NORWEST ADVANTAGE FUNDS, 485BPOS, 1996-03-08

NORWEST ADVANTAGE FUNDS
485BPOS, 1996-03-08

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<PAGE>

As filed with the Securities and Exchange Commission on March 8, 1996

File No. 33-9645
File No. 811-4881
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 35

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 37

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NORWEST ADVANTAGE FUNDS
(Formerly "Norwest Funds" and prior thereto "Prime Value Funds, Inc.")
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square
Portland, Maine 04101
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: (207) 879-1900
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David I. Goldstein, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)

Copies of Communications to:
Anthony C.J. Nuland, Esq.
Seward & Kissel
1200 G Street, N.W.
Washington, D.C. 20005
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It is proposed that this filing will become effective:

X immediately upon filing pursuant to Rule 485, paragraph (b)
___ on [ ] pursuant to Rule 485, paragraph (b)
___ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
___ on [ ] pursuant to Rule 485, paragraph (a)(i)
___ 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
___ on [ ] pursuant to Rule 485, paragraph (a)(ii)
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith.

<PAGE>

Registrant filed a Rule 24f-2 notice its various portfolios with an October 31
fiscal year end on November 15, 1995 and an amendment thereto on December 8,
1995.

INTERNATIONAL FUND OF REGISTRANT IS CURRENTLY STRUCTURED AS A MASTER-FEEDER
FUND. THIS AMENDMENT INCLUDES A MANUALLY EXECUTED SIGNATURE PAGE FOR THE MASTER
FUND, INTERNATIONAL PORTFOLIO, A SERIES OF CORE TRUST (DELAWARE).

-2-
<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART A
(PROSPECTUS OFFERING I SHARES OF FUNDS WITH OCTOBER 31 FISCAL YEAR END)
<TABLE>
<CAPTION>

Form N-1A
Item No. (Caption) Location in Prospectus (Caption)
- --------- ----------- --------------------------------
<S> <C> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Summary

Item 3. Condensed Financial Information Financial Highlights

Item 4. General Description of Registrant Summary; Investment Objectives,
Polices and Risk Considerations;
Other Information - The Trust
and its Shares; Appendix A

Item 5. Management of the Fund Summary; Management of the Funds

Item 6. Capital Stock and Other Securities Dividends, Distributions and Tax
Matters; Other Information - The
Trust and its Shares; Purchases and
Redemptions of Shares

Item 7. Purchase of Securities Being Purchases and Redemptions of
Offered Shares; Management of the Funds

Item 8. Redemption or Repurchase Purchases and Redemptions of Shares

Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
-3-
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART B
(STATEMENT OF ADDITIONAL INFORMATION ("SAI") OFFERING I SHARES OF FUNDS
WITH OCTOBER 31 FISCAL YEAR END AND A SHARES AND B SHARES OF INTERNATIONAL FUND)

<TABLE>
<CAPTION>
Form N-1A
Item No. (Caption) Location in SAI (Caption)
- --------- ----------- --------------------------------
<S> <C> <C>
Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information and History Prospectus

Item 13. Investment Objectives and Policies Investment Policies; Investment
Limitations

Item 14. Management of the Registrant Management; Other Information

Item 15. Control Persons and Principal Other Information - Ownership of
Holders of Securities Fund Shares

Item 16. Investment Advisory and Other Management
Services

Item 17. Brokerage Allocation Other Information - Portfolio
and Other Practices Transactions

Item 18. Capital Stock and Other Securities Other Information - Additional
Information about the Trust

Item 19. Purchase, Redemption and Pricing of Other information - Additional
Securities Being Offered Purchase and Redemption Information

Item 20. Tax Status Other Information - Taxation

Item 21. Underwriters Management - Administration and Distribution

Item 22. Calculation of Performance Data Performance Data

Item 23. Financial Statements Other Information - Financial Statements

</TABLE>
-4-

<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART A
(PROSPECTUSES OFFERING A SHARES AND B SHARES OF DIVERSIFIED EQUITY FUND,
GROWTH EQUITY FUND, INCOME EQUITY FUND AND INTERNATIONAL FUND)

<TABLE>
<CAPTION>
Form N-1A
Item No. (Caption) Location in Prospectus (Caption)
- --------- ----------- --------------------------------
<S> <C> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Prospectus Summary

Item 3. Condensed Financial Information Financial Highlights; Other
Information - Performance Information

Item 4. General Description of Registrant Prospectus Summary; Investment
Objectives and Policies; and Other
Information - The Trust and its Shares

Item 5. Management of the Fund Prospectus Summary; Management

Item 5A. Management's Discussion of Fund Not Applicable
Performance

Item 6. Capital Stock and Other Securities Cover; Dividends and Tax Matters;
Other Information - The Trust and its Shares

Item 7. Purchase of Securities Being How To Buy Shares; Other
Offered Shareholder Services - Exchanges; Other
Shareholder Services; and Management -
Management and Distribution Services.

Item 8. Redemption or Repurchase How to Sell Shares

Item 9. Pending Legal Proceedings Not Applicable

</TABLE>
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<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART B
(STATEMENT OF ADDITIONAL INFORMATION ("SAI") OFFERING A SHARES AND B SHARES OF
DIVERSIFIED EQUITY FUND, GROWTH EQUITY FUND AND INCOME EQUITY FUND)

<TABLE>
<CAPTION>
Form N-1A
Item No. (Caption) Location in SAI (Caption)
- --------- ----------- --------------------------------
<S> <C> <C>
Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information and History Prospectus

Item 13. Investment Objectives and Policies Investment Policies; Investment
Limitations

Item 14. Management of the Registrant Management; Other Information

Item 15. Control Persons and Principal Other Information - Ownership of
Holders of Securities Fund Shares

Item 16. Investment Advisory and Other Management
Services

Item 17. Brokerage Allocation Other Information - Portfolio
and Other Practices Transactions

Item 18. Capital Stock and Other Securities Other Information - Additional
Information about the Trust

Item 19. Purchase, Redemption and Pricing of Other information - Additional
Securities Being Offered Purchase and Redemption Information

Item 20. Tax Status Other Information - Taxation

Item 21. Underwriters Management - Administration and Distribution

Item 22. Calculation of Performance Data Performance Data

Item 23. Financial Statements Other Information - Financial Statements
</TABLE>
-6-
<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART A
(PROSPECTUSES OFFERING A SHARES, B SHARES AND I SHARES OF FUNDS WITH MAY 31
FISCAL YEAR END, INSTITUTIONAL SHARES AND INVESTOR SHARES)

Not Applicable in this Filing

PART B
(STATEMENTS OF ADDITIONAL INFORMATION ("SAIs") OFFERING A SHARES, B SHARES AND
I SHARES OF FUNDS WITH MAY 31 FISCAL YEAR END, INSTITUTIONAL
SHARES AND INVESTOR SHARES)

Not Applicable in this Filing

-7-
<PAGE>

Prospectus

March 1, 1996

I Shares - Diversified Equity Fund, Growth Equity Fund, Large Company Growth
Fund, Small Company Growth Fund, International Fund, Income Equity Fund, Index
Fund, Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Intermediate U.S. Government Fund, Managed Fixed Income Fund and Stable Income
Fund.

This Prospectus offers the above listed shares (the "Shares") of thirteen
separate portfolios (each a "Fund" and collectively the "Funds") of Norwest
Advantage Funds (the "Trust"), an open-end, management investment company.

This Prospectus sets forth concisely the information concerning the Trust and
each Fund that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. The Trust has
filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information (the "SAI") with respect to each Fund dated the same date
as the prospectus for the Fund and as may be further amended from time to time,
which contains more detailed information about the Trust and the Fund and which
is incorporated into this Prospectus by reference. The SAI is available without
charge by contacting the transfer agent at 733 Marquette Avenue, Minneapolis,
Minnesota, 55479-0040, (800) 338-1348. Investors should read this Prospectus and
retain it for future reference.

International Fund currently seeks to achieve its investment objective by
investing all of its investment assets in International Portfolio, a separate
portfolio of Core Trust (Delaware) ("Core Trust"), a registered investment
company. International Fund and International Portfolio have identical
investment objectives.

AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY OTHER FEDERAL AGENCY.
SHARES OF THE FUNDS ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF OR ENDORSED OR
GUARANTEED BY NORWEST BANK MINNESOTA, N.A. OR ANY OF ITS BANK OR NON-BANK
AFFILIATES.

AN INVESTMENT IN A FUND IS SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

-8-
<PAGE>

Table of Contents

Shareholder
Information
(800) 338-1348

Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040

Summary
Financial Highlights
Investment Objectives, Policies and Risk Considerations
Investment Objectives
Investments in Core Trust
Investment Policies - Equity Funds
Investment Policies - Balanced Funds
Investment Policies - Fixed Income Funds
Additional Investment Policies
Management of the Funds
Investment Advisory Services
Advisory Fees
Administrative and Other Services
Expenses of the Funds
Purchases and Redemptions of Shares
Purchase and Redemption Procedures
General Information
Dividends, Distributions and Tax Matters
Dividends and Distributions
Tax Matters
Shareholder Tax Matters
Other Information
Fund Performance
Banking Law Matters
Portfolio Transactions
The Trust and its Shares
Core Trust Structure
Appendix A: Investments, Investment Strategies
and Risk Considerations

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<PAGE>

Summary

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

Who Should Invest?

I Shares of the Funds are offered through this Prospectus to fiduciary, agency
and custodial clients of bank trust departments, trust companies and their
affiliates, including participants in certain qualified and nonqualified
employee benefit plans ("Plans") and to related IRA and KEOGH accounts. See
"Purchases and Redemptions of Shares." Only certain Funds may be available as
investment alternatives in a Plan; participants in a Plan that invests in the
Funds should consult with their employer or plan sponsor to determine which
Funds are offered through their Plan. While no single Fund is intended to
provide a complete or balanced investment program, each can serve as a component
of an investor's long-term program to accumulate assets for retirement or other
major goals.

The Norwest Advantage Funds

Each Fund has distinct investment objectives and policies as described under
"Investment Objectives, Policies and Risk Considerations." There are seven
equity funds (the "Equity Funds"): two Funds, Diversified Equity Fund and Growth
Equity Fund, that invest their assets in several different equity investment
styles according to specified percentages, and five Funds that invest in a
single style.

There are three balanced funds (the "Balanced Funds") and three fixed income
funds (the "Fixed Income Funds"). The Balanced Funds invest specified
percentages of their assets in accordance with the investment styles of
Diversified Equity Fund and three to five different fixed income investment
styles.

INVESTMENT PROGRAM AND STRUCTURE

EQUITY
FUNDS DIVERSIFIED EQUITY FUND seeks long-term capital
appreciation while moderating annual return volatility by
diversifying its investments among five different equity
investment styles as indicated:

Index Fund style 25%
Income Equity Fund style 25%
Large Company Growth Fund style 25%
Small Company style 10%
International Fund style 15%
--------------------------------------
TOTAL FUND ASSETS 100%

GROWTH EQUITY FUND seeks a high level of long-term
capital appreciation while moderating annual return
volatility by diversifying its investments among three
different equity investment styles as indicated:

Large Company Growth Fund style 35%
Small Company style 35%
International Fund style 30%
--------------------------------------
TOTAL FUND ASSETS 100%

GROWTH EQUITY FUND ASSUMES A HIGHER LEVEL OF RISK THAN
DIVERSIFIED EQUITY FUND IN ORDER TO SEEK INCREASED
RETURNS.

SMALL COMPANY GROWTH FUND seeks long-term capital
appreciation by investing primarily in the common stock
of small and medium-sized domestic companies that are
either growing rapidly or completing a period of
significant change. This Fund currently is not open to
new investors.

-10-
<PAGE>

LARGE COMPANY GROWTH FUND seeks long-term capital
appreciation by investing in large, high-quality domestic
companies that the investment adviser believes have
superior growth potential.

INTERNATIONAL FUND seeks long-term capital appreciation
by investing directly or indirectly in high-quality
companies based outside the United States and currently
pursues its investment objective through investment of
all of its investable assets in International Portfolio.

AS INTERNATIONAL FUND INVESTS EXCLUSIVELY IN
INTERNATIONAL PORTFOLIO, THE INVESTMENT EXPERIENCE OF
INTERNATIONAL FUND WILL CORRESPOND DIRECTLY WITH THE
INVESTMENT EXPERIENCE OF INTERNATIONAL PORTFOLIO. SEE
"OTHER INFORMATION - CORE TRUST STRUCTURE." INTERNATIONAL
PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AND POLICIES
AS INTERNATIONAL FUND AND SELECTS ITS INVESTMENTS ON THE
BASIS OF THEIR POTENTIAL FOR CAPITAL APPRECIATION WITHOUT
REGARD TO CURRENT INCOME.

INCOME EQUITY FUND seeks long-term capital appreciation
in line with that of the overall equity securities
markets and to provide above average dividend income.

INDEX FUND seeks to duplicate the return of the Standard
& Poor's 500 Composite Stock Price Index.
BALANCED
FUNDS CONSERVATIVE BALANCED FUND seeks a combination of current
income and capital appreciation by diversifying
investment of the Fund's assets among stocks, bonds and
other fixed income instruments through investment in
several equity and fixed income investment styles as
indicated:

Diversified Equity Fund style 25%
Managed Fixed Income Fund style 16 2/3%
Total Return style 16 2/3%
Positive Return style 16 2/3%
Stable Income Fund style 15%
Short Maturity style 10%
------------------------------------------
TOTAL FUND ASSETS 100%

OF THE BALANCED FUNDS, CONSERVATIVE BALANCED FUND MOST
EMPHASIZES SAFETY OF PRINCIPAL THROUGH LIMITED EXPOSURE
TO EQUITY SECURITIES.

MODERATE BALANCED FUND seeks a combination of current
income and capital appreciation by diversifying
investment of the Fund's assets among stocks, bonds and
other fixed income investments through investment in
several equity and fixed income investment styles as
indicated:

Diversified Equity Fund style 40%
Managed Fixed Income Fund style 15%
Total Return style 15%
Positive Return style 15%
Stable Income Fund style 15%
-----------------------------------------
TOTAL FUND ASSETS 100%

MODERATE BALANCED FUND IS MORE EVENLY-BALANCED BETWEEN
FIXED INCOME AND EQUITY SECURITIES THAN THE OTHER
BALANCED FUNDS.

-11-
<PAGE>

GROWTH BALANCED FUND seeks a combination of current
income and capital appreciation by diversifying
investment of the Fund's assets between stocks and bonds
through investment in several equity and fixed income
investment styles as indicated:

Diversified Equity Fund style 65%
Managed Fixed Income Fund style 11 2/3%
Total Return style 11 2/3%
Positive Return style 11 2/3%
------------------------------------------
TOTAL FUND ASSETS 100%

GROWTH BALANCED FUND HAS THE LARGEST EQUITY COMPONENT OF
THE BALANCED FUNDS.
FIXED
INCOME
FUNDS INTERMEDIATE U.S. GOVERNMENT FUND seeks income and safety
of principal by investing primarily in U.S. Government
Securities. The Fund seeks to moderate its volatility by
using a conservative approach to structuring the
maturities of its investment portfolio.

MANAGED FIXED INCOME FUND seeks to provide consistent
fixed income returns by investing primarily in a
portfolio of intermediate maturity, investment grade
fixed income securities.

STABLE INCOME FUND seeks to maintain safety of principal
and provide low volatility total return by investing
primarily in short and intermediate maturity, investment
grade fixed income securities.

Management of the Funds

The investment adviser to each Fund (the "Adviser") is Norwest Investment
Management, a part of Norwest Bank Minnesota, N.A. ("Norwest"). The Adviser
provides investment advice to various institutions, pension plans and other
accounts and, as of December 31, 1995, managed assets totaling approximately
$22.7 billion. Except for International Fund, the Adviser makes investment
decisions for the Funds and continuously reviews, supervises and administers
each Fund's investment program.

Subject to the Adviser's general oversight, Schroder Capital Management
International Inc. ("Schroder") acts as investment subadviser to Diversified
Equity Fund, Growth Equity Fund and each Balanced Fund (Schroder and the
Adviser, collectively, are sometimes referred to as the "Advisers"). Schroder
also serves as International Portfolio's investment adviser.

Norwest serves as the Trust's transfer agent, dividend disbursing agent and
custodian, and provides certain administrative services to International Fund.
The manager of the Trust and distributor of its shares is Forum Financial
Services, Inc. ("Forum"). Forum also serves as administrator of Core Trust. See
"Management of the Funds - Investment Advisory Services" and "Administrative and
Other Services."

Purchase and Redemption of Shares

Shares of beneficial interest of each Fund are offered without a sales charge
and may be redeemed without charge. Norwest offers investors in the Funds
various periodic investment and redemption services. The minimum initial
investment in each Fund is $1,000. See "Purchases and Redemptions of Shares."

Dividends and Distributions

Dividends of net investment income are declared annually by each Fund. Each
Fund's net capital gain, if any, is distributed at least annually. See
"Dividends, Distributions and Tax Matters."

Certain Risk Factors

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<PAGE>

There can be no assurance that any Fund will achieve its investment objective.
Each Fund's net asset value will fluctuate based upon changes in the value of
the Fund's portfolio securities and, accordingly, upon redemption an investment
in a Fund may be worth more or less than its original value. The Fixed Income
Funds' net asset values will tend to vary inversely with movements in interest
rates and the potential for appreciation in a Fixed Income Fund in the event of
a decline in interest rates may be limited or negated by increased principal
prepayments on certain mortgage-backed securities held by the Fund. The policy
of investing in smaller companies employed by Small Company Growth Fund and the
Equity Funds that invest in small company securities entails certain risks in
addition to those normally associated with investments in equity securities.
Similarly, International Fund's policy of investing directly or indirectly in
foreign securities entails certain risks in addition to those normally
associated with investments in equity securities.

By investing solely in International Portfolio, International Fund may achieve
certain efficiencies and economies of scale. Nonetheless, this investment could
also have potential adverse effects on International Fund. Investors in
International Fund should consider these risks, as described under "Other
Information - Core Trust Structure."

An investment in any Fund involves certain risks, depending on the types of
investments made and the types of investment techniques employed. All
investments by the Funds entail some risk. Certain investments and investment
techniques, however, entail additional risks, such as investments in foreign
issuers, issuers with limited market capitalization, mortgage or asset-backed
securities, zero-coupon bonds and options, futures contracts, forward contracts
and swap agreements. The use of leverage by certain Funds through borrowings,
margin transactions, short sales, reverse repurchase agreements and other
investment techniques involves additional risks. For more details about each
Fund, their investments and their risks see "Investment Objectives, Policies and
Risk Considerations" and "Appendix A: Investments, Investment Strategies and
Risk Considerations."

Expenses of Investing in the Funds

The purpose of the following table is to assist investors in understanding the
various expenses that an investor in the Funds will bear directly or indirectly.
There are no transaction charges in connection with purchases, redemptions or
exchanges of Shares. None of the Funds has adopted a Rule 12b-1 plan with
respect to the Shares and, accordingly, no Fund incurs distribution expenses
with respect to the Shares.

ANNUAL FUND OPERATING EXPENSES

AS A PERCENTAGE OF AVERAGE NET ASSETS
(AFTER WAIVERS AND REIMBURSEMENTS AS NOTED BELOW)(1)

<TABLE>
<CAPTION>
INVESTMENT TOTAL
ADVISORY SHAREHOLDER OTHER OPERATING
FEE SERVICING EXPENSES(2) EXPENSES(2)
<S> <C> <C> <C> <C>
Diversified Equity Fund (3) 0.65% 0.25% 0.10% 1.00%
Growth Equity Fund (3) 0.90% 0.25% 0.10% 1.25%
Small Company Growth Fund 0.90% 0.25% 0.10% 1.25%
Large Company Growth Fund 0.65% 0.25% 0.10% 1.00%
International Fund (3) 0.45% 0.25% 0.80% 1.50%
Income Equity Fund 0.65% 0.25% 0.10% 1.00%
Index Fund 0.15% 0.25% 0.10% 0.50%
Conservative Balanced Fund (3) 0.45% 0.25% 0.10% 0.80%
Moderate Balanced Fund (3) 0.53% 0.25% 0.10% 0.88%
Growth Balanced Fund (3) 0.58% 0.25% 0.10% 0.93%
Intermediate U.S. Government Fund 0.33% 0.25% 0.10% 0.68%
Managed Fixed Income Fund 0.32%(2) 0.25% 0.10% 0.67%
Stable Income Fund 0.30% 0.25% 0.10% 0.65%
</TABLE>

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<PAGE>

(1) Except with respect to Income Equity Fund's investment advisory fee, the
amounts of expenses are based on amounts incurred during the Funds' first fiscal
year ended October 31, 1995. The table reflects an increase in Income Equity
Fund's advisory fee from 0.50% which is expected to be approved by that Fund's
shareholders at a meeting to be held on ____________.

