ADVANTUS ENTERPRISE FUND INC
DEFS14A, 2000-03-21
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<PAGE>   1

                                  SCHEDULE 14A
                                 (RULE 14A-101)

                    INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION

          PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)

     Filed by the registrant [X]

     Filed by a party other than the registrant [ ]

     Check the appropriate box:

     [ ] Preliminary proxy statement.       [ ] Confidential, for use of the
                                                Commission only (as permitted by
                                                Rule 14a-6(e)(2).

     [X] Definitive proxy statement.

     [ ] Definitive additional materials.

     [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.

                         Advantus Enterprise Fund, Inc.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of filing fee (check the appropriate box):

     [X] No fee required.

     [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
         0-11.

     (1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

     (2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

     (4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

     (5) Total fee paid:

- --------------------------------------------------------------------------------

     [ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------

     [ ] Check box if any part of the fee is offset as provided by Exchange Act
         Rule 0-11(a)(2) and identify the filing for which the offsetting fee
         was paid previously. Identify the previous filing by registration
         statement number, or the form or schedule and the date of its filing.

     (1) Amount Previously Paid:

- --------------------------------------------------------------------------------

     (2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

     (3) Filing Party:

- --------------------------------------------------------------------------------

     (4) Date Filed:

- --------------------------------------------------------------------------------




<PAGE>   2

<PAGE>   1

                            ADVANTUS BOND FUND, INC.
                        ADVANTUS CORNERSTONE FUND, INC.
                         ADVANTUS ENTERPRISE FUND, INC.
                          ADVANTUS HORIZON FUND, INC.
                         ADVANTUS INDEX 500 FUND, INC.
                   ADVANTUS INTERNATIONAL BALANCED FUND, INC.
                        ADVANTUS MONEY MARKET FUND, INC.
                    ADVANTUS MORTGAGE SECURITIES FUND, INC.
                   ADVANTUS REAL ESTATE SECURITIES FUND, INC.
                          ADVANTUS SPECTRUM FUND, INC.
                          ADVANTUS VENTURE FUND, INC.
                            400 ROBERT STREET NORTH
                           ST. PAUL, MINNESOTA 55101

                         ------------------------------

                NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
                          TO BE HELD ON APRIL 17, 2000

                         ------------------------------

     Advantus Bond Fund, Inc., Advantus Cornerstone Fund, Inc., Advantus
Enterprise Fund, Inc., Advantus Horizon Fund, Inc., Advantus Index 500 Fund,
Inc., Advantus International Balanced Fund, Inc., Advantus Money Market Fund,
Inc., Advantus Mortgage Securities Fund, Inc., Advantus Real Estate Securities
Fund, Inc., Advantus Spectrum Fund, Inc. and Advantus Venture Fund, Inc. (the
"Funds") will hold a Special Joint Meeting of Shareholders at the offices of
Advantus Capital Management, Inc., 400 Robert Street North, St. Paul, Minnesota
55101, on April 17, 2000, at 10:00 a.m., for the following purposes:

     1. To set the number of directors at five and to elect a Board of
        Directors.

     2. To approve the elimination or modification of certain investment
        policies.

     3. To approve a change in the investment objective of Advantus Horizon
        Fund, Inc.

     4. To approve amended Investment Advisory Agreements between the Funds and
        Advantus Capital Management, Inc.

     5. To approve new Sub-Advisory Agreements for Enterprise Fund and Venture
        Fund.

     6. To ratify the selection by the Board of Directors of KPMG LLP as
        independent public accountants for the Funds for their fiscal years
        ending in 2000.

     7. To transact any other business properly brought before the meeting.

     The Funds' Board of Directors unanimously recommends approval of each item
listed on this Notice of Special Joint Meeting of Shareholders.

     Only shareholders of record as of the close of business on February 28,
2000 may vote at the meeting or any adjournment(s) of the meeting.

     YOU CAN VOTE EASILY AND QUICKLY BY TOLL-FREE TELEPHONE CALL, BY INTERNET OR
BY MAIL. JUST FOLLOW THE INSTRUCTIONS THAT APPEAR ON YOUR ENCLOSED PROXY CARD.
PLEASE HELP THE FUNDS AVOID THE COST OF A FOLLOW-UP MAILING BY VOTING TODAY.

                                          Michael J. Radmer
                                          Secretary

Dated: March 17, 2000
<PAGE>   2

                            ADVANTUS BOND FUND, INC.
                        ADVANTUS CORNERSTONE FUND, INC.
                         ADVANTUS ENTERPRISE FUND, INC.
                          ADVANTUS HORIZON FUND, INC.
                         ADVANTUS INDEX 500 FUND, INC.
                   ADVANTUS INTERNATIONAL BALANCED FUND, INC.
                        ADVANTUS MONEY MARKET FUND, INC.
                    ADVANTUS MORTGAGE SECURITIES FUND, INC.
                   ADVANTUS REAL ESTATE SECURITIES FUND, INC.
                          ADVANTUS SPECTRUM FUND, INC.
                          ADVANTUS VENTURE FUND, INC.
                            400 ROBERT STREET NORTH
                           ST. PAUL, MINNESOTA 55101

                         ------------------------------

                                PROXY STATEMENT

                     SPECIAL JOINT MEETING OF SHAREHOLDERS
                                 APRIL 17, 2000

                         ------------------------------

     The Board of Directors of Advantus Bond Fund, Inc. ("Bond Fund"), Advantus
Cornerstone Fund, Inc. ("Cornerstone Fund"), Advantus Enterprise Fund, Inc.
("Enterprise Fund"), Advantus Horizon Fund, Inc. ("Horizon Fund"), Advantus
Index 500 Fund, Inc. ("Index 500 Fund"), Advantus International Balanced Fund,
Inc. ("International Balanced Fund"), Advantus Money Market Fund, Inc. ("Money
Market Fund"), Advantus Mortgage Securities Fund, Inc. ("Mortgage Securities
Fund"), Advantus Real Estate Securities Fund, Inc. ("Real Estate Securities
Fund"), Advantus Spectrum Fund, Inc. ("Spectrum Fund") and Advantus Venture
Fund, Inc. ("Venture Fund") (collectively, the "Funds") is soliciting the
enclosed proxy in connection with a special joint meeting of shareholders to be
held April 17, 2000, and any adjournment of the meeting.

     The Funds' investment advisor is Advantus Capital Management, Inc.
("Advantus Capital"). Ascend Financial Services, Inc. ("Ascend Financial") is
the Funds' principal underwriter. Both Advantus Capital and Ascend Financial are
located at 400 Robert Street North, St. Paul, Minnesota 55101.

     The Funds will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of Joint Special Shareholders' Meeting and this
Proxy Statement. Representatives of Advantus Capital, without cost to the Funds,
may solicit proxies by means of mail, telephone, or personal calls. Advantus
Capital may also arrange for an outside firm, Shareholder Communications
Corporation, to solicit shareholder votes by telephone on behalf of Bond Fund,
Horizon Fund, Index 500 Fund, Money Market Fund, Mortgage Securities Fund and
Spectrum Fund. This procedure is expected to cost approximately $51,800, which
will be allocated among these Funds on the basis of their net assets.

     In order for the shareholder meeting to go forward for a Fund, there must
be a quorum. This means that at least 10% of that Fund's shares must be
represented at the meeting -- either in person or by proxy. All returned proxies
count toward a quorum, regardless of how they are voted. An abstention or a vote
withheld will be counted as shares present at the meeting in determining whether
a proposal has been approved, and will have the same effect as a vote "against"
the proposal. Broker non-votes will not be counted as present in calculating the
vote on any proposal. (Broker non-votes are shares for which (a) the underlying
owner has not voted and (b) the broker holding the shares does not have
discretionary authority to vote on the particular matter.) If a quorum is not
obtained or if sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. In determining whether to
adjourn the meeting, the following factors may be considered: the nature of the
proposal; the percentage of votes actually cast; the percentage of negative
votes actually cast; the nature of any further solicitation; and the information
to be provided to shareholders with respect to the reasons for

                                        1
<PAGE>   3

the solicitation. Any adjournment will require a vote in favor of the
adjournment by the holders of a majority of the shares present in person or by
proxy at the meeting (or any adjournment of the meeting).

     You may revoke your proxy at any time up until voting results are announced
at the shareholder meeting. You can do this by writing to the Funds' Secretary,
or by voting in person at the meeting and notifying the election judge that you
are revoking your proxy. In addition, you can revoke a prior proxy simply by
voting again -- using your original proxy card or by internet or toll-free
telephone call. If you return an executed proxy card without instructions, your
shares will be voted "for" each proposal.

     Only shareholders of record on February 28, 2000 may vote at the meeting or
any adjournment of the meeting. On that date the Funds had the following numbers
of shares of common stock issued and outstanding:

<TABLE>
<CAPTION>
              FUND                    SHARES                       FUND                     SHARES
              ----                    ------                       ----                     ------
<S>                                  <C>             <C>                                  <C>
Bond Fund........................    2,612,657       Money Market Fund................    41,354,719
Cornerstone Fund.................    6,995,533       Mortgage Securities Fund.........     4,757,943
Enterprise Fund..................    3,268,669       Real Estate Securities Fund......       931,717
Horizon Fund.....................    3,118,021       Spectrum Fund....................     5,783,601
Index 500 Fund...................    3,222,441       Venture Fund.....................     3,028,878
International Balanced Fund......    4,901,938
</TABLE>

     Each shareholder is entitled to one vote for each share owned on the record
date. None of the matters to be presented at the meeting will entitle any
shareholder to cumulative voting or appraisal rights.

     Minnesota Life Insurance Company ("Minnesota Life"), an affiliate of
Advantus Capital, owns more than 50% of the outstanding shares of Cornerstone
Fund, Enterprise Fund, International Balanced Fund, Real Estate Securities Fund
and Venture Fund. See "Additional Information About the Funds." As a result,
Minnesota Life is able to determine the vote on each proposal made with respect
to these Funds. Minnesota Life intends to vote "FOR" each proposal.

     At this point, we know of no other business to be brought before the
shareholder meeting. However, if any other matters do come up, the persons named
as proxies will vote upon these matter according to their best judgment.

     THE FUNDS' MOST RECENT ANNUAL AND SEMIANNUAL REPORTS ARE AVAILABLE AT NO
COST. TO REQUEST A REPORT, PLEASE CONTACT THE FUND AT P.O. BOX 9767, PROVIDENCE,
RHODE ISLAND 02940-5059 OR CALL 1-800-665-6005.

     Please be sure to read the entire proxy statement before casting your vote.
If you need help voting your proxy, you may call 1-800-665-6005 or your
registered representative.

     This proxy statement and proxy cards were first mailed to shareholders on
or about March 20, 2000.

                                        2
<PAGE>   4

                              SUMMARY OF PROPOSALS

     The Board of Directors of the Funds is asking for your vote on the
following proposals. Each proposal is described in detail below.

<TABLE>
<CAPTION>
                      PROPOSAL                                          FUNDS AFFECTED
                      --------                           --------------------------------------------
<S>    <C>                                               <C>
1.     To set the number of directors at five and to     All Funds
       elect a Board of Directors
2.     To approve the elimination or modification of     All Funds
       the following investment policies:
       A.  Modify policies regarding borrowing and       All Funds
       the issuance of senior securities
       B.  Modify policies regarding concentration in    All Funds
       a particular industry
       C.  Modify policies regarding investments in      All Funds
       real estate and commodities
       D.  Modify policies regarding lending             All Funds
       E.  Eliminate policies restricting the            All Funds except Real Estate Securities Fund
       pledging of assets
       F.  Eliminate policies restricting margin         All Funds
       purchases and short sales
       G.  Eliminate policies prohibiting                Horizon Fund, Index 500 Fund, Venture Fund
       transactions with affiliates
       H.  Eliminate policies prohibiting                Bond Fund, Horizon Fund, Index 500 Fund,
       participation in a joint trading account          Money Market Fund, Real Estate Securities
                                                         Fund, Spectrum Fund, Venture Fund
       I.   Eliminate policies limiting investment in    Bond Fund, Horizon Fund, Mortgage Securities
            restricted securities and other illiquid     Fund, Spectrum Fund
            assets
       J.   Eliminate policies prohibiting or            Horizon Fund, Index 500 Fund, Money Market
       limiting options transactions                     Fund, Spectrum Fund, Venture Fund
       K.  Eliminate diversification policies            Bond Fund, Horizon Fund, Money Market Fund,
                                                         Mortgage Securities Fund, Spectrum Fund
       L.  Eliminate policies regarding investments      Bond Fund, Horizon Fund, Money Market Fund,
       in issuers that have been in operation for        Mortgage Securities Fund, Spectrum Fund
           less than three years
       M. Eliminate policies addressing potential        Bond Fund, Horizon Fund, Money Market Fund,
          conflicts of interest                          Mortgage Securities Fund, Spectrum Fund
       N.  Eliminate policies prohibiting investing      Bond Fund, Horizon Fund, Money Market Fund,
       in companies for control                          Mortgage Securities Fund, Spectrum Fund
       O.  Eliminate policies restricting investments    Bond Fund, Horizon Fund, Money Market Fund,
       in other investment companies                     Mortgage Securities Fund, Spectrum Fund
3.     To approve a change in the investment             Horizon Fund
       objective of Horizon Fund
4.     To approve an amended Investment Advisory         All Funds
       Agreement with Advantus Capital Management,
       Inc.
5.     To approve a new Sub-Advisory Agreement           Enterprise Fund, Venture Fund
6.     To ratify the selection by the Board of           All Funds
       Directors of the Funds of KPMG LLP as
       independent public accountants for the Funds
       for their fiscal years ending in 2000
7.     To transact such other business as may            All Funds
       properly come before the meeting
</TABLE>

                                        3
<PAGE>   5

                                  PROPOSAL ONE
                             ELECTION OF DIRECTORS

This proposal applies to all Funds.

     At the meeting, you will be asked to elect the nominees listed below to
each Fund's Board of Directors, and to thereby set the number of Directors at
five. The Bylaws of each Fund provide that the shareholders have the power to
set the number of Directors (subject to the authority of the Board of Directors
to increase or decrease the number as permitted by law).

     Each person elected will serve until the next meeting of the shareholders
or until his or her successor is elected. Information regarding each nominee's
principal occupation and business experience during the past five years is set
forth below. Unless otherwise indicated, all positions have been held more than
five years. Each nominee also serves as a Director of Advantus Series Fund,
Inc., another open-end investment company advised by Advantus Capital. The Funds
and Advantus Series Fund, Inc. are referred to herein as the "Advantus Fund
Complex."

<TABLE>
<CAPTION>
NAME, TERM OF OFFICE                AGE   PRINCIPAL OCCUPATION/BUSINESS EXPERIENCE DURING PAST 5 YEARS
- --------------------                ---   ------------------------------------------------------------
<S>                                 <C>   <C>
William N. Westhoff*..............  52    President, Treasurer and Director, Advantus Capital; Senior
  Director since July 1998**                Vice President and Treasurer, Minnesota Life Insurance
                                            Company; Vice President and Director, Robert Street
                                            Energy, Inc.; President, MCM Funding 1997-1, Inc.;
                                            President, MCM Funding 1998-1, Inc.; Senior Vice
                                            President, Global Investments, American Express Financial
                                            Corporation, Minneapolis, Minnesota, from August 1994 to
                                            October 1997.
Frederick P. Feuerherm*...........  53    Vice President, Assistant Secretary and Director, Advantus
  Director since July 1993**                Capital; Vice President, Minnesota Life Insurance Company;
                                            Vice President and Director, MIMLIC Funding, Inc.; Vice
                                            President and Assistant Secretary, MCM Funding 1997-1,
                                            Inc.; Vice President and Assistant Secretary, MCM Funding
                                            1998-1, Inc.
Ralph D. Ebbott...................  72    Retired; Vice President and Treasurer of Minnesota Mining
  Director since October 1985**             and Manufacturing Company (industrial and consumer products)
                                            through June 1989
Charles E. Arner..................  77    Retired; Vice Chairman of the First National Bank of Saint
  Director since April 1986**               Paul from November 1983 through June 1984; Chairman and
                                            Chief Executive Office of The First National Bank of Saint
                                            Paul from October 1980 through November 1983.
Ellen S. Berscheid................  63    Regents' Professor of Psychology at the University of
  Director since October 1985**             Minnesota
</TABLE>

- ------------------------------
 * Denotes directors who are considered to be "interested persons" (as defined
   under the 1940 Act) of the Funds.

** Director of each Fund since the later of the date set forth in the table or
   the date the Fund commenced operations. The Funds commenced operations on the
   following dates: Horizon Fund, Mortgage Securities Fund, Money Market
   Fund -- May 3, 1985; Spectrum Fund -- November 16, 1987; Bond Fund -- August
   14, 1987; Cornerstone Fund, Enterprise Fund, International Balanced
   Fund -- September 16, 1994; Venture Fund, Index 500 Fund -- January 31, 1997;
   Real Estate Securities Fund -- February 15, 1999.

     Each Fund has an audit committee and a nominations committee. The members
of both committees are Ms. Berscheid and Messrs. Arner and Ebbott. There were
four meetings of the Board of Directors and two meetings of the audit committee
during both the fiscal year ended July 31, 1999 (the fiscal year end for Index
500 Fund, Real Estate Securities Fund and Venture Fund) and the fiscal year
ended September 30, 1999 (the fiscal year end for the remaining Funds). The
nominations committee did not meet during the Funds' most

                                        4
<PAGE>   6

recent fiscal years. During both of these fiscal years, each director attended
all Board of Directors meetings and all meetings of committees on which he or
she served.

     The audit committee's purpose is to oversee the Funds' accounting and
financial reporting policies and practices and matters relating to internal
control, to oversee the quality and objectivity of each Fund's financial
statements and the independent audits of those statements and to be a liaison
between the independent auditors of the Funds and the full Board. The
nominations committee will act to present names for consideration for election
of Board members in the event of a vacancy or expansion of the Board. This
committee will consider nominees recommended to it for consideration by
shareholders of the Funds. Shareholders can recommend nominees by submitting
their names to the secretary of the Funds for forwarding to the committee.

     No compensation is paid by any of the Funds to any Director or officer who
is affiliated with Advantus Capital. Each Director who is not affiliated with
Advantus Capital receives aggregate compensation from the Advantus Fund Complex
equal to $8,000 per year and $2,000 per meeting attended (and reimbursement of
travel expenses to attend directors' meetings). Each individual Fund pays a pro
rata portion of such compensation based on the ratio that the Fund's net assets
bear to the total net assets of the Advantus Fund Complex. The following table
sets forth the compensation received by directors not affiliated with Advantus
Capital from each Fund during its most recent fiscal year, as well as the total
compensation received by each such director from the Advantus Fund Complex
during the calendar year ended December 31, 1999. The Directors did not accrue
any pension or retirement benefits during such time periods and are not entitled
to any annual benefits upon retirement.

<TABLE>
<CAPTION>
                                                                           ELLEN S.
                                                    CHARLES E. ARNER       BERSCHEID         RALPH D. EBBOTT
                                                    ----------------    ---------------    -------------------
<S>                                                 <C>                 <C>                <C>
Bond Fund.......................................        $   174             $   174              $   174
Cornerstone Fund................................        $   760             $   760              $   760
Enterprise Fund.................................        $   269             $   269              $   269
Horizon Fund....................................        $   399             $   399              $   399
Index 500 Fund..................................        $   271             $   271              $   271
International Balanced Fund.....................        $   259             $   259              $   259
Money Market Fund...............................        $   260             $   260              $   260
Mortgage Securities Fund........................        $   282             $   282              $   282
Real Estate Securities Fund.....................        $    24             $    24              $    24
Spectrum Fund...................................        $   544             $   544              $   544
Venture Fund....................................        $   215             $   215              $   215
Total Compensation Received From Advantus Fund
  Complex.......................................        $20,000             $20,000              $20,000
</TABLE>

VOTE REQUIRED

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF EACH FUND SET THE
NUMBER OF DIRECTORS AT FIVE AND VOTE IN FAVOR OF THE ABOVE NOMINEES TO SERVE AS
DIRECTORS OF THAT FUND. For each Fund, the vote of a majority of the shares of
the Fund represented at the meeting, provided at least a quorum is represented
in person or by proxy, is sufficient for the election of the above nominees.
Unless otherwise instructed, the proxies will vote for the above five nominees.
All of the nominees listed above have consented to serve as Directors if
elected. In the event any of the above nominees are not candidates for election
at the meeting, the proxies may vote for such other persons as management may
designate. Nothing currently indicates that such a situation will arise.

                                        5
<PAGE>   7

                                  PROPOSAL TWO
                        THE ELIMINATION OR MODIFICATION
                       OF FUNDAMENTAL INVESTMENT POLICIES

This proposal applies to all Funds.

     Each Fund has a number of investment policies that are "fundamental," which
means that they may be changed only with the approval of shareholders. These
fundamental policies differ significantly from Fund to Fund. This is in part
because the Funds commenced operations at different times, and the wording of
the Funds' fundamental policies has evolved over time. In addition, some of the
older Funds have fundamental policies that were adopted in response to state
securities regulations that no longer apply to mutual funds. Because having
different fundamental policies among the Funds presents difficulties from a
compliance standpoint, and because certain fundamental policies, in the opinion
of Fund management, are unnecessarily restrictive, Fund management proposed that
the Funds' investment policies be standardized, and that some policies be
eliminated. The Board of Directors has adopted these proposals, subject to
shareholder approval.

     The Investment Company Act of 1940, as amended (the "1940 Act") requires
that only certain activities of investment companies be governed by fundamental
policies. The Board of Directors has recommended that shareholders approve
proposed revisions to the fundamental policies of the Funds governing these
activities. Each proposed revision is, in general, intended to provide the Board
with the maximum flexibility permitted under the 1940 Act, and to provide
uniformity among the Funds' policies. The Board of Directors has also
recommended that shareholders approve the elimination of all fundamental
policies that are not required by the 1940 Act. If shareholders approve the
elimination of these policies, the Board of Directors will have complete
discretion regarding the Funds' investment activities in these areas.

A. MODIFY POLICIES REGARDING BORROWING AND THE ISSUANCE OF SENIOR SECURITIES

This proposal applies to all Funds.

     The 1940 Act requires that each Fund have a fundamental policy governing
its ability to borrow money and issue senior securities. The Funds' current
policies regarding borrowing are set forth below, as is Real Estate Securities
Fund's current policy addressing the issuance of senior securities. The other
Funds do not currently have fundamental policies in place regarding the issuance
of senior securities.

     Bond Fund
     The Fund will not borrow money, except from banks and only as a temporary
     measure for extraordinary or emergency purposes, including the meeting of
     redemption requests which might otherwise require the untimely disposition
     of securities, and not in excess of 5% of its net assets; or enter into
     reverse repurchase agreements.

