
5,800 American Express Company......................... $ 863,837
12,200 Capital One Financial Corporation................ 584,838
------------
1,448,675
------------
Finance-Diversified (2.6%)
49,500 Federal National Mortgage Association............ 2,793,656
------------
Insurance (7.1%)
26,418 American International Group..................... 2,892,771
78,160 Citigroup, Inc................................... 4,635,865
------------
7,528,636
------------
Investment Bankers/Brokers (2.9%)
8,800 Merrill Lynch & Co., Inc......................... 924,000
26,140 Morgan Stanley Dean Witter....................... 2,132,044
------------
3,056,044
------------
HEALTH CARE (3.4%)
Drugs (2.7%)
15,000 Bristol-Myers Squibb Company..................... 866,250
37,400 Pfizer, Inc...................................... 1,367,438
17,700 Schering Plough Corporation...................... 650,475
------------
2,884,163
------------
Health Care-Diversified (.7%)
10,700 Johnson & Johnson................................ 749,669
------------
TECHNOLOGY (20.9%)
11,500 American Tower Corporation (b)................... 567,813
31,400 Cisco Systems, Inc. (b).......................... 2,427,613
23,200 Compuware Corporation (b)........................ 488,650
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS CORNERSTONE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
2,200 Comverse Technology (b).......................... $ 415,800
5,600 Dell Computer Corporation (b).................... 302,050
5,900 EMC Corporation (b).............................. 737,500
9,700 Gateway, Inc. (b)................................ 514,100
9,000 Hewlett-Packard Company.......................... 1,193,063
20,200 Intel Corporation................................ 2,665,138
15,190 International Business Machines.................. 1,792,420
19,000 Lucent Technologies, Inc......................... 1,154,250
6,600 McLeodusa, Inc. (b).............................. 559,763
28,600 Microsoft Corporation (b)........................ 3,038,750
10,200 Motorola, Inc.................................... 1,452,225
2,800 Nokia Oyj (c).................................... 608,300
7,900 Nortel Networks Corporation (c).................. 995,400
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
16,300 Oracle Corporation (b)........................... $ 1,272,419
10,000 Sun Microsystems, Inc. (b)....................... 937,031
3,800 Telefonaktiebolaget LM Ericsson (c).............. 356,488
4,800 Texas Instruments, Inc........................... 768,000
------------
22,246,773
------------
UTILITIES (4.5%)
Electric Companies (2.3%)
19,500 AES Corporation (b).............................. 1,535,625
25,900 Peco Energy Company.............................. 955,063
------------
2,490,688
------------
Natural Gas (2.2%)
31,000 Enron Corporation................................ 2,321,125
------------
Total common stock (cost: $90,092,870)........................ 104,349,756
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
---------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (1.5%)
$1,562,470 Federated Money Market Obligations Trust - Prime
Obligation Fund, current rate 5.890%..................... 1,562,470
-----------
Total short-term securities (cost: $1,562,470)............ 1,562,470
-----------
Total investments in securities
(cost: $91,655,340) (d).................................. $105,912,226
===========
</TABLE>
Notes to Investments in Securities
-----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 2.6% of net assets in foreign securities as of March 31, 2000.
(d) At March 31, 2000 the cost of securities for federal income tax purposes was
$92,333,710. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation......................................... $16,202,111
Gross unrealized depreciation......................................... (2,623,595)
----------
Net unrealized appreciation........................................... $13,578,516
==========
</TABLE>
9
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value - see accompanying schedule for
detailed listing
(identified cost: $91,655,340)........ $105,912,226
Cash in bank on demand deposit......... 11
Receivable for Fund shares sold........ 41,093
Receivable for investment securities
sold.................................. 638,630
Accrued interest receivable............ 4,513
Dividends receivable................... 73,041
Other receivables...................... 5,662
-----------
Total assets....................... 106,675,176
-----------
LIABILITIES
Payable for investment securities
purchased............................. 3,400
Payable for Fund shares redeemed....... 57,350
Payable to Adviser..................... 122,067
-----------
Total liabilities.................. 182,817
-----------
Net assets applicable to outstanding
capital stock......................... $106,492,359
===========
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....... $ 68,850
Additional paid-in capital........... 96,859,595
Accumulated net realized losses from
investments.......................... (4,692,972)
Unrealized appreciation on
investments.......................... 14,256,886
-----------
Total - representing net assets
applicable to outstanding capital
stock.............................. $106,492,359
===========
Net assets applicable to outstanding
Class A shares........................ $89,271,403
===========
Net assets applicable to outstanding
Class B shares........................ $15,629,561
===========
Net assets applicable to outstanding
Class C shares........................ $ 1,591,395
===========