(2) Absent actual expense reimbursements and fee waivers, the Other Expenses and
Total Operating Expenses of each Fund would be, respectively: Diversified Equity
Fund: 0.18% and 1.08%; Growth Equity Fund: 0.19% and 1.34%; Small Company Growth
Fund: 0.20% and 1.35%; Large Company Growth Fund: 0.30% and 1.20%; International
Fund: 0.96% and 1.66%; Income Equity Fund: 0.37% and 1.27%; Index Fund: 0.14%
and 0.64%; Conservative Balanced Fund: 0.26% and 0.96%; Moderate Balanced Fund:
0.20% and 0.98%; Growth Balanced Fund: 0.20% and 1.03%; Intermediate U.S.
Government Fund: 0.35% and 0.93%; Stable Income Fund: 0.43% and 0.98%. With
respect to Managed Fixed Income Fund, absent actual expense reimbursements and
fee waivers, the Investment Advisory Fees, Other Expenses and Total Operating
Expenses of that Fund would be: 0.35%. 0.12%, and 0.82%, respectively. For a
further description of the various expenses incurred in the operation of the
Funds, see "Management of the Funds."

(3) International Fund's Other Expenses include the Fund's pro rata portion of
the operating expenses of International Portfolio, which will be borne
indirectly by International Fund shareholders. As long as its assets are
invested in International Portfolio, International Fund pays no investment
advisory fees directly. International Fund pays Forum a management fee, and Core
Trust pays Forum an administration fee for its services to International
Portfolio, of which International Fund will bear its pro rata portion. The Board
of Trustees of the Trust believes that the aggregate per share expenses of
International Fund and International Portfolio will be approximately equal to
the expenses International Fund would incur if its assets were invested directly
in foreign securities. Pursuant to several expense waiver undertakings,
Diversified Equity Fund, Growth Equity Fund, Conservative Balanced Fund,
Moderate Balanced Fund and Growth Balanced Fund invest portions of their assets
in other portfolios of Core Trust, each of which bears certain expenses not
reflected in the table. See "Investment Objectives, Policies and Risk
Considerations - Investments in Core Trust" and "Management of the Funds -
Expenses of the Funds."

EXAMPLE OF EXPENSES

ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS

Diversified Equity Fund $10 $32 $55 $122
Growth Equity Fund 13 40 69 152
Small Company Growth Fund 13 40 69 151
Large Company Growth Fund 10 32 55 122
International Fund 15 47 82 179
Income Equity Fund 9 27 47 105
Index Fund 5 16 28 63
Conservative Balanced Fund 8 26 44 99
Moderate Balanced Fund 9 28 49 108
Growth Balanced Fund 9 30 51 114
Intermediate U.S. Government Fund 7 22 38 85
Managed Fixed Income Fund 7 21 37 83
Stable Income Fund 7 21 36 81

The above table is a hypothetical example that indicates the expenses an
investor would pay assuming a $1,000 investment in each Fund, a 5 percent annual
return, reinvestment of all dividends and distributions, and full redemption at
the end of each period. The example is based on the expenses listed in the
"Annual Fund Operating Expenses" table above. The 5 percent annual return is not
a prediction of and does not represent the Funds' projected returns; rather, it
is required by government regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN
MAY BE GREATER OR LESS THAN INDICATED.

-14-
<PAGE>

FINANCIAL HIGHLIGHTS

The information in the Financial Highlights section represents selected
data for a single outstanding Share of each Fund for the fiscal period ended
October 31, 1995. Financial information contained in this section was audited
by KPMG Peat Marwick LLP, independent auditors. The Funds' financial statements
for the fiscal period ended October 31, 1995, and independent auditors' report
thereon are contained in the Annual Report of the Funds, and are incorporated by
reference into the SAI. Further information about each Fund's performance is
contained in the Annual Report which may be obtained from the Trust without
charge.

Diversified Growth
Equity Fund Equity Fund
------------ ------------
Period Ended Period Ended
October 31 October 31
1995(a) 1995(a)
------------ ------------
Beginning Net Asset Value per Share $ 22.21 $ 22.28
Net Investment Income (Loss) 0.22 (0.02)
Net Realized and Unrealized
Gain (Loss) on Investments,
Foreign Currency Transactions
and Futures Transactions 5.10 4.71
Dividends from Net
Investment Income -.- -.-
Distributions from Net
Realized Gains -.- -.-
------- -------
Ending Net Asset Value per Share $ 27.53 $ 26.97
-------- -------
-------- -------
Ratios to Average Net Assets:
Expenses (b) 1.00%(c)(d) 1.25%(c)(d)
Net Investment Income (Loss) 1.01%(c) (0.11%)(c)
Total Return 23.95% 21.10%
Portfolio Turnover Rate 10.33% 8.90%
Net Assets at the End of
Period/Year (000's Omitted) $ 711,111 $ 564,004

(a) Each Fund commenced operations and the offering of I Shares on November 11,
1994.

(b) During the period, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratios
of expenses to average net assets would have been:

Expenses 1.08%(c)(d) 1.34%(c)(d)

(d) Excludes expenses related to investment in Core Trust.

-15-
<PAGE>

<TABLE>
<CAPTION>
Large Company Small Company International Income Index
Growth Fund Growth Fund Fund Equity Fund Fund
------------ ------------ ------------ ------------ ------------
Period Ended Period Ended Period Ended Period Ended Period Ended
October 31 October 31 October 31 October 31 October 31
1995(a) 1995(a) 1995(a) 1995(a) 1995(a)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Beginning Net Asset Value per Share $ 18.50 $ 21.88 $17.28 $18.90 $ 21.80
Net Investment Income (Loss) (0.05) (0.11) 0.09 0.46 0.45
Net Realized and Unrealized
Gain (Loss) on Investments,
Foreign Currency Transactions
and Futures Transactions 5.14 8.22 0.62 4.66 5.42
Dividends from Net
Investment Income -.- -.- -.- -.- -.-
Distributions from Net
Realized Gains -.- -.- -.- -.- -.-
------ ------ ------ ------ ------
Ending Net Asset Value per Share $23.59 $29.99 $17.99 $24.02 $27.67
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Ratios to Average Net Assets:
Expenses (b) 1.00%(c) 1.25%(c) 1.50%(c)(d) 0.85%(c) 0.50%(c)
Net Investment Income (Loss) (0.23%)(c) (0.47%)(c) 0.54%(c) 2.51%(c) 2.12%(c)
Total Return 27.51% 37.07% 4.11% 27.09% 26.93%
Portfolio Turnover Rate 31.60% 106.55% N/A 7.03% 14.48%
Net Assets at the End of
Period/Year (000's Omitted) $ 63,567 $ 278,058 $91,401 $ 49,000 $ 186,197

(a) Each Fund commenced operations and the offering of I Shares on November 11,
1994.

Expenses 1.20%(c) 1.35%(c) 1.66%(c)(d) 1.12%(c) 0.64%(c)

(d) Includes expenses allocated from International Portfolio of Core Trust of
0.80%, net of waivers of 0.10%.

</TABLE>

-16-

<PAGE>

<TABLE>
<CAPTION>
Conservative Moderate Growth
Balanced Fund Balanced Fund Balanced Fund
------------- ------------- -------------
Period Ended Period Ended Period Ended
October 31 October 31 October 31
1995(a) 1995(a) 1995(a)
------------- ------------- -------------
<S> <C> <C> <C>
Beginning Net Asset Value per Share $ 16.19 $ 17.25 $ 17.95
Net Investment Income (Deficit) 0.75 0.65 0.47
Net Realized and Unrealized
Gain (Loss) on Investments,
Foreign Currency Transactions
and Futures Transactions 1.27 1.94 2.83
Dividends from Net
Investment Income -.- -.- -.-
Distributions from Net
Realized Gains -.- -.- -.-
--------- -------- --------
Ending Net Asset Value per Share $ 18.21 $ 19.84 $ 21.25
--------- -------- --------
--------- -------- --------
Ratios to Average Net Assets:
Expenses (b) 0.80%(c)(d) 0.88%(c)(d) 0.93%(c)(d)
Net Investment Income (Deficit) 4.67%(c) 3.76%(c) 2.63%(c)
Total Return 12.48% 15.01% 18.38%
Portfolio Turnover Rate 65.53% 62.08% 41.04%
Net Assets at the End of
Period/Year (000's Omitted) $ 136,710 $ 373,998 $ 374,892

(a) Each Fund commenced operations and the offering of I Shares on November 11,
1994.

(b) During the period, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratios of
expenses to average net assets would have been:

Expenses 0.96%(c)(d) 0.98%(c)(d) 1.03%(c)(d)

(d) Excludes expenses related to investment in Core Trust.

</TABLE>

-17-

<PAGE>

<TABLE>
<CAPTION>
Intermediate Managed
US Government Fixed Income Stable Income
Fund Fund Fund
------------ ------------ -------------
Period Ended Period Ended Period Ended
October 31 October 31 October 31
1995(a) 1995(a) 1995(a)
------------ ------------ -------------
<S> <C> <C> <C>
Beginning Net Asset Value per Share $ 55.55 $ 25.08 $ 10.00
Net Investment Income (Deficit) 4.67 1.65 0.50
Net Realized and Unrealized
Gain (Loss) on Investments,
Foreign Currency Transactions
and Futures Transactions 1.76 1.19 0.22
Dividends from Net
Investment Income -.- -.- -.-
Distributions from Net
Realized Gains -.- -.- -.-
-------- --------- --------
Ending Net Asset Value per Share $ 61.98 $ 27.92 $ 10.72
-------- --------- --------
-------- --------- --------
Ratios to Average Net Assets:
Expenses (b) 0.68%(c) 0.67%(c) 0.65%(c)
Net Investment Income (Deficit) 7.79%(c) 5.87%(c) 5.91%(c)
Total Return 11.58% 11.32% 7.20%
Portfolio Turnover Rate 240.90% 58.90% 115.85%
Net Assets at the End of
Period/Year (000's Omitted) $ 50,213 $ 171,453 $ 48,087

(a) Each Fund commenced operations and the offering of I Shares on November 11,
1994.

(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratios of
expenses to average net assets would have been:

Expenses 0.93%(c) 0.82%(c) 0.98%(c)

-18-

<PAGE>

Investment Objectives, Policies
and Risk Considerations

The Funds offered through this Prospectus consist of thirteen Funds, each of
which has distinct investment objectives and policies. There are seven Equity
Funds: two Funds that invest their assets in several different equity investment
styles, Diversified Equity Fund and Growth Equity Fund, and five Funds that
invest in a single style. The use of multiple equity investment styles - through
a percentage allocation consistent with the Fund's investment objective - is
intended to reduce the risk associated with the use of a single style, which may
move in and out of favor during the course of a market cycle. The Funds also
include three Balanced Funds and three Fixed Income Funds. The Balanced Funds
invest specified percentages of their assets in accordance with the investment
styles of Diversified Equity Fund and three to five different fixed income
investment styles. The Balanced Funds rebalance their portfolios periodically
and Diversified Equity and Growth Equity Funds rebalance their portfolios daily
to maintain specified percentages of assets invested in particular investment
styles. The percentage of a Fund's assets invested using a specified investment
style may be changed at any time by the Adviser in response to market or other
conditions.

For a further description of each Fund's investments and investment techniques
and additional risk considerations associated with those investments and
techniques, see the discussion below, "Investment Objectives, Investment
Policies and Risk Considerations - Additional Investment Policies," "Appendix A:
Investments, Investment Strategies and Risk Considerations" and the SAI.

Investment Objectives

Each of the Funds has its own distinct investment objective which may not be
changed without approval of the Fund's shareholders. There can be no assurance
that any Fund will achieve its investment objective.

Equity Funds

Diversified Equity Fund's investment objective is to provide long-term capital
appreciation while moderating annual return volatility by diversifying its
investments in accordance with different equity investment styles.

Growth Equity Fund's investment objective is to provide a high level of long-
term capital appreciation while moderating annual return volatility by
diversifying its investments in accordance with different equity investment
styles. Because the Fund seeks increased returns, it is subject to
correspondingly greater risks than Diversified Equity Fund.

Small Company Growth Fund's investment objective is to provide long-term capital
appreciation by investing primarily in small and medium-sized domestic companies
that are either growing rapidly or completing a period of significant change.

International Fund's investment objective is to provide long-term capital
appreciation by investing directly or indirectly in high-quality companies based
outside the United States. International Portfolio, in which International Fund
invests all of its assets, has the same investment objective.

Large Company Growth Fund's investment objective is to provide long-term capital
appreciation by investing primarily in large, high-quality domestic companies
that the investment adviser believes have superior growth potential.

Income Equity Fund's investment objective is to provide both long-term capital
appreciation in line with that of the overall equity securities markets and
above average dividend income.

Index Fund's investment objective is to duplicate the return of the Standard &
Poor's 500 Composite Stock Price Index.

Balanced Funds

-19-
<PAGE>

Conservative Balanced Fund's investment objective is to provide a combination of
current income and capital appreciation by diversifying investment of the Fund's
assets among stocks, bonds and other fixed income investments. The Fund
emphasizes safety of principal through limited exposure to equity securities.
The Fund has the smallest equity securities position of the three Balanced
Funds.

Moderate Balanced Fund's investment objective is to provide a combination of
current income and capital appreciation by diversifying investment of the Fund's
assets among stocks, bonds and other fixed income investments. The Fund provides
a portfolio more evenly-balanced between fixed income and equity securities than
the other Balanced Funds.

Growth Balanced Fund's investment objective is to provide a combination of
current income and capital appreciation by diversifying investment of the Fund's
assets between stocks and bonds. The Fund has the largest equity securities
position of the Balanced Funds.

Fixed Income Funds

Intermediate U.S. Government Fund's investment objective is to provide income
and safety of principal by investing primarily in U.S. Government Securities.

Managed Fixed Income Fund's investment objective is to provide consistent fixed
income returns by investing primarily in a portfolio of intermediate maturity,
investment grade fixed income securities.

Stable Income Fund's investment objective is to maintain safety of principal
while providing low-volatility total return.

Investments in Core Trust

International Fund currently seeks to achieve its investment objective by
investing all of its investment assets in International Portfolio, a separate
Portfolio of Core Trust. In addition, the Trust has received an exemptive order
from the SEC under which Diversified Equity Fund, Growth Equity Fund,
Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund
(collectively the "Blended Funds") currently invest the portions of their assets
that are managed in a small company, an index and an international investment
style, respectively, in Small Company Portfolio, Index Portfolio, and
International Portfolio II (the "Blended Portfolios"). These Portfolios are each
separate portfolios of Core Trust. By pooling their assets in the Blended
Portfolios, the Blended Funds may be able to achieve benefits that they could
not achieve by investing directly in securities. See "Other Information - Core
Trust Structure."

The investment objectives and policies and investment risk considerations for
International Portfolio II and Index Portfolio are identical to the investment
objectives and policies and investment risk considerations of International Fund
and Index Fund, respectively. The investment objective of Small Company
Portfolio is to provide long-term capital appreciation by investing primarily in
small and medium-sized domestic companies that are either growing rapidly or
completing a period of significant change. This Portfolio invests its assets in
a small company stock investment style (the "Small Company Stock style"), a
small company value investment style (the "Small Company Value style") and in
the style of Small Company Growth Fund and, in the future, may invest its assets
in accordance with additional small company investment styles.

Investment Policies

Equity Funds

To achieve their investment objectives, the Equity Funds invest primarily in
common stocks and other equity securities. International Fund currently invests
exclusively in International Portfolio which invests primarily in common stocks
and other equity securities of foreign issuers. See "Other Information - Core
Trust Structure." The domestic securities in which an Equity Fund invests are
generally listed on a securities exchange or included in the National
Association of Securities Dealers Automated Quotation (NASDAQ) National Market
System but may be

-20-
<PAGE>

traded in the over-the-counter securities market. Under normal
circumstances, each of the Equity Funds will invest substantially all of its
assets, but not less than 65 percent of its total assets, in equity securities.

DIVERSIFIED EQUITY FUND is designed to minimize the volatility and risk of
investing in equity securities. The Fund's portfolio combines five different
equity investment styles, those of four of the Equity Funds - Large Company
Growth Fund, International Fund, Income Equity Fund and Index Fund - and a small
company investment style that reflects a mix of the Small Company Growth Fund
style, the Small Company Stock style and the Small Company Value style ("Small
Company style"). The Fund utilizes different equity investment styles in order
to reduce the risk of price and return volatility associated with reliance on a
single investment style. Because Diversified Equity Fund blends five equity
investment styles, it is anticipated that its price and return volatility will
be less than that of Growth Equity Fund, which blends three equity investment
styles. The Fund will generally invest the following percentages of its total
assets in accordance with the indicated investment styles:

Diversified Equity Fund Allocation

Index Fund style 25%
Income Equity Fund style 25%
Large Company Growth Fund style 25%
Small Company style 10%
International Fund style 15%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions below of each of the foregoing Equity
Funds and Small Company style for a discussion of the objectives, policies and
risks involved in the investments and investment techniques of those styles and,
accordingly, of the portions of Diversified Equity Fund invested in those
styles. The management of the Fund's assets is divided among the Fund's six
portfolio managers, four of whom are also the portfolio manager for a
corresponding Equity Fund and two of whom jointly co-manage the assets allocated
to the Small Company style. The percentage of a Fund's assets invested using a
specified investment style may be changed at any time by the Adviser in response
to market or other conditions.

GROWTH EQUITY FUND is designed to reduce the volatility and risk of investing in
equity securities. The Fund's portfolio combines three different equity
investment styles, those of two of the Equity Funds - Large Company Growth Fund
and International Fund - and a small company investment style that reflects a
mix of the Small Company Growth Fund style, the Small Company Stock style and
the Small Company Value style ("Small Company style"). The Fund utilizes
different equity investment styles in order to reduce the risk of price and
return volatility associated with reliance on a single investment style. It is
anticipated that the Fund's price and return volatility will be somewhat greater
than those of Diversified Equity Fund, which blends five equity investment
styles. The Fund will generally invest the following percentages of its total
assets in accordance with the indicated investment styles:

Growth Equity Fund Allocation

Large Company Growth Fund style 35%
Small Company style 35%
International Fund style 30%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions below of each of the foregoing Equity
Funds and the Small Company style for a discussion of the objectives, policies
and risks involved in the investments and investment techniques of those styles
and, accordingly, of the portions of Growth Equity Fund invested using those
styles. The management of the Fund's assets is divided among the Fund's four
portfolio managers, two of whom are also the portfolio manager for a
corresponding Equity Fund and two of whom jointly co-manage the assets allocated
to the Small Company style. The percentage of a Fund's assets invested using a
specified investment style may be changed at any time by the Adviser in response
to market or other conditions.

-21-

<PAGE>

SMALL COMPANY GROWTH FUND and the SMALL COMPANY STYLE each invest primarily in
the common stock of small and medium size domestic companies which have a market
capitalization well below that of the average company in the Standard & Poor's
500 Composite Stock Price Index. Market capitalization refers to the total
market value of a company's outstanding shares of common stock. Small Company
Growth Fund considers small and medium companies to be those whose market
capitalizations are less than $750 million at the time of the Fund's purchase.
Under normal crcumstances, Small Company Growth Fund will invest at least 65
percent of its total assets in common stock isssued by these companies.

In selecting securities for SMALL COMPANY GROWTH FUND, the Adviser seeks to
identify companies that are rapidly growing (usually with relatively short
operating histories) or that are emerging from a period of investor neglect by
undergoing a dramatic change. These changes may involve a sharp increase in
earnings, the hiring of new management or measures taken to close the gap
between its share price and takeover/asset value. The Fund may invest up to 10
percent of its total assets in foreign securities and in American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers. See "Investment Policies - Equity Funds - International Fund - Foreign
Investment Risks and Considerations." The Fund may not invest more than 10% of
its total assets in the securities of a single issuer. The Fund does not
currently invest in preferred stock and securities convertible into common stock
but reserves the right to do so in the future.

In selecting securities allocated to the SMALL COMPANY STYLE component of Growth
Equity Fund, Diversified Equity Fund and the Balanced Funds, the Adviser uses
the investment style of Small Company Growth Fund and two other investment
styles: Small Company Stock style and the Small Company Value style. Assets
allocated to the Small Company style are invested 1/3 in the Small Company
Growth Fund style, 1/3 in the Small Company Stock style and 1/3 in the Small
Company Value style.

Prior to December 11, 1995 the Small Company style did not allocate any assets
to the Small Company Value style. This allocation is expected to be completed by
June 1, 1996. The Small Company style may in the future allocate its assets to
additional investment styles.

In selecting securities in the SMALL COMPANY STOCK STYLE, the Adviser seeks
securities with significant price appreciation potential and attempts to
identify companies that show above average growth, as compared to long term
overall market growth. In investing assets allocated to this investment style,
the Adviser may invest in preferred stock and securities convertible into common
stock and may invest up to 20 percent of total assets allocated to this style in
foreign securities and in American Depository Receipts, European Depository
Receipts and other similar securities of foreign issuers.

In selecting portfolio investments, the SMALL COMPANY VALUE STYLE focuses on
securities that are conservatively valued in the marketplace relative to their
underlying fundamentals. Value investing provides investors with a less
aggressive way to take advantage of growth opportunities of small companies. In
investing in accordance with this style, the Adviser will seek to invest in
stocks priced low relative to the stock of comparable companies, determined by
price/earnings ratios, cash flows or other measures. Value investing therefore
may reduce downside risk while offering potential for capital appreciation as a
stock gains favor among other investors and its stock price rises.