     Cornerstone Fund, Enterprise Fund, Horizon Fund, Index 500 Fund,
     International Balanced Fund, Mortgage Securities Fund, Venture Fund
     The Fund will not borrow money, except from banks and only as a temporary
     measure for extraordinary or emergency purposes and not in excess of 5% of
     its net assets.

     Money Market Fund
     The Fund will not borrow money or enter into reverse repurchase agreements
     in excess of 5% of its net assets and, with respect to borrowing money,
     only from banks and only as a temporary measure for extraordinary or
     emergency purposes.

     Real Estate Securities Fund
     The Fund will not borrow money, or enter into reverse repurchase
     agreements, in excess of one-third of its net assets, and, with respect to
     borrowing money, only from banks for temporary purposes. For purposes of
     this restriction, the use of options and futures transactions and the
     purchase of securities on a when-issued or delayed delivery basis shall not
     be deemed the borrowing of money.

                                        6
<PAGE>   8

     The Fund will not make additional investments while its borrowings exceed
     5% of its total assets.

     The Fund will not issue any senior securities, as defined in the 1940 Act,
     other than as set forth in [the Fund's policy regarding borrowing,] above
     and except to the extent that using options and futures contracts or
     purchasing or selling securities on a when-issued or forward commitment
     basis may be deemed to constitute issuing a senior security.

     All Other Funds
     The Fund will not borrow money, except from banks and only as a temporary
     measure for extraordinary or emergency purposes and not in excess of 5% of
     its net assets.

     IT IS PROPOSED THAT EACH FUND REPLACE ITS CURRENT POLICY OR POLICIES
REGARDING BORROWING AND THE ISSUANCE OF SENIOR SECURITIES WITH THE FOLLOWING
POLICY:

     THE FUND WILL NOT BORROW MONEY OR ISSUE SENIOR SECURITIES, EXCEPT AS
     PERMITTED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND AS
     INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY AUTHORITY
     HAVING JURISDICTION.

     The Board believes that the Funds' current policies regarding borrowing are
unnecessarily restrictive and could be disadvantageous to shareholders. With the
exception of Real Estate Securities Fund, each Fund is currently limited to
borrowing an amount no greater than 5% of net assets. In addition, the policies
for Bond Fund and Money Market Fund place limitations on the Funds' ability to
enter into reverse repurchase agreements. Under a reverse repurchase agreement,
a Fund sells a security and agrees to repurchase the security from the buyer at
an agreed upon price and future date. A reverse repurchase agreement may be
considered a form of borrowing by the Fund from the buyer, collateralized by the
security.

     The addition of borrowing power will provide the Funds with greater
flexibility to respond to sudden needs for cash that may arise and that cannot
be anticipated. Ordinarily, a Fund would expect to be able to meet needs for
cash to facilitate redemptions by using current cash flow arising from new
investments, investment income, and liquidations of securities in the ordinary
course of business. However, there may be instances when these sources of cash
flow are not sufficient to meet current cash needs, in which case the ability to
borrow money may be advantageous to the Funds.

     The proposed policy would permit each Fund to engage in borrowing in a
manner and to the full extent permitted by applicable law, including through the
use of reverse repurchase agreements. The 1940 Act requires borrowings,
including any borrowing through reverse repurchase agreements, to have 300%
asset coverage, which means, in effect, that each Fund would be permitted to
borrow up to an amount equal to one-third of the value of its total assets under
the proposed borrowing policy. This asset coverage requirement applies at all
times, and not just at the time of borrowing.

     All borrowing involves risks. Interest paid by a Fund on borrowed funds
would decrease the net earnings of the Fund. In addition, if a Fund were to
incur debt to purchase additional securities, a practice known as "leveraging,"
the Fund would incur a loss unless the income or gain on such investment
exceeded the interest payable with respect to the borrowing. Borrowing for
leverage would increase a Fund's volatility and the risk of loss in a declining
market. However, the Board has no current intention of authorizing the Funds to
borrow for leverage purposes. As a nonfundamental investment restriction that
may be changed without shareholder approval, each Fund will not acquire any new
securities while borrowings, including borrowings through reverse repurchase
agreements, exceed 5% of total assets.

     The proposed policy also prohibits the Funds from issuing senior
securities, except as permitted by applicable law. The Funds' current policies
address borrowing (which could be considered the issuance of a senior security),
but in general do not address the issuance of other types of senior securities.
Senior securities include any obligation of a fund that takes priority over the
claims of the fund's shareholders. The 1940 Act prohibits open-end funds from
issuing most types of senior securities, but permits funds, if specified
conditions are met, to enter into certain transactions that might be considered
to involve the issuance of senior securities. For example, a fund may enter into
a transaction that obligates it to pay money at a future date, such as
purchasing securities on a when-issued basis, if cash or liquid securities are
set aside to cover the obligation.

                                        7
<PAGE>   9

These types of transactions would be permitted under the proposed policy,
provided that a Fund sets aside cash or liquid securities to cover its
obligations.

B. MODIFY THE POLICY REGARDING CONCENTRATION IN A PARTICULAR INDUSTRY

This proposal applies to all Funds.

     The 1940 Act requires that each Fund have a fundamental policy governing
its ability to concentrate investments in a particular industry or group of
industries. The Funds' current policies regarding industry concentration are set
forth below.

     Bond Fund
     The Fund will not purchase any security if, as a result, more than 25% of
     the Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry,
     provided that (a) the electric, telephone, gas, gas transmission, water,
     telegraph and satellite communications utilities are each regarded as
     separate industries and (b) banks, savings and loan associations, savings
     banks, and finance companies are each regarded as separate industries.
     There is no limitation with respect to the concentration of investments in
     securities issued or guaranteed by the United States Government, its
     agencies or instrumentalities.

     Cornerstone Fund, Enterprise Fund, Horizon Fund, International Balanced
     Fund, Venture Fund
     The Fund will not purchase any security if, as a result, 25% or more of the
     Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry.

     Index 500 Fund
     The Fund will not purchase any security if, as a result, 25% or more of the
     Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry
     (provided, however, that the Fund may invest more than 25% of its assets in
     a single industry if the S&P 500 is so concentrated).

     Money Market Fund
     The Fund will not purchase any security if, as a result, more than 25% of
     the Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry,
     provided that (a) telephone, gas and electric public utilities are each
     regarded as separate industries and (b) United States banks, savings and
     loan associations, savings banks and finance companies are each regarded as
     separate industries for the purpose of this limitation. There are no
     limitations with respect to the concentration of investments in securities
     issued or guaranteed by the United States Government, its agencies or
     instrumentalities, or certificates of deposit and bankers acceptances of
     domestic branches of United States banks

     Mortgage Securities Fund
     The Fund will not purchase any security if, as a result, more than 25% of
     the Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry, except
     that this limitation shall not apply to investments in the mortgage- and
     mortgage-finance industry (in which more than 25% of the value of the
     Fund's total assets will, except for temporary defensive positions, be
     invested) or securities issued or guaranteed by the United States
     Government, its agencies or instrumentalities.

     Real Estate Securities Fund
     The Fund will not purchase any security if, as a result, 25% or more of the
     Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry, except
     that this limitation will not apply to investments in securities of issuers
     in the real estate or real estate-related industry (in which 25% or more of
     the value of the Fund's total assets will, except for temporary defensive
     positions, be invested).

                                        8
<PAGE>   10

     Spectrum Fund
     The Fund will not purchase any security if, as a result, more than 25% of
     the Fund's total assets would be invested in the securities of issuers
     conducting their principal business activities in a single industry,
     provided that (a) telephone, gas and electric public utilities are each
     regarded as separate industries and (b) banking, savings and loan
     associations, savings banks and finance companies as a group will not be
     considered a single industry for the purpose of this limitation. There is
     no limitation with respect to the concentration of investments in
     securities issued or guaranteed by the United States Government, its
     agencies or instrumentalities or certificates of deposit and bankers
     acceptances of United States banks and savings and loan associations.

     IT IS PROPOSED THAT THE FUNDS REPLACE THEIR CURRENT POLICIES REGARDING
CONCENTRATION WITH THE FOLLOWING POLICIES:

     BOND FUND, CORNERSTONE FUND, ENTERPRISE FUND, HORIZON FUND, INTERNATIONAL
     BALANCED FUND, SPECTRUM FUND AND VENTURE FUND
     THE FUND WILL NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY. FOR
     PURPOSES OF THIS LIMITATION, THE U.S. GOVERNMENT, AND STATE OR MUNICIPAL
     GOVERNMENTS AND THEIR POLITICAL SUBDIVISIONS, ARE NOT CONSIDERED MEMBERS OF
     ANY INDUSTRY. WHETHER THE FUND IS CONCENTRATING IN AN INDUSTRY SHALL BE
     DETERMINED IN ACCORDANCE WITH THE INVESTMENT COMPANY ACT OF 1940, AS
     AMENDED, AND AS INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY
     AUTHORITY HAVING JURISDICTION.

     INDEX 500 FUND
     THE FUND WILL NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY,
     EXCEPT THAT THE FUND MAY CONCENTRATE ITS INVESTMENTS IN A PARTICULAR
     INDUSTRY IF THE S&P 500 INDEX IS SO CONCENTRATED. FOR PURPOSES OF THIS
     LIMITATION, THE U.S. GOVERNMENT, AND STATE OR MUNICIPAL GOVERNMENTS AND
     THEIR POLITICAL SUBDIVISIONS, ARE NOT CONSIDERED MEMBERS OF ANY INDUSTRY.
     WHETHER THE FUND IS CONCENTRATING IN AN INDUSTRY SHALL BE DETERMINED IN
     ACCORDANCE WITH THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND AS
     INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY AUTHORITY
     HAVING JURISDICTION.

     MONEY MARKET FUND
     THE FUND WILL NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY. FOR
     PURPOSES OF THIS LIMITATION, THE U.S. GOVERNMENT, AND STATE OR MUNICIPAL
     GOVERNMENTS AND THEIR POLITICAL SUBDIVISIONS, ARE NOT CONSIDERED MEMBERS OF
     ANY INDUSTRY. IN ADDITION, THIS LIMITATION DOES NOT APPLY TO INVESTMENTS IN
     DOMESTIC BANKS. WHETHER THE FUND IS CONCENTRATING IN AN INDUSTRY SHALL BE
     DETERMINED IN ACCORDANCE WITH THE INVESTMENT COMPANY ACT OF 1940, AS
     AMENDED, AND AS INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY
     AUTHORITY HAVING JURISDICTION.

     MORTGAGE SECURITIES FUND
     UNDER NORMAL MARKET CONDITIONS, THE FUND WILL CONCENTRATE ITS INVESTMENTS
     IN THE MORTGAGE AND MORTGAGE-FINANCE INDUSTRY. THE FUND WILL NOT
     CONCENTRATE ITS INVESTMENTS IN ANY OTHER PARTICULAR INDUSTRY. FOR PURPOSES
     OF THIS LIMITATION, THE U.S. GOVERNMENT, AND STATE OR MUNICIPAL GOVERNMENTS
     AND THEIR POLITICAL SUBDIVISIONS, ARE NOT CONSIDERED MEMBERS OF ANY
     INDUSTRY. WHETHER THE FUND IS CONCENTRATING IN AN INDUSTRY SHALL BE
     DETERMINED IN ACCORDANCE WITH THE INVESTMENT COMPANY ACT OF 1940, AS
     AMENDED, AND AS INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY
     AUTHORITY HAVING JURISDICTION.

     REAL ESTATE SECURITIES FUND
     UNDER NORMAL MARKET CONDITIONS, THE FUND WILL CONCENTRATE ITS INVESTMENTS
     IN THE REAL ESTATE OR REAL ESTATE RELATED INDUSTRY. THE FUND WILL NOT
     CONCENTRATE ITS INVESTMENTS IN ANY OTHER PARTICULAR INDUSTRY. FOR PURPOSES
     OF THIS LIMITATION, THE U.S. GOVERNMENT, AND STATE OR MUNICIPAL GOVERNMENTS
     AND THEIR POLITICAL SUBDIVISIONS, ARE NOT CONSIDERED MEMBERS OF ANY
     INDUSTRY. WHETHER THE FUND IS CONCENTRATING IN AN INDUSTRY SHALL BE
     DETERMINED IN ACCORDANCE WITH THE INVESTMENT COMPANY ACT OF 1940, AS

                                        9
<PAGE>   11

     AMENDED, AND AS INTERPRETED OR MODIFIED FROM TIME TO TIME BY ANY REGULATORY
     AUTHORITY HAVING JURISDICTION.

     The 1940 Act requires that a Fund state its position regarding
concentration in an industry. While the 1940 Act does not define what
constitutes "concentration," the staff of the Securities and Exchange Commission
(the "Commission") takes the position that investment of 25% or more of a Fund's
assets in an industry constitutes concentration. If a Fund concentrates in an
industry, it must at all times have 25% or more of its assets invested in that
industry, and if its policy is not to concentrate, it must invest less than 25%
of its assets in the applicable industry, unless, in either case, the Fund
discloses the specific conditions under which it will change from concentrating
to not concentrating or vice versa.

     As set forth above, each Fund other than Real Estate Securities Fund and
Mortgage Securities Fund has a policy not to concentrate its investments in a
particular industry, except that Index 500 Fund's policy provides that the Fund
may concentrate in an industry if the S&P 500 is so concentrated. Some Funds
have exceptions for U.S. Government securities and bank obligations. In some
cases, what constitutes an industry for the purposes of this policy is included
in the policy itself. A Fund is permitted to adopt reasonable definitions of
what constitutes an industry, or it may use standard classifications recognized
by the Commission, or some combination thereof. Because a Fund may create its
own reasonable industry classifications, management believes that it is not
necessary to include such matters in the fundamental policies of the Funds.

     The proposed policies do not materially change the Funds' current policies.
However, rather than defining concentration, as the current policies do, the
proposed policies state that whether a Fund is concentrating in an industry
shall be determined in accordance with the 1940 Act as it is interpreted from
time to time. This will provide the Fund with more flexibility should the staff
of the Commission reinterpret the term "concentrate." The proposed policies also
clarify that U.S., state and local governments are not considered members of any
industry, and that limitations on concentration do not apply to investments by
Money Market Fund in domestic banks.

C. MODIFY THE POLICY REGARDING INVESTMENTS IN REAL ESTATE AND COMMODITIES

This proposal applies to all Funds.

     The 1940 Act requires that each Fund have fundamental policies governing
its ability to invest in real estate and commodities. The Funds' current
policies regarding real estate and commodity investments are set forth below.

     Bond Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate or interests in real estate which are not
     readily marketable, commodities or commodity contracts, except that it may
     invest in interest rate futures contracts. (This does not prevent the Fund
     from purchasing securities of companies investing in the foregoing).

     Cornerstone Fund, Enterprise Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate, real estate limited partnership interests,
     or interests in real estate which are not readily marketable, commodities
     or commodity contracts. (This does not prevent the Fund from purchasing
     securities of companies investing in the foregoing).

     Horizon Fund, Money Market Fund, Spectrum Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate or interests in real estate which are not
     readily marketable, commodities or commodity contracts. (This does not
     prevent the Fund from purchasing securities of companies investing in the
     foregoing).

                                       10
<PAGE>   12

     Index 500 Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate, real estate limited partnership interests,
     or interests in real estate which are not readily marketable, commodities
     or commodity contracts, except that it may invest in stock index futures
     contracts. (This does not prevent the Fund from purchasing securities of
     companies investing in the foregoing).

     International Balanced Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate, real estate limited partnership interests,
     or interests in real estate which are not readily marketable, commodities
     or commodity contracts, except the Fund may purchase and sell futures
     contracts on financial instruments and indices, and options on such futures
     contracts. (This does not prevent the Fund from purchasing securities of
     companies investing in the foregoing).

     Mortgage Securities Fund
     The Fund will not buy or sell (a) oil, gas or other mineral leases, rights
     or royalty contracts, (b) real estate, except that it may invest in
     mortgage-related securities and whole loans and purchase and sell
     securities of companies which deal in real estate or interests therein; or
     (c) commodities or commodity contracts, except that it may invest in
     interest rate futures contracts.

     Real Estate Securities Fund
     The Fund will not purchase or sell real estate, except that the Fund may
     invest in securities secured by real estate or interests therein or issued
     by companies which invest in real estate or interests therein.

     The Fund will not purchase or sell physical commodities, or futures or
     options contracts with respect to physical commodities. This restriction
     shall not restrict the Fund from purchasing or selling any financial
     contracts or instruments which may be deemed commodities (including, by way
     of example and not by way of limitation, options, futures, and options on
     futures with respect, in each case, to interest rates, currencies, stock
     indices, bond indices or interest rate indices) or any security which is
     collateralized or otherwise backed by physical commodities.

     Venture Fund
     The Fund will not buy or sell oil, gas or other mineral leases, rights or
     royalty contracts, real estate, real estate limited partnership interests,
     or interests in real estate which are not readily marketable, commodities
     or commodity contracts, including futures contracts. (This does not prevent
     the Fund from purchasing securities of companies investing in the
     foregoing).

     IT IS PROPOSED THAT EACH FUND REPLACE ITS CURRENT POLICY OR POLICIES
REGARDING INVESTMENTS IN REAL ESTATE AND COMMODITIES WITH THE FOLLOWING TWO
POLICIES:

     THE FUND WILL NOT PURCHASE OR SELL REAL ESTATE UNLESS ACQUIRED AS A RESULT
     OF OWNERSHIP OF SECURITIES OR OTHER INSTRUMENTS, BUT THIS SHALL NOT PREVENT
     THE FUND FROM INVESTING IN SECURITIES OR OTHER INSTRUMENTS BACKED BY REAL
     ESTATE OR INTERESTS THEREIN OR IN SECURITIES OF COMPANIES THAT DEAL IN REAL
     ESTATE OR MORTGAGES.

     THE FUND WILL NOT PURCHASE PHYSICAL COMMODITIES OR CONTRACTS RELATING TO
     PHYSICAL COMMODITIES.

Policy Regarding Investments in Real Estate

     Both the current and proposed policies prohibit direct investments in real
estate. The proposed policy clarifies, however, that investments in securities
backed by real estate or issued by companies that deal in real estate are not
prohibited. In addition, investments in real estate limited partnerships, which
are expressly prohibited under the current policies of Cornerstone Fund,
Enterprise Fund, International Balanced Fund, Venture Fund and Index 500 Fund,
would be permissible under the proposed policy. None of these Funds has any
current intention, however, of investing in real estate limited partnerships. To
the extent that a Fund buys securities and instruments of companies in the real
estate business, the Fund's performance will be affected by

                                       11
<PAGE>   13

the condition of the real estate market. This industry is sensitive to factors
such as changes in real estate values and property taxes, overbuilding,
variations in rental income, and interest rates. Performance could also be
affected by the structure, cash flow, and management skill of real estate
companies.

     The current policies for each Fund other than Real Estate Securities Fund
also prohibit investments in oil, gas or other mineral leases, rights or royalty
contracts. These policies were adopted in response to state securities
regulations which are no longer applicable. Therefore, the proposed policy does
not contain a provision dealing with these types of investments. However, the
Funds have no current intention of investing in oil, gas or other mineral
leases, rights or contracts.

Policy Regarding Investments in Commodities

     The 1940 Act requires a mutual fund to state as a fundamental investment
policy the extent to which it may engage in the purchase and sale of
commodities. At the time the 1940 Act was enacted, the term "commodities" was
understood to refer principally to physical commodities such as agricultural
products, precious and base metals, oil and gas, and the like. In recent years,
however, a variety of new financial contracts and instruments, such as interest
rate, currency and stock index futures contracts, have been created which may be
considered to be "commodities" for regulatory purposes. The current policies for
Horizon Fund, Spectrum Fund, Money Market Fund and Cornerstone Fund prohibit
investments in commodities or commodity contracts. These policies would arguably
prohibit the Funds from investing in financial instruments, such as futures
contracts, that might be deemed commodities. Venture Fund's current policy
specifically prohibits investments in futures contracts. Policies for the other
Funds permit them to invest in certain specified types of financial instruments
that might be categorized as commodities. The purpose of the proposed change is
to standardize the Funds' policies regarding investments in commodities, to
clarify that the Funds are not permitted to invest in physical commodities or
contracts relating to physical commodities, to provide Horizon Fund, Spectrum
Fund, Money Market Fund, Cornerstone Fund and Venture Fund with the flexibility
of investing in financial contracts and instruments that might be categorized as
commodities, and to provide the other Funds that currently specify which types
of financial instruments or contracts are permissible with greater flexibility.

     Futures contracts are standardized, exchange-traded contracts that require
delivery of the underlying financial instrument (such as a bond, currency or
stock index) at a specified price, on a specified future date. The buyer of the
futures contract agrees to buy the underlying financial instruments from the
seller at a fixed purchase price upon the expiration of the contract. The seller
of the futures contract agrees to sell the underlying financial instrument to
the buyer at expiration at the fixed sales price. In most cases, delivery never
takes place. Instead, both the buyer and the seller, acting independently of
each other, usually liquidate their long and short positions before the contract
expires; the buyer sells futures and the seller buys futures.

     Futures may be used for hedging (i.e., to protect against adverse future
price movements in portfolio securities, or in securities a fund intends to
purchase). For example, a portfolio manager who thinks that the stock market
might decline could sell stock index futures to safeguard a fund's portfolio. If
the market declines as anticipated, the value of stocks in the portfolio would
decrease, but the value of the futures contracts would increase. Futures
contracts may also be used to speculate on the market. For example, a portfolio
manager might buy stock index futures on the expectation that the value of the
particular index will rise, even though the stocks comprising the index are
unrelated to stocks held in the portfolio or that the portfolio manager intends
to purchase. Using futures for speculation, however, involves significant risk
since futures contracts are highly leveraged instruments. When a portfolio
manager enters into a futures contract, the manager needs to put up only a small
fraction of the value of the underlying contract as collateral, yet gains or
losses will be based on the full value of the contract. In order to avoid the
need to register with the Commodity Futures Trading Commission ("CFTC") as a
"commodity pool operator," each Fund will use futures contracts and options on
futures contracts only (a) for "bona fide hedging purposes" (as defined in CFTC
regulations) or (b) for other purposes so long as the aggregate initial margins
and premiums required in connection with non-hedging positions do not exceed 5%
of the liquidation value of the Fund's portfolio.

                                       12
<PAGE>   14

     The use of futures contracts, options on futures contracts and similar
instruments would expose a Fund to additional investment risks and transaction
costs. Risks include: the risk that interest rates, securities prices or
currency markets will not move in the direction that the investment adviser
anticipates; an imperfect correlation between the price of the instrument and
movements in the prices of any securities or currencies being hedged; the
possible absence of a liquid secondary market for any particular instrument and
possible exchange-imposed price fluctuation limits; leverage risk, which is the
risk that adverse price movements in an instrument can result in a loss
substantially greater than the Fund's initial investment in that instrument; and
the risk that the counterparty to an instrument will fail to perform its
obligations.