Shares outstanding and net asset value
per share:
Class A - Shares outstanding
5,759,557............................ $ 15.50
===========
Class B - Shares outstanding
1,021,231............................ $ 15.30
===========
Class C - Shares outstanding
104,257.............................. $ 15.26
===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 87,346
Dividends............................ 903,851
----------
Total investment income.......... 991,197
----------
Expenses (note 4):
Investment advisory fee.............. 440,118
Rule 12b-1 fees - Class A............ 113,620
Rule 12b-1 fees - Class B............ 86,793
Rule 12b-1 fees - Class C............ 8,872
Administrative services fee.......... 37,200
Custodian fees....................... 8,318
Auditing and accounting services..... 9,307
Legal fees........................... 4,000
Directors' fees...................... 1,132
Registration fees.................... 16,000
Printing and shareholder reports..... 28,252
Insurance............................ 1,936
Other................................ 6,950
----------
Total expenses................... 762,498
----------
Investment income - net.......... 228,699
----------
Realized and unrealized losses on
investments:
Net realized losses on investments
(note 3)........................... (4,260,527)
Net change in unrealized appreciation
or depreciation on investments..... 8,053,232
----------
Net gains on investments......... 3,792,705
----------
Net increase in net assets resulting
from operations...................... $4,021,404
==========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS CORNERSTONE FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000 AND YEAR ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Operations:
Investment income - net.............. $ 228,699 $ 998,312
Net realized (loss) gain on
investments........................ (4,260,527) 5,320,674
Net change in unrealized appreciation
or depreciation on investments..... 8,053,232 5,693,886
------------ ------------
Increase in net assets resulting
from operations................ 4,021,404 12,012,872
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A............................ (249,000) (954,423)
Class B............................ - (46,968)
Class C............................ - (5,609)
Net realized gains on investments:
Class A............................ (1,115,365) -
Class B............................ (222,560) -
Class C............................ (22,368) -
------------ ------------
Total distributions.............. (1,609,293) (1,007,000)
------------ ------------
Capital share transactions (notes 4 and
5):
Proceeds from sales:
Class A............................ 2,727,696 8,232,673
Class B............................ 514,554 2,198,168
Class C............................ 49,942 324,824
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 1,260,054 610,577
Class B............................ 216,243 46,818
Class C............................ 22,191 5,520
Payments for redemption of shares:
Class A............................ (9,404,890) (18,614,760)
Class B............................ (4,054,820) (6,881,002)
Class C............................ (533,399) (1,749,088)
------------ ------------
Decrease in net assets from
capital share transactions..... (9,202,429) (15,826,270)
------------ ------------
Total decrease in net assets..... (6,790,318) (4,820,398)
Net assets at beginning of period...... 113,282,677 118,103,075
------------ ------------
Net assets at end of period (including
undistributed net investment income
of $0 and $10,353, respectively)..... $106,492,359 $113,282,677
============ ============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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. 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.
13
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to
December 31, in order to avoid federal excise tax.
Net investment income 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 and decrease additional paid-in capital by
$9,948.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period ended March 31, 2000, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $119,771,188 and $127,305,846, 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 (PFPC
Global Fund Services, formerly First Data Investor Services Group). The fee for
investment management and advisory services is based on the average daily net
assets of the Fund at the annual rate of .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. The Class B and
Class C Plans provide for a fee up to 1.00 percent of average daily net assets
of Class B and Class C shares, respectively. The Class B and Class C
1.00 percent fee is comprised of a .75 percent distribution fee and a
.25 percent service fee.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
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)
The Fund has entered into a shareholder and administrative services
agreement with Minnesota Life Insurance Company (Minnesota Life). Under this
agreement, the Fund pays an administrative services fee equal to $6,200 per
month to Minnesota Life for accounting, auditing, legal and other administrative
services which Minnesota Life provides. Prior to August 1, 1999, the
administrative services fee was $5,700 per month. In addition, for shareholder
services performed by Minnesota Life, the Adviser will pay Minnesota Life an
annual account servicing fee as agreed by the Adviser and Minnesota Life.
Advantus Capital directly incurs and pays the Fund's operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $31,586.