SMALL COMPANY INVESTMENT RISKS AND CONSIDERATIONS. The companies in which Small
Company Growth Fund and the Small Company style components of the other Funds
invest may be in a relatively early stage of development or may produce goods
and services which have favorable prospects for growth due to increasing demand
or developing markets. Frequently, such companies have a small management group
and single product or product line expertise. These characteristics may result
in an enhanced entrepreneurial spirit and greater focus which may make those
companies successful. The Adviser believes that such companies may develop into
significant business enterprises and that an investment in such companies offers
a greater opportunity for capital appreciation than an investment in larger more
established entities. Small companies frequently retain a large part of their
earnings for research, development and investment in capital assets, however, so
that the prospects for immediate dividend income are limited.

-22-
<PAGE>

Investments in smaller companies generally involve greater risks than
investments in larger companies due to the small size of the issuer and the fact
that the issuer may have limited product lines, access to financial markets and
management depth. In addition, many of the securities of smaller companies trade
less frequently and in lower volumes than securities issued by larger firms. The
result is that the short-term price volatility of small company securities is
greater than the short-term price volatility of the securities of larger, more
established companies that are widely held. The securities of small companies
may also be more sensitive to market changes generally than the securities of
large companies. In addition, securities that are traded in the over-the-counter
market or on a regional securities exchange may not be traded every day or in
the volume typical of securities traded on a national securities exchange. As a
result, disposition of a portfolio security, to meet redemptions by shareholders
or otherwise, may require a Fund to sell the security at a discount from market
prices, to sell during periods when disposition is not desirable, or to make
many small sales over an extended period.

While securities issued by smaller companies historically have experienced
greater market appreciation than the securities of larger entities, there is no
assurance that they will continue to do so or that the Fund will be successful
in identifying companies whose securities will appreciate.

LARGE COMPANY GROWTH FUND invests primarily in the common stock of large, high-
quality domestic companies that have superior growth potential. Large companies
are those whose market capitalization is at least $500 million at the time of
the Fund's purchase and whose equity trading volume would permit the sale or
purchase of a large position in the securities of the company in 2 or 3 trading
days. Market capitalization refers to the total market value of a company's
outstanding shares of common stock. In selecting securities for the Fund, the
Adviser seeks issuers whose stock is attractively valued and whose fundamental
characteristics both are significantly better than the market average and which
support internal earnings growth capability. The Fund's holdings may include the
securities of companies whose growth potential is, in the Adviser's opinion,
generally unrecognized or misperceived by the market. In addition, the Fund may
invest up to 20 percent of its total assets in American Depository Receipts,
European Depository Receipts and other similar securities of large foreign
issuers and may attempt to reduce the overall risk of its foreign investments by
using foreign currency forward contracts. See "Investment Policies - Equity
Funds - International Fund - Foreign Investment Risks and Considerations." Under
normal circumstances, the Fund will not invest more than 10 percent of its total
assets in the securities of a single issuer. The Fund does not currently invest
in preferred stock or securities convertible into common stock but reserves the
right to do so in the future.

INTERNATIONAL FUND is designed for investors who desire to achieve international
diversification of their investments by participating in foreign securities
markets. Because international investments generally involve risks in addition
to those risks associated with investments in the United States, the Fund should
be considered only as a vehicle for international diversification.

As the Fund has the same investment policies as International Portfolio and
currently invests all of its assets in International Portfolio, the following
investment policies are discussed with respect to International Portfolio only.
International Portfolio normally will invest substantially all of its assets in
equity securities of companies domiciled outside the United States.
International Portfolio selects its investments on the basis of their potential
for capital appreciation without regard to current income. International
Portfolio may also invest in the securities of closed-end investment companies
investing primarily in foreign securities and may invest in debt obligations of
foreign governments or their political subdivisions, agencies or
instrumentalities, of supranational organizations and of foreign corporations.
Investment will be diversified among securities of issuers in foreign countries
including, but not limited to, Japan, Germany, the United Kingdom, France, the
Netherlands, Hong Kong, Singapore and Australia. In general, International
Portfolio will invest only in securities of companies and governments in
countries that Schroder, in its judgment, considers both politically and
economically stable. International Portfolio has no limit on the amount of its
foreign assets which may be invested in any one type of foreign instrument or in
any foreign country; however, to the extent International Portfolio concentrates
its assets in a foreign country, it will incur greater risks.

International Portfolio may purchase preferred stock and securities convertible
into common stock, and may purchase American Depository Receipts, European
Depository Receipts or other similar securities of foreign issuers.
International Portfolio may also enter into foreign exchange contracts,
including forward contracts to purchase or sell foreign currencies, in
anticipation of its currency requirements and to protect against possible
adverse movements in

-23-
<PAGE>

foreign exchange rates. Although such contracts may reduce
the risk of loss to International Portfolio from adverse movements in currency
values, the contracts also limit possible gains from favorable movements.

FOREIGN INVESTMENT RISKS AND CONSIDERATIONS. All investments, domestic and
foreign, involve certain risks. Investments in the securities of foreign issuers
may involve risks in addition to those normally associated with investments in
the securities of U.S. issuers. All foreign investments are subject to risks of
foreign political and economic instability, adverse movements in foreign
exchange rates, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, and changes in foreign
governmental attitudes towards private investment, possibly leading to
nationalization, increased taxation or confiscation of foreign investors'
assets.

Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to
International Portfolio's shareholders; commission rates payable on foreign
transactions are generally higher than in the United States; foreign accounting,
auditing and financial reporting standards differ from those in the United
States and, accordingly, less information may be available about foreign
companies than is available about issuers of comparable securities in the United
States; and foreign securities may trade less frequently and with lower volume
and may exhibit greater price volatility than United States securities.

Changes in foreign exchange rates will also affect the value in U.S. dollars of
all foreign currency-denominated securities held by International Portfolio.
Exchange rates are influenced generally by the forces of supply and demand in
the foreign currency markets and by numerous other political and economic events
occurring outside the United States, many of which may be difficult, if not
impossible, to predict.

Income from foreign securities will be received and realized in foreign
currencies, and International Portfolio is required to compute and distribute
income in U.S. dollars. Accordingly, a decline in the value of a particular
foreign currency against the U.S. dollar will reduce the dollars available to
make a distribution. Similarly, if the exchange rate declines between the time
after International Portfolio's income has been earned and computed in U.S.
dollars and the time it is paid may require International Portfolio to liquidate
portfolio securities to acquire sufficient U.S. dollars to make a distribution.
Similarly, if the exchange rate declines between the time International
Portfolio incurs expenses in U.S. dollars and the time such expenses are paid,
International Portfolio may be required to liquidate additional foreign
securities to purchase the U.S. dollars required to meet such expenses.

INCOME EQUITY FUND invests primarily in the common stock of large, high-quality
domestic companies that have above-average return potential based on current
market valuations. Primary emphasis is placed on investing in securities of
companies with above-average dividend income. In selecting securities for the
Fund, the Adviser uses various valuation measures, including above-average
dividend yields and below industry average price to earnings, price to book and
price to sales ratios. The Fund considers large companies to be those whose
market capitalization is at least $600 million at the time of the Fund's
purchase. Market capitalization refers to the total market value of a company's
outstanding shares of common stock. The Fund may also invest in preferred stock
and securities convertible into common stock and may purchase American
Depository Receipts, European Depository Receipts and other similar securities
of foreign issuers. See "Investment Policies - Equity Funds - International Fund
- - Foreign Investment Risks and Considerations." Under normal circumstances, the
Fund will not invest more than 10 percent of its total assets in the securities
of a single issuer.

INDEX FUND is designed to duplicate the return of the Standard & Poor's 500
Composite Stock Index (the "Index") with minimum tracking error, while also
minimizing transaction costs. Under normal circumstances, the Fund will hold
stocks representing 96 percent or more of the capitalization-weighted market
values of the Index. Portfolio transactions for the Fund generally are executed
only to duplicate the composition of the Index, to invest cash received from
portfolio security dividends or shareholder investments in the Fund, and to
raise cash to fund Share redemptions. The Fund may hold cash or cash equivalents
for the purpose of facilitating payment of the Fund's expenses or Share
redemptions. For these and other reasons, the Fund's performance can be expected
to approximate but not be equal to that of the Index.

In addition, the Fund may utilize index futures contracts to a limited extent.
Index futures contracts are bilateral agreements pursuant to which two parties
agree to take or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the index value at the close of trading of
the contract and the price at

-24-
<PAGE>

which the futures contract is originally struck.
As no physical delivery of securities comprising the index is made, a purchaser
of index futures contracts may participate in the performance of the securities
contained in the index without the required capital commitment.

Index futures contracts may be used for several reasons: to simulate full
investment in the underlying index while retaining a cash balance for fund
management purposes, to facilitate trading or to reduce transactions costs. For
a description of futures contracts and their risks see "Appendix A: Investments,
Investment Strategies and Risk Considerations - Futures Contracts and Options."

The Index tracks the total return performance of 500 common stocks which are
chosen for inclusion in the Index by Standard & Poor's Corporation ("S&P") on a
statistical basis. The inclusion of a stock in the Index in no way implies that
S&P believes the stock to be an attractive investment. The 500 securities, most
of which trade on the New York Stock Exchange, represent approximately 70
percent of the total market value of all U.S. common stocks. Each stock in the
Index is weighted by its market value. Because of the market-value weighting,
the 50 largest companies in the Index currently account for approximately 45
percent of its value. The Index emphasizes large-capitalizations and, typically,
companies included in the Index are the largest and most dominant firms in their
respective industries.

The Fund is not sponsored, endorsed, sold or promoted by S&P, nor does S&P make
any representation or warranty, implied or express, to the purchasers of the
Fund or any member of the public regarding the advisability of investing in
index funds or the ability of the Index to track general stock market
performance. S&P does not guarantee the accuracy and/or the completeness of the
Index or any data included therein.

S&P makes no warranty, express or implied, as to the results to be obtained by
the Fund, owners of the Fund, any person or any entity from the use of the Index
or any data included therein. S&P makes no express or implied warranties and
hereby expressly disclaims all such warranties of merchantability or fitness for
a particular purpose for use with respect to the Index or any data included
therein.

INVESTMENT POLICIES

BALANCED FUNDS

Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund each
invest in a balanced portfolio of fixed income and equity securities.
Conservative Balanced Fund has the smallest equity securities component of the
three Funds and is the most conservative Balanced Fund. Growth Balanced Fund has
the largest equity securities component of the three Balanced Funds and is the
most aggressive of these Funds. The equity portion of each Balanced Fund's
portfolio uses the five different equity investment styles of Diversified Equity
Fund. Diversified Equity Fund combines the different equity investment styles of
four of the Equity Funds - Large Company Growth Fund, International Fund, Income
Equity Fund and Index Fund - and investment in a small company investment style
(the "Small Company style") in order to reduce the risk of relying on a single
equity investment style. The blending of different equity investment styles is
intended to reduce the price and return volatility of the equity portion of the
Balanced Funds.

The fixed income portion of each Balanced Fund's portfolio uses from three to
five different fixed income investment styles. Conservative Balanced Fund uses
five fixed income investment styles - the investment styles of Managed Fixed
Income Fund and Stable Income Fund, a "total return" investment style (the
"Total Return style"), a "positive return" investment style (the "Positive
Return style") and a short maturity investment style (the "Short Maturity
style"). Moderate Balanced Fund uses four fixed income investment styles - the
Managed Fixed Income Fund style, the Stable Income Fund style, the Total Return
style and the Positive Return style. Growth Balanced Fund uses three fixed
income investment styles - the Managed Fixed Income Fund style, the Total Return
style and the Positive Return style. The blending of different fixed income
investment styles is intended to reduce the risk associated with relying on a
single fixed income investment style.

The base allocation among investment styles for each Balanced Fund is set forth
below. As market values of the Funds' assets change, the percentage of Fund
assets invested in any style may temporarily deviate from the base allocations.
In response thereto, the Adviser will periodically effect transactions for the
Balanced Funds to

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<PAGE>

reestablish their base allocations. In addition, as the securities markets
change, the Adviser may attempt to enhance the returns of any of the Balanced
Funds by changing, within certain limits, the percentage of Fund assets
invested in fixed-income and equity securities. The Adviser may, in its
discretion, increase or decrease the fixed income and equity percentages by
up to 5 percent for Conservative Balanced Fund, 10 percent for Moderate
Balanced Fund and 15 percent for Growth Balanced Fund. For example, the
Managed Fixed Income Fund style, the Total Return style and the Positive
Return style of Growth Balanced Fund, each of which currently is used with
respect to 11 2/3 percent of that Fund's assets (a total of 35 percent), may
each be increased to 16 2/3 percent (a total of 50 percent) or decreased to 6
2/3 percent (a total of 20 percent) of that Fund's assets. In making these
changes, each Balanced Fund is required to limit its redemptions to no more
than 1% of a Blended Portfolio's net assets during any period of less than
thirty days. Absent unstable market conditions, the Adviser does not
anticipate making a substantial number of percentage changes. When the
Adviser believes a change in the base allocation percentages is desirable, it
will sell and purchase securities to effect the change. When the Adviser
believes that a change will be temporary (generally, 3 years or less), it may
choose to effect the change by using futures contract strategies as described
below in "Temporary Allocations."

CONSERVATIVE BALANCED FUND is designed for investors seeking exposure primarily
to fixed income securities with limited exposure to equity securities. The fixed
income portion of the Fund's portfolio uses the Managed Fixed Income Fund style,
the Stable Income Fund style, the Total Return style, the Positive Return style
and the Short Maturity style, in order to reduce the risk of relying on a single
fixed income investment style.

The Fund will generally invest the following percentages of its total assets in
accordance with the indicated investment styles (as noted under "Investment
Policies - Equity Funds - Diversified Equity Fund" above, Diversified Equity
Fund generally invests its assets using five different equity investment
styles):

Conservative Balanced Fund Allocation

Diversified Equity Fund style 25%
Index Fund style 25%, Income Equity Fund style 25%,
Large Company Growth Fund style 25%, Small Company
style 10%, International Fund style 15%
Managed Fixed Income Fund style 16 2/3%
Total Return style 16 2/3%
Positive Return style 16 2/3%
Stable Income Fund style 15%
Short Maturity style 10%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions of Diversified Equity Fund (and the
five investment styles used by Diversified Equity Fund), Managed Fixed Income
Fund and Stable Income Fund for a discussion of the objectives, policies and
risks involved in the investments and investment techniques of those Funds which
relate to the portions of Conservative Balanced Fund that are invested using
similar investment styles. The investment policies related to the Total Return
style, the Positive Return style and the Short Maturity style are listed below.
The management of the Fund's assets is divided among the Fund's eleven portfolio
managers - the portfolio managers of Diversified Equity Fund, the portfolio
managers of Managed Fixed Income Fund and Stable Income Fund and the portfolio
managers who manage the assets allocated to the Total Return style, the Positive
Return style and the Short Maturity style. The percentage of a Fund's assets
invested using a specified investment style may be changed at any time by the
Adviser in response to market or other conditions.

MODERATE BALANCED FUND is designed for investors seeking roughly equivalent
exposures to fixed income securities and equity securities. The fixed income
portion of the Fund's portfolio uses the Managed Fixed Income Fund style, the
Stable Income Fund style, the Total Return style and the Positive Return style
in order to reduce the risk of relying on a single fixed income investment
style.

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<PAGE>

Moderate Balanced Fund Allocation

Diversified Equity Fund style 40%
Index Fund style 25%, Income Equity Fund style 25%,
Large Company Growth Fund style 25%,
Small Company style 10%, International Fund style 15%
Managed Fixed Income Fund style 15%
Total Return style 15%
Positive Return style 15%
Stable Income Fund style 15%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions of Diversified Equity Fund (and
the five investment styles used by Diversified Equity Fund), Managed Fixed
Income Fund and Stable Income Fund for a discussion of the objectives,
policies and risks involved in the investments and investment techniques of
those Funds and, accordingly, of the portions of Moderate Balanced Fund that
are invested using similar investment styles. The investment policies related
to the Total Return style and the Positive Return style are listed below. The
management of the Fund's assets is divided among the Fund's ten portfolio
managers - the portfolio managers of Diversified Equity Fund, the portfolio
managers of Managed Fixed Income Fund, and Stable Income fund and the
portfolio managers who manages the assets allocated to the Total Return style
and the Positive Return style. The percentage of a Fund's assets invested
using a specified investment style may be changed at any time by the Adviser
in response to market or other conditions.

GROWTH BALANCED FUND is designed for investors seeking long-term capital
appreciation in the equity securities market in a balanced fund. The fixed
income portion of the Fund's portfolio uses the Managed Fixed Income Fund style,
the Total Return style and the Positive Return style in order to reduce the risk
of relying on a single fixed income investment style.

Growth Balanced Fund Allocation

Diversified Equity Fund style 65%
Index Fund style 25%, Income Equity Fund
style 25%, Large Company Growth Fund
style 25%, Small Company style 10%,
International Fund style 15%
Managed Fixed Income Fund style 11 2/3%
Total Return style 11 2/3%
Positive Return style 11 2/3%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions of Diversified Equity Fund (and the
five investment styles used by Diversified Equity Fund) and Managed Fixed Income
Fund for a discussion of the objectives, policies and risks involved in the
investments and investment techniques of those Funds which relate to the
portions of Growth Balanced Fund that are invested using similar investment
styles. The investment policies related to the Total Return style and the
Positive Return style are listed below. Management of the Fund's assets is
divided among the Fund's nine portfolio managers - the portfolio managers of
Diversified Equity Fund, the portfolio managers of Managed Fixed Income Fund and
the portfolio managers who manage the assets allocated to the Total Return style
and the

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<PAGE>

Positive Return style. The percentage of a Fund's assets invested using
a specified investment style may be changed at any time by the Adviser in
response to market or other conditions.

The TOTAL RETURN STYLE seeks total return by investing in a portfolio of U.S.
Government and high-quality corporate fixed income securities, including
mortgage-backed securities, and high-quality corporate fixed income securities.
The Adviser's investment decisions are based on its analysis of major changes in
the direction of interest rates rather than on attempts by the Adviser to
predict short-term interest rate fluctuations. The Adviser also applies a
contrarian perspective by looking for undervalued segments of the fixed income
market which the Adviser believes offer opportunities for increased returns.

In making its investment decisions with respect to assets allocated to this
investment style, the Adviser focuses on the maturity structure and quality
structure of the Fund's portfolio. When the Adviser's outlook is for rising
interest rates and falling bond values, the majority of these assets will be
invested in securities with short-term maturities in an effort to take advantage
of rising interest rates while minimizing the negative effect of falling bond
prices. When the Adviser anticipates interest rates to fall and bond prices to
increase, the Adviser will invest assets allocated to this investment style in
securities with long-term maturities in an attempt to lock in high interest
rates and capitalize on bond price appreciation. Accordingly, the average
maturity of securities managed in accordance with this investment style will
vary from 1 to 30 years.

The Adviser may invest an unlimited amount of assets allocated to this
investment style in either corporate securities (including corporate bonds,
debentures and notes) or U.S. Government Securities. The Adviser will invest
assets allocated to this investment style to a greater degree in corporate
securities, however, to the extent the spread between corporate and U.S.
Government Securities offers potential for incremental returns. In investing
assets allocated to this investment style, the Adviser limits investment in
variable or floating rate securities to 5 percent of its net assets. The Adviser
does not currently invest in mortgage-backed securities or enter "dollar roll"
transactions with respect to this investment style, but reserves the right to do
so in the future.

With respect to this investment style, the Adviser may invest in preferred
stocks and securities convertible into common stock, but may not own the common
stock underlying a convertible security. The Adviser will only purchase
securities (including convertible securities) that are rated, at the time of
purchase, within the four highest long term or two highest short-term rating
categories assigned by a Nationally Recognized Statistical Rating Organization,
such as Moody's Investors Service, Inc., Standard & Poor's Corporation and Fitch
Investors Services, Inc., or which are unrated and determined by the Adviser to
be of comparable quality.

The POSITIVE RETURN STYLE seeks positive total return each calendar year
regardless of the bond market by investing in a portfolio of U.S. Government and
corporate fixed income investments. The Adviser's investment with respect to
assets invested in this investment style are divided into two components, short
bonds with maturities of 2 years or less and long bonds with maturities of 25
years or more. Shifts between short bonds and long bonds are made based on
movement in the prices of bonds rather than on the Adviser's forecast of
interest rates. During periods of falling prices (generally, increasing interest
rate environments) long bonds are sold to protect capital and limit losses.
Conversely, when bond prices rise, long bonds are purchased. Accordingly, the
average maturity of the portfolio of securities invested in the Positive Return
style will vary. It is anticipated that under normal circumstances the portfolio
of securities invested in this investment style will have an average dollar-
weighted maturity of between 1 and 30 years.