D. MODIFY THE POLICY REGARDING LENDING

This proposal applies to all Funds.

     The 1940 Act requires each Fund to have a fundamental policy regarding
lending. The Funds' current policies regarding lending are set forth below.

     Bond Fund
     The Fund will not make loans, except by purchase of qualified debt
     obligations referred to in the Prospectus and under "Investment Objectives
     and Policies" [in the Statement of Additional Information], and except
     loans of portfolio securities to broker-dealers and financial institutions,
     determined by the Fund to have sufficient financial responsibility, if such
     loans are secured at all time by cash or securities issued or guaranteed by
     the United States Government, its agencies or instrumentalities, in an
     amount at all times equal to at least 100% of the market value of the
     portfolio securities loaned and if, immediately after making such loan, the
     total amount of portfolio securities loaned does not exceed 20% of the
     market value of the Fund's total assets.

     Cornerstone Fund, Enterprise Fund, Horizon Fund, International Balanced
     Fund
     The Fund will not make loans, except by purchase of bonds, debentures,
     commercial paper, certificates of deposit, corporate notes and similar
     evidences of indebtedness, which are a part of an issue to the public or to
     financial institutions, and except loans of portfolio securities to
     broker-dealers and financial institutions, determined by the Fund to have
     sufficient financial responsibility, if such loans are secured at all time
     by cash or securities issued or guaranteed by the United States Government,
     its agencies or instrumentalities, in an amount at all times equal to at
     least 100% of the market value of the portfolio securities loaned and if,
     immediately after making such loan, the total amount of portfolio
     securities loaned does not exceed 20% of the market value of the Fund's
     total assets.

     Index 500 Fund, Venture Fund
     The Fund will not make loans, except by purchase of bonds, debentures,
     commercial paper, certificates of deposit, corporate notes and similar
     evidences of indebtedness, which are a part of an issue to the public or to
     financial institutions, and except loans of portfolio securities if,
     immediately after making such loan, the total amount of portfolio
     securities loaned does not exceed 20% of the market value of the Fund's
     total assets.

     Money Market Fund
     The Fund will not make loans, except by purchase of bonds, debentures,
     commercial paper, corporate notes and similar evidences of indebtedness,
     which are a part of an issue to the public or to financial institutions.

     Mortgage Securities Fund
     The Fund will not lend its portfolio securities.

     The Fund will not make loans, except by purchase of qualified debt
     obligations referred to in the Prospectus and in "Investment Objectives and
     Policies" [in the Statement of Additional Information].

                                       13
<PAGE>   15

     Real Estate Securities Fund
     The Fund will not make loans to other persons, except that it may lend
     portfolio securities representing up to one-third of the value of its total
     assets. (The Fund, however, may purchase and hold debt instruments and
     enter into repurchase agreements in accordance with its investment
     objectives and policies.)

     Spectrum Fund
     The Fund will not make loans, except by purchase of qualified debt
     obligations referred to in the Prospectus, and except loans of portfolio
     securities to broker-dealers and financial institutions, determined by the
     Fund's investment adviser to have sufficient financial responsibility, if
     such loans are secured at all time by cash or securities issued or
     guaranteed by the United States Government, its agencies or
     instrumentalities, in an amount at all times equal to at least 100% of the
     market value of the portfolio securities loaned and if, immediately after
     making such loan, the total amount of portfolio securities loaned does not
     exceed 20% of the market value of the Fund's total assets.

     IT IS PROPOSED THAT EACH FUND REPLACE ITS CURRENT POLICY REGARDING LENDING
     WITH THE FOLLOWING POLICY:

     THE FUND MAY NOT MAKE LOANS EXCEPT AS PERMITTED UNDER THE INVESTMENT
     COMPANY ACT OF 1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED FROM TIME
     TO TIME BY ANY REGULATORY AUTHORITY HAVING JURISDICTION.

     As noted above, each Fund's current lending policy prohibits making loans
to others, but contains exceptions to this prohibition. For example, each Fund
other than Money Market Fund and Mortgage Securities Fund is permitted to lend
its portfolio securities. The Funds' policies also contain exceptions to the
prohibition on lending to the extent that certain transactions, such as the
entry into repurchase agreements or the purchase of debt securities, might be
deemed loans. Unlike the current policies, the proposed policy does not specify
the particular types of lending in which each Fund is permitted to engage.
Instead, the proposed policy permits each Fund to lend in a manner and to the
extent permitted by applicable law. The proposed change would, therefore, permit
each Fund, subject to Board approval, to lend its securities to the full extent
permitted by the 1940 Act. Currently, the maximum amount that any Fund could
lend under the 1940 Act would be portfolio securities equal to one-third of the
value of the Fund's total assets (including securities lent), compared to the
20% of total assets permitted under the current policies of most Funds.

     In addition, under the proposed new fundamental policy, the Fund could rely
on regulatory interpretations issued from time to time concerning what types of
transactions are not deemed to involve "lending" for 1940 Act purposes, and
could engage in such other types of "lending" as may be permitted under the 1940
Act and applicable interpretations from time to time. The proposed policy,
unlike the current policies, thus would permit the Funds to take advantage of
new regulatory interpretations as they are issued, without seeking shareholder
approval.

     The proposed new policy also would permit the Funds, subject to the receipt
of any necessary regulatory approval and Board authorization, to enter into
other lending arrangements, including lending agreements under which the Funds
could for temporary purposes lend money directly to and borrow money directly
from each other (and other funds advised by Advantus Capital) through a credit
facility. Although the Funds have no current intention of entering into these
types of lending arrangements, the Board believes that it would be in
shareholders' best interests for the Funds to have the maximum flexibility
regarding the use of lending. Should the Board determine in the future that such
transactions are warranted, inter-fund lending arrangements could possibly
reduce the Funds' borrowing costs and enhance their ability to earn higher rates
of interest on available cash.

                                       14
<PAGE>   16

E. ELIMINATE THE POLICY RESTRICTING THE PLEDGING OF ASSETS

This proposal applies to each Fund other than Real Estate Securities Fund.

     Each Fund other than Real Estate Securities Fund has a fundamental
investment policy restricting its ability to pledge, mortgage or hypothecate its
assets. It is proposed that these policies, which are set forth below, be
eliminated.

     Bond Fund, Mortgage Securities Fund, Spectrum Fund
     The Fund will not mortgage, pledge, hypothecate, or in any manner transfer,
     as security for indebtedness, any assets of the Fund, except that this
     limitation shall not apply to deposits made in connection with the entering
     into and holding of interest rate futures contracts.

     Cornerstone Fund, Enterprise Fund, Horizon Fund, Index 500 Fund,
     International Balanced Fund, Money Market Fund, Venture Fund
     The Fund will not mortgage, pledge, hypothecate, or in any manner transfer,
     as security for indebtedness, any assets of the Fund.

     Mutual funds are not required to adopt fundamental policies regarding the
pledging of assets. However, the Funds other than Real Estate Securities Fund
adopted these fundamental investment policies as counterparts to their
fundamental policies limiting borrowing to 5% of net assets. As discussed above
in the proposal regarding borrowing, the Board believes that it is in each
Fund's best interest to have the ability to borrow to the maximum extent
permitted by the 1940 Act. Similarly, the Board believes that it is in each
Fund's best interest to be able to pledge assets to the extent necessary to
secure such borrowing. The Board further believes that limitations on a Fund's
ability to pledge its assets are unnecessary since, even if the Fund is not
restricted in its ability to pledge assets, it is limited in its ability to
borrow by the 1940 Act. Therefore, the Board is recommending that the above
policy be eliminated.

     Pledging assets does entail certain risks. To the extent that a Fund
pledges its assets, the Fund may have less flexibility in liquidating its
assets. If a large portion of the Fund's assets are involved, the Fund's ability
to meet redemption requests or other obligations could be delayed. The Board
intends to adopt a nonfundamental policy providing that each Fund may mortgage,
pledge or hypothecate its assets only to secure permitted borrowings. Collateral
arrangements with respect to futures contracts, options transactions and certain
options transactions will not be considered pledges by the Funds and will not be
restricted. This policy could be amended or eliminated in the future without
shareholder approval.

F. ELIMINATE THE POLICIES RESTRICTING MARGIN PURCHASES AND SHORT SALES

This proposal applies to each Fund.

     The Funds have policies, separate and apart from their borrowing policies,
prohibiting them from purchasing securities on margin. The same policies also
prohibit, for some of the Funds, short sales other than "against the box." It is
proposed that these policies, which are set forth below, be eliminated.

     Bond Fund, Cornerstone Fund, Enterprise Fund, Horizon Fund, International
     Balanced Fund, Mortgage Securities Fund, Venture Fund
     The Fund will not purchase securities on margin (but it may obtain such
     short-term credits as may be necessary for the clearance of purchases and
     sales of securities); or make short sales except short sales against the
     box where it owns the securities sold or, by virtue of ownership of other
     securities, it has the right to obtain, without payment of further
     consideration, securities equivalent in kind and amount to those sold.

     Index 500 Fund
     The Fund will not purchase securities on margin, although it may obtain
     such short-term credits as may be necessary for the clearance of purchases
     and sales of securities (for purposes of this restriction, the deposit or
     payment of initial or variation margin in connection with futures contracts
     will not be deemed

                                       15
<PAGE>   17

     to be a purchase of securities on margin); or make short sales except short
     sales against the box where it owns the securities sold or, by virtue of
     ownership of other securities, it has the right to obtain, without payment
     of further consideration, securities equivalent in kind and amount to those
     sold.

     Money Market Fund
     The Fund will not purchase securities on margin (but it may obtain such
     short-term credits as may be necessary for the clearance of purchases and
     sales of securities); or make short sales except short sales against the
     box where it owns the securities sold or, by virtue of ownership of other
     securities, it has the right to obtain, without payment of further
     consideration, securities equivalent in kind and amount to those sold, and
     only to the extent that the Fund's short positions will not at the time of
     any short sale aggregate in total sale prices more than 10% of its total
     assets.

     Real Estate Securities Fund
     The Fund will not purchase securities on margin (but it may obtain such
     short-term credits as may be necessary for the clearance of purchases and
     sales of securities).

     Spectrum Fund
     The Fund will not purchase any security on margin (but it may obtain such
     short-term credits as may be necessary for the clearance of purchases and
     sales of securities).

     The Fund will not make short sales except short sales against the box where
     it owns the securities sold or, by virtue of ownership of other securities,
     it has the right to obtain, without payment of further consideration,
     securities equivalent in kind and amount to those sold.

     The Funds generally adopted these policies in order to comply with state
securities laws that no longer apply. The Board believes that the portion of
each Fund's policy prohibiting the purchase of securities on margin is not
necessary since a Fund's ability to engage in margin transactions is limited by
the 1940 Act. Margin transactions involve the purchase of securities with money
borrowed from a broker, with cash or eligible securities being used as
collateral against the loan. A Fund's potential use of margin transactions
beyond transactions in futures and options and for the clearance of purchases
and sales of securities, including the use of margin in ordinary securities
transactions, will generally be limited by the current position taken by the
staff of the Commission that margin transactions with respect to securities are
prohibited under the 1940 Act because they create senior securities. A Fund's
ability to engage in margin transactions is also limited by the restrictions on
borrowing imposed by the 1940 Act.

     The Board believes that the portion of the policies prohibiting short sales
of securities is not necessary because each Fund will be limited in its ability
to sell securities short by the restrictions on the issuance of senior
securities imposed by the 1940 Act. A short sale is made by selling a security a
Fund does not own. A short sale is "against the box" if the Fund
contemporaneously owns, or has the right to obtain at no added cost, securities
identical to those sold short. The Commission staff has taken the position that
a short sale, other than a short sale against the box, involves the creation of
a senior security, and violates the 1940 Act prohibition on the issuance of
senior securities unless the fund sets aside cash or liquid securities in an
amount equal to the current value of the securities sold short.

     Should shareholders vote to eliminate the current fundamental policies, the
Board intends to adopt nonfundamental policies providing that (a) the Funds may
not make short sales of securities, other than short sales "against the box,"
and (b) the Funds may not purchase securities on margin, but they may obtain
such short-term credits as may be necessary for the clearance of securities
transactions and they may make margin deposits in connection with futures
contracts. These policies could be amended or eliminated in the future without
shareholder approval.

                                       16
<PAGE>   18

G. ELIMINATE THE POLICY PROHIBITING TRANSACTIONS WITH AFFILIATES

This proposal applies to Horizon Fund, Index 500 Fund and Venture Fund.

     Each of the foregoing Funds has a fundamental policy providing that the
Fund will not purchase or sell any securities other than Fund shares from or to
its investment adviser or any officer or director of the Fund or its investment
adviser. It is proposed that these policies be eliminated. These transactions
are prohibited by the 1940 Act and therefore the policy is not necessary.

H. ELIMINATE THE POLICY PROHIBITING PARTICIPATION IN A JOINT TRADING ACCOUNT

This proposal applies to Bond Fund, Horizon Fund, Index 500 Fund, Money Market
Fund, Real Estate Securities Fund, Spectrum Fund and Venture Fund

Each of the foregoing Funds has a fundamental policy providing that it may not
participate in a joint trading account. It is proposed that these policies,
which are set forth below, be eliminated.

     Bond Fund
     The Fund will not participate on a joint or joint and several basis in any
     trading account in securities (but this does not prohibit the "bunching" of
     orders for the sale or purchase of the Fund's portfolio securities with
     other accounts advised by the Fund's investment adviser to reduce brokerage
     commissions or otherwise to achieve best overall execution).

     Horizon Fund, Index 500 Fund, Money Market Fund, Real Estate Securities
     Fund, Spectrum Fund, Venture Fund
     The Fund will not participate on a joint or joint and several basis in any
     trading account in securities.

     Management believes that the Funds' policies regarding joint trading
accounts are unnecessary, since participation by a mutual fund in a joint
trading account is governed by the 1940 Act. Section 12(a)(2) of the 1940 Act
provides that it is unlawful for a fund to participate in a joint trading
account in securities "in contravention of such rules and regulations or orders
as the Commission may prescribe as necessary or appropriate in the public
interest or for the protection of investors." The Funds would currently have to
apply for an exemptive order from the Commission in order to participate in a
joint securities trading account, and they have no current intention of doing
so.

I. ELIMINATE THE POLICY LIMITING INVESTMENTS IN RESTRICTED SECURITIES AND OTHER
   ILLIQUID ASSETS

This proposal applies to Bond Fund, Horizon Fund, Mortgage Securities Fund and
Spectrum Fund.

     Each of the foregoing Funds has a fundamental policy restricting its
investments in restricted securities and other illiquid assets. It is proposed
that these policies, which are set forth below, be eliminated.

     Bond Fund
     The Fund will not invest more than a total of 10% of the Fund's net assets
     in securities restricted as to disposition under federal securities laws or
     otherwise or other illiquid assets (which include repurchase agreements
     with a maturity of over seven days and OTC options for which there is no
     secondary market).

     Horizon Fund
     The Fund will not invest more than a total of 10% of the Fund's net assets
     in securities restricted as to disposition under federal securities laws or
     otherwise or other illiquid assets (which include repurchase agreements
     with a maturity of over seven days).

     Mortgage Securities Fund
     The Fund will not invest more than a total of 10% of the Fund's net assets
     in securities restricted as to disposition under federal securities laws or
     otherwise or other illiquid assets (which include put and call options).

                                       17
<PAGE>   19

     Spectrum Fund
     The Fund will not invest more than a total of 10% of the Fund's net assets
     in securities restricted as to disposition under federal securities laws or
     otherwise or other illiquid assets.

     The Funds' policies regarding investments in securities "restricted as to
disposition under federal securities laws or otherwise" ("restricted
securities") were designed to assure that each Fund's portfolio would consist
primarily of securities that are readily marketable, and that the Funds would
therefore be able to make timely payment for redeemed shares. However, the
current policies are more restrictive than the Commission'scurrent policy, which
permits mutual funds to invest up to 15% of their net assets in illiquid
securities (10% for money market funds). The Commission determined that these
standards should satisfactorily assure that mutual funds will be able to make
timely payment for redeemed shares. In addition, some restricted securities are
no longer necessarily illiquid, and may in fact be readily marketable. Rule 144A
under the Securities Act of 1933 provides an exemption from the registration
requirements of the Securities Act for resales of restricted securities to
"qualified institutional buyers," as defined in the Rule. The result of this
rule has been the development of a more liquid and efficient institutional
resale market for restricted securities. Therefore, the Board of Directors has
determined that there should be no limitation imposed upon the total value of
restricted securities purchased by the Funds. Rather, each Fund should be
limited only with respect to the percentage of its net assets invested in
securities deemed to be illiquid, regardless of whether such securities are
restricted.

     The sale of illiquid securities often requires more time and results in
higher brokerage charges or dealer discounts and other selling expenses than
does the sale of securities eligible for trading on national securities
exchanges or in the over-the-counter markets. A Fund may be restricted in its
ability to sell such securities at a time when Advantus Capital deems it
advisable to do so. In addition, in order to meet redemption requests, a Fund
may have to sell other assets, rather than such illiquid securities, at a time
which is not advantageous. If the proposal is approved by shareholders, the
Funds will be able to invest to an unlimited extent in Rule 144A securities
which are determined to be liquid under guidelines adopted by the Funds' Board
of Directors. However, investing in Rule 144A securities could have the effect
of increasing the level of illiquidity in the Funds to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.

     If shareholders approve elimination of the fundamental policy regarding
investments in restricted and other illiquid securities, each affected Fund will
adopt a non-fundamental policy providing that it may invest up to 15% of its net
assets in illiquid securities. This policy could be amended or eliminated in the
future without shareholder approval. However, the Board of Directors would not
be able to increase the percentage of a Fund's assets that could be invested in
illiquid securities absent a change in the Commission's position regarding these
investments.

J. ELIMINATE POLICIES PROHIBITING OR LIMITING OPTIONS TRANSACTIONS

This proposal applies to Horizon Fund, Index 500 Fund, Money Market Fund,
Spectrum Fund and Venture Fund.

     Each of the foregoing Funds has a fundamental policy prohibiting or
limiting options transactions. It is proposed that these policies, which are set
forth below, be eliminated.

     Horizon Fund
     The Fund will not write put or call options, except covered call options
     which are traded on national securities exchanges with respect to common
     stocks in its portfolio, in an aggregate amount not greater than 15% of its
     net assets; or purchase options, except call options in order to close out
     a position.

     Index 500 Fund
     The Fund will not write put or call options.

                                       18
<PAGE>   20

     Money Market Fund
     The Fund will not write or purchase put or call options, or combinations
     thereof.

     Spectrum Fund
     The Fund will not write call or purchase put options, except covered
     options which are traded on national securities exchanges with respect to
     securities in its portfolio, in an amount not greater than 15% of its net
     assets, or purchase a call option or write a put option, except to close
     out a position.

     Venture Fund
     The Fund will not write put or call options, except covered call options
     which are traded on national securities exchanges with respect to common
     stocks in its portfolio, in an aggregate amount not greater than 15% of its
     net assets.

     The Board believes that it would be in shareholders' best interests for the
Funds to have the maximum flexibility regarding the use of put and call options
going forward. Each Fund intends to limit the total market value of securities
against which it may write call or put options to 20% of its total assets. In
addition, no Fund intends to commit more than 5% of its total assets to premiums
when purchasing put or call options. However, these policies may be changed at
any time without shareholder approval.

     A put option gives the purchaser the right to sell a security or other
instrument to the writer of the option at a stated price during the term of the
option. A call option gives the purchaser the right to purchase a security or
other instrument from the writer of the option at a stated price during the term
of the option. Thus, if a Fund writes a call option on a security, it becomes
obligated during the term of the option to deliver the security underlying the
option upon payment of the exercise price. If a Fund writes a put option, it
becomes obligated during the term of the option to purchase the security
underlying the option at the exercise price if the option is exercised.

     Funds may use put and call options for a variety of purposes. For example,
if a portfolio manager wishes to hedge a security a fund owns against a decline
in price, the manager may purchase a put option on the underlying security;
i.e., purchase the right to sell the security to a third party at a stated
price. If the underlying security then declines in price, the manager can
exercise the put option, thus limiting the amount of loss resulting from the
decline in price. Similarly, if the manager intends to purchase a security at
some date in the future, the manager may purchase a call option on the security
today in order to hedge against an increase in its price before the intended
purchase date. Put and call options also can be used for speculative purposes.
For example, if a portfolio manager believes that the price of stocks generally
is going to rise, the manager may purchase a call option on a stock index, the
components of which are unrelated to the stocks held or intended to be
purchased. Finally, a portfolio manager may write options on securities owned in
order to realize additional income. Funds receive premiums from writing call or
put options, which they retain whether or not the options are exercised. By
writing a call option, a Fund might lose the potential for gain on the
underlying security while the option is open, and by writing a put option a Fund
might become obligated to purchase the underlying security for more than its
current market price upon exercise. If a Fund purchases a put or call option,
any loss to the Fund is limited to the premium paid for, and transaction costs
paid in connection with, the option.

     When a fund enters into options transactions, its risk is limited to a
certain extent by the provisions of the 1940 Act that prohibit mutual funds from
issuing senior securities. Certain options transactions could be deemed to
result in a prohibited issuance of senior securities, since they may obligate a
fund to pay money to a third party at some time in the future. However, the
Commission staff has taken the position that a fund may engage in these options
transactions if it takes certain steps designed to limit risk to the fund. These
steps typically involve either "covering" the transaction with an offsetting
transaction or segregating cash or liquid securities in an amount sufficient to
cover the fund's exposure under the option transaction. Although these steps
will not protect a fund from loss on these transactions, they assure that the
fund will have the securities or liquid assets required to meet its obligations
thereunder, and they prevent the fund from effectively "leveraging" its
portfolio.

                                       19
<PAGE>   21

     Given these staff positions, the Board of Directors believes that it is
appropriate to eliminate the fundamental investment restrictions discussed
above. In addition, the elimination of these restrictions will provide the Board
with the flexibility to determine, without shareholder vote, the extent to which
the Funds may enter into options transactions in the future.

K. ELIMINATE DIVERSIFICATION POLICIES

This proposal applies to Bond Fund, Horizon Fund, Money Market Fund, Mortgage
Securities Fund and Spectrum Fund.

     Each of the foregoing Funds has one or more policies related to
diversification. It is proposed that these policies, which are set forth below,
be eliminated.

     Bond Fund, Horizon Fund, Spectrum Fund
     The Fund will not purchase any security (other than securities issued or
     guaranteed by the United States Government, its agencies or
     instrumentalities) if, as a result, more than 5% of the Fund's total assets
     would be invested in securities of a single issuer, except that up to 25%
     of the value of the Fund's total assets may be invested without regard to
     this limitation.

     The Fund will not acquire more than 10% of any class of securities of an
     issuer (taking all preferred stock issues of an issuer as a single class
     and all debt issues of an issuer as a single class) or acquire more than
     10% of the outstanding voting securities of an issuer.