As of March 31, 2000, Minnesota Life and subsidiaries and the directors and
officers of the Fund as a whole owned 2,291,861 Class A shares which represents
39.8 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 $2,825.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1999 to March 31, 2000
and the year ended September 30, 1999 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999
-------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold..................................... 179,196 519,547 34,336 142,407 3,344 21,022
Issued for reinvested distributions...... 80,088 39,130 13,913 2,964 1,429 364
Redeemed................................. (619,172) (1,197,618) (270,309) (444,700) (35,455) (112,523)
-------- ---------- -------- -------- ------- --------
(359,888) (638,941) (222,060) (299,329) (30,682) (91,137)
======== ========== ======== ======== ======= ========
</TABLE>
15
<PAGE>
ADVANTUS CORNERSTONE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(6) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
PERIOD FROM
OCTOBER 1,
1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 -------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995(A)
----------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 15.14 $ 13.88 $ 18.68 $ 15.06 $ 12.96 $ 10.63
------- ------- ------- -------- ------- -------
Income from investment operations:
Net investment income (loss)......... .04 .15 .16 .14 .09 .12
Net gains (losses) on securities
(both realized and unrealized)..... .55 1.26 (3.04) 5.19 2.91 2.42
------- ------- ------- -------- ------- -------
Total from investment operations... .59 1.41 (2.88) 5.33 3.00 2.54
------- ------- ------- -------- ------- -------
Less distributions:
Dividends from net investment
income............................. (.04) (.15) (.16) (.14) (.08) (.16)
Distributions from net realized
gains.............................. (.19) - (1.76) (1.57) (.82) (.05)
------- ------- ------- -------- ------- -------
Total distributions................ (.23) (.15) (1.92) (1.71) (.90) (.21)
------- ------- ------- -------- ------- -------
Net asset value, end of period......... $ 15.50 $ 15.14 $ 13.88 $ 18.68 $ 15.06 $ 12.96
======= ======= ======= ======== ======= =======
Total return (c)....................... 3.86% 10.13% (16.45)% 38.35% 24.52% 24.38%
Net assets, end of period (in
thousands)........................... $89,271 $92,657 $93,833 $107,322 $48,383 $29,520
Ratio of expenses to average daily net
assets (d)(e)........................ 1.25%(f) 1.21% 1.16% 1.08% 1.26% 1.35%
Ratio of net investment income (loss)
to average daily net
assets (d)(e)........................ .54%(f) .94% .98% .85% .70% 1.01%
Portfolio turnover rate (excluding
short-term securities)............... 111.3% 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 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 CLASS C
----------------------------------------------------------- -----------
PERIOD FROM PERIOD FROM
OCTOBER 1, OCTOBER 1,
1999 TO 1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31,
2000 ---------------------------------------------- 2000
(UNAUDITED) 1999 1998 1997 1996 1995(A) (UNAUDITED)
----------- -------- -------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 14.97 $ 13.73 $ 18.52 $ 14.92 $12.90 $10.63 $14.93
------- ------- ------- ------- ------ ------ ------
Income from investment operations:
Net investment income (loss)......... - .03 .03 - (.01) .02 -
Net gains (losses) on securities
(both realized and unrealized)..... .52 1.24 (3.02) 5.18 2.86 2.41 .52
------- ------- ------- ------- ------ ------ ------
Total from investment operations... .52 1.27 (2.99) 5.18 2.85 2.43 .52
------- ------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment
income............................. - (.03) (.04) (.01) (.01) (.11) -
Distributions from net realized
gains.............................. (.19) - (1.76) (1.57) (.82) (.05) (.19)
------- ------- ------- ------- ------ ------ ------
Total distributions................ (.19) (.03) (1.80) (1.58) (.83) (.16) (.19)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of period......... $ 15.30 $ 14.97 $ 13.73 $ 18.52 $14.92 $12.90 $15.26
======= ======= ======= ======= ====== ====== ======
Total return (c)....................... 3.42% 9.26% (17.21)% 37.68% 23.37% 23.18% 3.43%
Net assets, end of period (in
thousands)........................... $15,630 $18,611 $21,176 $21,405 $7,095 $1,635 $1,591
Ratio of expenses to average daily net
assets (d)(e)........................ 2.00%(f) 1.96% 1.95% 1.98% 2.15% 2.25% 2.00%(f)
Ratio of net investment income (loss)
to average daily net
assets (d)(e)........................ (.19)%(f) .20% .18% (.05)% (.11)% .05% (.20)%(f)
Portfolio turnover rate (excluding
short-term securities)............... 111.3% 78.7% 114.4% 87.7% 128.0% 160.1% 111.3%
<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 period... $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... 1.28 (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 period......... $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 period (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>
------------
(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 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.
17
<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
18
<PAGE>
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 7:30
a.m. to 5:15 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
INTERNET ADDRESS: www.Advantusfunds.com
HOW TO INVEST
You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005) or visit
www.Advantusfunds.com.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages twelve mutual funds containing $3.7
billion in assets in addition to $10.9 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 14 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS. THIS MAY BE USED AS SALES
LITERATURE IN
CONNECTION WITH THE OFFER OR SALE OF THE ADVANTUS CORNERSTONE FUND
IF PRECEDED OR ACCOMPANIED BY (A) THE CURRENT PROSPECTUS FOR THE
ADVANTUS CORNERSTONE FUND, AND (B) THE CURRENT
ADVANTUS MUTUAL FUND PERFORMANCE REPORT.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO]
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.48648 Rev. 5-2000