Under normal circumstances, at least 50% of the net assets allocated to this
style will be U.S. Government Securities, including Treasury securities. All
securities allocated to this style will be, at the time of purchase, (i) rated
in one of the two highest long-term rating categories assigned by a Nationally
Recognized Statistical Rating Organization such as Moody's Investors Service,
Inc., Standard & Poor's Corporation and Fitch Investors Services, Inc. or (ii)
unrated and determined by the Adviser to be of comparable quality. No more than
25 percent may be in the second highest rating category. Investments may include
zero-coupon securities, securities with variable or floating rates of interest
and asset-backed securities, but only 25 percent of the net assets allocated to
this investment style, in the aggregate, may be invested in these securities.
The Positive Return style may not invest in convertible securities, mortgage
pass-through securities or private placement securities. Within these
constraints, the Adviser purchases securities which it believes have above
average yields.

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<PAGE>

The SHORT MATURITY STYLE seeks to provide a higher total return than is
generally available from money market funds. The assets allocated to the Short
Maturity style will be invested in a portfolio of high-quality fixed and
variable rate fixed income securities. This investment style is managed to
increase income and preserve or enhance total return by actively managing
average portfolio maturity in light of market conditions and trends. Investments
may include a broad spectrum of short-term instruments of United States and
foreign issuers, including U.S. Government Securities, and the debt securities
of financial institutions, corporations, foreign governments, municipal
governments, supranational organizations and others. Investments are limited to
instruments with a remaining maturity of 5 years or less. With respect to assets
allocated to this style, the Fund will maintain a dollar-weighted average
portfolio maturity of 1 year or less and, under normal circumstances, will
maintain 50 percent of the assets in instruments with a maturity of under 1
year. Up to 25 percent of the assets may be non-U.S. dollar denominated and,
with respect to those assets, the Adviser will attempt to hedge currency
fluctuation risk. Investments may include mortgage-backed securities and other
asset-backed securities, limited to not more than 50 percent and 25 percent,
respectively, of the assets allocated to this investment style. The Fund may
enter into "dollar roll" transactions related to these investments and may
purchase stripped mortgage-backed securities. The Fund may invest up to 10
percent of its assets allocated to the style in guaranteed investment contracts
issued by insurance companies. The securities allocated to the style may have
variable or floating rates of interest or principal and may include
participation interests and Municipal Securities. Municipal Securities include
obligations of the states, territories or possessions of the United States and
their subdivisions, authorities and corporations.

All securities allocated to the Short Maturity style will be, at the time of
purchase, (i) rated in one of the two highest short-term rating categories by
two Nationally Recognized Statistical Rating Organizations ("NRSROs") (or, if
only one NRSRO has issued a rating, by that NRSRO), (ii) rated in one of the
three highest long-term rating categories by two NRSROs (or, if only one NRSRO
has issued a rating, by that NRSRO), or (iii) unrated and determined by the
Adviser to be of comparable quality. Of the securities allocated to this style,
no more than 5 percent may be in any of the lowest permissible rating
categories.

In order to manage its exposure to different types of investments, when
investing in this style the Adviser may enter into interest rate, currency and
mortgage swap agreements and may purchase and sell interest rate caps, floors
and collars. With respect to assets invested in this style, the Adviser may also
engage in certain strategies involving options (both exchange-traded and over-
the-counter) to attempt to enhance the return on assets invested in this style
and may attempt to reduce the overall risk of those assets or limit the
uncertainty in the level of future foreign exchange rates (hedge) by using
options and futures contracts and foreign currency forward contracts. The
Adviser's ability to use these strategies with respect to this style may be
limited by market considerations, regulatory limits and tax considerations. In
investing in accordance with this style, the Adviser may write covered call and
put options, buy put and call options, buy and sell interest rate and foreign
currency futures contracts and buy options and write covered options on those
futures contracts. An option is covered if, so long as the respective Fund is
obligated under the option, it owns an offsetting position in the underlying
security or futures contract or maintains a segregated account of liquid, high-
grade debt instruments with a value at all times sufficient to cover the Fund's
obligations under the option.

TEMPORARY ALLOCATIONS. In its discretion, the Adviser may increase or decrease
the percentage of assets of each Balanced Fund that are invested in fixed income
and equity securities. When the Adviser believes that a percentage reallocation
will be of short duration (generally, up to 3 years), the Adviser may determine
to achieve the economic equivalent of a reallocation without incurring
securities transaction costs by using futures contracts rather than selling and
purchasing securities. Under this strategy, to the extent of the percentage
asset allocation change, the Fund would not be invested in nor subject to the
risks related to the types of individual securities purchased in accordance with
the various investment styles used by the Fund. Rather, the Fund would be
invested in and subject to the risks related to futures contracts. For a
description of futures contracts and their risks see "Appendix A: Investments,
Investment Strategies and Risk Considerations - Futures Contracts and Options."

Investment Policies

Fixed Income Funds

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<PAGE>

The five Fixed Income Funds invest primarily in fixed income securities pursuant
to the investment policies described below. For a general description of fixed
income securities, see "Additional Investment Policies - Fixed Income Securities
and Their Characteristics" below. Each Fixed Income Fund except Intermediate
U.S. Government Fund may invest in foreign issuers. These investments may
involve certain risks. See "Investment Policies - Equity Funds - International
Fund - Foreign Investment Risks and Considerations."

INTERMEDIATE U.S. GOVERNMENT FUND seeks to attain its investment objective by
investing primarily in fixed and variable rate U.S. Government Securities. Under
normal circumstances, the Fund intends to invest at least 65 percent of its
assets in U.S. Government Securities and may invest up to 35 percent of its
assets in fixed income securities that are not U.S. Government Securities. The
Fund emphasizes the use of intermediate maturity securities to lessen interest
rate risk, while employing low risk yield enhancement techniques to add to the
Fund's return over a complete economic or interest rate cycle.

The securities in which the Fund invests will include mortgage-backed and other
asset-backed securities, although the Fund will limit these investments to not
more than 50 percent and 25 percent, respectively, of its total assets. As part
of its mortgage-backed securities investments, the Fund may enter into "dollar
roll" transactions. Certain fixed income securities are "zero-coupon" securities
and the Fund will limit its investment in these securities, except those issued
through the U.S. Treasury's STRIPS program, to not more than 10 percent of the
Fund's total assets. The Fund may also invest in securities that are restricted
as to disposition under the Federal securities laws (sometimes referred to as
"private placements" or "restricted securities"). In addition, the Fund may not
invest more than 25 percent of its total assets in securities issued or
guaranteed by any single agency or instrumentality of the U.S. Government,
except the U.S. Treasury. The Fund may make short sales and may purchase
securities on margin (borrow money in order to purchase securities), which are
considered speculative investment techniques. See "Appendix A: Investments,
Investment Strategies and Risk Considerations - Short Sales" and "- Purchasing
Securities on Margin."

The Fund will only purchase securities that are rated, at the time of purchase,
within the two highest rating categories assigned by a Nationally Recognized
Statistical Rating Organization, such as Moody's Investors Service, Inc.,
Standard & Poor's Corporation or Fitch Investors Services, Inc., or which are
unrated and determined by the Adviser to be of comparable quality. See
"Additional Investment Policies - Rating Matters" below.

The Fund primarily will invest in debt obligations with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from short-
term (including overnight) to 12 years. Under normal circumstances, the Fund's
portfolio of securities will have an average dollar-weighted maturity of between
3 and 7 years. Under normal circumstances, the Fund's portfolio of securities
will have a duration of between 75 percent and 125 percent of the duration of
the Lehman Intermediate Government Bond Index, which is used as the Fund's
benchmark index as described under "Other Information - Fund Performance."
Duration is a measure of a debt security's average life that reflects the
present value of the security's cash flow and, accordingly, is a measure of
price sensitivity to interest rate changes ("duration risk"). Because earlier
payments on a debt security have a higher present value, duration of a security,
except a zero-coupon security, will be less than the security's stated maturity.

In order to manage its exposure to different types of investments, the Fund may
enter into interest rate and mortgage swap agreements and may purchase and sell
interest rate caps, floors and collars. The Fund may also engage in certain
strategies involving options (both exchange-traded and over-the-counter) to
attempt to enhance the Fund's return and may attempt to reduce the overall risk
of its investments ("hedge") by using options and futures contracts. The Fund's
ability to use these strategies may be limited by market considerations,
regulatory limits and tax considerations. The Fund may write covered call and
put options, buy put and call options, buy and sell interest rate futures
contracts, and buy options and write covered options on those futures contracts.
An option is covered if, so long as the Fund is obligated under the option, it
owns an offsetting position in the underlying security or futures contract or
maintains a segregated account of liquid, high-grade debt instruments with a
value at all times sufficient to cover the Fund's obligations under the option.

MANAGED FIXED INCOME FUND seeks to attain its investment objective by investing
primarily in investment grade intermediate term obligations. The Fund invests
in a diversified portfolio of fixed and variable rate U.S. dollar denominated
fixed income securities of a broad spectrum of United States and foreign
issuers, including U.S.

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<PAGE>

Government Securities and the debt securities of financial institutions,
corporations, and others. The Fund emphasizes the use of intermediate
maturity securities to lessen duration risk (as described below under
"Determination of Net Asset Value"), while employing low risk yield
enhancement techniques to add to the Fund's return over a complete economic
or interest rate cycle. Intermediate term obligations comprise securities
with maturities of between 2 and 20 years.

The securities in which the Fund invests include mortgage-backed securities and
other asset-backed securities, although the Fund limits these investments to not
more than 50 percent and 25 percent, respectively, of its total assets. As part
of its asset-backed securities investments, the Fund may enter into "dollar
roll" transactions and may purchase stripped mortgage-backed securities. The
Fund may invest any amount of its assets in U.S. Government Securities, or in
the securities of financial institutions, corporations, and others. The Fund may
invest in securities that are restricted as to disposition under the Federal
securities laws (sometimes referred to as "private placement" or "restricted
securities"). In addition, the Fund may not invest more than 30 percent of its
total assets in the securities issued or guaranteed by any single agency or
instrumentality of the U.S. Government, except the U.S. Treasury.

The Fund may invest up to 10 percent of its total assets in participations
purchased from financial institutions in loans or securities in which the Fund
may invest directly. The Fund may also invest up to 10 percent of its total
assets in each of (i) obligations issued or guaranteed by the governments of
countries which the Adviser believes do not present undue risk or by those
countries' political subdivisions, agencies or instrumentalities, (ii)
obligations of supranational organizations and (iii) obligations of the states,
territories or possessions of the United States and their subdivisions,
authorities and corporations ("municipal securities").

The Fund only purchases securities that are rated, at the time of purchase,
within the four highest long-term or two highest short-term rating categories
assigned by a Nationally Recognized Statistical Rating Organization, such as
Moody's Investors Service, Inc., Standard & Poor's Corporation or Fitch
Investors Services, Inc., or which are unrated and determined by the Adviser to
be of comparable quality. See "Additional Investment Policies - Rating Matters"
below.

The Fund invests in debt obligations with maturities (or average life in the
case of mortgage-backed and similar securities) ranging from short-term
(including overnight) to 30 years. Under normal circumstances, the Fund's
portfolio of securities will have an average dollar-weighted portfolio maturity
of between 3 and 12 years and a duration of between 2 and 6 years. Duration is
a measure of a debt security's average life that reflects the present value of
the security's cash flow and, accordingly, is a measure of price sensitivity to
interest rate changes ("duration risk"). Because earlier payments on a debt
security have a higher present value, duration of a security, except a zero-
coupon security, is less than the security's stated maturity.

In order to manage its exposure to different types of investments, the Fund may
enter into interest rate and mortgage swap agreements and may purchase and sell
interest rate caps, floors and collars. The Fund may also engage in certain
strategies involving options (both exchange-traded and over-the-counter) to
attempt to enhance the Fund's return and may attempt to reduce the overall risk
of its investments ("hedge") by using options and futures contracts. The Fund's
ability to use these strategies may be limited by market considerations,
regulatory limits and tax considerations. The Fund may write covered call and
put options, buy put and call options, buy and sell interest rate futures
contracts and buy options and write covered options on those futures contracts.
An option is covered if, so long as the Fund is obligated under the option, it
owns an offsetting position in the underlying security or futures contract or
maintains a segregated account of liquid, high-grade debt instruments with a
value at all times sufficient to cover the Fund's obligations under the option.

Effective April 1, 1996 the Fund will employ two investment styles - Total
Return style and Positive Return style - in addition to the investment style
currently employed by the Fund, to the extent consistent with the Fund's
investment objective and policies. Each of the two new investment styles, based
on distinct investment criteria, tends to invest in debt obligations with either
shorter or longer maturities. For a desciption of these investment styles, see
"Investment Policies - Balanced Funds." Reliance on multiple investment styles
is intended to reduce the price and return volatility of the Fund and provide
more consistent fixed income returns. In addition, to more appropriately
reflect the utilization of three distinct investment styles in pursuit of the
the Fund's investment objective, effective April 1, 1995 the Fund will change
its name to "Diversified Bond Fund."

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<PAGE>

STABLE INCOME FUND seeks to maintain safety of principal while providing low
volatility total return by investing primarily in investment grade short-term
obligations. The Fund invests in a diversified portfolio of fixed and variable
rate U.S. dollar denominated fixed income securities of a broad spectrum of
United States and foreign issuers, including U.S. Government Securities and the
debt securities of financial institutions, corporations, and others.

The securities in which the Fund invests include mortgage-backed and other
asset-backed securities, although the Fund limits these investments to not more
than 60 percent and 25 percent, respectively, of its total assets. In addition,
the Fund limits its holdings of mortgage-backed securities that are not U.S.
Government Securities to 25 percent of its total assets. The Fund may invest any
amount of its assets in U.S. Government Securities, but under normal
circumstances less than 50 percent of the Fund's total assets are so invested.
The Fund may invest in securities that are restricted as to disposition under
the Federal securities laws (sometimes referred to as "private placements" or
"restricted securities"). In addition, the Fund may not invest more than 25
percent of its total assets in the securities issued or guaranteed by any single
agency or instrumentality of the U.S. Government, except the U.S. Treasury, and
may not invest more than 10 percent of its total assets in the securities of any
other issuer.

The Fund only purchases those securities that are rated, at the time of
purchase, within the three highest long-term or two highest short-term rating
categories assigned by a Nationally Recognized Statistical Rating Organization,
such as Moody's Investors Service, Inc., Standard & Poor's Corporation or Fitch
Investors Services, Inc., or which are unrated and determined by the Adviser to
be of comparable quality. See "Additional Investment Policies - Rating Matters"
below.

The Fund invests in debt obligations with maturities (or average life in the
case of mortgage-backed and similar securities) ranging from short-term
(including overnight) to 12 years and seeks to maintain an average dollar-
weighted portfolio maturity of between 2 and 5 years.

In order to manage its exposure to different types of investments, the Fund may
enter into interest rate and mortgage swap agreements and may purchase and sell
interest rate caps, floors and collars. The Fund may also engage in certain
strategies involving options (both exchange-traded and over-the-counter) to
attempt to enhance the Fund's income and may attempt to reduce the overall risk
of its investments or limit the uncertainty in the level of future foreign
exchange rates (hedge) by using options and futures contracts and foreign
currency forward contracts. The Fund's ability to use these strategies may be
limited by market considerations, regulatory limits and tax considerations. The
Fund may write covered call and put options, buy put and call options, buy and
sell interest rate and foreign currency futures contracts and buy options and
write covered options on those futures contracts. An option is covered if, so
long as the Fund is obligated under the option, it owns an offsetting position
in the underlying security or futures contract or maintains a segregated account
of liquid, high-grade debt instruments with a value at all times sufficient to
cover the Fund's obligations under the option.

Additional Investment Policies

All investment policies of a Fund that are designated as fundamental, and each
Fund's investment objective, may not be changed without approval of the holders
of a majority of the Fund's outstanding voting securities. A majority of a
Fund's outstanding voting securities means the lesser of 67 percent of the
shares of the Fund present or represented at a shareholders' meeting at which
the holders of more than 50 percent of the shares are present or represented, or
more than 50 percent of the outstanding shares of the Fund. Except as otherwise
indicated, investment policies of the Funds are not fundamental and may be
changed by the Board without shareholder approval.

Investment Limitations. The Funds have adopted the investment limitations listed
below, each of which is a nonfundamental policy except as noted. These policies
relate to each Fund and, unless otherwise noted, not to a portion of a Fund
invested in a particular investment style. Other investment limitations,
including additional provisions with respect to the limitations listed below,
are described in the SAI.

Diversification. Each Fund is a "diversified" portfolio as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). As a fundamental
policy, with respect to 75 percent of its assets, no Fund may purchase a
security (other than a U.S. Government Security) if, as a result, (i) more than
5 percent of the Fund's total assets

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would be invested in the securities of a single issuer or (ii) the Fund would
own more than 10 percent of the outstanding voting securities of any single
issuer. International Fund may invest up to 100 percent of its investment
assets in the International Portfolio and each other Fund reserves the right
to invest all or a portion of its assets in another diversified, open-end
investment company with substantially the same investment objective and
policies as the Fund.

Concentration. Except as noted below, each of the Funds is prohibited from
concentrating its assets in the securities of issuers in any industry. As a
fundamental policy, no Fund may purchase securities if, immediately after the
purchase, more than 25 percent of the value of the Fund's total assets would be
invested in the securities of issuers conducting their principal business
activities in the same industry. This limit does not apply to investments in
U.S. Government Securities, foreign government securities, repurchase agreements
covering U.S. Government Securities or investment company securities. It is
currently anticipated that the Funds will not concentrate in securities issued
by any single foreign government.

Illiquid Securities. Each of the Funds limits its purchase of illiquid
securities. No Fund may knowingly acquire securities or invest in repurchase
agreements with respect to any securities if, as a result, more than 15 percent
of the Fund's net assets taken at current value would be invested in securities
which are not readily marketable. Illiquid investments include securities that
are illiquid by virtue of legal or contractual restrictions on the sale of such
securities and repurchase agreements not entitling the holder to principal
within 7 days. Under the supervision of the Board, the Advisers determine and
monitor the liquidity of portfolio securities.

Borrowing and Lending. As a fundamental policy, each Fund may borrow money for
temporary or emergency purposes, including the meeting of redemption requests,
but not in excess of 33 1/3 percent of the value of the Fund's total assets as
computed immediately after the borrowing. Borrowing for other than temporary or
emergency purposes or meeting redemption requests is limited to 5 percent of the
value of each Fund's total assets except in the case of Intermediate U.S.
Government Fund, Managed Fixed Income Fund and, with respect to their assets
invested in the Managed Fixed Income Fund style, the Balanced Funds. When a Fund
establishes a segregated account to limit the amount of leveraging of the Fund
with respect to certain investment techniques, the Fund does not treat those
techniques as involving borrowings (although they may have characteristics and
risks similar to borrowings and result in the Fund's assets being leveraged).
See "Appendix A: Investments, Investment Strategies and Risk Considerations -
Borrowing" and "Techniques Involving Leverage." As a fundamental policy, no Fund
may make loans except for loans of portfolio securities, through the use of
repurchase agreements, and through the purchase of debt securities that are
otherwise permitted investments for the Fund.

Margin and Short Sales. Except for Intermediate U.S. Government Fund, no Fund
may purchase securities on margin or make short sales of securities, except
short sales against the box. These prohibitions do not restrict the Funds'
ability to use short-term credits necessary for the clearance of portfolio
transactions and to make margin deposits in connection with permitted
transactions in options and futures contracts.

Temporary Defensive Position. When business or financial conditions warrant,
each Fund may assume a temporary defensive position and invest all or any
portion of their assets in cash or in cash equivalents, including (i) short-term
U.S. Government Securities, (ii) prime quality short-term instruments of
commercial banks, (iii) prime quality commercial paper, (iv) repurchase
agreements with banks and broker-dealers covering any of the securities in which
the Fund may invest directly and (v) shares of money market mutual funds. During
periods when and to the extent that a Fund has assumed a temporary defensive
position, it may not be pursuing its investment objective. The Funds may from
time to time maintain investments in cash and cash equivalents pending
investment in securities. The International Portfolio and, with respect to the
portion of their assets managed by Schroder, Diversified Equity Fund, Growth
Equity Fund and each Balanced Fund, may hold cash and bank instruments
denominated in any major foreign currency. Prime quality refers to the two
highest short-term ratings of a Nationally Recognized Statistical Rating
Organization.

Common Investment Techniques. Each of the Funds may enter into repurchase
agreements (for reasons other than temporary defensive purposes) and reverse
repurchase agreements, may lend their portfolio securities and may purchase
portfolio securities on a when-issued or forward commitment basis. It is
currently anticipated that the

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Equity Funds will not enter into reverse repurchase agreements or purchase
portfolio securities on a when-issued or forward commitment basis to any
material extent.

Fixed Income Securities and Their Characteristics. Although each Fund only
invests in investment grade fixed income securities, including money market
instruments, an investment in a Fund is subject to risk even if all fixed income
securities in the Fund's portfolio are paid in full at maturity. All fixed
income securities, including U.S. Government Securities, can change in value
when there is a change in interest rates or the issuer's actual or perceived
creditworthiness or ability to meet its obligations.