     Money Market Fund
     The Fund will not purchase any security (other than securities issued or
     guaranteed by the United States Government, its agencies or
     instrumentalities) if, as a result, more than 5% of the Fund's total assets
     would be invested in securities of a single issuer.

     The Fund will not acquire more than 10% of any class of securities of an
     issuer (taking all preferred stock issues of an issuer as a single class
     and all debt issues of an issuer as a single class) or acquire more than
     10% of the outstanding voting securities of an issuer.

     Mortgage Securities Fund
     The Fund will not purchase any security (other than securities issued or
     guaranteed by the United States Government, its agencies or
     instrumentalities) if, as a result, more than 5% of the Fund's total assets
     would be invested in securities of a single issuer, except that up to 25%
     of the value of the Fund's total assets may be invested without regard to
     this limitation.

     Management believes that it is appropriate to eliminate each of these
investment policies. Each of the foregoing Funds has elected, as a fundamental
policy that may not be changed without shareholder vote, to operate as a
"diversified" investment company as defined under the 1940 Act. This fundamental
policy will not change if you vote to eliminate the policies listed above.
Section 5(b)(1) of the 1940 Act currently defines a diversified investment
company as one that meets the following requirements:

     At least 75% of the value of its total assets is represented by cash and
     cash items (including receivables), Government securities, securities of
     other investment companies, and other securities for the purposes of this
     calculation limited in respect of any one issuer to an amount not greater
     in value than 5 per centum of the value of the total assets of such
     management company and to not more than 10 per centum of the outstanding
     voting securities of such issuer.

This definition is nearly identical to the diversification policies currently in
place for Horizon Fund, Spectrum Fund, Bond Fund and Mortgage Securities Fund,
and management therefore feels that these diversification policies are redundant
and unnecessary. The policy currently in place for Money Market Fund is more
restrictive than is required for the Fund to operate as a diversified Fund,
since it applies to 100% of the Fund's assets. Management believes that the
policy is unnecessarily restrictive and should be eliminated.

                                       20
<PAGE>   22

L. ELIMINATE POLICIES REGARDING INVESTMENTS IN ISSUERS THAT HAVE BEEN IN
   OPERATION FOR LESS THAN THREE YEARS

This proposal applies to Bond Fund, Horizon Fund, Money Market Fund, Mortgage
Securities Fund and Spectrum Fund.

     Each of the foregoing Funds has a fundamental policy limiting investments
in issuers that have been in operation for less than three years. It is proposed
that these policies, which are set forth below, be eliminated.

     Bond Fund, Horizon Fund, Mortgage Securities Fund, Spectrum Fund
     The Fund will not invest more than a total of 5% of its total assets in
     securities of businesses (including predecessors) less than three years old
     or equity securities which are not readily marketable.

     Money Market Fund
     The Fund will not invest more than 5% of its total assets in securities of
     businesses (including predecessors) less than three years old.

     In the past, the securities laws of some states imposed limitations on a
fund's ability to invest in issuers which had been in business for less than
three years. These laws are no longer in effect, and the Board has therefore
recommended eliminating the above fundamental restrictions. In addition, the
above restriction for Bond Fund, Horizon Fund, Mortgage Securities Fund and
Spectrum Fund also limits investments in equity securities which are not readily
marketable. These investments will be governed by the Funds' nonfundamental
investment restriction governing investments in illiquid securities, discussed
above.

     Companies which have been in operation for less than three years could have
relatively small equity market capitalizations (e.g., under $1 billion).
Although these companies may provide greater opportunities for increased
investment return, they also involve greater risk. These companies often have
limited product lines, markets or financial resources. The securities of these
companies may trade less frequently and in limited volume, and only in the
over-the-counter market or on a regional securities exchange. As a result, these
securities may fluctuate in value more than those of larger, more established
companies.

M. ELIMINATE THE POLICY ADDRESSING POTENTIAL CONFLICTS OF INTEREST

This proposal applies to Bond Fund, Horizon Fund, Money Market Fund, Mortgage
Securities Fund and Spectrum Fund.

     Each of the foregoing Funds is subject to the following fundamental policy
addressing potential conflicts of interest:

     The Fund will not purchase or retain securities of any company if officers
     and directors of the Fund or of its investment adviser who individually own
     more the 1/2 of 1% of the shares or securities of that company, together
     own more than 5%.

     It is proposed that this policy be eliminated. The policy originated with
now obsolete state securities laws which were designed to prevent conflicts of
interest in the management of mutual funds. Management believes that the Funds'
Code of Ethics is the best way to accomplish this objective. The Code of Ethics,
which has been adopted in accordance with Commission rules, restricts the
private investment activities of Fund Directors, officers, key advisory
personnel and certain other employees of Advantus Capital. The current policy
takes the opposite approach by potentially restricting Fund investments.
Management believes that the Funds' Code of Ethics is a more appropriate way to
address potential conflicts of interest.

N. ELIMINATE THE POLICY PROHIBITING INVESTING IN COMPANIES FOR CONTROL

This proposal applies to Bond Fund, Horizon Fund, Money Market Fund, Mortgage
Securities Fund and Spectrum Fund.

     Each of the foregoing Funds is subject to a fundamental policy providing
that "the Fund will not make investments for the purpose of exercising control
or management." It is proposed that this policy be

                                       21
<PAGE>   23

eliminated. The policy was adopted to comply with state securities laws that no
longer apply to the Fund, and management believes that the policy is not
necessary. None of the Funds invests in companies for the purpose of exercising
control over, or managing, those companies. Elimination of the policy will not
change the way any of the Funds currently subject to the policy is managed.

O. ELIMINATE THE POLICY RESTRICTING INVESTMENTS IN OTHER INVESTMENT COMPANIES

This proposal applies to Bond Fund, Horizon Fund, Money Market Fund, Mortgage
Securities Fund and Spectrum Fund.

     Each of the foregoing Funds is subject to a fundamental policy providing
that "the Fund will not invest in the securities of other investment companies
with an aggregate value in excess of 5% of the Fund's total assets, except
securities acquired as a result of a merger, consolidation or acquisition of
assets." It is proposed that this policy be eliminated.

     The Funds are not required to have fundamental policies regarding their
investments in other investment companies, which are governed by the 1940 Act.
The 1940 Act provides that a fund may not invest in the securities of another
investment company if, after the purchase, the acquiring fund owns (i) more than
3% of the voting stock of the acquired company, (ii) securities of the acquired
company with a value in excess of 5% of the total value of the acquiring fund,
or (iii) securities issued by the acquired company and all other investment
companies having an aggregate value in excess of 10% of the total assets of the
acquiring fund. The Board of Directors believes that the restrictions imposed by
the 1940 Act on investments in other companies are sufficient for the protection
of Fund shareholders. In addition, deletion of the above fundamental policy will
eliminate the need for a shareholder vote should the 1940 Act provisions
governing investment companies ever change, or should any Fund decide to seek
exemptive relief from those provisions. The Board also believes that Spectrum
Fund and Horizon Fund, which invest principally in equity securities, will find
the ability to invest up to 10% of total assets in the securities of other
investment companies particularly beneficial. This change will provide Spectrum
Fund and Horizon Fund with an increased ability to invest in securities such as
S&P 500 Depositary Receipts ("SPDRs") or other types of depositary receipts
which track stock indexes. These securities are shares of ownership of long-term
unit investment trusts (a type of investment company) that hold all of the stock
included in the relevant underlying index.

VOTE REQUIRED

     THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
TO APPROVE THE PROPOSED CHANGES TO THAT FUND'S INVESTMENT POLICIES. The changes
must be approved by a majority of the outstanding shares of the Fund, as defined
in the 1940 Act, which means the lesser of the vote of (a) 67% of the shares of
the Fund present at a meeting where more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
the Fund. Unless otherwise instructed, the proxies will vote for the approval of
the proposed investment policy changes.

                                 PROPOSAL THREE
                           TO APPROVE A CHANGE IN THE
                      INVESTMENT OBJECTIVE OF HORIZON FUND

This proposal applies to Horizon Fund

     The current investment objective of Horizon Fund is long-term growth of
capital combined with a moderate level of current income. The fund invests
primarily in various types of equity securities of mid and large capitalization
companies (i.e., companies with a market capitalization of at least $1 billion).
Advantus Capital has advised the Board that it is becoming increasingly
difficult for the portfolio manager to find securities that pay dividends.
Companies are becoming more likely to reinvest all of their income into the
business and less likely to distribute their income to shareholders. Lower
dividend yields on the Fund's portfolio of securities has reduced the Fund's
dividend income to a point where income is less than Fund expenses. As a
consequence, the Fund has not paid income dividends to shareholders in several
years.

                                       22
<PAGE>   24

Advantus Capital therefore recommended to the Board that the Fund's objective be
changed to eliminate income as an objective. If shareholders approve, Horizon
Fund's objective will be "long-term growth of capital." While the Fund may still
purchase securities that pay dividends, it will no longer have income as an
objective in making investment decisions.

VOTE REQUIRED

     THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF HORIZON FUND
VOTE TO APPROVE THE PROPOSED CHANGE IN THE FUND'S INVESTMENT OBJECTIVE. The
change must be approved by a majority of the outstanding shares of the Fund, as
defined in the 1940 Act, which means the lesser of the vote of (a) 67% of the
shares of the Fund present at a meeting where more than 50% of the outstanding
shares are present in person or by proxy, or (b) more than 50% of the
outstanding shares of the Fund. Unless otherwise instructed, the proxies will
vote for the approval of the proposed investment objective change.

                                 PROPOSAL FOUR
                         TO APPROVE AMENDED INVESTMENT
                   ADVISORY AND MANAGEMENT AGREEMENTS BETWEEN
                EACH FUND AND ADVANTUS CAPITAL MANAGEMENT, INC.

This proposal applies to all Funds

PROPOSED AMENDMENTS TO INVESTMENT ADVISORY AGREEMENTS

     Advantus Capital serves as the investment advisor to each Fund under
separate investment advisory agreements (the "Current Agreements"). The Board of
Directors of the Funds is recommending that shareholders approve an amended
advisory investment agreement for each Fund (the "Amended Agreements"). A form
of Amended Agreement is attached to this proxy statement as Appendix A. Except
for the modifications discussed below, each Fund's Amended Agreement is
substantially identical to its Current Agreement. (For a detailed discussion of
the Current Agreements, refer to the section below entitled "-- Information
Concerning the Current Agreements.") If approved by shareholders, the Amended
Agreements will go into on effect May 1, 2000. The Amended Agreements include
the following modifications of the Current Agreements:

     A Decrease in Advisory Fees and the Addition of, or a Change in,
Breakpoints for Bond Fund, Cornerstone Fund, Enterprise Fund, Horizon Fund,
International Balanced Fund, Mortgage Securities Fund, Spectrum Fund and Venture
Fund. For Bond Fund, Cornerstone Fund, Enterprise Fund, Horizon Fund,
International Balanced Fund, Mortgage Securities Fund, Spectrum Fund and Venture
Fund, the Amended Agreements will incorporate a decrease in the advisory fee
payable by the Fund to Advantus Capital. In addition, for each of these Funds,
"breakpoints" will be included in Fund's advisory fee schedule. This means that
a Fund's advisory fee as a percentage of its net assets will decrease as the
Fund becomes larger. None of the Funds other than International Balanced Fund
currently has breakpoints in its advisory fee schedule. For International
Balanced Fund, breakpoints in the Amended Agreement are higher than in the
Current Agreement, in order to bring International Balanced Fund's breakpoints
into line with those of the other Funds.

     For each Fund other than International Balanced Fund, the advisory fee will
decrease by 0.10% of the Fund's net assets. For International Balanced Fund, the
current advisory fee is 0.95% of the first $25 million of assets, decreasing to
as low as 0.65% of assets in excess of $100 million. The proposed fee is 0.70%
of the first $250 million of net assets, decreasing to as low as 0.55% of assets
in excess of $1 billion. A detailed comparison of the current and proposed
advisory fee schedules for each Fund is set forth below under the caption
"-- Current and Proposed Advisory Fee Schedules."

     The Addition of Breakpoints for Index 500 Fund, Money Market Fund and Real
Estate Securities Fund. The base investment advisory fee will remain unchanged
for Index 500 Fund, Money Market Fund and Real Estate Securities Fund. However,
breakpoints will be added to the advisory fee schedule for each of these Funds.
Although none of these Funds is currently large enough to be impacted by the
proposed breakpoints, as

                                       23
<PAGE>   25

each Fund becomes larger and reaches its first breakpoint, its advisory fee will
decrease as a percentage of its net assets. Proposed breakpoints appear below
under the caption "-- Current and Proposed Advisory Fee Schedules."

     For Bond Fund, Cornerstone Fund, Enterprise Fund, Horizon Fund,
International Balanced Fund, Mortgage Securities Fund, Spectrum Fund and Venture
Fund, Deletion of the Requirement That Advantus Capital Pay the Cost of Transfer
Agent Services. The Current Agreements of Bond Fund, Cornerstone Fund,
Enterprise Fund, Horizon Fund, International Balanced Fund, Mortgage Securities
Fund, Spectrum Fund and Venture Fund provide that Advantus Capital is
responsible for bearing the cost of transfer agent, dividend disbursing agent
and redemption agent services. Under the Amended Agreements the Funds will be
responsible for these costs. AS A RESULT OF THIS MODIFICATION, DESPITE THE
LOWERING OF ADVISORY FEES AND THE ADDITION OF BREAKPOINTS, OVERALL FUND EXPENSES
FOR BOND FUND, CORNERSTONE FUND, ENTERPRISE FUND, HORIZON FUND, INTERNATIONAL
BALANCED FUND, MORTGAGE SECURITIES FUND, SPECTRUM FUND AND VENTURE FUND WILL
INCREASE ON A PRO FORMA BASIS. EXPENSE TABLES SHOWING THE FUNDS' CURRENT
EXPENSES, AND THEIR PRO FORMA EXPENSES ASSUMING APPROVAL OF THE AMENDED
AGREEMENTS, ARE SET FORTH IN APPENDIX B TO THIS PROXY STATEMENT. However, the
Amended Agreements for Bond Fund, Cornerstone Fund, Enterprise Fund, Horizon
Fund, International Balanced Fund, Mortgage Securities Fund, Spectrum Fund and
Venture Fund include an agreement by Advantus Capital to reimburse each Fund,
through its 2001 fiscal year end, to the extent that total Fund operating
expenses exceed current expense levels. The expense caps that will be in place
for the Class A, Class B and Class C shares of each Fund are as follows: Bond
Fund -- 1.15%, 1.90%, 1.90%; Cornerstone Fund -- 1.24%, 1.99%, 1.99%; Enterprise
Fund -- 1.38%, 2.23%, 2.23%; Horizon Fund -- 1.35%, 2.10%, 2.10%; International
Balanced Fund -- 1.62%, 2.42%, 2.42%; Mortgage Securities Fund -- 0.95%, 1.70%,
1.70%; Spectrum Fund -- 1.12%, 1.87%, 1.87%; and Venture Fund -- 1.40%, 2.25%,
2.25%.

     For Each Fund Other Than International Balanced Fund, the Addition of a
Provision Allowing Advantus Capital to Engage a Sub-Advisor. The Current
Agreements for the Funds other than International Balanced Fund do not contain a
provision explicitly allowing Advantus Capital to retain a sub-advisor. As
discussed below under Proposal Five, the Board of Directors is recommending that
shareholders approve sub-advisory agreements for Enterprise Fund and Venture
Fund. Therefore, a provision has been added to the Amended Agreements that will
allow Advantus Capital to retain one or more sub-advisors. This provision has
been added to all Amended Agreements, not just those for Enterprise Fund and
Venture Fund. This will allow Advantus Capital to retain a sub-advisor for a
Fund in the future without submitting an amendment to that Fund's investment
advisory agreement to shareholders for their approval. (The 1940 Act, as
currently interpreted, would require shareholder approval of the sub-advisory
agreement.) Each Amended Agreement authorizes Advantus Capital, at its option
and expense, to retain one or more sub-advisors for the respective Fund and to
enter into such service agreements as Advantus Capital deems appropriate in
connection with the performance of its duties and obligations under the
Agreement.

     For Each Fund, the Modification of Amendment Provisions. The Amended
Agreements will allow Advantus Capital and the Funds to amend their respective
agreements subject to the provisions of Section 15 of the 1940 Act, as modified
or interpreted by the Commission. In contrast, the current agreements explicitly
require the vote of a majority of the outstanding voting securities of the Fund
to authorize all material amendments. Generally, the proposed modification to
the Current Agreements' amendment provisions will allow Advantus Capital and a
Fund to amend the respective agreement without shareholder vote if the 1940 Act
permits them to do so. For example, under current interpretations of Section 15
of the 1940 Act, Advantus Capital and the Funds would have the ability to amend
the Amended Agreements to immediately reflect a management fee decrease (but not
an increase) without the delay of having first to conduct a proxy solicitation.
In short, the proposed modification gives Advantus Capital and the Funds added
flexibility to amend the Amended Agreements subject to 1940 Act constraints. Of
course, any future amendments to the Amended Agreements would require the
approval of the respective Fund's Board of Directors.

                                       24
<PAGE>   26

CURRENT AND PROPOSED ADVISORY FEE SCHEDULES

     The following table sets forth the current and proposed advisory fee
schedules for each Fund, and the net assets of each Fund at December 31, 1999.
In the table, advisory fees are expressed as a percentage of the Fund's average
daily net assets. Where Advantus Capital has retained or intends to retain a
sub-advisor for a Fund (see Proposal Five, below), the sub-advisory fees paid by
Advantus Capital out of its advisory fee also are indicated.

<TABLE>
<CAPTION>
FUND
- ----
<S>                              <C>                      <C>
Bond...........................  Current advisory fee:    0.70%
                                 Proposed advisory fee:   0.60% of assets to $250 million; 0.55% of
                                                          assets exceeding $250 million to $500
                                                          million; 0.50% of assets exceeding $500
                                                          million to $1 billion; 0.45% of assets
                                                          exceeding $1 billion
                                 Net assets at 12/31/99:  $26,101,262
Cornerstone....................  Current advisory fee:    0.80%
                                 Proposed advisory fee:   0.70% of assets to $500 million; 0.65% of
                                                          assets exceeding $500 million to $1
                                                          billion; 0.60% of assets exceeding $1
                                                          billion to $2 billion; 0.55% of assets
                                                          exceeding $2 billion
                                 Net assets at 12/31/99:  $113,280,427
Enterprise.....................  Current advisory fee:    0.80%
                                 Proposed advisory fee:   0.70% of assets to $1 billion; 0.68% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.66% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $67,480,045
                                 Sub-advisory fee:        Under the sub-advisory agreement described
                                                          in Proposal Five, a new sub-advisor will
                                                          receive fees from Advantus Capital ranging
                                                          from 0.65% to 0.45%, depending on total
                                                          assets of all funds and other accounts
                                                          advised by the sub-advisor for Advantus
                                                          Capital
Horizon........................  Current advisory fee:    0.80%
                                 Proposed advisory fee:   0.70% of assets to $1 billion; 0.65% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.60% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $97,679,395
Index 500......................  Current advisory fee:    0.34%
                                 Proposed advisory fee:   0.34% of assets to $500 million; 0.30% of
                                                          assets exceeding $500 million to $1
                                                          billion; 0.25% of assets exceeding $1
                                                          billion to $2 billion; 0.20% of assets
                                                          exceeding $2 billion
                                 Net assets at 12/31/99:  $61,351,031
</TABLE>

                                       25
<PAGE>   27

<TABLE>
<CAPTION>
FUND
- ----
<S>                              <C>                      <C>
International Balanced.........  Current advisory fee:    0.95% of assets to $25 million; 0.80% of
                                                          assets exceeding $25 million to $50
                                                          million; 0.75% of assets exceeding $50
                                                          million to $100 million; 0.65% of assets
                                                          exceeding $100 million
                                 Proposed advisory fee:   0.70% of assets to $250 million; 0.65% of
                                                          assets exceeding $250 million to $500
                                                          million; 0.60% of assets exceeding $500
                                                          million to $1 billion; 0.55% of assets
                                                          exceeding $1 billion
                                 Net assets at 12/31/99:  $60,346,282
                                 Sub-advisory fee:        0.70% of assets to $25 million; 0.55% of
                                                          assets exceeding $25 million to $50
                                                          million; 0.50% of assets exceeding $50 to
                                                          $100 million; 0.40% of assets exceeding
                                                          $100 million; provided that beginning May
                                                          1, 2000, breakpoints will be based upon the
                                                          total assets of all funds and other
                                                          accounts advised by the sub-advisor for
                                                          Advantus Capital if and when (a) the
                                                          sub-advisor provides other sub-advisory
                                                          services to Advantus Capital for small
                                                          company domestic equity accounts with
                                                          assets exceeding $100 million and (b)
                                                          Minnesota Life Insurance Company offers
                                                          certain funds advised by the sub-advisor as
                                                          investment options under its variable
                                                          insurance products. If these conditions are
                                                          met, the asset classes managed by the
                                                          sub-advisor that have the highest fee
                                                          schedules will be counted first as assets
                                                          of International Balanced Fund in order to
                                                          determine the appropriate starting
                                                          breakpoint
Money Market...................  Current advisory fee:    0.50%
                                 Proposed advisory fee:   0.50% of assets to $500 million; 0.45% of
                                                          assets exceeding $500 million to $1
                                                          billion; 0.425% of assets exceeding $1
                                                          billion to $2 billion; 0.40% of assets
                                                          exceeding $2 billion
                                 Net assets at 12/31/99:  $39,943,860
Mortgage Securities............  Current advisory fee:    0.575%
                                 Proposed advisory fee:   0.475% of assets to $1 billion; 0.46% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.45% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $50,299,132
Real Estate Securities.........  Current advisory fee:    0.75%
                                 Proposed advisory fee:   0.75% of assets to $1 billion; 0.725% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.70% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $8,771,107
Spectrum.......................  Current advisory fee:    0.60%
                                 Proposed advisory fee:   0.50% of assets to $1 billion; 0.48% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.46% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $113,907,711
</TABLE>

                                       26
<PAGE>   28

<TABLE>
<CAPTION>
FUND
- ----
<S>                              <C>                      <C>
Venture........................  Current advisory fee:    0.80%
                                 Proposed advisory fee:   0.70% of assets to $1 billion; 0.68% of
                                                          assets exceeding $1 billion to $2 billion;
                                                          0.66% of assets exceeding $2 billion
                                 Net assets at 12/31/99:  $32,783,775
                                 Sub-advisory fee:        Under the sub-advisory agreement described
                                                          in Proposal Five, a new sub-advisor will
                                                          receive fees from Advantus Capital ranging
                                                          from 0.65% to 0.50%, depending on total
                                                          "small company value" assets of all funds
                                                          and other accounts advised by the
                                                          sub-advisor for Advantus Capital
</TABLE>

REASONS FOR BOARD OF DIRECTORS' RECOMMENDATION

     Advantus Capital recommended the changes to the Current Agreements
discussed above to help ensure that Advantus Capital receives fees for its
services that will allow it to:

     - attract and retain high quality investment management and research
       personnel;

     - provide shareholders of certain Funds with access to experienced, high
       quality sub-advisors; and

     - continue to provide technology and other systems necessary to keep the
       Funds operating effectively.

A detailed comparison of the current and proposed advisory fee schedules is set
forth above under the caption "-- Current and Proposed Advisory Fee Schedules."

     In determining whether to approve the Amended Agreements, the Board of
Directors considered the following material factors:

     - The Board noted that in the case of Index 500 Fund, Money Market Fund and
       Real Estate Securities Fund, the adoption of the Amended Agreements would
       result in no change to the Funds' total expense ratios, since those Funds
       are responsible for paying the costs of transfer agent, dividend
       disbursing agent and redemption agent services under their Current
       Agreements and none of the Funds has reached a size where it would
       benefit from the proposed new breakpoints. However, shareholders could
       benefit from the proposed breakpoints as the Funds grow, while not
       experiencing any financial detriment.

     - The Board recognized that in the case of the other Funds, the net effect
       of the proposed revisions to the Funds' advisory fee schedules and the
       deletion of the requirement that Advantus Capital bear the costs of
       transfer agent, dividend disbursing agent and redemption agent services
       would be to increase each Fund's total expense ratio. The Board also
       recognized, however, that in the case of each such Fund, Advantus Capital
       has guaranteed to maintain total expenses at their current levels through
       at least fiscal 2001. In addition, the Board also determined that it
       would not be in shareholders' interests to decrease advisory fees by an
       amount equivalent to the costs of transfer agent, dividend disbursing
       agent and redemption agent services (thus resulting in no change to total
       expense ratios), for the following reasons:

      - The Board recognized that, with the exception of a decrease in advisory
        fees for Spectrum Fund, the Funds' advisory fee schedules have not been
        modified since the Funds' respective dates of inception, which date as
        far back as 1985. Advantus Capital represented that since these
        respective dates of inception, competition among mutual funds for
        qualified portfolio managers, analysts, and sub-advisors has
        intensified. Advantus Capital also presented information indicating that
        this increased competition has increased the expense associated with
        attracting and retaining qualified portfolio managers, securities
        analysts, and sub-advisors. Advantus Capital represented that the
        proposed new advisory fee schedule has been designed to enable it to
        meet this competition. The Board believed

                                       27
<PAGE>   29

        that it would be in shareholders' interests for Advantus Capital to
        continue to have the ability to attract and retain qualified portfolio
        managers, analysts, and sub-advisors.

      - The Board reviewed information concerning the advisory fees paid by
        comparable mutual funds and an analysis of the anticipated profitability
        of the proposed new advisory fee schedule to Advantus Capital. In
        addition, the Board reviewed the nature, quality, and extent of the
        investment advisory services provided and to be provided by Advantus
        Capital to the Funds and the Funds' historical performance. Based on
        these reviews, the Board believed that the proposed advisory fees are
        reasonable in light of the nature, quality, and extent of the investment
        advisory services provided and to be provided by Advantus Capital to the
        Funds and the Funds' historical performance.

      - The Board also reviewed information concerning the total expense ratios
        of comparable mutual funds. Based on this review, the Board believed
        that the Funds' total expense ratios, after giving effect to the
        proposed new advisory fee schedule and the proposed guarantee of total
        expenses, would remain near or below the medians for funds it deemed to
        be comparable.

      - The Board also noted that even those Funds that would experience
        increased total expense ratios would benefit from the "breakpoints"
        proposed by Advantus Capital at higher asset levels. It recognized,
        however, that there is no assurance that any Fund will reach the size at
        which its "breakpoints" take effect.

      - The Board also considered the benefits that Advantus Capital and its
        affiliates would realize under the proposed changes to the advisory fee
        schedule. These benefits include the advisory fees to be received by
        Advantus Capital under the Amended Agreements and the fact that Advantus
        Capital would be relieved of its obligation to bear the costs of
        transfer agent, dividend disbursing agent and redemption agent services
        for certain Funds. The Board also recognized that Ascend Financial, an
        affiliate of Advantus Capital, receives compensation in connection with
        sales of Fund shares; that Minnesota Life Insurance Company, an
        affiliate of Advantus Capital, receives administrative fees from the
        Funds; that Advantus Capital may benefit from research services
        purchased with the Funds' "soft dollars"; and that all of the foregoing
        types of benefits may increase as the Funds' net assets increase.

     - With respect to the proposal that a provision be added allowing Advantus
       Capital to retain one or more sub-advisors, the Board considered the
       appropriateness of retaining sub-advisors for Enterprise Fund and Venture
       Fund, as discussed below under Proposal Five. The Board also noted that
       the addition of such a provision to the advisory agreements of all Funds
       would allow Advantus Capital to retain a sub-advisor for a Fund in the
       future without submitting an amendment to that Fund's investment advisory
       agreement to shareholders for their approval. The Board determined that
       this would not be adverse to the interests of shareholders since, under
       current interpretations of the 1940 Act, the agreement between Advantus
       Capital and the sub-advisor would be subject to shareholder approval.

     - With respect to the proposal that would allow the advisory agreement to
       be amended without shareholder approval when regulatory interpretations
       of the 1940 Act so permit, the Board noted that current Commission
       interpretations only permit this to be done when fund shareholders will
       not be adversely affected. The Board believed that this change would save
       the Funds the expense of proxy solicitations in such cases, while
       continuing to allow each Fund's shareholders to vote on amendments to
       their advisory agreement that might adversely affect them.

     Based on the considerations described above, the Board of Directors
concluded that the Amended Agreements are in the best interests of the Funds and
their shareholders. Accordingly, the Board of Directors, including those
directors who are not "interested persons" of Advantus Capital or the Funds,
unanimously approved the Amended Agreements at an "in-person" meeting held on
February 10, 2000, and recommended that shareholders should approve the changes
as well.

                                       28
<PAGE>   30

ACTUAL AND PRO FORMA EXPENSE TABLES AND EXAMPLES

     Each Fund's operating expenses are paid out of its assets, and thus are
indirectly borne by shareholders. As described above, the Board of Directors is
recommending that shareholders approve both (i) changes in the schedule of
investment advisory fees paid by each Fund, and (ii) a deletion of the advisory
agreement requirement that Advantus Capital pay the costs of transfer agent,
dividend disbursing agent and redemption agent services for Bond Fund,
Cornerstone Fund, Enterprise Fund, Horizon Fund, International Balanced Fund,
Mortgage Securities Fund, Spectrum Fund and Venture Fund.

     The following tables set forth the actual operating expenses currently
borne by the Funds, and the pro forma operating expenses that the Funds will
bear if the Amended Agreements are approved. Actual expenses are based on each
Fund's expenses during its most recent fiscal year, restated to reflect an
increase in "other expenses" due to increased administration fees and proxy
solicitation expenses. Fee tables are not included for Index 500 Fund, Money
Market Fund and Real Estate Securities Fund, since the only proposed fee change
for these Funds is the addition of asset level "breakpoints" to the advisory fee
schedules. At current asset levels, the addition of these breakpoints should not
have an impact on total Fund operating expenses.

     After the table for each Fund, an example is set forth which shows the
costs you would bear indirectly as a result of investing in the Fund. These
examples are intended to help you compare the costs of investing in the Fund
with the cost of investing in other mutual funds. The examples assume that you
invest $10,000 in the Fund for the time periods indicated, that your investment
has a 5% return each year and that the Fund's operating expenses remain the
same. Your actual costs may be higher or lower than those set forth in the
examples.

                                       29
<PAGE>   31

BOND FUND

<TABLE>
<CAPTION>
                                                   CLASS A                CLASS B                CLASS C
                                             -------------------    -------------------    -------------------
                                             ACTUAL    PRO FORMA    ACTUAL    PRO FORMA    ACTUAL    PRO FORMA
                                             ------    ---------    ------    ---------    ------    ---------
<S>                                          <C>       <C>          <C>       <C>          <C>       <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)....     4.50%       4.50%      none        none       none        none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)....     1.00%**     1.00%**    5.00%       5.00%      none        none
Exchange Fees
  On first twelve exchanges each year....     none        none       none        none       none        none
  On each additional exchange............    $7.50       $7.50      $7.50       $7.50      $7.50       $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees........................     0.70%       0.60%      0.70%       0.60%      0.70%       0.60%
  Rule 12b-1 Fees........................     0.25%       0.25%      1.00%       1.00%      1.00%       1.00%
  Other Expenses.........................     0.66%       1.05%      0.66%       1.05%      0.66%       1.05%
     Total Fund Operating Expenses*......     1.61%       1.90%      2.36%       2.65%      2.36%       2.65%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements are as follows.
   Pro forma expenses are based on a
   contractual commitment by Advantus
   Capital to cap expenses at these
   levels through September 30, 2001.....     1.15%       1.15%      1.90%       1.90%      1.90%       1.90%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will be
   imposed if such shares are sold within
   one year after the purchase date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                                1 YEAR                 3 YEARS                5 YEARS               10 YEARS
                          -------------------    -------------------    -------------------    -------------------
                          ACTUAL    PRO FORMA    ACTUAL    PRO FORMA    ACTUAL    PRO FORMA    ACTUAL    PRO FORMA
                          ------    ---------    ------    ---------    ------    ---------    ------    ---------
<S>                       <C>       <C>          <C>       <C>          <C>       <C>          <C>       <C>
Class A...............     $606       $634       $  935     $1,020      $1,287     $1,430      $2,275     $2,572
Class B...............      739        768        1,086      1,173       1,410      1,555       2,422      2,720
Class C...............      239        268          736        823       1,260      1,405       2,510      2,802
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                                 1 YEAR                 3 YEARS                5 YEARS               10 YEARS
                           -------------------    -------------------    -------------------    -------------------
                           ACTUAL    PRO FORMA    ACTUAL    PRO FORMA    ACTUAL    PRO FORMA    ACTUAL    PRO FORMA
                           ------    ---------    ------    ---------    ------    ---------    ------    ---------
<S>                        <C>       <C>          <C>       <C>          <C>       <C>          <C>       <C>
Class A................     $606       $634        $935      $1,020      $1,287     $1,430      $2,275     $2,572
Class B................      239        268         736         823       1,260      1,405       2,422      2,720
Class C................      239        268         736         823       1,260      1,405       2,510      2,802
</TABLE>

                                       30
<PAGE>   32

CORNERSTONE FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%     none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%     none      none
Exchange Fees
  On first twelve exchanges each year...  none      none       none      none       none      none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.80%      0.70%     0.80%      0.70%     0.80%      0.70%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.19%      0.40%     0.19%      0.40%     0.19%      0.40%
          Total Fund Operating
            Expenses*...................  1.24%      1.35%     1.99%      2.10%     1.99%      2.10%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements are as
   follows. Pro forma expenses are based
   on a contractual commitment by
   Advantus Capital to cap expenses at
   these levels through September 30,
   2001.................................  1.24%      1.24%     1.99%      1.99%     1.99%      1.99%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $669      $680      $  922    $  954     $1,194    $1,249     $1,967    $2,085
Class B...............    702       713         974     1,008      1,223     1,279      2,032     2,150
Class C...............    202       213         624       658      1,073     1,129      2,123     2,240
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $669      $680      $  922    $  954     $1,194    $1,249     $1,967    $2,085
Class B...............    202       213         624       658      1,073     1,129      2,032     2,150
Class C...............    202       213         624       658      1,073     1,129      2,123     2,240
</TABLE>

                                       31
<PAGE>   33

ENTERPRISE FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%      none       none      none       none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%      none       none
Exchange Fees
  On first twelve exchanges each year...   none       none      none       none      none       none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.80%      0.70%     0.80%      0.70%     0.80%      0.70%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.43%      0.73%     0.43%      0.73%     0.43%      0.73%
     Total Fund Operating Expenses*.....  1.48%      1.68%     2.23%      2.43%     2.23%      2.43%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements and waivers
are as follows. Pro forma expenses are
based on a contractual commitment by
Advantus Capital to cap expenses at
these levels through September 30,
2001. ..................................  1.38%      1.38%     2.23%      2.23%     2.23%      2.23%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                                1 YEAR               3 YEARS               5 YEARS               10 YEARS
                          ------------------    ------------------    ------------------    ------------------
                          ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA
                          ------   ---------    ------   ---------    ------   ---------    ------   ---------
<S>                       <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>
Class A...............     $692      $711       $  992    $1,050      $1,313    $1,412      $2,221    $2,428
Class B...............      726       746        1,047     1,108       1,345     1,446       2,287     2,494
Class C...............      226       246          697       758       1,195     1,296       2,376     2,581
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                                1 YEAR               3 YEARS               5 YEARS               10 YEARS
                          ------------------    ------------------    ------------------    ------------------
                          ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA
                          ------   ---------    ------   ---------    ------   ---------    ------   ---------
<S>                       <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>
Class A...............     $692      $711       $  992    $1,050      $1,313    $1,412      $2,221    $2,428
Class B...............      226       246          697       758       1,195     1,296       2,287     2,494
Class C...............      226       246          697       758       1,195     1,296       2,376     2,581
</TABLE>

                                       32
<PAGE>   34

HORIZON FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%     none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%     none      none
Exchange Fees
  On first twelve exchanges each year...  none      none       none      none       none      none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.80%      0.70%     0.80%      0.70%     0.80%      0.70%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.30%      0.69%     0.30%      0.69%     0.30%      0.69%
     Total Fund Operating Expenses*.....  1.35%      1.64%     2.10%      2.39%     2.10%      2.39%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements and waivers
   are as follows. Pro forma expenses
   are based on a contractual commitment
   by Advantus Capital to cap expenses
   at these levels through September 30,
   2001.................................  1.35%      1.35%     2.10%      2.10%     2.10%      2.10%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $680      $708      $  954    $1,039     $1,249    $1,393     $2,085    $2,387
Class B...............    713       742       1,008     1,095      1,279     1,425      2,150     2,453
Class C...............    213       242         658       745      1,129     1,275      2,240     2,540
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $680      $708      $  954    $1,039     $1,249    $1,393     $2,085    $2,387
Class B...............    213       242         658       745      1,129     1,275      2,150     2,453
Class C...............    213       242         658       745      1,129     1,275      2,240     2,540
</TABLE>

                                       33
<PAGE>   35

INTERNATIONAL BALANCED FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%     none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%     none      none
Exchange Fees
  On first twelve exchanges each year...  none      none       none      none       none      none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.86%      0.70%     0.86%      0.70%     0.86%      0.70%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.62%      0.90%     0.62%      0.90%     0.62%      0.90%
     Total Fund Operating Expenses*.....  1.73%      1.85%     2.48%      2.60%     2.48%      2.60%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements and waivers
   are as follows. Pro forma expenses
   are based on a contractual commitment
   by Advantus Capital to cap expenses
   at these levels through September 30,
   2001. ...............................  1.68%      1.62%     2.48%      2.42%     2.48%      2.42%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $716      $728      $1,065    $1,100     $1,437    $1,496     $2,479    $2,600
Class B...............    751       763       1,123     1,158      1,471     1,530      2,545     2,667
Class C...............    251       263         773       808      1,321     1,380      2,632     2,752
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $716      $728      $1,065    $1,100     $1,437    $1,496     $2,479    $2,600
Class B...............    251       263         773       808      1,321     1,380      2,545     2,667
Class C...............    251       263         773       808      1,321     1,380      2,632     2,752
</TABLE>

                                       34
<PAGE>   36

MORTGAGE SECURITIES FUND

<TABLE>
<CAPTION>
                                            CLASS A              CLASS B              CLASS C
                                       ------------------   ------------------   ------------------
                                       ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                       ------   ---------   ------   ---------   ------   ---------
<S>                                    <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering
  price).............................   4.50%     4.50%       none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales
  proceeds)..........................   1.00%**   1.00%**   5.00 %     5.00%       none      none
Exchange Fees
  On first twelve exchanges each
  year...............................    none      none       none      none       none      none
  On each additional exchange........   $7.50     $7.50      $7.50     $7.50      $7.50     $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees....................  0.575%    0.475%     0.575%    0.475%     0.575%    0.475%
  Rule 12b-1 Fees....................   0.25%     0.25%     1.00 %     1.00%      1.00%     1.00%
  Other Expenses.....................   0.42%     0.67%     0.42 %     0.67%      0.42%     0.67%
     Total Fund Operating
       Expenses*.....................   1.24%     1.39%     1.99 %     2.14%      1.99%     2.14%
- ------------------------------
 * Total Fund operating expenses
after
   expense reimbursements and waivers
are as follows. Pro forma expenses
are based on a contractual commitment
by Advantus Capital to cap expenses
at these levels through September 30,
2001 ................................   0.95%     0.95%      1.70%     1.70%      1.70%     1.70%
** Applies to purchases of at least
   $1 million, in which case a
   contingent deferred sales charge
   of 1.00% will be imposed if such
   shares are sold within one year
   after the purchase date.
</TABLE>

     EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                                 1 YEAR               3 YEARS               5 YEARS               10 YEARS
                           ------------------    ------------------    ------------------    ------------------
                           ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA
                           ------   ---------    ------   ---------    ------   ---------    ------   ---------
<S>                        <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>
Class A................     $571      $585        $826      $870       $1,100    $1,176      $1,882    $2,043
Class B................      702       717         974     1,020        1,223     1,299       2,032     2,192
Class C................      202       217         624       670        1,073     1,149       2,123     2,282
</TABLE>

     EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                                 1 YEAR               3 YEARS               5 YEARS               10 YEARS
                           ------------------    ------------------    ------------------    ------------------
                           ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA    ACTUAL   PRO FORMA
                           ------   ---------    ------   ---------    ------   ---------    ------   ---------
<S>                        <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>
Class A................     $571      $585        $826      $870       $1,100    $1,176      $1,882    $2,043
Class B................      202       217         624       670        1,073     1,149       2,032     2,192
Class C................      202       217         624       670        1,073     1,149       2,123     2,282
</TABLE>

                                       35
<PAGE>   37

SPECTRUM FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%     none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%     none      none
Exchange Fees
  On first twelve exchanges each year...  none      none       none      none       none      none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.60%      0.50%     0.60%      0.50%     0.60%      0.50%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.27%      0.61%     0.27%      0.58%     0.27%      0.58%
     Total Fund Operating Expenses*.....  1.12%      1.36%     1.87%      2.08%     1.87%      2.08%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements and waivers
are as follows. Pro forma expenses are
based on a contractual commitment by
Advantus Capital to cap expenses at
these levels through September 30,
2001. ..................................  1.12%      1.12%     1.87%      1.87%     1.87%      1.87%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                               1 YEAR              3 YEARS              5 YEARS              10 YEARS
                         ------------------   ------------------   ------------------   ------------------
                         ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                         ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                      <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A................   $658      $681       $886     $  957     $1,133    $1,254     $1,838    $2,095
Class B................    690       711        938      1,002      1,161     1,269      1,903     2,140
Class C................    190       211        588        652      1,011     1,119      1,995     2,226
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                               1 YEAR              3 YEARS              5 YEARS              10 YEARS
                         ------------------   ------------------   ------------------   ------------------
                         ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                         ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                      <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A................   $658      $681       $886     $  957     $1,133    $1,254     $1,838    $2,095
Class B................    190       211        588        652      1,011     1,119      1,903     2,140
Class C................    190       211        588        652      1,011     1,119      1,995     2,226
</TABLE>

                                       36
<PAGE>   38

VENTURE FUND

<TABLE>
<CAPTION>
                                               CLASS A              CLASS B              CLASS C
                                          ------------------   ------------------   ------------------
                                          ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
SHAREHOLDER FEES
  (Fees paid directly from your
     investment)
Maximum Sales Charge on Purchases
  (as a percentage of offering price)...  5.50%      5.50%     none      none       none      none
Maximum Deferred Sales Charge
  (as a percentage of sales proceeds)...  1.00%**    1.00%**   5.00%      5.00%     none      none
Exchange Fees
  On first twelve exchanges each year...  none      none       none      none       none      none
  On each additional exchange...........  $7.50      $7.50     $7.50      $7.50     $7.50      $7.50
ANNUAL FUND OPERATING EXPENSES:
  Management Fees.......................  0.80%      0.70%     0.80%      0.70%     0.80%      0.70%
  Rule 12b-1 Fees.......................  0.25%      0.25%     1.00%      1.00%     1.00%      1.00%
  Other Expenses........................  0.62%      0.84%     0.62%      0.84%     0.62%      0.84%
     Total Fund Operating Expenses*.....  1.67%      1.79%     2.42%      2.54%     2.42%      2.54%
- ------------------------------
 * Total Fund operating expenses after
   expense reimbursements and waivers
   are as follows. Pro forma expenses
   are based on a contractual commitment
   by Advantus Capital to cap expenses
   at these levels through July 31,
   2001. ...............................  1.40%      1.40%     2.25%      2.25%     2.25%      2.25%
** Applies to purchases of at least $1
   million, in which case a contingent
   deferred sales charge of 1.00% will
   be imposed if such shares are sold
   within one year after the purchase
   date.
</TABLE>

EXAMPLE -- expenses if you redeem your shares at the end of the indicated
periods:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $710      $722      $1,048    $1,082     $1,407    $1,466     $2,417    $2,539
Class B...............    745       757       1,105     1,141      1,441     1,500      2,484     2,606
Class C...............    245       257         755       791      1,291     1,350      2,571     2,692
</TABLE>

EXAMPLE -- expenses if you do not redeem your shares:

<TABLE>
<CAPTION>
                              1 YEAR              3 YEARS              5 YEARS              10 YEARS
                        ------------------   ------------------   ------------------   ------------------
                        ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA   ACTUAL   PRO FORMA
                        ------   ---------   ------   ---------   ------   ---------   ------   ---------
<S>                     <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>
Class A...............   $710      $722      $1,048    $1,082     $1,407    $1,466     $2,417    $2,539
Class B...............    245       257         755       791      1,291     1,350      2,484     2,606
Class C...............    245       257         755       791      1,291     1,350      2,571     2,692
</TABLE>

                                       37
<PAGE>   39

ACTUAL AND PRO FORMA ADVISORY FEES PAID; OTHER FEES PAID TO AFFILIATES OF
ADVANTUS CAPITAL

     The following table sets forth the actual advisory fees paid by each Fund
during its last fiscal year (the year ended July 31, 1999 for Index 500 Fund,
Real Estate Securities Fund and Venture Fund and September 30, 1999 for the
other Funds); the pro forma fees each such Fund would have paid during such
period if the proposed advisory fee schedules had been in effect; and the
percentage difference between these two figures. The last column of the table
sets forth the aggregate fees, other than advisory fees, paid by each Fund to
Advantus Capital and its affiliated persons, and affiliated persons of such
persons, during such period. The figures in this column represent fees paid by
the Funds to Minnesota Life Insurance Company for certain accounting, legal, and
other administrative services, and Rule 12b-1 fees paid by the Funds to Ascend
Financial for distribution and shareholder services. Minnesota Life and Ascend
Financial will continue to provide these services to the Funds if shareholders
approve the proposed changes to the advisory agreement. None of the Funds paid
any brokerage commissions to Ascend Financial in connection with purchases and
sales of portfolio securities during their most recent fiscal year.