The market value of the interest-bearing debt securities held by the Funds will
be affected by changes in interest rates. There is normally an inverse
relationship between the market value of securities sensitive to prevailing
interest rates and actual changes in interest rates. In other words, an increase
in interest rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. Changes in the ability of an
issuer to make payments of interest and principal and in the market's perception
of an issuer's creditworthiness will also affect the market value of the debt
securities of that issuer. The possibility exists, therefore, that, the ability
of any issuer to pay, when due, the principal of and interest on its debt
securities may become impaired.

Fixed income securities include those issued by the governments of foreign
countries or by those countries' political subdivisions, agencies or
instrumentalities as well as by supranational organizations such as the
International Bank for Reconstruction and Development. To the extent otherwise
permitted, the Funds may invest in these securities if the Adviser or Schroder
believes that the securities do not present risks inconsistent with a Fund's
investment objective.

Rating Matters. The Fixed Income Funds and, with respect to their assets
invested in fixed income investment styles, the Balanced Funds, will invest in
securities rated in the categories described in "Investment Objectives, Policies
and Risk Considerations - Investment Policies - Fixed Income Funds." The Funds
also may purchase unrated securities if the Adviser determines the security to
be of comparable quality to a rated security that the Fund may purchase. Unrated
securities may not be as actively traded as rated securities. Each Fund may
retain a security whose rating has been lowered below the Fund's lowest
permissible rating category (or that are unrated and determined by the Adviser
to be of comparable quality to securities whose rating has been lowered below
the Fund's lowest permissible rating category) if the Adviser or Schroder, as
appropriate, determines that retaining the security is in the best interests of
the Fund.

The Fund's investments are subject to "credit risk" relating to the financial
condition of the issuers of the securities that the Funds hold. To limit credit
risk, the Funds may only invest in securities that are investment grade - rated
in the top four long-term investment grades by a Nationally Recognized
Statistical Rating Organization ("NRSRO") or in the top two short-term
investment grades by an NRSRO. Accordingly, the lowest permissible long-term
investment grades for corporate bonds, including convertible bonds, are Baa in
the case of Moody's Investor Services, Inc. ("Moody's") and BBB in the case of
Standard & Poor's Corporation ("S&P") and Fitch Investors Service, Inc.
("Fitch"); the lowest permissible long-term investment grades for preferred
stock are Baa in the case of Moody's and BBB in the case of S&P and Fitch; and
the lowest permissible short-term investment grades for short-term debt,
including commercial paper, are Prime-2 (P-2) in the case of Moody's, A-2 in the
case of S&P and F-2 in the case of Fitch. A further description of the rating
categories of certain NRSROs is contained in the SAI. All these ratings are
generally considered to be investment grade ratings, although Moody's indicates
that securities with long-term ratings of Baa have speculative characteristics.

Variable and Floating Rate Securities. The securities in which the Funds invest
may have variable or floating rates of interest and, under certain limited
circumstances, may have varying principal amounts. These securities pay interest
at rates that are adjusted periodically according to a specified formula,
usually with reference to some interest rate index or market interest rate (the
"underlying index"). The interest paid on these securities is a function
primarily of the underlying index upon which the interest rate adjustments are
based. Such adjustments minimize changes in the market value of the obligation
and, accordingly, enhance the ability of the Fund to maintain a stable net asset
value. Similarly to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's creditworthiness. The rate of interest on
securities

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purchased by a Fund may be tied to Treasury or other government securities or
indices on those securities as well as any other rate of interest or index.
Certain variable rate securities (including mortgage-backed securities) pay
interest at a rate that varies inversely to prevailing short-term interest
rates (sometimes referred to as inverse floaters). For example, upon reset
the interest rate payable on a security may go down when the underlying index
has risen. During periods when short-term interest rates are relatively low
as compared to long-term interest rates, a Fund may attempt to enhance its
yield by purchasing inverse floaters. Certain inverse floaters may have an
interest rate reset mechanism that multiplies the effects of changes in the
underlying index. While this form of leverage may increase the security's,
and thus the Fund's, yield, it may also increase the volatility of the
security's market value.

There may not be an active secondary market for any particular floating or
variable rate instrument; this could make it difficult for a Fund to dispose of
the instrument during periods of market volatility or economic uncertainty or if
the issuer's credit became impaired at a time when the Fund was not entitled to
exercise any demand rights it might have. A Fund could, for this or other
reasons, suffer a loss with respect to the instrument. The Advisers monitor the
liquidity of the Funds' investments in variable and floating rate instruments,
but there can be no guarantee that an active secondary market will exist at any
time.

Certain securities may have an initial principal amount that varies over time
based on an interest rate index, and, accordingly, a Fund might be entitled to
less than the initial principal amount of the security upon the security's
maturity. The Funds intend to purchase these securities only when the Adviser
believes the interest income from the instrument justifies any principal risks
associated with the instrument. The Advisers may attempt to limit any potential
loss of principal by purchasing similar instruments that are intended to provide
an offsetting increase in principal. There can be no assurance that an Adviser
will be able to limit the effects of principal fluctuations and, accordingly, a
Fund may incur losses on those securities even if held to maturity without
issuer default.

Management of the Funds

The business of the Trust is managed under the direction of the Board of
Trustees. The Board formulates the general policies of the Funds and generally
meets quarterly to review the results of the Funds, monitor investment
activities and practices and discuss other matters affecting the Funds and the
Trust. In order to minimize potential conflicts of interest, only one trustee of
Core Trust, John Y. Keffer, is also a trustee of the Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust. The Board currently consists of seven members.

Investment Advisory Services

Norwest Investment Management. The Adviser serves as investment adviser of each
Fund pursuant to investment advisory agreements between Norwest and the Trust.
Subject to the general supervision of the Board, the Adviser makes investment
decisions for each Fund and continuously reviews, supervises and administers
each Fund's investment program or oversees the investment decisions of the
investment subadviser, as applicable. The Adviser is a part of Norwest, which is
a subsidiary of Norwest Corporation, a multi-bank holding company incorporated
under the laws of Delaware in 1929. As of December 31, 1995, Norwest Corporation
was the 11th largest bank holding company in the United States in terms of
assets. Norwest became a subsidiary of Norwest Corporation in 1929 and, as of
December 31, 1995, the Adviser managed or provided investment advice with
respect to assets totaling approximately $22.7 billion. Except for the fees paid
to Norwest, each investment advisory agreement is the same in all material
respects.

Schroder Capital Management International Inc. Subject to the Adviser's general
oversight, Schroder, through its London, England branch, acts as investment
subadviser to International Fund, Diversified Equity Fund, Growth Equity Fund,
Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund
pursuant to investment subadvisory agreements among the Trust, Norwest and
Schroder. Under these agreements, Schroder makes investment decisions for each
Fund and continuously reviews, supervises and administers each Fund's investment
program with respect to that portion, if any, of the respective Fund's portfolio
that the Adviser believes should be invested using International Fund's
investment philosophy. Each investment subadvisory agreement is the same in all
material respects. Through its management of International Portfolio, Schroder
manages the entire portfolio of International Fund.

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Schroder, whose principal business address is 787 Seventh Avenue, New York, New
York 10019, is registered with the SEC as an investment adviser and is a wholly-
owned U.S. subsidiary of Schroders Incorporated, the wholly-owned U.S. holding
company subsidiary of Schroders plc. Schroders plc is the holding company parent
of a large worldwide group of banks and financial services companies (referred
to as the "Schroder Group") and has associated companies and branch and
representative offices located in seventeen countries worldwide. The Schroder
Group specializes in providing investment management services and has assets
under management currently in excess of $100 billion.

International Fund. International Fund may withdraw its investment from
International Portfolio, for which Schroder serves as investment adviser, at any
time if the Board determines that it is in the best interests of International
Fund and its shareholders to do so. See "Other Information - Core Trust
Structure." Accordingly, International Fund has retained the Adviser as its
investment adviser and Schroder as its investment subadviser to manage the
Fund's assets in the event International Fund so withdraws its investment.
Neither the Adviser or Schroder will receive any advisory or subadvisory fees
with respect to International Fund as long as International Fund remains
completely invested in International Portfolio or any other investment company.

Schroder acts as investment adviser to International Portfolio pursuant to an
advisory agreement with Core Trust. Subject to the general supervision of Core
Trust's board of trustees, Schroder makes investment decisions for International
Portfolio and continuously reviews, supervises and administers International
Portfolio's investment program. The investment advisory agreement between
Schroder and Core Trust with respect to International Portfolio is the same in
all material respects as the Funds' investment subadvisory agreements except as
to the parties, the circumstances under which fees will be paid and the
jurisdiction whose laws govern the agreement.

Core Trust Blended Portfolios. As noted under "Investment Policies - Investment
in Core Trust," the five Blended Funds invest their assets which are managed in
a small company, index and international investment style in three Blended
Portfolios of Core Trust - Small Company Portfolio, Index Portfolio and
International Portfolio II. Each Blended Fund may withdraw its investment from a
Blended Portfolio at any time that the Board determines it is in the best
interests of the Blended Fund and its shareholders to do so. See "Other
Information - Core Trust Structure." Norwest serves as investment adviser to
Small Company Portfolio and Index Portfolio and Schroder serves as investment
adviser to International Portfolio II pursuant to separate advisory agreements
with Core Trust. Subject to the general supervision of Core Trust's board of
trustees, Norwest and Schroder perform services for the Blended Portfolios
similar to those performed for the Trust under its investment advisory
agreements.

Portfolio Managers. Many persons on the advisory staff of each of the Adviser
and Schroder contribute to the investment advisory services provided to the
Funds, International Portfolio and the three Blended Portfolios of Core Trust,
as applicable. The following persons, however, are primarily responsible for the
day-to-day management of the Funds' investment portfolios and, unless otherwise
noted, have been since inception of the Funds:

Small Company Growth Fund - Robert B. Mersky, Senior Portfolio Manager and an
Officer of Norwest and President of Peregrine Capital Management, Inc. Mr.
Mersky has held various investment management positions with Norwest or its
affiliates, including Peregrine, since 1977. From 1980 to 1984 he was head of
investments for Norwest.

Large Company Growth Fund - John S. Dale, Senior Portfolio Manager and an
Officer of Norwest and Senior Vice President of Peregrine Capital Management,
Inc. Mr. Dale has held various investment management positions with Norwest or
its affiliates, including Peregrine, since 1968. From 1984 to 1987 he was a
Senior Vice President and Manager of Equity Advisors for Norwest.

International Fund - International Fund invests all of its assets in the
International Portfolio and, accordingly, there is currently no portfolio
manager for this Fund. Mr. Mark J. Smith, First Vice President and Director of
Schroder since April 1993, however, is responsible for the day-to-day management
of the International Portfolio's investment portfolio. Mr. Smith has been
associated with Schroder or its affiliates since 1983 in various positions,
including portfolio manager of other mutual funds and pooled investment vehicles
that invest in international securities. Mr. Smith also serves as portfolio
manager of International Portfolio II.

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Income Equity Fund - David L. Roberts, Senior Vice President of Norwest since
1991. Mr. Roberts has been associated with Norwest for 20 years in various
investment related capacities.

Index Fund - No single person at the Adviser acts as portfolio manager of the
Fund.

Intermediate U.S. Government Fund - Marjorie H. Grace, Vice President of Norwest
since 1992. Ms. Grace was a portfolio manager of Norwest Bank from 1992-1993; an
Institutional Salesperson with Norwest Investment Services, Inc. from 1991-1992;
a portfolio manager with United Banks of Colorado from 1989-1991; and Vice
President and portfolio manager with Colombia Savings and Loan from 1987-1989.

Managed Fixed Income Fund - William D. Giese, Senior Portfolio Manager and an
officer of Norwest and Senior Vice President of Peregrine Capital Management,
Inc. Mr. Giese has been a portfolio manager with Peregrine for 10 years and has
approximately 20 years experience in the fixed income securities management
business.

Stable Income Fund - Karl P. Tourville, Vice President of Norwest since 1989.
Mr. Tourville has been associated with Norwest since 1986. As of December 31,
1994, Mr. Tourville was responsible for the management of over $1.3 billion in
pooled fixed income assets.

Short Maturity style - David D. Sylvester and Laurie R. White. Mr. Sylvester has
been associated with Norwest for 15 years, the last 7 years as a Vice President
and Senior Portfolio Manager. He has over 20 years experience in managing fixed
income securities portfolios. Ms. White has been a Vice President and Senior
Portfolio Manager of Norwest since 1991; from 1989 to 1991 she was a Portfolio
Manager at Richfield Bank and Trust.

Small Company style and Small Company Portfolio - Robert B. Mersky, Kirk McCown
and Thomas H. Forester. For a description of Mr. Mersky, see "Small Company
Growth Fund" above. Mr. McCown is founder, President and a Director of Crestone
Capital Management, Inc., a subsidiary of Norwest which is investment subadviser
to Small Company Stock Fund, another fund of the Trust. Prior thereto, Mr.
McCown was Senior Vice President of Reich & Tang, L.P. Mr. Forester is an
officer of Norwest and Senior Vice President of Peregrine Capital Management,
Inc. Mr. Forester joined Peregrine in 1995. From 1992 to 1995 he was Vice
President of Lord Asset Management, an investment adviser. Mr. McCown commenced
serving as a portfolio manager of each Blended Fund on June 1, 1995. Mr.
Forester commenced serving as a portfolio manager of each Blended Fund in
December 1995.

Total Return style - Mr. David B. Kinney, Vice President and Senior Portfolio
Manager of Norwest, has been associated with Norwest since 1981. Mr. Kinney has
been portfolio manager of the Total Return Bond Fund, another fund of the Trust
that invests exclusively in this investment style since its inception and
commenced serving as a portfolio manager of each Blended Fund on June 1, 1995.

Positive Return style - William D. Giese, Senior Portfolio Manager and an
officer of Norwest and Senior Vice President of Peregrine Capital Management,
Inc. For a description of Mr. Giese see "Managed Fixed Income Fund" above. Mr.
Giese commenced serving as a portfolio manager of each Blended Fund on June 1,
1995.

The day-to-day management of the portfolios of Diversified Equity Fund, Growth
Equity Fund, Conservative Balanced Fund, Moderate Balanced Fund and Growth
Balanced Fund is performed by the portfolio managers listed above with respect
to the portion of the Fund's portfolio that is invested using the investment
style of another Fund. In addition, the portfolio managers responsible for the
management of a Blended Funds' assets allocated to the Small Company style,
Positive Return style and Short Maturity style are listed above:

As an example, there are five portfolio managers of Growth Equity Fund: Mr.
Mersky. Mr. McCown and Mr. Forester are responsible for the Fund's assets
invested in accordance with the Small Company style, Mr. Dale is responsible for
the Fund's assets invested in accordance with the Large Company Growth Fund
style and Mr. Smith of Schroder is responsible for the Fund's assets invested in
accordance with the International Fund style. Cash balances of each Fund, are
managed by Mr. Sylvester and Ms. White, the portfolio managers for Ready Cash
Investment Fund, a separate series of the Trust that is offered by a separate
prospectus.

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Advisory Fees

The investment advisory fees payable to Norwest by the Trust with respect to
each Fund (and payable to Schroder by Core Trust with respect to International
Portfolio) are based on the average daily net assets of the respective Fund (or
International Portfolio) at the following annual rates:

Advisory Fee Rate

Diversified Equity Fund 0.65%
Growth Equity Fund 0.90%
Large Company Growth Fund 0.65%
Small Company Growth Fund 0.90%
International Fund 0.45%
Income Equity Fund 0.65%
Index Fund 0.15%
Conservative Balanced Fund 0.45%
Moderate Balanced Fund 0.53%
Growth Balanced Fund 0.58%
Intermediate U.S. Government Fund 0.33%
Managed Fixed Income Fund 0.35%
Stable Income Fund 0.30%

The advisory agreement for International Fund provides for an advisory fee
payable to the Adviser of 0.85 percent of the average annual daily net assets of
the Fund in the event that the Fund is not completely invested in International
Portfolio or another investment company. As International Fund currently invests
all of its assets in International Portfolio, no fees are payable under that
agreement. Pursuant to the investment subadvisory agreements, the Adviser (and
not the Trust) pays Schroder a fee for their investment subadvisory services;
however, that compensation does not increase the amount paid by the Trust to the
Adviser pursuant to the Adviser's investment advisory agreements.

With respect to International Portfolio, for services under its advisory
agreement, Schroder receives from Core Trust an advisory fee of 0.45 percent of
International Portfolio's average annual daily net assets.

With respect to Small Company Portfolio and Index Portfolio of Core Trust, for
services under its investment advisory agreements, Norwest receives from Core
Trust advisory fees of 0.90 percent and 0.15 percent of the respective
Portfolio's average annual daily net assets. For its services under its
investment advisory agreement, with respect to International Portfolio II of
Core Trust, Schroder receives from Core Trust an advisory fee of 0.45 percent of
International Portfolio II's average annual daily net assets. Norwest waives all
of the advisory fees payable by Small Company Portfolio and Index Portfolio.
Schroder does not receive a subadvisory fee from any Blended Fund to the extent
that such Fund's assets are invested in International Portfolio II, and Norwest
reimburses International Portfolio II the amount of the advisory fee the
Portfolio pays to Schroder. Accordingly, duplicative investment advisory fees
are not incurred by any Fund.

Advisory fees are accrued daily and paid monthly. The advisory fees for Growth
Equity Fund and Small Company Growth Fund and the combined advisory and
administrative services fees for International Fund are higher than those paid
by most investment companies of all types to their advisers, but the Trust
believes that the fees are appropriate for these Funds considering their
investment objectives and policies.

Administrative and Other Services

Administration and Distribution Services. Subject to the supervision of the
Board, Forum Financial Services, Inc. ("Forum") supervises the overall
management of the Trust (other than portfolio management), including the Trust's
receipt of services for which the Trust is obligated to pay, and provides the
Trust with general office facilities pursuant to a management agreement with the
Trust. Forum provides persons satisfactory to the Board to serve as officers of
the Trust. As of the date of this Prospectus, Forum acted as manager and
distributor of registered investment companies and collective trust funds with
assets of approximately $11 billion. Forum, whose principal

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business address is Two Portland Square, Portland, Maine 04101, is a
registered broker-dealer and investment adviser and is a member of the
National Association of Securities Dealers, Inc. As of the date hereof, Forum
is controlled by John Y. Keffer, Chairman and President of the Trust and Core
Trust.

For its management services and facilities, Forum receives a fee at an annual
rate of 0.10 percent of the average daily net assets of each Fund. Forum also
serves as administrator of Core Trust and provides administrative services for
the International Portfolio and each Blended Portfolio that are similar in
nature to those provided to the Funds. For its administrative services, Forum is
compensated by Core Trust at an annual rate of 0.15 percent of the average daily
net assets of International Portfolio and at an annual rate of 0.10 percent of
the average daily net assets of each Blended Portfolio. Forum will waive the
amount of its management fee that it would otherwise be entitled to receive from
a Blended Fund for that portion of the assets of the Blended Fund invested in a
Blended Portfolio. Forum's management and administration fees are accrued daily
and paid monthly.

In addition, pursuant to a separate services agreement, Norwest receives a fee
at an annual rate of 0.25 percent of the average annual daily net assets of
International Fund. Under this agreement, Norwest is responsible for compiling
data for and preparing communications between the Fund and its shareholders,
maintaining requisite information flows between the Fund and the investment
adviser to International Portfolio, monitoring and reporting to the Board on the
performance of International Portfolio and reimbursing the Fund for certain
excess expenses. No fees are payable under this service agreement in the event
that the International Fund is not completely invested in International
Portfolio or another investment company. International Fund incurs total
management and administrative fees at a higher rate than the other Funds due in
part to the nature of the Fund's structure and the Fund's investment policies.

Pursuant to a separate distribution agreement with the Trust, Forum acts as the
agent of the Trust in connection with the offering of the Shares of the Funds.
Forum receives no payments for its services as distributor of the Shares. In
addition, no Fund and no Portfolio of Core Trust has adopted a Rule 12b-1 Plan
applicable to the Shares and, accordingly, no Fund incurs any distribution
expenses with respect to the Shares. Forum also provides accounting services to
the Funds and to Core Trust.

Shareholder Servicing and Custody. Norwest serves as transfer agent and dividend
disbursing agent for the Trust (in this capacity, the "Transfer Agent"). The
Transfer Agent maintains an account for each shareholder of the Trust (unless
such accounts are maintained by sub-transfer agents or processing agents),
performs other transfer agency and shareholder servicing functions for the
Trust, and acts as dividend disbursing agent for the Trust. The Transfer Agent
is permitted to subcontract any or all of its functions with respect to all or
any portion of the Trust's shareholders to one or more qualified sub-transfer
agents or processing agents, which may be its or Forum's affiliates, who agree
to comply with the terms of the Transfer Agent's agreement with the Trust. The
Transfer Agent is permitted to compensate those agents for their services;
however, no such compensation may increase the aggregate amount of payments by
the Trust to the Transfer Agent. For its services, Norwest is compensated at the
annual rate of 0.25 percent of each Fund's average annual daily net assets
attributable to the Shares.