     THE PRO FORMA DECREASES IN ADVISORY FEES THAT ARE DEPICTED IN THE FOLLOWING
TABLE DO NOT TAKE INTO ACCOUNT THE FACT THAT ADVANTUS CAPITAL WILL NO LONGER BE
RESPONSIBLE FOR PAYING THE COSTS OF TRANSFER AGENT, DIVIDEND DISBURSING AGENT
AND REDEMPTION AGENT SERVICES FOR BOND FUND, CORNERSTONE FUND, ENTERPRISE FUND,
HORIZON FUND, INTERNATIONAL BALANCED FUND, MORTGAGE SECURITIES FUND, SPECTRUM
FUND AND VENTURE FUND. As noted before, with respect to these Funds, the net
effect of the decrease in advisory fees in the Amended Agreements and the
deletion in the Amended Agreements of the requirement that Advantus Capital pay
Fund transfer agency fees will be to increase the expenses borne by the Funds
and, indirectly, by shareholders. However, Advantus Capital has agreed to cap
expenses for each Fund at their current levels through fiscal 2001. Expense
tables showing the Funds' current expenses, and their pro forma expenses giving
effect to the Amended Agreements, are set forth above.

<TABLE>
<CAPTION>
                                                                                                 OTHER FEES PAID
                                             ACTUAL ADVISORY      PRO FORMA                    TO ADVANTUS CAPITAL
                                                FEES PAID       ADVISORY FEES                    AND AFFILIATES
                                               DURING MOST        FOR MOST                         DURING MOST
                                              RECENT FISCAL     RECENT FISCAL    PERCENTAGE          RECENT
                  FUND                            YEAR*             YEAR*         DECREASE        FISCAL YEAR*
                  ----                       ---------------    -------------    ----------    -------------------
<S>                                          <C>                <C>              <C>           <C>
Bond.....................................      $  207,779         $178,096         14.29%           $219,655
Cornerstone..............................       1,005,217          879,565         12.50%            574,722
Enterprise...............................         366,946          321,078         12.50%            238,750
Horizon..................................         646,511          565,697         12.50%            456,441
Index 500................................         139,480          139,480          0.00%            329,590
International Balanced...................         499,749          408,033         18.35%            270,351
Money Market.............................         261,232          261,232          0.00%            224,230
Mortgage Securities......................         287,662          237,634         17.39%            315,814
Real Estate Securities...................          18,842**         18,842**        0.00%             35,097**
Spectrum.................................         613,092          510,909         16.67%            548,087
Venture..................................         275,255          240,849         12.50%            178,826
</TABLE>

- ------------------------------
 * Fiscal year ended July 31, 1999 for Index 500 Fund, Real Estate Securities
   Fund and Venture Fund and September 30, 1999 for the remaining Funds.

** Fees paid from commencement of operations on February 1, 1999, through July
   31, 1999

INFORMATION CONCERNING THE CURRENT AGREEMENTS

     For Venture Fund and Index 500 Fund, the Current Agreements are dated July
16, 1996 and for Real Estate Securities Fund the Current Agreement is dated
October 22, 1998. The Current Agreements for Venture Fund, Index 500 Fund and
Real Estate Securities Fund have not been submitted to a vote of such Funds'
public shareholders. The Current Agreements for each of the other Funds are
dated March 1, 1995 and were approved by shareholders at a meeting held February
14, 1995. The agreements were submitted to

                                       38
<PAGE>   40

shareholders at that time for the purpose of approving Advantus Capital as the
Funds' investment adviser. Prior thereto, the Funds were advised by MIMLIC Asset
Management Company, the former parent of Advantus Capital. Each Fund's Current
Agreement was last approved by the Board of Directors (including a majority of
the directors who are not parties to the Agreement, or interested persons of any
such party) on February 10, 2000. The proposed amendments to the Current
Agreements are described above. This section describes the provisions of the
Current Agreements that are not proposed, to be changed.

     Under the Current Agreements, Advantus Capital furnishes the Funds' office
space and all necessary office facilities, equipment and personnel for servicing
the investments of the Funds. Each Fund pays all its costs and expenses which
are not assumed by Advantus Capital. These Fund expenses include, by way of
example, but not by way of limitation, all expenses incurred in the operation of
the Fund including, among others, interest, taxes, brokerage fees and
commissions, fees of the directors who are not employees of Advantus Capital or
any of its affiliates, expenses of directors' and shareholders' meetings,
including the cost of printing and mailing proxies, expenses of insurance
premiums for fidelity and other coverage, association membership dues, charges
of custodians, and bookkeeping, auditing and legal expenses. Each Fund will also
pay the fees and bear the expense of registering and maintaining the
registration of the Fund and its shares with the Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders. The Funds'
underwriter bears all advertising and promotional expenses in connection with
the distribution of the Funds' shares, including paying for prospectuses,
statements of additional information and shareholder reports for new
shareholders, and the costs of sales literature. The Current Agreements of Bond
Fund, Cornerstone Fund, Enterprise Fund, Horizon Fund, International Balanced
Fund, Mortgage Securities Fund, Spectrum Fund and Venture Fund provide that
Advantus Capital is responsible for bearing the cost of transfer agent, dividend
disbursing agent and redemption agent services. However, as discussed above,
this provision is deleted from the Amended Agreements.

     Each Current Agreement will terminate automatically in the event of its
assignment. In addition, each Current Agreement is terminable at any time,
without penalty, by the Board of Directors of the Fund or by vote of a majority
of the Fund's outstanding voting securities on 60 days' written notice to
Advantus Capital, and by Advantus Capital on 60 days' written notice to the
Fund. Unless sooner terminated, each Current Agreement shall continue in effect
only so long as such continuance is specifically approved at least annually
either by the Board of Directors of the Fund or by a vote of a majority of the
outstanding voting securities, provided that in either event such continuance is
also approved by the vote of a majority of the directors who are not interested
persons of any party to the Current Agreement, cast in person at a meeting
called for the purpose of voting on such approval.

     No material amendment may be made to the Current Agreements unless approved
by the vote of a majority of the outstanding voting securities of the Fund. As
discussed above, the Amended Agreements may be amended without shareholder
approval if permitted by the 1940 Act.

VOTE REQUIRED

     THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
TO APPROVE THE FUND'S AMENDED AGREEMENT. Each Fund's Amended Agreement must be
approved by a majority of the outstanding shares of the Fund, as defined in the
1940 Act, which means the lesser of the vote of (a) 67% of the shares of the
Fund present at a meeting where more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
the Fund.

                                       39
<PAGE>   41

                                 PROPOSAL FIVE
                      APPROVAL OF SUB-ADVISORY AGREEMENTS
                      FOR ENTERPRISE FUND AND VENTURE FUND

This proposal applies to Enterprise Fund and Venture Fund

BACKGROUND

For the past 18 months, Advantus Capital has focused on better defining and
positioning itself within the marketplace. In connection with this initiative,
Advantus Capital determined that it will no longer manage small capitalization
portfolios. Following this decision, Advantus Capital presented to the Board of
Directors for its approval:

     - a new sub-advisory agreement between Advantus Capital and State Street
       Research & Management Company ("State Street Research") for the Venture
       Fund and

     - a new sub-advisory agreement between Advantus Capital and Credit Suisse
       Asset Management, LLC ("CSAM") for the Enterprise Fund.

THE PROPOSED SUB-ADVISORY AGREEMENTS

     The Board has approved, and recommends that shareholders of the respective
Fund approve, the sub-advisory agreement for Venture Fund (the "Venture Fund
Sub-Advisory Agreement") and the sub-advisory agreement for Enterprise Fund (the
"Enterprise Fund Sub-Advisory Agreement") (collectively, the "Sub-Advisory
Agreements"). Copies of the Venture Fund Sub-Advisory Agreement and the
Enterprise Fund Sub-Advisory Agreement are attached as Appendix B and Appendix
C, respectively, to this proxy statement. If approved by shareholders, the
Sub-Advisory Agreements will go into effect on May 1, 2000.

     Under the terms of the Sub-Advisory Agreements, and subject to the
supervision of Advantus Capital, either State Street Research or CSAM, as the
case may be (each is sometimes referred to as a "Sub-Advisor"), will direct the
investment of the respective Fund's assets and will be responsible for the
formulation and implementation of a continuing investment program for the Fund.
Each Sub-Advisor will make all determinations with respect to the investment of
the assets of the respective Fund and will take all steps as may be necessary to
implement the determinations, including the placement of purchase and sale
orders on behalf of the Fund.

     The Venture Fund Sub-Advisory Agreement provides that Advantus Capital
shall pay State Street Research a monthly management fee which will vary
depending on the total "small company value" assets sub-advised by State Street
Research for Advantus Capital, including assets of Venture Fund and small
company value assets of other mutual funds and private accounts. The Enterprise
Fund Sub-Advisory Agreement provides that Advantus Capital shall pay CSAM a
monthly management fee which will vary depending on the total assets sub-advised
by CSAM for Advantus Capital, including assets of Enterprise Fund and of other
mutual funds and private accounts. Sub-advisory fees that will be payable to
State Street Research and CSAM are set forth in the following tables. Total
assets will be measured each March 31, June 30, September 30 and December 31. In
the case of the Enterprise Fund Sub-Advisory Agreement, whenever a new
breakpoint is reached, the sub-advisory fee will change with respect to all Fund
assets.

               SUB-ADVISORY FEES PAYABLE TO STATE STREET RESEARCH

<TABLE>
<CAPTION>
   SUB-ADVISORY FEE (AS A PERCENTAGE OF      TOTAL SMALL COMPANY VALUE ASSETS ADVISED BY
        VENTURE FUND'S NET ASSETS)           STATE STREET RESEARCH FOR ADVANTUS CAPITAL
   ------------------------------------      -------------------------------------------
<S>                                          <C>
            0.65%..........................  $0 to $500 million
            0.60%..........................  In excess of $500 million to $1 billion
            0.50%..........................  In excess of $1 billion
</TABLE>

                                       40
<PAGE>   42

                       SUB-ADVISORY FEES PAYABLE TO CSAM

<TABLE>
<CAPTION>
   SUB-ADVISORY FEE (AS A PERCENTAGE OF         TOTAL ASSETS ADVISED BY CSAM FOR
       ENTERPRISE FUND'S NET ASSETS)                    ADVANTUS CAPITAL
   ------------------------------------      ---------------------------------------
<S>                                          <C>
            0.65%..........................  $0 to $500 million
            0.60%..........................  In excess of $500 million to $1 billion
            0.50%..........................  In excess of $1 billion to $2 billion
            0.45%..........................  In excess of $2 billion
</TABLE>

     Each Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, each Sub-Advisory Agreement is terminable at any
time, without penalty, by the Board of Directors of the respective Fund or by a
vote of a majority of that Fund's outstanding voting securities on 60 days'
written notice to Advantus Capital and the Sub-Advisor, by Advantus Capital on
60 days' written notice to the Sub-Advisor, or by the Sub-Advisor on 60 days'
written notice to Advantus Capital. Each Sub-Advisory Agreement shall continue
in effect for a period of more than two years only so long as such continuance
is specifically approved at least annually by either the Board of Directors of
the Fund, or by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Fund, provided that, in either event, such
continuance is also approved by a vote of a majority of the Directors who are
not parties to such Agreement, or interested persons of such parties, cast in
person at a meeting called for the purpose of voting on such approval.

     Additional information about CSAM and State Street Research is provided
below under "Additional Information About CSAM" and "Additional Information
About State Street Research."

BOARD DELIBERATIONS

     The Sub-Advisory Agreements were approved by the Funds' Board of Directors,
subject to shareholder approval, at a meeting held February 10, 2000. Prior to
approving the Sub-Advisory Agreements, the Board considered a variety of
factors, including (a) the historical performance of Enterprise Fund and Venture
Fund; (b) the nature, quality and extent of the services proposed to be provided
under each Sub-Advisory Agreement by Advantus Capital and the respective
Sub-Advisor relative to those currently provided by Advantus Capital alone; (c)
the organizational depth, reputation and experience of Advantus Capital in
managing mutual funds and of CSAM in managing small cap growth stocks and State
Street Research in managing small cap value stocks; and (d) the performance of
accounts and funds advised by CSAM and State Street Research that are similar in
portfolio composition to Enterprise Fund and Venture Fund, respectively. The
Board also considered the reasonableness of the proposed fee allocations between
Advantus Capital and the respective Sub-Advisors in light of Advantus Capital's
reduced investment role but continued overall responsibility. In making its
determination, the Board reviewed, among other things, background information
provided by each of CSAM and State Street Research. In addition, representatives
of CSAM and State Street Research reviewed with the Board their investment
strategies for Enterprise Fund and Venture Fund, respectively, and responded to
questions from Board members.

VOTE REQUIRED

     THE BOARD OF DIRECTORS OF THE FUNDS RECOMMENDS THAT THE SHAREHOLDERS OF
ENTERPRISE FUND AND VENTURE FUND VOTE TO APPROVE THE PROPOSED SUB-ADVISORY
AGREEMENT FOR THEIR FUND. Adoption of the proposal by a Fund requires the
favorable vote of a majority of the outstanding shares of that Fund, as defined
in the 1940 Act, which means the lesser of the vote of (a) 67% of the shares of
the Fund present at a meeting where more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
the Fund. Unless otherwise instructed, the proxies will vote for the approval of
the proposed Sub-Advisory Agreements.

                                       41
<PAGE>   43

                                  PROPOSAL SIX
                                RATIFICATION OF
                         INDEPENDENT PUBLIC ACCOUNTANTS

This proposal applies to all Funds.

     The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or of its investment adviser. The 1940 Act
provides that the selection be submitted for ratification or rejection by the
shareholders.

     The Board of Directors of the Funds, including a majority of the Directors
who are not interested persons of Advantus Capital or the Funds, has selected
KPMG LLP to be the Funds' independent public accountants for the current fiscal
year (the fiscal year ending July 31, 2000 for Venture Fund, Index 500 Fund and
Real Estate Securities Fund and September 30, 2000 for the other Funds). KPMG
LLP has no direct or material indirect financial interest in any of the Funds or
in Advantus Capital, other than receipt of fees for services to the Funds. KPMG
LLP has served as the independent public accountants for each Fund since its
inception. KPMG LLP also serves as independent public accountants for Advantus
Series Fund, Inc., which is also advised by Advantus Capital.

     Representatives of KPMG LLP are expected to be present at the meeting. Such
representatives will be given the opportunity to make a statement to the
shareholders if they desire to do so and are expected to be available to respond
to any questions that may be raised at the meeting.

VOTE REQUIRED

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE IN
FAVOR OF THE RATIFICATION OF KPMG LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS FOR
THAT FUND. For each Fund, the affirmative vote of a majority of the shares of
the Fund represented at the meeting, provided at least a quorum is represented
in person or by proxy, is sufficient for the ratification of the selection of
the independent public accountants. Unless otherwise instructed, the proxies
will vote for the ratification of the selection of KPMG LLP as each Fund's
independent public accountants.

                        EXECUTIVE OFFICERS OF THE FUNDS

     Information about each executive officer's position and term of office with
the Funds and business experience during the past five years is set forth below.
Unless otherwise indicated, all positions have been held more than five years.
No executive officer receives any compensation from the Funds.

<TABLE>
<CAPTION>
        NAME AND (AGE)              POSITION/TERM OF OFFICE       BUSINESS EXPERIENCE DURING PAST FIVE YEARS
        --------------            ----------------------------    ------------------------------------------
<S>                               <C>                             <C>
William N. Westhoff (52).......   President since 1998            See biographical information in Proposal
                                                                    One.
Frederick P. Feuerherm (53)....   Vice President and Treasurer    See biographical information in Proposal
                                    since 1993                      One.
Michael J. Radmer (54).........   Secretary since 1985            Partner with the law firm of Dorsey &
                                                                    Whitney LLP
</TABLE>

                                       42
<PAGE>   44

                     ADDITIONAL INFORMATION ABOUT THE FUNDS

     As of February 28, 2000, all directors and officers as a group owned less
than 1% of the outstanding shares of each Fund. As of that date, the following
persons were known to Fund management to be the beneficial owners of 5% or more
of a class of shares of any of the Funds.

<TABLE>
<CAPTION>
                                                               SHARE        NUMBER OF         PERCENT OF
         FUND/NAME AND ADDRESS OF BENEFICIAL OWNER             CLASS       SHARES OWNED         CLASS
         -----------------------------------------             -----       ------------       ----------
<S>                                                            <C>         <C>                <C>
Bond Fund
Minnesota Life Insurance Company...........................      A            341,589           19.5%
400 Robert Street North
St. Paul, MN 55101
Gary M. Wortham............................................      C             20,409           15.2%
Kathleen J. Wortham
7812 S. Townsend
Broken Arrow, OK 74014
Cornerstone Fund
Minnesota Life Insurance Company...........................      A          4,696,765           80.6%
400 Robert Street North
St. Paul, MN 55101
Enterprise Fund
Minnesota Life Insurance Company...........................      A          2,207,793           80.7%
400 Robert Street North
St. Paul, MN 55101
Harry M. Nebenzahl.........................................      C              4,538            7.0%
228 30th Avenue
San Francisco, CA 94121
Horizon Fund
Cleary Shahi Associates PC Defined Benefit Plan............      C              7,414            8.6%
110 Merchants Row, #6740
Rutland, VT 05701
Index 500 Fund
Minnesota Life Insurance Company...........................      A            500,000           33.9%
400 Robert Street North
St. Paul, MN 55101
Sisters of the Holy Family.................................      A            161,440           10.9%
6901 Chef Menteur Highway
New Orleans, LA 70126
International Balanced Fund
Minnesota Life Insurance Company...........................      A          2,872,933           67.4%
400 Robert Street North
St. Paul, MN 55101
David H. Rohrbach..........................................      C             11,243            6.4%
11955 Parliament Street #908
San Antonio, TX 78216
Michael A. Martinelli......................................      C             11,193            6.4%
Kathleen A. Martinelli
2147 Paseo Del Oro
San Jose, CA 95124
</TABLE>

                                       43
<PAGE>   45

<TABLE>
<CAPTION>
                                                               SHARE        NUMBER OF         PERCENT OF
         FUND/NAME AND ADDRESS OF BENEFICIAL OWNER             CLASS       SHARES OWNED         CLASS
         -----------------------------------------             -----       ------------       ----------
<S>                                                            <C>         <C>                <C>
Money Market Fund
Mellon Bank (DE) N.A. .....................................      A          2,451,821            6.1%
Enhanced Cash Fund Trust
135 Santilli Highway
Everett, MA 02149
Chi-Ming Fan Defined Benefit & Pension Plan................      B             83,667           11.5%
9835 Romandel Avenue
Santa Fe Springs, CA 90670-3439
Richard Kundrat............................................      B             80,236           11.0%
287 Pieller Road
Robesonia, PA 19551
Ajax Bituminous Paving Defined Benefit Plan................      B             79,425           10.9%
6524 Crabtree Lane
Brecksville, OH 44141
Yvonne Eike................................................      B             44,293            6.1%
303 Jane Drive
Lucedale, MS 39452
Joan M. Shaver.............................................      B             40,665            5.6%
44 Virginia Avenue
Midland, PA 15059-1709
Johnny J. Garza............................................      C             97,490           51.5%
113 Sunview Street
Sunnyvale, TX 75182
James R. Maddox, Jr........................................      C             54,956           29.0%
Cynthia D. Maddox
1745 Riverdale Road
Germantown, TN 38138
James R. Flynn.............................................      C             18,496            9.8%
3723 Stone Station Road
Spartanburg, SC 29306
Mortgage Securities Fund
Minnesota Life Insurance Company...........................      A            572,399           18.4%
400 Robert Street North
St. Paul, MN 55101
Deborah M. Molinaro........................................      C             34,924           10.8%
1810 Van Buren Court
Northfield, MN 55057
Real Estate Securities Fund
Minnesota Life Insurance Company...........................      A            892,691           95.8%
400 Robert Street North
St. Paul, MN 55101
Spectrum Fund
Rolland T. Scales..........................................      C             15,967            5.2%
5455 La Sierra Drive, #705
Dallas, TX 75231
</TABLE>

                                       44
<PAGE>   46

<TABLE>
<CAPTION>
                                                               SHARE        NUMBER OF         PERCENT OF
         FUND/NAME AND ADDRESS OF BENEFICIAL OWNER             CLASS       SHARES OWNED         CLASS
         -----------------------------------------             -----       ------------       ----------
<S>                                                            <C>         <C>                <C>
Venture Fund
Minnesota Life Insurance Company...........................      A          2,500,000           90.3%
400 Robert Street North
St. Paul, MN 55101
Advantus Capital Management, Inc.
400 Robert Street North....................................      C              5,477           21.7%
St. Paul, MN 55101
Michael A. Martinelli
Kathleen A. Martinelli.....................................      C              3,502           13.9%
2147 Paseo Del Oro
San Jose, CA 95124
M. David Thornton
Debra M. Thornton..........................................      C              3,041           12.0%
2865 Monterey Blvd
Brookfield, WI 53005
</TABLE>

                 ADDITIONAL INFORMATION ABOUT ADVANTUS CAPITAL

     Advantus Capital was incorporated in Minnesota in June 1994 and is a
wholly-owned subsidiary of Minnesota Life Insurance Company ("Minnesota Life").
Minnesota Life is a third-tier subsidiary of a mutual insurance holding company
called Minnesota Mutual Companies, Inc. Minnesota Life was organized in 1880 and
has assets of more than $16 billion.

     The name, address and principal occupation of the principal executive
officer and each director of Advantus Capital are set forth below.

<TABLE>
<CAPTION>
          NAME                       ADDRESS                      PRINCIPAL OCCUPATION
          ----               -----------------------    -----------------------------------------
<S>                          <C>                        <C>
William N. Westhoff......    400 Robert Street North    President, Treasurer and Director,
                               St. Paul, Minnesota        Advantus Capital; Senior Vice President
                               55101                      and Treasurer, Minnesota Life Insurance
                                                          Company; Vice President and Director,
                                                          Robert Street Energy, Inc.; President,
                                                          MCM Funding 1997-1, Inc.; President,
                                                          MCM Funding 1998-1, Inc.
Frederick P. Feuerherm...    400 Robert Street North    Vice President, Assistant Secretary and
                               St. Paul, Minnesota        Director, Advantus Capital; Vice
                               55101                      President, Minnesota Life Insurance
                                                          Company; Vice President and Director,
                                                          MIMLIC Funding, Inc.; Vice President
                                                          and Assistant Secretary, MCM Funding
                                                          1997-1, Inc.; Vice President and
                                                          Assistant Secretary, MCM Funding
                                                          1998-1, Inc.
</TABLE>

     The following officers and directors of the Funds are also officers,
directors or employees of Advantus Capital:

<TABLE>
<CAPTION>
          NAME                   POSITION WITH FUNDS             POSITION WITH ADVANTUS CAPITAL
          ----               ----------------------------    --------------------------------------
<S>                          <C>                             <C>
William N. Westhoff......    President and Director          President, Treasurer and Director
Frederick P. Feuerherm...    Vice President, Director and    Vice President, Assistant Secretary
                               Treasurer                     and Director
</TABLE>

                                       45
<PAGE>   47

     In addition to acting as the investment advisor for the Funds, Advantus
Capital also serves as investment advisor to one other open-end investment
company, Advantus Series Fund, Inc., which offers its shares in 19 portfolios.
Some of these portfolios have investment objectives similar to those of one or
more of the Funds. The Board of Directors of Advantus Series Fund, Inc. has
recommended, in a separate proxy statement, that the shareholders of these
portfolios approve changes to the portfolios' advisory fee schedules. The
following table sets forth the current and proposed advisory fee schedules for
each such portfolio, and the net assets of each such portfolio at December 31,
1999. In the table, advisory fees are expressed as a percentage of the
portfolio's average daily net assets. Advantus Capital has not waived, reduced
or otherwise agreed to reduce its advisory fees for any of the portfolios in the
table.

<TABLE>
<CAPTION>
         PORTFOLIO
         ---------
<S>                             <C>                        <C>
Growth......................    Current advisory fee:      0.50%
                                Proposed advisory fee:     0.45% of assets to $1 billion; 0.40% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $594,675,721
Bond........................    Current advisory fee:      0.50%
                                Proposed advisory fee:     0.30% of assets to $500 million; 0.25% of
                                                           assets exceeding $500 million to $1 billion;
                                                           0.20% of assets exceeding $1 billion
                                Net assets at 12/31/99:    $181,881,241
Money Market................    Current advisory fee:      0.50%
                                Proposed advisory fee:     0.25% of assets to $1 billion; 0.20% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $156,579,677
Asset Allocation............    Current advisory fee:      0.50%
                                Proposed advisory fee:     0.35% of assets to $1 billion; 0.30% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $750,128,689
Mortgage Securities.........    Current advisory fee:      0.50%
                                Proposed advisory fee:     0.30% of assets to $1 billion; 0.25% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $138,815,267
Index 500...................    Current advisory fee:      0.40%
                                Proposed advisory fee:     0.15% of assets to $250 million; 0.10% of
                                                           assets exceeding $250 million to $1 billion;
                                                           0.075% of assets exceeding $1 billion
                                Net assets at 12/31/99:    $657,824,365
Capital Appreciation........    Current advisory fee:      0.75%
                                Proposed advisory fee:     0.50% of assets to $1 billion; 0.45% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $457,448,754
</TABLE>

                                       46
<PAGE>   48

<TABLE>
<CAPTION>
         PORTFOLIO
         ---------
<S>                             <C>                        <C>
                                Sub-advisory fee:          Currently 0.375%. Commencing May 1, 2000, a
                                                           new sub-advisor will receive fees from
                                                           Advantus Capital ranging from 0.50% to
                                                           0.30%, depending on total assets of all
                                                           funds and other accounts advised by the
                                                           sub-advisor for Advantus Capital
International Stock.........    Current advisory fee:      1.00% of assets to $10 million; 0.90% of
                                                           assets exceeding $10 million to $25 million;
                                                           0.80% of assets exceeding $25 million to $50
                                                           million; 0.75% of assets exceeding $50
                                                           million to $100 million; and 0.65% of assets
                                                           exceeding $100 million
                                Proposed advisory fee:     0.60% of assets to $250 million; 0.55% of
                                                           assets exceeding $250 million to $500
                                                           million; 0.50 % of assets exceeding $500
                                                           million to $1 billion; and 0.45% of assets
                                                           exceeding $1 billion
                                Net assets at 12/31/99:    $363,848,958
                                Sub-advisory fee:          0.70% of assets to $10 million; 0.65% of
                                                           assets exceeding $10 million to $25 million;
                                                           0.55% of assets exceeding $25 million to $50
                                                           million; 0.50% of assets exceeding $50
                                                           million to $100 million; and 0.40% of assets
                                                           exceeding $100 million; provided that
                                                           beginning May 1, 2000, breakpoints will be
                                                           based upon the total assets of all funds and
                                                           other accounts advised by the sub-advisor
                                                           for Advantus Capital if and when (a) the
                                                           sub-advisor provides other sub-advisory
                                                           services to Advantus Capital for small
                                                           company domestic equity accounts with assets
                                                           exceeding $100 million and (b) Minnesota
                                                           Life Insurance Company offers certain funds
                                                           advised by the sub-advisor as investment
                                                           options under its variable insurance
                                                           products. If these conditions are met, the
                                                           asset classes managed by the sub-advisor
                                                           that have the highest fee schedules will be
                                                           counted first as assets of International
                                                           Stock Portfolio in order to determine the
                                                           appropriate starting breakpoint
Small Company
  Growth....................    Current advisory fee:      0.75%
                                Proposed advisory fee:     0.65% of assets to $1 billion; 0.60% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $269,881,112
                                Sub-advisory fee:          Commencing March 7, 2000, a sub-advisor will
                                                           be retained for this portfolio which will
                                                           receive fees from Advantus Capital ranging
                                                           from 0.65% to 0.45%, depending on total
                                                           assets of all funds and other accounts
                                                           advised by the sub-advisor for Advantus
                                                           Capital
</TABLE>

                                       47
<PAGE>   49

<TABLE>
<CAPTION>
         PORTFOLIO
         ---------
<S>                             <C>                        <C>
Value Stock.................    Current advisory fee:      0.75%
                                Proposed advisory fee:     0.50% of assets to $500 million; 0.45% of
                                                           assets exceeding $500 million to $1 billion;
                                                           0.40% of assets exceeding $1 billion
                                Net assets at 12/31/99:    $191,379,777
Small Company
  Value.....................    Current advisory fee:      0.75%
                                Proposed advisory fee:     0.70% of assets to $1 billion; 0.65% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $12,517,540
                                Sub-advisory fee:          Commencing March 7, 2000, a sub-advisor will
                                                           be retained for this portfolio which will
                                                           receive fees from Advantus Capital ranging
                                                           from 0.65% to 0.50% depending on total
                                                           assets of all "small cap value" funds and
                                                           other accounts advised by the sub-advisor
                                                           for Advantus Capital
Global Bond.................    Current advisory fee:      0.60%
                                Proposed advisory fee:     0.60% of assets to $1 billion; 0.55% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $32,092,912
                                Sub-advisory fee:          0.30%
Index 400 Mid-Cap...........    Current advisory fee:      0.40%
                                Proposed advisory fee:     0.15% of assets to $250 million; 0.10% of
                                                           assets exceeding $250 million to $1 billion;
                                                           0.075% of assets exceeding $1 billion
                                Net assets at 12/31/99:    $24,357,271
Macro-Cap Value.............    Current advisory fee:      0.70%
                                Proposed advisory fee:     0.50%
                                Net assets at 12/31/99:    $22,570,276
                                Sub-advisory fee:          0.45%
Micro-Cap Growth............    Current advisory fee:      1.10%
                                Proposed advisory fee:     0.95%
                                Net assets at 12/31/99:    $42,553,670
                                Sub-advisory fee:          0.85%
Real Estate
  Securities................    Current advisory fee:      0.75%
                                Proposed advisory fee:     0.60% of assets to $1 billion; 0.55% of
                                                           assets exceeding $1 billion
                                Net assets at 12/31/99:    $5,825,947
</TABLE>

                       ADDITIONAL INFORMATION ABOUT CSAM

     Credit Suisse Asset Management, LLC ("CSAM"), located at 153 East 53rd
Street, New York, New York 10022, is an indirect wholly-owned U.S. subsidiary of
Credit Suisse Group. Credit Suisse Group is a global financial services company,
providing a comprehensive range of banking and insurance products. Active on
every continent and in all major financial centers, Credit Suisse Group
comprises five business units -- Credit Suisse Asset Management (asset
management); Credit Suisse First Boston (investment banking); Credit Suisse
Private Banking (private banking); Credit Suisse (retail banking); and
Winterthur (insurance). Credit Suisse Group has approximately $680 billion of
global assets under management and employs approximately 62,000 people
worldwide. The principal business address of Credit Suisse Group is Paradeplatz
8, CH 8070, Zurich, Switzerland.

                                       48
<PAGE>   50

     The name and principal occupation of the principal executive officers of
CSAM are set forth below. The address of each such individual is that of CSAM.

<TABLE>
<CAPTION>
             NAME                                      PRINCIPAL OCCUPATION
             ----                  ------------------------------------------------------------
<S>                                <C>
William W. Priest, Jr..........    Chief Executive Officer, Chairman of Management Committee
                                   and Managing Director, CSAM; Managing Director, Credit
                                    Suisse Asset Management Ltd. (London)
Michael E. Guarasci, Sr........    Chief Financial Officer, Member of Management Committee and
                                   Managing Director, CSAM
Laurence R. Smith..............    Chief Investment Officer, Member of Management Committee and
                                    Managing Director, CSAM
Eugene L. Podsiadlo............    Head of Retail Distribution, Member of Management Committee
                                   and Managing Director, CSAM
Timothy T. Taussig.............    Head of Institutional Distribution, Member of Management
                                   Committee and Managing Director, CSAM; Managing Director,
                                    Credit Suisse Asset Management Ltd. (London)
Elizabeth B. Dater.............    Member of Management Committee and Managing Director, CSAM
Sheila N. Scott................    Member of Management Committee and Managing Director, CSAM
</TABLE>

     No officers or directors of the Funds are also officers, directors or
employees of CSAM.

     CSAM currently serves as investment advisor or sub-advisor for the
following mutual funds that have an investment objective similar to that of
Enterprise Fund:

<TABLE>
<CAPTION>
                                                                                            NET ASSETS
                                               RATE OF            FEES WAIVED UNDER         OF FUND AT
                FUND                     CSAM'S COMPENSATION     ADVISORY AGREEMENT      DECEMBER 31, 1999
                ----                     -------------------    ---------------------    -----------------
<S>                                      <C>                    <C>                      <C>
Cypress Tree -- North American
  Emerging Growth Fund...............          0.55%                     No               $    2,681,000
Nationwide -- Small Company Fund.....          0.60%                     No               $  121,160,000
Warburg Pincus Trust -- Small Company
  Growth Portfolio...................          0.90%                     No               $1,278,127,000
Warburg Pincus Institutional Fund --
  Small Company Growth Portfolio.....          0.90%                    Yes*              $  333,437,000
Warburg Pincus Small Company Growth
  Fund, Inc. ........................          1.00%                    Yes**             $   15,178,000
</TABLE>

- -------------------------
 * CSAM waived $434,248 of advisory fees, resulting in net advisory fees of
   $1,610,890 and a net advisory fee rate of 0.71%.

** CSAM waived its entire advisory fee of $65,661, resulting in a net advisory
   fee rate of 0%.

               ADDITIONAL INFORMATION ABOUT STATE STREET RESEARCH

     State Street Research & Management Company, One Financial Center, Boston,
Massachusetts 02111, traces its heritage back to 1924 and the founding of one of
America's first mutual funds. Today State Street Research has more than $53
billion in assets under management (as of January 31, 2000), including more than
$18 billion in mutual funds. State Street Research is an indirect wholly-owned
subsidiary of Metropolitan Life Insurance Company, located at One Madison
Avenue, New York, New York 10010-3690.

                                       49
<PAGE>   51

     The name and principal occupation of the principal executive officer and
each director of State Street Research are set forth below. The address of each
such individual is that of State Street Research.

<TABLE>
<CAPTION>
             NAME                                     PRINCIPAL OCCUPATION
             ----                 ------------------------------------------------------------
<S>                               <C>
Ralph F. Verni................    Chairman, President, Chief Executive Officer and Director,
                                  State Street Research; President, Chief Executive Officer
                                    and Director, SSRM Holdings, Inc.; Chairman and Director,
                                    State Street Research Investment Services, Inc.
Peter C. Bennett..............    Director and Executive Vice President, State Street Research
Gerard P. Maus................    Director, Executive Vice President, Treasurer, Chief
                                  Financial Officer and Chief Administrative Officer, State
                                    Street Research; Director, Executive Vice President,
                                    Treasurer and Chief Financial Officer, State Street
                                    Research Investment Services, Inc.; Treasurer and Chief
                                    Financial Officer, SSRM Holdings, Inc.
Thomas A. Shively.............    Director and Executive Vice President, State Street Research
</TABLE>

     No officers or directors of the Funds are also officers, directors or
employees of State Street Research.

     State Street Research currently serves as investment advisor for the
following mutual fund that has an investment objective similar to that of
Venture Fund:

<TABLE>
<CAPTION>
                                              RATE OF STATE STREET'S    FEES WAIVED UNDER     NET ASSETS OF FUND AT
                   FUND                            COMPENSATION         ADVISORY AGREEMENT      DECEMBER 31, 1999
                   ----                       ----------------------    ------------------    ---------------------
<S>                                           <C>                       <C>                   <C>
State Street Research Aurora Fund.........            1.00%                     No                $525,900,000
</TABLE>

                             SHAREHOLDER PROPOSALS

     The Funds are not required to hold annual shareholder meetings. Since the
Funds do not hold regular meetings of shareholders, the anticipated date of the
next shareholder meeting cannot be provided. Any shareholder proposal which may
properly be included in the proxy solicitation material for a shareholder
meeting must be received by the applicable Fund no later than four months prior
to the date proxy statements are mailed to shareholders.

Dated: March 17, 2000                               Michael J. Radmer, Secretary

                                       50
<PAGE>   52

                                                                      APPENDIX A

                         INVESTMENT ADVISORY AGREEMENT

     THIS AGREEMENT, made this 1st day of May, 2000, by and between Advantus
               Fund, Inc., a Minnesota corporation (the "Fund") and Advantus
Capital Management, Inc., a Minnesota corporation ("Management").

     WITNESSETH:

1. INVESTMENT ADVISORY AND MANAGEMENT SERVICES

     The Fund hereby engages Management, and Management hereby agrees to act, as
investment adviser for, and to manage the affairs, business, and the investment
of the assets of the Fund.

     The investment of the assets of the Fund shall at all times be subject to
the applicable provisions of the Articles of Incorporation, the Bylaws, the
Registration Statement, the current Prospectus and the Statement of Additional
Information, if any, of the Fund and shall conform to the investment objective
and policies of the Fund as set forth in such documents and as interpreted from
time to time by the Board of Directors of the Fund. Within the framework of the
objective and investment policies and restrictions of the Fund, Management shall
have the sole and exclusive responsibility for the management of the Fund's
portfolio and the making and execution of all investment decisions for the Fund.
Management shall report to the Board of Directors regularly at such times and in
such detail as the Board may from time to time determine to be appropriate, in
order to permit the Board to determine the adherence of Management to the
investment policies of the Fund.

     Management shall, at its own expense, furnish the Fund office space and all
necessary office facilities, equipment, and personnel for servicing the
investments of the Fund. Management shall arrange for officers or employees of
Management to serve without compensation from the Fund as directors, officers,
or employees of the Fund if duly elected to such positions by the shareholders
or directors of the Fund.

     Management hereby acknowledges that all records necessary in the operation
of the Fund, including records pertaining to its shareholders and investments,
are the property of the Fund, and in the event that a transfer of management or
investment advisory services to someone other than Management should ever occur,
Management will promptly, and at its own cost, take all steps necessary to
segregate such records and deliver them to the Fund.

     In providing the services and assuming the obligations set forth herein,
Management may at its expense employ one or more Sub-Advisers, or may enter into
such service agreements as Management deems appropriate in connection with the
performance of its duties and obligations hereunder. Reference herein to the
duties and responsibilities of Management shall include any Sub-Adviser employed
by Management to the extent Management shall delegate such duties and
responsibilities to the Sub-Adviser. Any agreement between Management and any
Sub-Adviser shall be subject to the approval of the Fund, its Board of
Directors, and Shareholders as required by the Investment Company Act of 1940,
as amended, and such Sub-Adviser shall at all times be subject to the direction
of the Board of Directors of the Fund and any duly constituted committee thereof
or any officer of the Fund acting pursuant to like authority.

2. COMPENSATION FOR SERVICES

     In payment for the investment advisory and other services to be rendered by
Management hereunder, the Fund shall pay to Management a monthly fee, which fee
shall be paid to Management not later than the fifth business day following the
end of each calendar month in which said services were rendered. Said monthly
fee shall be based on the average of the net asset values of all of the issued
and outstanding shares of the Fund as determined as of the close of each
business day of the month pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus and Statement of Additional Information, if any,
of the Fund. The amount

                                       A-1
<PAGE>   53

of such fee as applied to the average daily value of the net assets of the Fund
on an annual rate, shall be as described in the schedule below:

<TABLE>
<CAPTION>
                ASSETS                                   FEE
                ------                                   ---
<S>                                     <C>

</TABLE>

The fee shall be pro rated for any fraction of a month at the commencement or
termination of this Agreement.

3. ALLOCATION OF EXPENSES

     (a) In addition to the fee described in Section 2 hereof, the Fund shall
         pay all its costs and expenses which are not assumed by Management. The
         Fund expenses include, by way of example, but not by way of limitation,
         all expenses incurred in the operation of the Fund and any public
         offering of its shares, including, among others, interest, taxes,
         brokerage fees and commissions, fees of the directors who are not
         employees of Management or Ascend Financial Services, Inc., underwriter
         of the Fund's shares (the "Underwriter"), or any of their affiliates,
         expenses of directors' and shareholders' meetings, including the cost
         of printing and mailing proxies, expenses of insurance premiums for
         fidelity and other coverage, expenses of redemption of shares, expenses
         of issue and sale of shares (to the extent not borne by the Underwriter
         under its agreement with the Fund), expenses of printing and mailing
         stock certificates representing shares of the Fund, association
         membership dues, transfer agent and shareholder servicing expenses,
         charges of custodians, and bookkeeping, auditing, and legal expenses.
         The Fund will also pay the fees and bear the expense of registering and
         maintaining the registration of the Fund and its shares with the
         Securities and Exchange Commission and registering or qualifying its
         shares under state or other securities laws and the expense of
         preparing and mailing Prospectuses and reports to shareholders.

     (b) Management agrees to absorb all Fund costs and expenses which exceed
              % of Class A average daily net assets,      % of Class B average
         daily net assets and                % of Class C average daily net
         assets through the fiscal year of the Fund ending on             ,
         2001. [THIS PROVISION APPEARS ONLY IN THE ADVISORY AGREEMENTS FOR BOND
         FUND, CORNERSTONE FUND, ENTERPRISE FUND, HORIZON FUND, INTERNATIONAL
         BALANCED FUND, MORTGAGE SECURITIES FUND, SPECTRUM FUND AND VENTURE
         FUND.]

     (c) The Underwriter shall bear all advertising and promotional expenses in
         connection with the distribution of the Fund's shares, including paying
         for Prospectuses and Statements of Additional Information (if any) for
         new shareholders, shareholder reports for new shareholders, and the
         costs of sales literature.

4. FREEDOM TO DEAL WITH THIRD PARTIES

     Management shall be free to render services to others similar to those
rendered under this Agreement or of a different nature except as such services
may conflict with the services to be rendered or the duties to be assumed
hereunder.

5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT

     This Agreement shall become effective upon the later of its approval by
Shareholders or the date of its execution first above written. Wherever referred
to in this Agreement, the vote or approval of the holders of a majority of the
outstanding voting securities of the Fund shall mean the vote of 67% or more of
such securities if the holders of more than 50% of such securities are present
in person or by proxy or the vote of more than 50% of such securities, whichever
is the lesser.

                                       A-2
<PAGE>   54

     Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect for a period of more than two years from the date of its
execution only so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund, provided that in either event
such continuance shall also be approved by the vote of a majority of the
directors who are not interested persons of Management, the Underwriter, or the
Fund, cast in person at a meeting called for the purpose of voting on such
approval.

     This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the Fund, or by
Management, upon 60 days' written notice to the other party.

     This Agreement shall automatically terminate in the event of its assignment
as such term is defined by the Investment Company Act of 1940, as amended.

6. AMENDMENTS TO AGREEMENT

     This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of the directors of the
Fund who are not interested persons of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be amended without Shareholder
approval to the extent such is permitted under then-current regulatory
interpretations of the Investment Company Act.

7. NOTICES

     Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.

     IN WITNESS WHEREOF, the Fund and Management have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.

                                              ADVANTUS           FUND, INC.

                                          By
                                          --------------------------------------
                                                    William N. Westhoff
                                                       Its President

                                            ADVANTUS CAPITAL MANAGEMENT, INC.

                                          By
                                          --------------------------------------
                                                   Frederick P. Feuerherm
                                                 Its Senior Vice President

                                       A-3
<PAGE>   55

                                                                      APPENDIX B

                       INVESTMENT SUB-ADVISORY AGREEMENT

     THIS AGREEMENT, made as of the 1st day of May, 2000, by and between
Advantus Capital Management, Inc., a Minnesota corporation, registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Adviser") and
State Street Research & Management Company, a Delaware corporation, registered
as an investment adviser under the Investment Advisers Act of 1940 (the "Sub-
Adviser").

     WHEREAS, the Adviser is the investment adviser to Advantus Venture Fund,
Inc. (the "Fund"), an open-end diversified management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and

     WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in connection
with the Adviser's investment advisory activities on behalf of the Fund and the
Sub-Adviser desires to furnish such services to the Adviser;

     NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:

1. APPOINTMENT OF SUB-ADVISER

     In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for investment and reinvestment of
the Fund, subject to the control and direction of the Fund's Board of Directors,
for the period and on the terms hereinafter set forth. The Sub-Adviser accepts
such appointment and agrees to furnish the services hereinafter set forth for
the compensation herein provided. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized, have no authority to act for or represent the Fund or
the Adviser in any way or otherwise be deemed an agent of the Fund or the
Adviser.

2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE SUB-ADVISER

     (a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Fund:

          (1) The investment of the assets of the Fund shall at all times be
     subject to the applicable provisions of the Articles of Incorporation, the
     Bylaws, the Registration Statement, the current Prospectus and the
     Statement of Additional Information of the Fund and shall conform to the
     investment objectives, policies and restrictions of the Fund as set forth
     in such documents and as interpreted from time to time by the Board of
     Directors of the Fund and by the Adviser, and communicated in writing to
     the Sub-Adviser. Within the framework of the investment objectives,
     policies and restrictions of the Fund, and subject to the supervision of
     the Adviser, the Sub-Adviser shall have the sole and exclusive
     responsibility for the making and execution of all investment decisions for
     the Fund. The Adviser agrees to promptly inform the Sub-Adviser if such
     objectives, policies or restrictions change and to deliver to the
     Sub-Adviser updated documents, if prepared.