Norwest also serves as the Trust's custodian and may appoint subcustodians for
the foreign securities and other assets held in foreign countries. Except as
noted below, Norwest currently receives no additional compensation for its
custodial services, but the Funds will incur the expenses and costs of any
subcustodian. International Fund and, to the extent they invest in the
International Fund style, each Blended Fund indirectly incurs its pro rata
portion of the custodial fees of Core Trust. The Chase Manhattan Bank, N.A.
serves as custodian of International Portfolio and International Portfolio II
and is paid a fee by Core Trust for its services. Norwest serves as custodian of
Small Company Portfolio and Index Portfolio and currently receives no additional
compensation for its custodial services with respect to those Portfolios.

Expenses of the Funds

Each Fund, as well as each Portfolio of Core Trust, is obligated to pay for all
of its expenses, although Norwest has agreed to reimburse the Trust for certain
of each Fund's operating expenses which in any year exceed the limits prescribed
by any state in which the Fund's shares are qualified for sale. For an estimate
of each Fund's expenses for the current fiscal year, see "Summary - Expenses of
Investing in the Funds." These expenses include: interest

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<PAGE>

charges; taxes; brokerage fees and commissions; certain insurance premiums;
applicable fees and expenses under the Trust's or Core Trust's contracts with
the Advisers, Forum, the Transfer Agent and any custodian; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership
in trade associations; auditing, legal and compliance expenses; costs of
preparing and printing the Trust's prospectuses, statements of additional
information and shareholder reports and delivering them to existing
shareholders; compensation of certain of the Trust's or Core Trust's
trustees, officers and employees and other personnel performing services for
the Trust or Core Trust; and registration fees and related expenses.

Each Fund's expenses comprise Trust expenses attributable to the Fund and
expenses not attributable to any particular portfolio of the Trust, which are
allocated among the Funds and all other portfolios of the Trust in proportion to
their average net assets. International Fund's expenses include the Fund's pro
rata share of the operating expenses of International Portfolio, which are borne
indirectly by International Fund's shareholders. Although the Blended Portfolios
do not incur investment advisory fees, they do incur other administrative and
operating expenses. While the Blended Portfolios' expenses are not borne
directly by the Blended Funds, those expenses have the effect of reducing the
net investment income of the Blended Portfolios.

The Advisers, Forum, the Transfer Agent and any other service provider to the
Funds, International Portfolio or a Blended Portfolio may elect to waive all or
a portion of their fees. Any such waivers will have the effect of increasing a
Fund's performance for the period during which the waiver was in effect. No fee
waivers may be recouped at a later date. Other than investment advisory fees,
any fee paid by the Trust or Core Trust may be increased by the Board or the
board of trustees of Core Trust without shareholder approval. In addition,
applicable waivers may be reduced or eliminated at any time by the appropriate
board of trustees without shareholder approval.

Each service provider to the Trust or their agents or affiliates may also act in
various capacities for, and receive compensation from, their customers who are
shareholders in a Fund. Under agreements with those customers, these entities
may elect to credit against the fees payable to them by their customers or to
rebate to customers all or a portion of any fee received from the Trust with
respect to assets of those customers invested in the Funds.

Purchases and
Redemptions of Shares

Shares of each Fund are continuously sold and redeemed at a price equal to their
net asset value on each Fund Business Day (as defined below) without charge. All
transactions in Fund Shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions only from shareholders of record
and new investors. Shareholders of record receive periodic statements from the
Trust listing all account activity during the statement period. I Shares of a
Fund are offered to fiduciary, agency and custodial clients of bank trust
departments, trust companies and their affiliates.

Purchase and Redemption Procedures

Purchases and Redemptions Through Financial Institutions. Shares may be
purchased and redeemed (and in the case of Plans, generally will be purchased
and redeemed) through certain banks, trust companies and their affiliates,
including Norwest and its affiliates ("Processing Organizations"). Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.

Investors who purchase shares through a Processing Organization will be subject
to the procedures of their Processing Organization, which may include
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their Processing
Organization procedures and should read this Prospectus in conjunction with any
materials and information provided by their Processing Organization. Customers
who purchase a Fund's shares through a Processing Organization may or may not be
the shareholder of record and, subject to their Processing Organization's and
the Funds' procedures, may have Fund shares transferred into their name. Under
their arrangements with the Trust, broker-dealer Processing Organizations are
not generally required to deliver payment

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for purchase orders until several business days after a purchase order has
been received by a Fund. Certain other Processing Organizations may also
enter purchase orders with payment to follow.

Certain shareholder services may not be available to shareholders who have
purchased shares through a Processing Organization. These shareholders should
contact their Processing Organization for further information. The Trust may
confirm purchases and redemptions of a Processing Organization's customers
directly to the Processing Organization, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the Processing Organization and its customers. The
Trust is not responsible for the failure of any Processing Organization to carry
out its obligations to its customer. Certain states permit shares of the Funds
to be purchased and redeemed only through registered broker-dealers, including
the Funds' distributor.

Initial Purchases of Shares. Investors may obtain the account application form
necessary to open an account by writing the Trust at the address listed on page
2 of this Prospectus.

To participate in shareholder services not referenced on the account application
form and to change information on a shareholder's account (such as addresses),
investors or existing shareholders should contact the Trust. The Trust reserves
the right in the future to modify, limit or terminate any shareholder privilege
upon appropriate notice to shareholders and to charge a fee for certain
shareholder services, although no such fees are currently contemplated. Any
privilege and participation in any program may be terminated by the shareholder
at any time by writing to the Trust.

By Mail. Investors may send a check made payable to the Trust along with a
completed account application form to the Trust at the address listed below.
Checks are accepted at full value subject to collection. Payment by a check
drawn on any member of the Federal Reserve System can normally be converted into
Federal funds within two business days after receipt of the check. Checks drawn
on some non-member banks may take longer.

By Bank Wire. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
Transfer Agent at 612-667-8833 or 800-338-1348 to obtain an account number. The
investor should then instruct a bank to wire the investor's money immediately
to:

Norwest Bank Minnesota, N.A.
ABA 091 000 019
For Credit to: Norwest Funds 0844-131
Re: [Name of Fund], [I Shares]
Account Number:
Account Name:

The investor should then promptly complete and mail the account application
form. There may be a charge by the investor's bank for transmitting the money by
bank wire, and there also may be a charge for the use of Federal funds. The
Trust does not charge investors for the receipt of wire transfers. Payment by
bank wire is treated as a Federal funds payment when received.

Subsequent Purchases of Shares. Subsequent purchases may be made by mailing a
check, by sending a bank wire or through the shareholder's Processing
Organization as indicated above. All payments should clearly indicate the
shareholder's name and account number.

Redemptions of Shares. Shareholders that wish to redeem shares by telephone or
receive redemption proceeds by bank wire must elect these options by properly
completing the appropriate sections of their account application form. These
privileges may not be available until several weeks after a shareholder's
application is received. Shares for which certificates have been issued may not
be redeemed by telephone.

By Mail. Shareholders may redeem shares by sending a written request to the
Transfer Agent accompanied by any share certificate that may have been issued to
the shareholder to evidence the shares being redeemed. All written requests for
redemption must be signed by the shareholder with signature guaranteed, and all
certificates submitted

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<PAGE>

for redemption must be endorsed by the shareholder with signature guaranteed.
See "Purchases and Redemptions of Shares - General Information."

By Telephone. A shareholder who has elected telephone redemption privileges may
make a telephone redemption request by calling the Transfer Agent at 800-338-
1348 or 612-667-8833 and providing the shareholder's account number, the exact
name in which the shares are registered and the shareholder's social security or
taxpayer identification number. In response to the telephone redemption
instruction, the Trust will mail a check to the shareholder's record address or,
if the shareholder has elected wire redemption privileges, wire the proceeds.
See "Purchases and Redemptions of Shares - General Information."

By Bank Wire. For redemptions of more than $5,000, a shareholder who has elected
wire redemption privileges may request a Fund to transmit the redemption
proceeds by Federal funds wire to a bank account designated in writing by the
shareholder. To request bank wire redemptions by telephone, the shareholder also
must have elected the telephone redemption privilege. Redemption proceeds are
transmitted by wire on the day after a redemption request in proper form is
received by the Trust Transfer Agent.

Exchanges. Shareholders of I Shares may exchange their Shares for I Shares of
the other Funds or certain other portfolios of the Trust, Institutional Shares
of certain other portfolios of the Trust, and for shares of U.S. Government Fund
and Treasury Fund of the Trust. The Trust may in the future offer I Shares,
Institutional Shares, or other shares which will be exchangeable with the Shares
of the Funds.

The Funds do not charge for exchanges, and there is currently no limit on the
number of exchanges a shareholder may make; the Funds reserve the right,
however, to limit excessive exchanges by any shareholder. Exchanges are subject
to the fees charged by, and the limitations (including minimum investment
restrictions) of, the Fund into which a shareholder is exchanging.

Exchanges may only be made between identically registered accounts or to open a
new account. A new account application is required to open a new account through
an exchange if the new account will not have an identical registration and the
same shareholder privileges as the account from which the exchange is being
made. Shareholders may only exchange into a fund if that fund's shares may
legally be sold in the shareholder's state of residence. For Federal tax
purposes, an exchange is treated as a redemption and a simultaneous new
purchase. Exchange procedures may be materially amended or terminated by the
Trust at any time upon 60 days' notice to shareholders. See "Additional Purchase
and Redemption Information" in the SAI.

By Mail. Exchanges may be made by sending a written request to the Transfer
Agent accompanied by any share certificates for the shares to be exchanged. All
written requests for exchanges must be signed by the shareholder, and all
certificates submitted for exchange must be endorsed by the shareholder with
signature guaranteed. See "Purchases and Redemptions of Shares - General
Redemption Information."

By Telephone. A shareholder who has elected telephone exchange privileges may
make a telephone exchange by calling the Transfer Agent at 800-338-1348 or 612-
667-8833 and providing the shareholder's account number, the exact name in which
the shareholder's shares are registered and the shareholder's social security or
taxpayer identification number. See "Purchases and Redemptions of Shares -
General Information."

General Information

Purchasing Shares. Investments in the Funds may be made either through certain
financial institutions or by an investor directly. An investor who invests in a
Fund directly will be the shareholder of record. Fund Shares are issued
immediately following the next determination of net asset value made after
acceptance of an investor's subscription and funds. An investor's funds will not
be accepted or invested during the period before the Fund's receipt of funds on
deposit at a Federal Reserve Bank ("Federal Funds"). The Fund reserves the right
to reject any subscription for the purchase of its shares. Share certificates
are issued only to shareholders of record upon their written request and are not
issued for fractional shares. With approval of the Trust and the Adviser, shares
may be purchased with portfolio securities in lieu of cash.

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<PAGE>

Redeeming Shares. There is no minimum period of investment and no restriction on
the frequency of redemptions. Fund Shares are redeemed as of the next
determination of the Fund's net asset value following acceptance by the Transfer
Agent of the redemption order in proper form (and any supporting documentation
which the Transfer Agent may require). Normally, redemption proceeds are paid
immediately, but in no event later than 7 days, following acceptance of a
redemption order. Proceeds of a redemption request, however, will not be paid
unless any check used for investment has been cleared by the shareholder's bank,
which may take up to 15 days. Unless otherwise indicated, redemption proceeds
normally are paid by check mailed to the shareholder's record address. The right
of redemption may not be suspended nor the payment dates postponed for more than
7 days except when the New York Stock Exchange is closed (or when trading
thereon is restricted) for any reason other than its customary weekend or
holiday closings or under any emergency or other circumstances as determined by
the SEC.

Shareholders who wish to accomplish redemptions or exchanges by telephone must
elect those privileges. The Trust, the Transfer Agent and Forum are not
responsible for the authenticity of telephone instructions or losses, if any,
resulting from unauthorized telephone redemption or exchange requests which
reasonably are believed to be genuine. The Trust employs reasonable procedures
(including the recording of certain telephone transactions) to insure that
telephone orders are genuine. Shareholders should verify the accuracy of
telephone instructions immediately upon receipt of confirmation statements.

Investment Minimums. Shares of each Fund are offered without a sales charge and
may be redeemed without charge. The minimum investment in I Shares is $1,000.
The minimum subsequent investment is $100. Shareholders who elect to purchase I
Shares through electronic share purchase privileges such as the Automatic
Investment Plan or the Directed Dividend Option are not subject to the initial
investment minimums. See "Purchases and Redemptions of Shares - General
Information - Automatic Investment Plan" and "Dividends, Distributions and Tax
Matters."

IRAs and KEOGHs. Shares may be a suitable investment vehicle for part or all of
the assets held in certain IRAs or KEOGH accounts. An appropriate account
application form may be obtained by contacting the Trust or, for accounts
rolling over from a Plan, the shareholder's employer. Under current IRA rules,
by directly rolling over a distribution from a Plan, investors can avoid the 20
percent withholding tax imposed on distributions from a Plan. Rollover IRA
assets must be held separately from other IRA assets if the investor wishes to
invest his Rollover IRA in another employer's plan in the future. The amount of
the deductible contribution to an IRA will be reduced if the individual or, in
the case of a married individual filing jointly, either the individual or the
individual's spouse is an active participant in an employer-sponsored retirement
plan and has adjusted gross income above certain levels.

Currently, individuals may make tax-deductible IRA contributions of up to a
maximum of $2,000 annually. However, the deduction will be reduced if the
individual or, in the case of a married individual filing jointly, either the
individual or the individual's spouse is an active participant in an employer-
sponsored retirement plan and has adjusted gross income above certain levels.

Signature Guarantees. A signature guarantee is required for any endorsement on a
share certificate and for instructions to change a shareholder's record name or
address, designated bank account for wire redemptions, Automatic Investment or
Withdrawal Plan, dividend election, telephone redemption or any other option
election in connection with the shareholder's account. Signature guarantees may
be provided by any eligible institution acceptable to the Transfer Agent,
including a bank, a broker, a dealer, a national securities exchange, a credit
union, or a savings association that is authorized to guarantee signatures.
Whenever a signature guarantee is required, each person required to sign for the
account must have that person's signature guaranteed.

Other Redemption Information. Proceeds of redemptions normally are paid in cash.
However, payments may be made wholly or partially in portfolio securities if the
Board determines that payment in cash would be detrimental to the best interests
of the Fund. The Company will only effect a redemption in portfolio securities
if the particular shareholder is redeeming more than $250,000 or 1 percent of
the Fund's total net assets, whichever is less, during any 90-day period. Due to
the cost to the Trust of maintaining smaller accounts, the Trust reserves the
right to redeem, upon not less than 60 days written notice, all shares in any
Fund account with an aggregate net asset value of less than $1,000. The Trust
will not redeem accounts that fall below that amount solely as a result of a
reduction in net asset value.

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<PAGE>

Automatic Investment Plan. Under the Automatic Investment Plan which is
available to shareholders of I Shares of a Fund, shareholders may authorize
monthly amounts of $50 or more to be withdrawn automatically from the
shareholder's designated bank account (other than passbook savings) and sent to
the Transfer Agent for investment in a Fund. Shareholders wishing to use this
plan must complete an application which may be obtained by writing or calling
the Transfer Agent. The Trust may modify or terminate the Automatic Investment
Plan with respect to any shareholder in the event that the Trust is unable to
settle any transaction with the shareholder's bank. If the Automatic Investment
Plan is terminated before the shareholder's account totals $1,000, the Trust
reserves the right to close the account in accordance with the procedures
described under "Other Redemption Information" above.

Automatic Withdrawal Plan. A shareholder of I Shares of a Fund whose shares in a
single account total $1,000 or more may establish a withdrawal plan to provide
for the preauthorized payment from the shareholder's account of $250 or more on
a monthly, quarterly, semi-annual or annual basis. Under the withdrawal plan,
sufficient shares in the shareholder's account are redeemed to provide the
amount of the periodic payment and any taxable gain or loss is recognized by the
shareholder upon redemption of the shares.

Shareholders wishing to utilize the withdrawal plan may do so by completing an
application which may be obtained by writing or calling the Transfer Agent. The
Trust may suspend a shareholder's withdrawal plan without notice if the account
contains insufficient funds to effect a withdrawal or if the account balance is
less than the required minimum amount at any time.

Reopening Accounts. Provided that the information on the account application
form on file with the Trust is still applicable, a shareholder may reopen an
account, without filing a new account application form, at any time within one
year after the shareholder's account is closed.

Determination of Net Asset Value. The Trust determines the net asset value per
share of each Fund as of 4:00 P.M., Eastern time, on all weekdays, except New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas ("Fund Business Day") by dividing the value of the Fund's net assets
(i.e., the value of its securities and other assets less its liabilities) by the
number of Shares outstanding at the time the determination is made.

Securities owned by a Fund for which market quotations are readily available are
valued at current market value. Securities for which market quotations are not
readily available are valued at fair value as determined by the Board in
accordance with procedures adopted by the Board.

Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Fund Business Day. In addition, trading in
foreign securities generally or in a particular country or countries may not
take place on all Fund Business Days. Trading does take place in various foreign
markets, however, on days on which the Funds' net asset value is not calculated.
Calculation of the net asset value per share of a Fund may not occur
contemporaneously with the determination of the prices of the foreign securities
used in the calculation. Events affecting the values of foreign securities that
occur after the time their prices are determined and before the Fund's
determination of net asset value will not be reflected in the Fund's calculation
of net asset value unless the Adviser or Schroder determines that the particular
event would materially affect net asset value, in which case an adjustment will
be made.

All assets and liabilities of a Fund denominated in foreign currencies are
valued in U.S. dollars at the mean of the bid and asked prices of such
currencies against the U.S. dollar last quoted by a major bank prior to the time
of the valuation.

Dividends, Distributions
and Tax Matters

Dividends and Distributions

Shares become entitled to receive dividends on the next Fund Business Day after
acceptance of an order and are not entitled to receive dividends declared after
the day on which their redemption becomes effective.

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<PAGE>

Dividends of net investment income currently are declared and paid monthly by
Intermediate U.S. Government Fund, Managed Fixed Income Fund and Stable Income
Fund and quarterly by the other Funds. Each Fund's net capital gain, if any, is
distributed at least annually, typically in December.

Shareholders may choose to have dividends and distributions of a Fund reinvested
in shares of that Fund (the "Reinvestment Option"), to receive dividends and
distributions in cash (the "Cash Option") or to direct dividends and
distributions to be reinvested in shares of another fund of the Trust (the
"Directed Dividend Option"). Plan, IRA and KEOGH accounts are automatically
assigned the Reinvestment Option. All dividends and distributions are treated in
the same manner for Federal income tax purposes whether received in cash or
reinvested in shares of a fund.

Under the Reinvestment Option, all dividends and distributions of a Fund are
automatically invested in additional Shares of that Fund. All dividends and
distributions are reinvested at a Fund's net asset value as of the payment date
of the dividend or distribution. Shareholders are assigned this option unless
one of the other two options is selected. Under the Cash Option, all dividends
and distributions are paid to the shareholder in cash. Under the Directed
Dividend Option, shareholders of a Fund whose shares in a single account of that
Fund total $10,000 or more may elect to have all dividends and distributions
reinvested in shares of another fund of the Trust, provided that those shares
are eligible for sale in the shareholder's state of residence. For further
information concerning the Directed Dividend Option, shareholders should contact
the Transfer Agent.

Tax Matters

Taxation of the Funds. Each Fund is treated as a separate corporation for
Federal tax purposes and intends to continue to qualify for each fiscal year as
a regulated investment company under the Internal Revenue Code of 1986, as
amended. In addition, each Fund intends to distribute all of its net investment
income and capital gain each year. Accordingly, it is anticipated that the Funds
will not be liable for Federal income or excise taxes on their net investment
income and capital gain. Tax rules applicable to short-term trading may affect
the timing of a Fund's portfolio transactions or its ability to realize short-
term trading profits or establish short-term positions.

International Fund-International Portfolio. International Portfolio is not
required to pay Federal income taxes on its net investment income and capital
gain, as it is treated as a partnership for Federal tax purposes. All interest,
dividends and gains and losses of International Portfolio are deemed to have
been "passed through" to International Fund in proportion to its holdings of
International Portfolio, regardless of whether such interest, dividends or gains
have been distributed by International Portfolio or losses have been realized by
the International Portfolio. Investment income received by International Fund
from sources within foreign countries may be subject to foreign income or other
taxes. International Fund intends to elect, if eligible to do so, to permit its
shareholders to take a credit (or a deduction) for foreign income and other
taxes paid by International Portfolio. Shareholders of International Fund will
be notified of their share of those taxes and will be required to include that
amount as income. In that event, the shareholder may be entitled to claim a
credit or deduction for those taxes.

Shareholder Tax Matters

General. Dividends paid by a Fund out of its net investment income (including
any realized net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions by a Fund of realized net long-term capital gain,
if any, are taxable to shareholders as long-term capital gain, regardless of the
length of time the shareholder may have held shares in the Fund at the time of
distribution. If Fund shares are sold at a loss after being held for 6 months or
less, the loss will be treated as long-term capital loss to the extent of any
long-term capital gain distribution received on those shares.