          (2) In carrying out its obligations to manage the investments and
     reinvestments of the assets of the Fund, the Sub-Adviser shall: (1) obtain
     and evaluate pertinent economic, statistical, financial and other
     information affecting the economy generally and individual companies or
     industries the securities of which are included in the Fund or are under
     consideration for inclusion therein; (2) formulate and implement a
     continuous investment program for the Fund consistent with the investment
     objectives and related investment policies for the Fund as set forth in the
     Fund's registration statement, as amended; and (3) take such steps as are
     necessary to implement the aforementioned investment program by purchase
     and sale of securities including the placing, or directing the placement
     through an affiliate of the Sub-Adviser, of orders for such purchases and
     sales.

                                       B-1
<PAGE>   56

          (3) In connection with the purchase and sale of securities of the
     Fund, the Sub-Adviser shall arrange for the transmission to the Adviser and
     the Custodian for the Fund on a daily basis such confirmation, trade
     tickets and other documents as may be necessary to enable them to perform
     their administrative responsibilities with respect to the Fund. With
     respect to portfolio securities to be purchased or sold through the
     Depository Trust Company, the Sub-Adviser shall arrange for the automatic
     transmission of the I.D. confirmation of the trade to the Custodian of the
     Fund. The Sub-Adviser shall render such reports to the Adviser and/or to
     the Fund's Board of Directors concerning the investment activity and
     portfolio composition of the Fund in such form and at such intervals as the
     Adviser or the Board may from time to time reasonably require.

          (4) The Sub-Adviser shall, in the name of the Fund, place or direct
     the placement of orders for the execution of portfolio transactions in
     accordance with the policies with respect thereto, as set forth in the
     Fund's Registration Statement, as amended from time to time, and under the
     1933 Act and the 1940 Act. In connection with the placement of orders for
     the execution of the Fund's portfolio transactions, the Sub-Adviser shall
     create and maintain all necessary brokerage records of the Fund in
     accordance with all applicable law, rules and regulations, including but
     not limited to, records required by Section 31(a) of the 1940 Act. All
     records shall be the property of the Fund and shall be available for
     inspection and use by the Securities and Exchange Commission, the Fund or
     any person retained by the Fund. Where applicable, such records shall be
     maintained by the Sub-Adviser for the period and in the place required by
     Rule 31a-2 under the 1940 Act.

          (5) In placing orders or directing the placement of orders for the
     execution of portfolio transactions, the Sub-Adviser shall select brokers
     and dealers for the execution of the Fund's transactions. In selecting
     brokers or dealers to execute such orders, the Sub-Adviser is expressly
     authorized to consider the fact that a broker or dealer has furnished
     statistical, research or other information or services which enhance the
     Sub-Adviser's investment research and portfolio management capability
     generally. It is further understood in accordance with Section 28(e) of the
     Securities Exchange Act of 1934, as amended, that the Sub-Adviser may
     negotiate with and assign to a broker a commission which may exceed the
     commission which another broker would have charged for effecting the
     transaction if the Sub-Adviser determines in good faith that the amount of
     commission charged was reasonable in relation to the value of brokerage
     and/or research services (as defined in Section 28(e)) provided by such
     broker, viewed in terms either of the Fund or the Sub-Adviser's overall
     responsibilities to the Sub-Adviser's discretionary accounts.

     (b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to other fiduciary accounts for
which it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.

3. EXPENSES

     During the terms of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement.

4. COMPENSATION

     In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Fund hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Fund. The fee shall be accrued daily and shall be based on the net
asset values of all of the issued and outstanding shares of the Fund as
determined as of the close of each business day pursuant to the Articles of
Incorporation, Bylaws and currently effective Prospectus and Statement of
Additional Information of the Fund. The fee shall be payable in arrears on the
last day of each calendar month.

                                       B-2
<PAGE>   57

     The amount of such annual fee, as applied to the average daily value of the
net assets of the Fund shall be as described in the schedule below:

<TABLE>
<CAPTION>
ASSETS*                                                        FEE
- -------                                                       -----
<S>                                                           <C>
On the first $500 million...................................  0.65%
On the next $500 million....................................  0.60%
On all assets in excess of $1 billion.......................  0.50%
</TABLE>

- ------------------------------
* The term "assets" for purposes of each of the breakpoints set forth above
  shall include all "small company value" assets sub-advised by the Sub-Adviser
  for the Adviser or its affiliates, in addition to the assets of the Fund. The
  aggregation of the assets for purposes of the breakpoints, shall be calculated
  quarterly based upon the aggregate assets on March 31st, June 30th, September
  30th and December 31st of each calendar year (or portion thereof) that this
  agreement is effective.

5. RENEWAL AND TERMINATION

     This Agreement shall continue in effect for a period more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the majority
of the outstanding voting securities of the Fund, or by a vote of the majority
of the Fund's Board of Directors. And further provided that such continuance is
also approved annually by a vote of the majority of the Fund's Board of
Directors who are not parties to this Agreement or interested persons of parties
hereto, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time without payment of
penalty: (i) by the Fund's Board of Directors or by a vote of a majority of the
outstanding voting securities of the Fund on sixty days' prior written notice,
or (ii) by either party hereto upon sixty days' prior written notice to the
other. This Agreement will terminate automatically upon any termination of the
Investment Advisory Agreement between the Fund and the Adviser or in the event
of its assignment. The terms "interested person," "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act.

6. GENERAL PROVISIONS

     (a) The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Adviser nor its officers, directors, employees or agents shall
be subject to any liability for any error of judgment or mistake of law or for
any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under this Agreement or for any
loss or damage resulting from the imposition by any government or exchange
control restrictions which might affect the liquidity of the Fund assets, or
from acts or omissions of custodians or securities depositories, or from any war
or political act of any foreign government to which such assets might be
exposed, provided that nothing herein shall be deemed to protect, or purport to
protect, the Sub-Adviser against any liability to the Fund or to its
shareholders to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its
obligations and duties hereunder.

     (b) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Fund may go up as well as down, is not guaranteed
and that investment decisions will not always be profitable. The Adviser has not
made and is not making any guarantees, including any guarantee as to any
specific level of performance of the Fund. The Adviser and the Fund's Board of
Directors acknowledge that this Fund is designed for the described investment
objective and is not intended as a complete investment program. They also
understand that investment decisions made on behalf of the Fund by Sub-Adviser
are subject to various market and business risks.

     (c) This Agreement shall not become effective unless and until it is
approved by the Board of Directors of the Fund, including a majority of the
members who are not "interested persons" of parties to this Agreement, by a vote
cast in person at a meeting called for the purpose of voting on such approval,
and by a majority of the outstanding voting securities of the Fund.

                                       B-3
<PAGE>   58

     (d) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and other
managed accounts, including other investment companies, and the Adviser has no
objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly
performs all obligations under this Agreement. The Adviser also understands that
the Sub-Adviser may give advice and take action with respect to any of its other
clients or for its own account which may differ from the timing or nature of
action taken by the Sub-Adviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell
or to recommend for purchase or sale, with respect to the Fund, any security
which the Sub-Adviser or its shareholders, directors, officers, employees or
affiliates may purchase or sell for its or their own account(s) or for the
account of any other client.

     (e) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or employees who may
also be an officer, director or employee of the Fund, or persons otherwise
affiliated with the Fund (within the meaning of the 1940 Act) to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other trust, corporation, firm, individual or
association.

     (f) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Minnesota. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

     (g) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the following
address: the Adviser and the Fund at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, and the Sub-Adviser at One Financial Center, Boston, MA
02111-2690 Attention: General Counsel.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement.
                                          ADVANTUS CAPITAL MANAGEMENT, INC.
                                          BY:
                                             -----------------------------------
                                          ITS:
                                             -----------------------------------
                                          STATE STREET RESEARCH & MANAGEMENT
                                          COMPANY
                                          BY:
                                             -----------------------------------
                                          ITS:
                                             -----------------------------------

                                       B-4
<PAGE>   59

                                                                      APPENDIX C

                       INVESTMENT SUB-ADVISORY AGREEMENT

     THIS AGREEMENT, made as of the 1st day of May, 2000, by and between
Advantus Capital Management, Inc., a Minnesota corporation, registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Adviser") and
Credit Suisse Asset Management, LLC, a Delaware limited liability company,
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Sub-Adviser").

     WHEREAS, the Adviser is the Investment Adviser to Advantus Enterprise Fund,
Inc. (the "Fund"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and

     WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in connection
with the Adviser's investment advisory activities on behalf of the Fund and the
Sub-Adviser desires to furnish such services to the Adviser;

     NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:

1. APPOINTMENT OF SUB-ADVISER

     In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for investment and reinvestment of
the Fund, subject to the control and direction of the Fund's Board of Directors,
for the period and on the terms hereinafter set forth. The Sub-Adviser accepts
such appointment and agrees to furnish the services hereinafter set forth for
the compensation herein provided. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized, have no authority to act for or represent the Fund or
the Adviser in any way or otherwise be deemed an agent of the Fund or the
Adviser.

2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE SUB-ADVISER

     (a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Fund:

          (1) The investment of the assets of the Fund shall at all times be
     subject to the applicable provisions of the Articles of Incorporation, the
     Bylaws, the Registration Statement, the current Prospectus and the
     Statement of Additional Information of the Fund and shall conform to the
     investment objectives, policies and restrictions of the Fund as set forth
     in such documents and as interpreted from time to time by the Board of
     Directors of the Fund and by the Adviser. Within the framework of the
     investment objectives, policies and restrictions of the Fund, and subject
     to the supervision of the Adviser, the Sub-Adviser shall have the sole and
     exclusive responsibility for the making and execution of all investment
     decisions for the Fund. The Adviser will provide copies of the Articles of
     Incorporation, Bylaws, Registration Statement, current Prospectus and
     Statement of Additional Information of the Fund, as well as any current
     interpretations by the Board of Directors of the Fund or the Adviser of the
     investment objectives, policies and restrictions of the Fund set forth
     therein, prior to commencement of the Sub-Adviser's services hereunder and
     agrees to promptly inform the Sub-Adviser, in writing, of any changes in
     such documents or interpretations which may affect the Sub-Adviser's
     services hereunder, it being understood that such changes will be effective
     with respect to the Sub-Adviser upon the Sub-Adviser's receipt of such
     notice.

          (2) In carrying out its obligations to manage the investments and
     reinvestments of the assets of the Fund, the Sub-Adviser shall: (1) obtain
     and evaluate pertinent economic, statistical, financial and other
     information affecting the economy generally and individual companies or
     industries the securities of which are included in the Fund or are under
     consideration for inclusion therein; (2) formulate and

                                       C-1
<PAGE>   60

     implement a continuous investment program for the Fund consistent with the
     investment objectives and related investment policies for such Fund as set
     forth in the Fund's registration statement, as amended; and (3) take such
     steps as are necessary to implement the aforementioned investment program
     by purchase and sale of securities including the placing of orders for such
     purchases and sales.

          (3) In connection with the purchase and sale of securities of the
     Fund, the Sub-Adviser shall arrange for the transmission to the Adviser and
     the Custodian for the Fund on a daily basis such confirmation, trade
     tickets and other documents as may be necessary to enable them to perform
     their administrative responsibilities with respect to the Fund. With
     respect to portfolio securities to be purchased or sold through the
     Depository Trust Company, the Sub-Adviser shall arrange for the automatic
     transmission of the I.D. confirmation of the trade to the Custodian of the
     Fund. The Sub-Adviser shall render such reports to the Adviser and/or to
     the Fund's Board of Directors concerning the investment activity and
     portfolio composition of the Fund in such form and at such intervals as the
     Adviser or the Board may from time to time reasonably require.

          (4) The Sub-Adviser shall, in the name of the Fund, place or direct
     the placement of orders for the execution of portfolio transactions in
     accordance with the policies with respect thereto, as set forth in the
     Fund's Registration Statement, as amended from time to time, and under the
     1933 Act and the 1940 Act. In connection with the placement of orders for
     the execution of the Fund's portfolio transactions, the Sub-Adviser shall
     create and maintain all necessary records required to be created and
     maintained by an investment adviser under all applicable law, rules and
     regulations, including but not limited to Section 31(a) of the 1940 Act.
     All records shall be the property of the Fund and shall be available for
     inspection and use, upon reasonable notice and during normal business
     hours, by the Securities and Exchange Commission, the Fund or any person
     retained by the Fund. Where applicable, such records shall be maintained by
     the Sub-Adviser for the period and in the place required by Rule 31a-2
     under the 1940 Act.

          (5) In placing orders or directing the placement of orders for the
     execution of portfolio transactions, the Sub-Adviser shall select brokers
     and dealers for the execution of the Fund's transactions. In selecting
     brokers or dealers to execute such orders, the Sub-Adviser is expressly
     authorized to consider the fact that a broker or dealer has furnished
     statistical, research or other information or services which enhance the
     Sub-Adviser's investment research and portfolio management capability
     generally. It is further understood in accordance with Section 28(e) of the
     Securities Exchange Act of 1934, as amended, that the Sub-Adviser may
     negotiate with and assign to a broker a commission which may exceed the
     commission which another broker would have charged for effecting the
     transaction if the Sub-Adviser determines in good faith that the amount of
     commission charged was reasonable in relation to the value of brokerage
     and/or research services (as defined in Section 28(e)) provided by such
     broker, viewed in terms either of the Fund or the Sub-Adviser's overall
     responsibilities to the Sub-Adviser's discretionary accounts.

     (b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to other fiduciary accounts for
which it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.

3. EXPENSES

     During the term of this Agreement, the Sub-Adviser will pay all of its own
expenses incurred in connection with its activities under this Agreement.

4. COMPENSATION

     In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Fund hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Fund. The fee shall be accrued daily and shall be based on the net
asset values of all of the issued and outstanding shares of the Fund as
determined as of the close of each business day pursuant to the Articles of
                                       C-2
<PAGE>   61

Incorporation, Bylaws and currently effective Prospectus and Statement of
Additional Information of the Fund. The fee shall be payable in arrears on the
last day of each calendar month.

     The amount of such annual fee, as applied to the average daily value of the
net assets of the Fund shall be as described in the schedule below:

<TABLE>
<CAPTION>
ASSETS*                                                        FEE
- -------                                                       -----
<S>                                                           <C>
Total assets between $0 and $500 million....................  0.65%
Total assets between $500 million and $1 billion............  0.60%
Total assets between $1 billion and $2 billion..............  0.50%
On all assets in excess of $2 billion.......................  0.45%
</TABLE>

- ------------------------------
* The term "assets" for purposes of the above schedule shall include all assets
  advised or sub-advised by the Sub-Adviser for the Adviser, in addition to
  those assets of the Fund. The aggregation of the assets for purposes of the
  breakpoints, shall be calculated quarterly based on the aggregate assets on
  March 31st, June 30th, September 30th and December 31st of each calendar year
  (or portion thereof) that this Agreement is effective, with the fee rate
  determined on each such date being applicable to the following period and
  applied to all assets back to the first dollar of the Fund.

5. RENEWAL AND TERMINATION

     This Agreement shall continue in effect for a period of more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the majority
of the outstanding voting securities of the Fund, or by a vote of the majority
of the Fund's Board of Directors, and further provided that such continuance is
also approved annually by a vote of the majority of the Fund's Board of
Directors who are not parties to this Agreement or interested persons of parties
hereto, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time without payment of
penalty: (i) by the Fund's Board of Directors or by a vote of a majority of the
outstanding voting securities of the Fund on sixty days' prior written notice,
or (ii) by either party hereto upon sixty days' prior written notice to the
other. This Agreement will terminate automatically upon any termination of the
Investment Advisory Agreement between the Fund and the Adviser or in the event
of its assignment. The terms "interested person," "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act.

6. GENERAL PROVISIONS

     (a) The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Adviser nor its officers, directors, employees or agents shall
be subject to any liability for any error of judgment or mistake of law or for
any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under this Agreement or for any
loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of the Adviser, custodians, securities depositories or
other third parties, or from any war or political act of any foreign government
to which such assets might be exposed, provided that nothing herein shall be
deemed to protect, or purport to protect, the Sub-Adviser against any liability
to the Fund or to its shareholders to which the Sub-Adviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of the Sub-Adviser's reckless
disregard of its obligations and duties hereunder.

     (b) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Account may go up as well as down and is not
guaranteed, and that investment decisions will not always be profitable. Neither
the Adviser nor the Sub-Adviser has made or is making any guarantees, including
any guarantee as to any specific level of performance of the Fund. The Adviser
and the Fund's Board of Directors acknowledge that this Fund is designed for the
described investment objective and is not intended as a

                                       C-3
<PAGE>   62

complete investment program. They also understand that investment decisions made
on behalf of the Fund by Sub-Adviser are subject to various market and business
risks.

     (c) This Agreement shall not become effective unless and until it is
approved by the Board of Directors of the Fund, including a majority of the
members who are not "interested persons" of parties to this Agreement, by a vote
cast in person at a meeting called for the purpose of voting on such approval,
and by a majority of the outstanding voting securities of the Fund.

     (d) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and other
managed accounts, including other investment companies, and the Adviser has no
objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly
performs all obligations under this Agreement. The Adviser also understands that
the Sub-Adviser may give advice and take action with respect to any of its other
clients or for its own account which may differ from the timing or nature of
action taken by the Sub-Adviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell
or to recommend for purchase or sale, with respect to the Fund, any security
which the Sub-Adviser or its shareholders, directors, officers, employees or
affiliates may purchase or sell for its or their own account(s) or for the
account of any other client.

     (e) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or employees who may
also be an officer, director or employee of the Fund, or persons otherwise
affiliated with the Fund (within the meaning of the 1940 Act) to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other trust, corporation, firm, individual or
association.

     (f) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Minnesota. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

     (g) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the following
address: the Adviser and the Fund at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, and the Sub-Adviser at 153 East 53rd Street, New York, New
York 10022 (Attention: General Counsel).

     IN WITNESS WHEREOF, the parties have duly executed this Agreement.

                                          ADVANTUS CAPITAL MANAGEMENT, INC.
                                          By:
                                            ------------------------------------
                                          Its:
                                            ------------------------------------
                                          CREDIT SUISSE ASSET MANAGEMENT, LLC
                                          By:
                                            ------------------------------------
                                          Its:
                                            ------------------------------------

                                       C-4

<PAGE>   3
                         ADVANTUS ENTERPRISE FUND, INC.

                                 Advantus Funds
                             400 Robert Street North
                               St. Paul, MN 55101

                    PROXY FOR SPECIAL SHAREHOLDERS' MEETING
                           TO BE HELD APRIL 17, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

         The undersigned appoints William N. Westhoff, Frederick P. Feuerherm,
Donald F. Gruber and Eric J. Bentley, or any one of them, as proxies of the
undersigned, with full power of substitution, to vote all shares of Advantus
Index 500 Fund, Inc. (the "Fund") held by the undersigned on February 28, 2000,
at a Special Shareholders' Meeting of the Fund, to be held at the offices of
Advantus Capital Management, Inc., 400 Robert Street North, St. Paul, Minnesota
55101, on Monday, April 17, 2000, at 10:00 a.m., and at any adjournment thereof,
with all powers the undersigned would possess if present in person. All previous
proxies given with respect to the meeting are revoked. Receipt of the Notice of
Special Meeting and the accompanying Proxy Statement is hereby acknowledged.

                         ADVANTUS ENTERPRISE FUND, INC.

         THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTERS SET FORTH BELOW.
IT IS UNDERSTOOD THAT IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR"
ALL ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE
BEST INTERESTS OF THE FUND.


<TABLE>
<CAPTION>
<S><C>

1.   ELECTION OF DIRECTORS:

     [ ]   FOR all nominees listed below (except as marked to the contrary below)       [ ]   WITHHOLD AUTHORITY

(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the box next to the nominee's name below.)

         [ ]    Charles E. Arner              [ ]    Ellen S. Berscheid        [ ]    Ralph D. Ebbott

                           [ ]   Frederick P. Feuerherm             [ ]    William N. Westhoff

2.   TO APPROVE THE MODIFICATION OR ELIMINATION OF THE FUNDAMENTAL INVESTMENT POLICIES LISTED BELOW
     AS DESCRIBED IN THE PROXY STATEMENT:

     [ ]   FOR all changes listed         [ ]   AGAINST all changes listed          [ ]   ABSTAIN as to all changes listed

     [ ]   Vote on individual changes listed as follows:

        For   Against Abstain

         [ ]    [ ]       [ ]     A.   Modify policy regarding borrowing and the issuance of senior securities
         [ ]    [ ]       [ ]     B.   Modify policy regarding concentration in a particular industry
         [ ]    [ ]       [ ]     C.   Modify policy regarding investments in real estate and commodities
         [ ]    [ ]       [ ]     D.   Modify policy regarding lending
         [ ]    [ ]       [ ]     E.   Eliminate policy restricting the pledging of assets
         [ ]    [ ]       [ ]     F.   Eliminate policy restricting margin purchases and short sales

3.   TO APPROVE AN AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND AND ADVANTUS
     CAPITAL MANAGEMENT, INC., AS DESCRIBED IN THE PROXY STATEMENT:

     [ ]   FOR          [ ]    AGAINST          [ ]    ABSTAIN

4.   TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH CREDIT SUISSE ASSET MANAGEMENT, LLC. AS
     DESCRIBED IN THE PROXY STATEMENT

     [ ]   FOR          [ ]    AGAINST          [ ]    ABSTAIN

5.   TO RATIFY THE SELECTION OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTS FOR THE FUND:

     [ ]   FOR          [ ]    AGAINST          [ ]    ABSTAIN

</TABLE>



<PAGE>   4

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.

NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. WHEN SIGNING IN A
FIDUCIARY CAPACITY, SUCH AS EXECUTOR, ADMINISTRATOR, TRUSTEE, ATTORNEY,
GUARDIAN, ETC., PLEASE SO INDICATE. CORPORATE AND PARTNERSHIP PROXIES SHOULD BE
SIGNED BY AN AUTHORIZED PERSON INDICATING THE PERSON'S TITLE.

                                       -----------------------------------------
                                       Signature(s) (Title(s), if applicable)


                                       Date:                              , 2000
                                            ------------------------------


YOU MAY ALSO VOTE BY TOUCH TONE PHONE OR THE INTERNET. CALL TOLL FREE
1-800-690-6903 OR ACCESS WWW.PROXYVOTE.COM. SEE THE ENCLOSED INSERT FOR FURTHER
INSTRUCTIONS ON VOTING BY PHONE OR INTERNET.


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