All capital gain distributions paid by a Fund and all dividends paid by a Fund
and received by a shareholder reduce the net asset value of the shareholder's
shares by the amount of the distribution or dividend. Furthermore, a dividend or
distribution made shortly after the purchase of shares by a shareholder,
although in effect a return of capital to that particular shareholder, would be
taxable to the shareholder as described above.

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<PAGE>

It is expected that a substantial portion of the dividends to shareholders of
each Equity Fund, except International Fund, and a portion of each Balanced
Fund's dividends to shareholders will qualify for the dividends received
deduction for corporations.

The Funds may be required by Federal law to withhold 31 percent of reportable
payments (which may include taxable dividends, capital gain distributions and
redemption proceeds) paid to individuals and certain other non-corporate
shareholders. Withholding is not required if a shareholder certifies that the
shareholder's social security or tax identification number provided to the Trust
is correct and that the shareholder is not subject to backup withholding for
prior under-reporting to the Internal Revenue Service.

Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by the Funds will
be mailed to shareholders shortly after the close of each year.

Tax-Deferred Accounts. Dividends or distributions of net long-term capital gain,
if any, paid with respect to the shares of a Fund held by a tax-deferred account
will not be taxable to that account. Currently, distributions from such accounts
will be taxable to individual participants under applicable tax rules without
regard to the character of the income earned by the account.

Other Information

Fund Performance

Each Fund's performance may be quoted in advertising in terms of yield or total
return. Both types are based on historical results and are not intended to
indicate future performance. The Funds' advertisements may reference ratings and
rankings among similar funds by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc. and IBC/Donoghue, Inc. In addition, the
performance of a Fund may be compared to recognized indices of market
performance. The comparative material found in the Funds' advertisements, sales
literature or reports to shareholders may contain performance ratings. This
material is not to be considered representative or indicative of future
performance.

Yield. A Fund's yield is a way of showing the rate of income earned by the Fund
as a percentage of the Fund's share price. Yield is calculated by dividing the
net investment income of the Fund for the stated period by the average number of
shares entitled to receive dividends and expressing the result as an annualized
percentage rate based on the Fund's share price at the end of the period. A Fund
may also quote a compounded annualized yield which assumes the reinvestment of
dividends paid by the Fund and therefore will be somewhat higher than the
annualized yield for the same period.

Total Return. Total Return refers to the average annual compounded rates of
return over some representative period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment, after giving effect to the reinvestment of all dividends and
distributions and deductions of expenses during the period. Because average
annual returns tend to smooth out variations in a Fund's returns, shareholders
should recognize that they are not the same as actual year-by-year results.

Performance Benchmarks. Each of the Funds uses a benchmark securities index as a
measure of the Fund's performance. These indices may be comprised of a composite
of various recognized securities indices to reflect the investment policies of
Diversified Equity Fund, Growth Equity Fund and each Balanced Fund, which invest
their assets using different investment styles. These indices are not used in
the management of the Fund but rather are standards by which the Advisers and
shareholders may compare the performance of a Fund to an unmanaged composite of
securities with similar, but not identical, characteristics as the Fund. For
instance, Index Fund's investment objective is to duplicate the return of the
Standard & Poor's 500 Composite Stock Price Index. Accordingly, the Adviser
generally uses that index as a comparison to measure the performance of Index
Fund. The Funds may from time to time advertise a comparison of their
performance against any of these or other indices.

Banking Law Matters

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Federal banking laws and regulations generally permit a bank or bank affiliate
to act as investment adviser, transfer agent and custodian to an investment
company and to purchase shares of the investment company as agent for and upon
the order of a customer. Forum believes that Norwest and any other bank or bank
affiliate that may perform sub-transfer agent or similar services or purchase
shares as agent for its customers may perform the services described in this
Prospectus for the Trust and its shareholders without violating applicable
Federal banking laws or regulations.

Federal or state statutes or regulations and judicial or administrative
decisions or interpretations relating to the activities of banks and their
affiliates, however, could prevent a bank or bank affiliate from continuing to
perform all or a part of the activities contemplated by this Prospectus. If
Norwest or another bank or bank affiliate were prohibited from so acting, its
shareholder customers would be permitted to remain shareholders of the Trust and
alternative means for continuing the servicing of such shareholders would be
sought. In this event, changes in the operation of the Trust might occur and
shareholders serviced by the bank or bank affiliate might no longer be able to
avail themselves of its services. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.

Portfolio Transactions

The Advisers place orders for the purchase and sale of assets they manage with
brokers and dealers selected by and in the discretion of the respective Adviser.
The Advisers seek "best execution" for all portfolio transactions, but a Fund
may pay higher than the lowest available commission rates when an Adviser
believes it is reasonable to do so in light of the value of the brokerage,
research and other services provided by the broker effecting the transaction.

Commission rates for brokerage transactions are fixed on many foreign securities
exchanges, and this may cause higher brokerage expenses to accrue to
International Fund and each other Fund that invests in foreign securities than
would be the case for comparable transactions effected on United States
securities exchanges.

Subject to the Funds' policy of obtaining the best price consistent with quality
of execution of transactions, each Adviser may employ Norwest Investment
Services, Inc., Wertheim Schroder & Company and other broker-dealer affiliates
of an Adviser (collectively "Affiliated Brokers") to effect brokerage
transactions for the Funds. The Fund's payment of commissions to Affiliated
Brokers is subject to procedures adopted by the Board and, with respect to the
Portfolios of Core Trust, Core Trust's board of trustees, to provide that the
commissions will not exceed the usual and customary broker's commissions charged
by unaffiliated brokers. No specific portion of a Fund's brokerage will be
directed to Affiliated Brokers and in no event will a broker affiliated with an
Adviser directing the transaction receive brokerage transactions in recognition
of research or other services provided to the Adviser.

The Adviser anticipates that the annual turnover rate in each Fund except Small
Company Growth Fund will be less than 100 percent and that the annual turnover
rate in Small Company Growth Fund will be less than 125 percent. Schroder
anticipates that the annual turnover rate in International Portfolio will be
less than 100 percent. An annual turnover rate of 100 percent would occur if all
of the securities in a Fund were replaced once in a period of 1 year. With
respect to Funds that invest in equity securities, higher portfolio turnover
rates may result in increased brokerage costs to the Fund.

The Trust and its Shares

The Trust was originally organized under the name "Prime Value Funds, Inc." as a
Maryland corporation on August 29, 1986 and on July 30, 1993 was reorganized as
a Delaware business trust under the name "Norwest Funds." The Trust has an
unlimited number of authorized shares of beneficial interest. The Board may,
without shareholder approval, divide the authorized shares into an unlimited
number of separate portfolios or series (such as the Funds) and may divide
portfolios or series into classes of shares (such as I Shares), and the costs of
doing so will be borne by the Trust. Currently the authorized shares of the
Trust are divided into 30 series.

Other Classes of Shares. Each Fund may issue shares of other classes. Funds of
the Trust (except money market funds) currently may issue three classes of
shares, I Shares, A Shares and B Shares, and may in the future create additional
class types. I Shares are offered to fiduciary, agency and custodial clients of
bank trust departments, trust

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<PAGE>

companies and their affiliates without any sales charges. A Shares are sold
with front-end sales charge or, in some cases, a contingent deferred sales
charge. B Shares are sold with a contingent deferred sales charge and pay
distribution fees. Each class of a Fund will have a different expense ratio
and may have different sales charges (including distribution fees). Each
class' performance is affected by its expenses and sales charges. For more
information on any other class of shares of the Funds investors may contact
the Transfer Agent at 612-667-8833 or 800-338-1348. Investors may also
contact their Norwest sales representative to obtain information on the other
classes. Sales personnel of broker-dealers and other financial institutions
selling the Fund's shares may receive differing compensation for selling I
Shares, A Shares and B Shares of the Funds.

Shareholder Voting and Other Rights. Each share of each portfolio of the Trust
and each class of shares has equal dividend, distribution, liquidation and
voting rights, and fractional shares have those rights proportionately, except
that expenses related to the distribution of the shares of each class (and
certain other expenses such as transfer agency and administration expenses) are
borne solely by those shares and each class votes separately with respect to the
provisions of any Rule 12b-1 plan which pertain to the class and other matters
for which separate class voting is appropriate under applicable law. Generally,
shares will be voted in the aggregate without reference to a particular
portfolio or class, except if the matter affects only one portfolio or class or
voting by portfolio or class is required by law, in which case shares will be
voted separately by portfolio or class, as appropriate. Delaware law does not
require the Trust to hold annual meetings of shareholders, and it is anticipated
that shareholder meetings will be held only when specifically required by
Federal or state law. Shareholders have available certain procedures for the
removal of Trustees. There are no conversion or preemptive rights in connection
with shares of the Trust. All shares when issued in accordance with the terms of
the offering will be fully paid and nonassessable. Shares are redeemable at net
asset value, at the option of the shareholders, subject to any contingent
deferred sales charge that may apply. A shareholder in a portfolio is entitled
to the shareholder's pro rata share of all dividends and distributions arising
from that portfolio's assets and, upon redeeming shares, will receive the
portion of the portfolio's net assets represented by the redeemed shares.

As an investor in International Portfolio, International Fund will be entitled
to vote in proportion to its relative beneficial interest in International
Portfolio. On most issues subject to a vote of investors, as required by the
1940 Act and other applicable law, the Fund will solicit proxies from
shareholders of the Fund and will vote its interest in International Portfolio
in proportion to the votes cast by its shareholders. If there are other
investors in International Portfolio, there can be no assurance that any issue
that receives a majority of the votes cast by Fund shareholders will receive a
majority of votes cast by all investors in International Portfolio; indeed, if
other investors hold a majority interest in International Portfolio, they could
hold have voting control of International Portfolio.

From time to time, a shareholder may own a large percentage of a Fund.
Accordingly, that shareholder may be able to greatly affect (if not determine)
the outcome of a shareholder vote.

Core Trust Structure

International Fund invests all of its assets in International Portfolio, a
separate series of Core Trust, a business trust organized under the laws of the
State of Delaware in September 1994. Core Trust is registered under the 1940 Act
as an open-end management investment company. Pursuant to an exemptive order
issued by the SEC, the Blended Funds invest portions of their assets in Small
Company Portfolio, International Portfolio II and Index Portfolio of Core Trust.
Core Trust currently consists of eight diversified portfolios. The assets of
each Portfolio of Core Trust belong only to, and the liabilities of each
Portfolio are borne solely by, the respective Portfolio and no other Portfolio
of Core Trust.

International Portfolio. International Fund seeks to achieve its investment
objective by investing all of its investable assets in International Portfolio,
which has the same investment objective and policies as the Fund. Accordingly,
International Portfolio directly acquires its own securities and the Fund
acquires an indirect interest in those securities. The investment objective and
fundamental investment policies of International Fund and International
Portfolio can be changed only with shareholder approval. See "Summary,"
"Investment Objectives, Policies and Risk Considerations," "Management of the
Funds" and "Appendix A: Investments, Investment Strategies and Risk
Considerations" for a complete description of International Portfolio's
investment objective, policies, restrictions, management, and expenses.

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International Fund's investment in International Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, the
Fund is the only institutional investor that has invested all of its assets in
International Portfolio. International Portfolio may permit other investment
companies or institutional investors to invest in International Portfolio. All
investors in International Portfolio will invest on the same terms and
conditions as International Fund and will pay a proportionate share of
International Portfolio's expenses.

International Portfolio will not sell its shares directly to members of the
general public. Another institutional investor in International Portfolio that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as International Fund, could
have different advisory and other fees and expenses than International Fund, and
might charge a sales commission. Therefore, International Fund shareholders may
have different returns than shareholders in another investment company that
invests exclusively in International Portfolio. There is currently no such other
investment company that offers its shares to members of the general public.
Information regarding any such funds in the future will be available from Core
Trust by calling 212-363-3300.

Certain Risks of Investing in International Portfolio. International Fund's
investment in International Portfolio may be affected by the actions of other
large investors in International Portfolio, if any. For example, if
International Portfolio had a large investor other than International Fund that
redeemed its interest in International Portfolio, International Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses, thereby producing lower returns.

International Fund may withdraw its entire investment from International
Portfolio at any time, if the Board determines that it is in the best interests
of International Fund and its shareholders to do so. International Fund might
withdraw, for example, if there were other investors in International Portfolio
with power to, and who did by a vote of the shareholders of all investors
(including the Fund), change the investment objective or policies of
International Portfolio in a manner not acceptable to the Board. A withdrawal
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by International Portfolio. That distribution could result in
a less diversified portfolio of investments for the Fund and could affect
adversely the liquidity of the Fund's portfolio. If International Fund decided
to convert those securities to cash, it usually would incur brokerage fees or
other transaction costs. If International Fund withdrew its investment from
International Portfolio, the Board would consider what action might be taken,
including the management of the Fund's assets in accordance with its investment
objective and policies by the Adviser and Schroder, the Fund's investment
adviser and subadviser, respectively, or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of International Fund to
find a suitable replacement investment, in the event the Board decided not to
permit the Adviser and Schroder to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.

Each investor in International Portfolio, including International Fund, will be
liable for all obligations of International Portfolio but not for those of any
other portfolio of Core Trust. The risk to an investor in International
Portfolio of incurring financial loss on account of such liability, however,
would be limited to circumstances in which International Portfolio was unable to
meet its obligations. Upon liquidation of International Portfolio, investors
would be entitled to share pro rata in the net assets of International Portfolio
available for distribution to investors.

Core Trust Blended Portfolios. The Blended Funds are permitted to invest a
portion of their assets which are managed by using the small company, index and
international investment styles in Small Company Portfolio, Index Portfolio, and
International Portfolio II pursuant to an exemptive order obtained from the SEC.
The conditions of the Trust's exemptive order do not permit a Fund to invest all
of its assets in a Blended Portfolio. Accordingly, Index Fund does not invest in
Index Portfolio and International Fund does not invest in International
Portfolio II.

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significant. If the duplication of brokerage costs becomes significant, the
Board will adopt procedures designed to limit duplication. Conservative
Balanced Fund, Moderate Balanced Fund, and Growth Balanced Fund will limit
any redemptions resulting from a reallocation in their respective equity and
fixed income security positions to no more than 1 percent of a Portfolio
during any period of less than 30 days. The Board will determine, at least
annually, that investment in the Portfolios is in the best interests of the
shareholders of each Blended Fund.

Appendix A
Investments, Investment Strategies
and Risk Considerations

Common Stock and Preferred Stock

Equity Funds, Balanced Funds. Common stockholders are the owners of the company
issuing the stock and, accordingly, vote on various corporate governance matters
such as mergers. They are not creditors of the company, but rather, upon
liquidation of the company are entitled to their pro rata share of the company's
assets after creditors (including fixed income security holders) and, if
applicable, preferred stockholders are paid. Preferred stock is a class of stock
having a preference over common stock as to dividends and, in the alternative,
as to the recovery of investment. A preferred stockholder is a shareholder in
the company and not a creditor of the company as is a holder of the company's
fixed income securities. Dividends paid to common and preferred stockholders are
distributions of the earnings of the company and not interest payments, which
are expenses of the company. Equity securities owned by a Fund may be traded on
national securities exchanges, in the over-the-counter market or on a regional
securities exchange and may not be traded every day or in the volume typical of
securities traded on a major national securities exchange. As a result,
disposition by a Fund of a portfolio security to meet redemptions by
shareholders or otherwise may require the Fund to sell these securities at a
discount from market prices, to sell during periods when disposition is not
desirable, or to make many small sales over an extended period of time. The
market value of all securities, including equity securities, is based upon the
market's perception of value and not necessarily the book value of an issuer or
other objective measure of a company's worth.

Convertible Securities

Equity Funds, Balanced Funds. Convertible securities, which include convertible
debt, convertible preferred stock and other securities exchangeable under
certain circumstances for shares of common stock, are fixed income securities or
preferred stock which generally may be converted at a stated price within a
specific amount of time into a specified number of shares of common stock. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stream of income with generally higher yields
than those of common stocks of the same or similar issuers. These securities are
usually senior to common stock in a company's capital structure, but usually are
subordinated to non-convertible debt securities. In general, the value of a
convertible security is the higher of its investment value (its value as a fixed
income security) and its conversion value (the value of the underlying shares of
common stock if the security is converted). As a fixed income security, the
value of a convertible security generally increases when interest rates decline
and generally decreases when interest rates rise. The value of a convertible
security is, however, also influenced by the value of the underlying common
stock.

A Fund may invest in equity-linked securities, including Preferred Equity
Redemption Cumulative Stock ("PERCS"), Equity-Linked Securities ("ELKS"), and
Liquid Yield Option Notes ("LYONS"). Equity-Linked Securities are securities
that are convertible into or based upon the value of, equity securities upon
certain terms and conditions. The amount received by an investor at maturity of
these securities is not fixed but is based on the price of the underlying common
stock, which may rise or fall. In addition, it is not possible to predict how
equity-linked securities will trade in the secondary market or whether the
market for them will be liquid or illiquid.

Warrants

Equity Funds, Balanced Funds. A Fund may invest in warrants, which are options
to purchase an equity security at a specified price (usually representing a
premium over the applicable market value of the underlying equity security at

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the time of the warrant's issuance) and usually during a specified period of
time. Unlike convertible securities and preferred stocks, warrants do not pay a
fixed dividend. Investments in warrants involve certain risks, including the
possible lack of a liquid market for the resale of the warrants, potential price
fluctuations as a result of speculation or other factors and failure of the
price of the underlying security to reach a level at which the warrant can be
prudently exercised (in which case the warrant may expire without being
exercised, resulting in the loss of the Fund's entire investment therein).

ADRs and EDRs

All Equity Funds (except Index Fund and Small Company Growth Fund), Balanced
Funds. A Fund may invest in sponsored and unsponsored American Depository
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depository of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. A Fund may also invest in European
Depository Receipts ("EDRs"), receipts issued by a European financial
institution evidencing an arrangement similar to that of ADRs, and in other
similar instruments representing securities of foreign companies. EDRs, in
bearer form, are designed for use in European securities markets.

U.S. Government Securities

All Funds. As used in this Prospectus, the term U.S. Government Securities means
obligations issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. The U.S. Government Securities in
which a Fund may invest include U.S. Treasury Securities and obligations issued
or guaranteed by U.S. Government agencies and instrumentalities and backed by
the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration or issued by the Government National Mortgage
Association. In addition, the U.S. Government Securities in which the Funds may
invest include securities supported primarily or solely by the creditworthiness
of the issuer, such as securities of the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation and the Tennessee Valley Authority.
There is no guarantee that the U.S. Government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. Government's full faith
and credit.

Zero Coupon Securities

Fixed Income Funds, Balanced Funds. A Fund may invest in separately traded
principal and interest components of securities issued or guaranteed by the U.S.
Treasury. These components are traded independently under the Treasury's
Separate Trading of Registered Interest and Principal of Securities ("STRIPS")
program or as Coupons Under Book Entry Safekeeping ("CUBES"). The Funds may
invest in other types of related zero coupon securities. For instance, a number
of banks and brokerage firms separate the principal and interest portions of
U.S. Treasury securities and sell them separately in the form of receipts or
certificates representing undivided interests in these instruments. These
instruments are generally held by a bank in a custodial or trust account on
behalf of the owners of the securities and are known by various names, including
Treasury Receipts ("TRs"), Treasury Investment Growth Receipts ("TIGRs") and
Certificates of Accrual on Treasury Securities ("CATS"). Zero-coupon securities
also may be issued by corporations and municipalities.

Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity, but a Fund holding a zero-coupon security must
include a portion of the original issue discount of the security as income.
Because of this, zero coupon securities may be subject to greater fluctuation of
market value than the other securities in which the Funds may invest. The Funds
distribute all of their net investment income, and may have to sell portfolio
securities to distribute imputed income, which may occur at a time when the
Adviser or Schroder would not have chosen to sell such securities and which may
result in a taxable gain or loss.

Corporate Debt Securities

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Commercial Paper

Corporate Debt Securities - Balanced Funds, Fixed Income Funds. Commercial Paper
- - All Funds. The corporate debt securities in which the Funds may invest include
corporate bonds and notes and short-term investments such as commercial paper
and variable rate demand notes. Commercial paper (short-term promissory notes)
is issued by companies to finance their or their affiliates' current obligations
and is frequently unsecured. Variable and floating rate demand notes are
unsecured obligations redeemable upon not more than 30 days' notice. These
obligations include master demand notes that permit investment of fluctuating
amounts at varying rates of interest pursuant to direct arrangement with the
issuer of the instrument. The issuer of these obligations often has the right,
after a given period, to prepay the outstanding principal amount of the
obligations upon a specified number of days' notice. These obligations generally
are not traded, nor generally is there an established secondary market for these
obligations. To the extent a demand note does not have a 7 day or shorter demand
feature and there is no readily available market for the obligation, it is
treated as an illiquid security.

Financial Institution Obligations

All Funds. A Fund may invest in obligations of financial institutions, including
negotiable certificates of deposit, bankers' acceptances and time deposits of
U.S. banks (including savings banks and savings associations), foreign branches
of U.S. banks, foreign banks and their non-U.S. branches (Eurodollars), U.S.
branches and agencies of foreign banks (Yankee dollars), and wholly-owned
banking-related subsidiaries of foreign banks. Short Maturity style of
Conservative Balanced Fund limits these purchases to institutions which at the
time of investment have total assets in excess of 1 billion dollars, or the
equivalent in other currencies.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Certificates of deposit and
fixed time deposits, which are payable at the stated maturity date and bear a
fixed rate of interest, generally may be withdrawn on demand but may be subject
to early withdrawal penalties which could reduce the Fund's yield. Deposits
subject to early withdrawal penalties or that mature in more than 7 days are
treated as illiquid securities if there is no readily available market for the
securities. A Fund's investments in the obligations of foreign banks and their
branches, agencies or subsidiaries may be obligations of the parent, of the
issuing branch, agency or subsidiary, or both. Investments in foreign bank
obligations are limited to banks and branches located in countries which the
Advisers believe do not present undue risk.

Participation Interests

Balanced Funds, Managed Fixed Income Fund. A Fund may purchase participation
interests in loans or securities in which the Fund may invest directly that are
owned by banks or other financial institutions. A participation interest gives
the Fund an undivided interest in a loan or security in the proportion that the
Fund's interest bears to the total principal amount of the security.
Participation interests, which may have fixed, floating or variable rates, may
carry a demand feature backed by a letter of credit or guarantee of the bank or
institution permitting the holder to tender them back to the bank or other
institution. For certain participation interests the Fund will have the right to
demand payment, on not more than 7 days' notice, for all or a part of the Fund's
participation interest. A Fund will only purchase participation interests from
banks or other financial institutions that the Adviser deems to be creditworthy.
A Fund will not invest more than 10 percent of its total assets in participation
interests in which the Fund does not have demand rights.

Illiquid Securities

Restricted Securities

Illiquid Securities - All Funds. Restricted Securities - International Fund,
Balanced Funds, Fixed Income Funds. Each Fund may invest up to 15 percent of its
net assets in securities that at the time of purchase are illiquid.

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Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 ("restricted securities"),
securities which are otherwise not readily marketable, such as over-the-counter
options, and repurchase agreements not entitling the holder to payment of
principal in 7 days. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a Fund might also have to register
restricted securities in order to dispose of them, resulting in expense and
delay. A Fund might not be able to dispose of restricted or other securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions. There can be no assurance that a liquid market will
exist for any security at any particular time.

An institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, including repurchase agreements,
commercial paper, foreign securities and corporate bonds and notes.
Institutional investors depend on an efficient institutional market in which the
unregistered security can be readily resold or on the issuer's ability to honor
a demand for repayment of the unregistered security. A securities contractual or
legal restrictions on resale to the general public or to certain institutions
may not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the Securities Act of 1933 or other exemptions, the Advisers may determine that
such securities are not illiquid securities, under guidelines or other
exemptions adopted by the Board. These guidelines take into account trading
activity in the securities and the availability of reliable pricing information,
among other factors. If there is a lack of trading interest in a particular Rule
144A security, a Fund's holdings of that security may be illiquid.

Borrowing

All Funds. Each Fund may borrow money for temporary or emergency purposes,
including the meeting of redemption requests, in amounts up to 33 1/3 percent of
the Fund's total assets. Borrowing involves special risk considerations.
Interest costs on borrowings may fluctuate with changing market rates of
interest and may partially offset or exceed the return earned on borrowed funds
(or on the assets that were retained rather than sold to meet the needs for
which funds were borrowed). Under adverse market conditions, a Fund might have
to sell portfolio securities to meet interest or principal payments at a time
when investment considerations would not favor such sales. No Fund, other than
Managed Fixed Income Fund, Intermediate U.S. Government Fund and, to the extent
they invest in the Managed Fixed Income Fund style or the Short Maturity style,
the Balanced Funds may purchase securities for investment while any borrowing
equal to 5 percent or more of the Fund's total assets is outstanding or borrow
for purposes other than meeting redemptions in an amount exceeding 5 percent of
the value of the Fund's total assets. A Fund's use of borrowed proceeds to make
investments would subject the Fund to the risks of leveraging. Reverse
repurchase agreements, short sales not against the box, dollar roll transactions
and other similar investments that involve a form of leverage have
characteristics similar to borrowings but are not considered borrowings if the
Fund maintains a segregated account; the use of these techniques in connection
with a segregated account may result in a Fund's assets being 100 percent
leveraged. See "Appendix A - Techniques Involving Leverage."

Purchasing Securities on Margin

Intermediate U.S. Government Fund. When the Fund purchases securities on margin,
it only pays part of the purchase price and borrows the remainder, typically
from the Fund's broker. As a borrowing, a Fund's purchase of securities on
margin is subject to the limitations and risks described in "Borrowing" above.
In addition, if the value of the securities purchased on margin decreases such
that the Fund's borrowing with respect to the security exceeds the maximum
permissible borrowing amount, the Fund will be required to make margin payments
(additional payments to the broker to maintain the level of borrowing at
permissible levels). A Fund's obligation to satisfy margin calls may require the
Fund to sell securities at an inappropriate time.

Techniques Involving Leverage

All Funds. Utilization of leveraging involves special risks and may involve
speculative investment techniques. The Funds may borrow for other than temporary
or emergency purposes, lend their securities, enter reverse repurchase
agreements, and purchase securities on a when issued or forward commitment
basis. In addition, certain funds may engage in dollar roll transactions and
Intermediate U.S. Government Fund may purchase securities on margin and

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sell securities short (other than against the box). Each of these transactions
involve the use of "leverage" when cash made available to the Fund through the
investment technique is used to make additional portfolio investments. In
addition, the use of swap and related agreements may involve leverage. The Funds
use these investment techniques only when the Adviser to a Fund believes that
the leveraging and the returns available to the Fund from investing the cash
will provide shareholders a potentially higher return.

Leverage exists when a Fund achieves the right to a return on a capital base
that exceeds the Fund's investment. Leverage creates the risk of magnified
capital losses which occur when losses affect an asset base, enlarged by
borrowings or the creation of liabilities, that exceeds the equity base of the
Fund.

The risks of leverage include a higher volatility of the net asset value of the
Fund's shares and the relatively greater effect on the net asset value of the
shares caused by favorable or adverse market movements or changes in the cost of
cash obtained by leveraging and the yield obtained from investing the cash. So
long as a Fund is able to realize a net return on its investment portfolio that
is higher than interest expense incurred, if any, leverage will result in higher
current net investment income being realized by the Fund than if the Fund were
not leveraged. On the other hand, interest rates change from time to time as
does their relationship to each other depending upon such factors as supply and
demand, monetary and tax policies and investor expectations. Changes in such
factors could cause the relationship between the cost of leveraging and the
yield to change so that rates involved in the leveraging arrangement may
substantially increase relative to the yield on the obligations in which the
proceeds of the leveraging have been invested. To the extent that the interest
expense involved in leveraging approaches the net return on the Fund's
investment portfolio, the benefit of leveraging will be reduced, and, if the
interest expense on borrowings were to exceed the net return to shareholders,
the Fund's use of leverage would result in a lower rate of return than if the
Fund were not leveraged. Similarly, the effect of leverage in a declining market
could be a greater decrease in net asset value per share than if the Fund were
not leveraged. In an extreme case, if the Fund's current investment income were
not sufficient to meet the interest expense of leveraging, it could be necessary
for the Fund to liquidate certain of its investments at an inappropriate time.
The use of leverage may be considered speculative.

Segregated Account. In order to limit the risks involved in various transactions
involving leverage, the Trust's custodian will set aside and maintain in a
segregated account cash, U.S. Government Securities and other liquid, high-grade
debt securities in accordance with SEC guidelines. The accounts value, which is
marked to market daily, will be at least equal to the Fund's commitments under
these transactions. The Fund's commitments may include (i) the Fund's
obligations to repurchase securities under a reverse repurchase agreement,
settle when-issued and forward commitment transactions and make payments under a
cap or floor (see "Appendix A - Swap Agreements") and (ii) the greater of the
market value of securities sold short or the value of the securities at the time
of the short sale (reduced by any margin deposit). The net amount of the excess,
if any, of a Fund's obligations over its entitlements with respect to each
interest rate swap will be calculated on a daily basis and an amount at least
equal to the accrued excess will be maintained in the segregated account. If the
Fund enters into an interest rate swap on other than a net basis, the Fund will
maintain the full amount accrued on a daily basis of the Fund's obligations with
respect to the swap in their segregated account. The use of a segregated account
in connection with leveraged transactions may result in a Fund's portfolio being
100 percent leveraged.

Repurchase Agreements

Securities Lending

Reverse Repurchase Agreements

When-Issued Securities and Forward Commitments

Dollar Roll Transactions

A Fund's use of repurchase agreements, securities lending, reverse repurchase
agreements and forward commitments (including dollar roll transactions) entails
certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty while these transactions remained open or a counterparty
defaulted on its obligations, the Fund might suffer a loss. Failure by the

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other party to deliver a security purchased by the Fund may result in a missed
opportunity to make an alternative investment. The Advisers monitor the
creditworthiness of counterparties to these transactions and intend to enter
into these transactions only when they believe the counterparties present
minimal credit risks and the income to be earned from the transaction justifies
the attendant risks. Counterparty insolvency risk with respect to repurchase
agreements is reduced by favorable insolvency laws that allow the Fund, among
other things, to liquidate the collateral held in the event of the bankruptcy of
the counterparty. Those laws do not apply to securities lending and,
accordingly, securities lending involves more risk than does the use of
repurchase agreements. As a result of entering forward commitments and reverse
repurchase agreements, as well as lending its securities, a Fund may be exposed
to greater potential fluctuations in the value of its assets and net asset value
per share. See "Appendix A - Techniques Involving Leverage."

Repurchase Agreements - All Funds. A Fund may enter into repurchase agreements,
transactions in which a Fund purchases a security and simultaneously commits to
resell that security to the seller at an agreed-upon price on an agreed-upon
future date, normally 1 to 7 days later. The resale price of a repurchase
agreement reflects a market rate of interest that is not related to the coupon
rate or maturity of the purchased security. The Trust's custodian maintains
possession of the collateral underlying a repurchase agreement, which has a
market value, determined daily, at least equal to the repurchase price, and
which consists of the types of securities in which the Fund may invest directly.
International Portfolio and, with respect to the portion of their assets managed
in the International Fund style, Diversified Equity Fund, Growth Equity Fund and
each Balanced Fund, may enter into repurchase agreements with foreign entities.

Securities Lending - All Funds. A Fund may lend securities from its portfolios
to brokers, dealers and other financial institutions. Securities loans must be
continuously secured by cash or U.S. Government Securities with a market value,
determined daily, at least equal to the value of the Fund's securities loaned,
including accrued interest. A Fund receives interest in respect of securities
loans from the borrower or from investing cash collateral. A Fund may pay fees
to arrange the loans. No Fund will lend portfolio securities in excess of 33 1/3
percent of the value of the Fund's total assets.

Reverse Repurchase Agreements - Balanced Funds, Fixed Income Funds. A Fund may
enter into reverse repurchase agreements, transactions in which the Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.
Because certain of the incidents of ownership of the security are retained by
the Fund, reverse repurchase agreements may be viewed as a form of borrowing by
the Fund from the buyer, collateralized by the security sold by the Fund. A Fund
will use the proceeds of reverse repurchase agreements to fund redemptions or to
make investments. In most cases these investments either mature or have a demand
feature to resell to the issuer on a date not later than the expiration of the
agreement. Interest costs on the money received in a reverse repurchase
agreement may exceed the return received on the investments made by the Fund
with those monies. Any significant commitment of a Fund's assets to the reverse
repurchase agreements will tend to increase the volatility of the Fund's net
asset value per share.

When-Issued Securities and Forward Commitments - All Funds. A Fund may purchase
fixed income securities on a "when-issued" or "forward commitment" basis. When
these transactions are negotiated, the price, which is generally expressed in
yield terms, is fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. Normally, the settlement
date occurs within 3 months after the transaction. During the period between a
commitment and settlement, no payment is made for the securities purchased and
no interest on the security accrues to the purchaser. At the time a Fund makes a
commitment to purchase securities in this manner, the Fund immediately assumes
the risk of ownership, including price fluctuation. Failure by the other party
to deliver a security purchased by a Fund may result in a loss or a missed
opportunity to make an alternative investment.

The use of when-issued transactions and forward commitments enables a Fund to
hedge against anticipated changes in interest rates and prices. If the Adviser
or Schroder were to forecast incorrectly the direction of interest rate
movements, however, a Fund might be required to complete these transactions when
the value of the security is lower than the price paid by the Fund. Except for
dollar-roll transactions, a Fund will not purchase securities on a

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when-issued or forward commitment basis if, as a result, more than 15 percent of
the value of the Fund's total assets would be committed to such transactions.

When-issued securities and forward commitments may be sold prior to the
settlement date, but the Funds purchase securities on a when-issued and forward
commitment basis only with the intention of actually receiving the securities.
When-issued securities may include bonds purchased on a "when, and if issued"
basis under which the issuance of the securities depends upon the occurrence of
a subsequent event. Commitment of a Fund's assets to the purchase of securities
on a when-issued or forward commitment basis will tend to increase the
volatility of the Fund's net asset value per share.

Dollar Roll Transactions - Balanced Funds, Fixed Income Funds. A Fund may enter
into dollar roll transactions wherein the Fund sells fixed income securities,
typically mortgage-backed securities, and makes a commitment to purchase
similar, but not identical, securities at a later date from the same party. Like
a forward commitment, during the roll period no payment is made for the
securities purchased and no interest or principal payments on the security
accrue to the purchaser, but the Fund assumes the risk of ownership. A Fund is
compensated for entering into dollar roll transactions by the difference between
the current sales price and the forward price for the future purchase, as well
as by the interest earned on the cash proceeds of the initial sale. Like other
when-issued securities or firm commitment agreements, dollar roll transactions
involve the risk that the market value of the securities sold by the Fund may
decline below the price at which a Fund is committed to purchase similar
securities. In the event the buyer of securities under a dollar roll transaction
becomes insolvent, the Fund's use of the proceeds of the transaction may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.
The Funds will engage in roll transactions for the purpose of acquiring
securities for its portfolio and not for investment leverage. Each Fund will
limit its obligations on dollar roll transactions to 35 percent of the Fund's
net assets.

Swap Agreements

Balanced Funds, Intermediate U.S. Government Fund, Managed Fixed Income Fund,
Stable Income Fund. To manage its exposure to different types of investments, a
Fund may enter into interest rate, currency and mortgage (or other asset) swap
agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate swap agreement, one party agrees to make
regular payments equal to a floating interest rate on a specified amount (the
"notional principal amount") in return for payments equal to a fixed interest
rate on the same amount for a specified period. If a swap agreement provides for
payment in different currencies, the parties may also agree to exchange the
notional principal amount. Mortgage swap agreements are similar to interest rate
swap agreements, except that the notional principal amount is tied to a
reference pool of mortgages. In a cap or floor, one party agrees, usually in
return for a fee, to make payments under particular circumstances. For example,
the purchaser of an interest rate cap has the right to receive payments to the
extent a specified interest rate exceeds an agreed upon level; the purchaser of
an interest rate floor has the right to receive payments to the extent a
specified interest rate falls below an agreed upon level. A collar entitles the
purchaser to receive payments to the extent a specified interest rate falls
outside an agreed upon range.

Swap agreements may involve leverage and may be highly volatile; depending on
how they are used, they may have a considerable impact on the Fund's
performance. See "Appendix A - Techniques Involving Leverage." Swap agreements
involve risks depending upon the counterparties creditworthiness and ability to
perform as well as the Fund's ability to terminate its swap agreements or reduce
its exposure through offsetting transactions. The Adviser monitors the
creditworthiness of counterparties to these transactions and intends to enter
into these transactions only when they believe the counterparties present
minimal credit risks and the income expected to be earned from the transaction
justifies the attendant risks.

Short Sales

Intermediate U.S. Government Fund. The Fund is authorized to make short sales of
securities it owns or has the right to acquire at no added cost through
conversion or exchange of other securities it owns (referred to as short sales
"against the box") and to make short sales of securities which it does not own
or have the right to acquire. A short sale that is not made "against the box" is
a transaction in which a Fund sells a security it does not own in anticipation

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of a decline in the market price for the security. When the Fund makes a short
sale, the proceeds it receives are retained by the broker until the Fund
replaces the borrowed security. In order to deliver the security to the buyer,
the Fund must arrange through a broker to borrow the security and, in so doing,
the Fund becomes obligated to replace the security borrowed at its market price
at the time of replacement, whatever that price may be.

Short sales that are not made "against the box" create opportunities to increase
the Fund's return but, at the same time, involve special risk considerations and
may be considered a speculative technique. Since the Fund in effect profits from
a decline in the price of the securities sold short without the need to invest
the full purchase price of the securities on the date of the short sale, the
Fund's net asset value per share, will tend to increase more when the securities
it has sold short decrease in value, and to decrease more when the securities it
has sold short increase in value, than would otherwise be the case if it had not
engaged in such short sales. Short sales theoretically involve unlimited loss
potential, as the market price of securities sold short may continuously
increase, although a Fund may mitigate such losses by replacing the securities
sold short before the market price has increased significantly. Under adverse
market conditions a Fund might have difficulty purchasing securities to meet its
short sale delivery obligations and might have to sell portfolio securities to
raise the capital necessary to meet its short sale obligations at a time when
fundamental investment considerations would not favor those sales. See "Appendix
A - Techniques Involving Leverage."

If the Fund makes a short sale "against the box", the Fund would not immediately
deliver the securities sold and would not receive the proceeds from the sale.
The seller is said to have a short position in the securities sold until it
delivers the securities sold, at which time it receives the proceeds of the
sale. The Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Adviser believes that the price
of a security may decline, causing a decline in the value of a security owned by
the Fund or a security convertible into or exchangeable for such security. In
such case, any future losses in the Fund's long position would be reduced by an
offsetting future gain in the short position. The Fund's ability to enter into
short sales transactions is limited by certain tax requirements. See "Dividends,
Distributions and Taxes" in the SAI.

Mortgage-Backed Securities

Fixed Income Funds, Balanced Funds. Mortgage-backed securities represent an
interest in a pool of mortgages originated by lenders such as commercial banks,
savings associations and mortgage bankers and brokers. Mortgage-backed
securities may be issued by governmental or government-related entities or by
non-governmental entities such as special purpose trusts created by banks,
savings associations, private mortgage insurance companies or mortgage bankers.

Interests in mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or on specified call dates. In
contrast, mortgage-backed securities provide monthly payments which consist of
interest and, in most cases, principal. In effect, these payments are a "pass-
through" of the monthly payments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of the
securities or a mortgage loan servicer. Additional payments to holders of these
securities are caused by prepayments resulting from the sale or foreclosure of
the underlying property or refinancing of the underlying loans.

Underlying Mortgages. Pools of mortgages consist of whole mortgage loans or
participations in mortgage loans. The majority of these loans are made to
purchasers of 1-4 family homes, but may be made to purchasers of mobile homes or
other real estate interests. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools. For
example, in addition to fixed-rate, fixed-term mortgages, the Fund may purchase
pools of variable rate mortgages, growing equity mortgages, graduated payment
mortgages and other types. Mortgage servicers impose qualification standards for
local lending institutions which originate mortgages for the pools as well as
credit standards and underwriting criteria for individual mortgages included in
the pools. In addition, many mortgages included in pools are insured through
private mortgage insurance companies.

Liquidity and Marketability. The market for mortgage-backed securities has
expanded considerably in recent years. The size of the primary issuance market
and active participation in the secondary market by securities dealers and many
types of investors make government and government-related pass-through pools
highly liquid. The recently

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introduced private conventional pools of mortgages (pooled by commercial
banks, savings and loan institutions and others, with no relationship with
government and government-related entities) have also achieved broad market
acceptance and consequently an active secondary market has emerged. However,
the market for conventional pools is smaller and less liquid than the market
for government and government-related mortgage pools.

Average Life and Prepayments. The average life of a pass-through pool varies
with the maturities of the underlying mortgage instruments. In addition, a
pool's terms may be shortened by unscheduled or early payments of principal and
interest on the underlying mortgages. Prepayments with respect to securities
during times of declining interest rates will tend to lower the return of a Fund
and may even result in losses to a Fund if the securities were acquired at a
premium. The occurrence of mortgage prepayments is affected by various factors
including the level of interest rates, general economic conditions, the location
and age of the mortgage and other social and demographic conditions.

As prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. For pools of fixed-
rate 30-year mortgages, common industry practice is to assume that prepayments
will result in a 12-year average life. Pools of mortgages with other maturities
or different characteristics will have varying assumptions for average life. The
assumed average life of pools of mortgages having terms of less than 30 years is
less than 12 years, but typically not less than 5 years.

Yield Calculations. Yields on pass-through securities are typically quoted by
investment dealers based on the maturity of the underlying instruments and the
associated average life assumption. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgages. Conversely, in periods of rising rates, the rate of
prepayment tends to decrease, thereby lengthening the actual average life of the
pool. Actual prepayment experience may cause the yield to differ from the
assumed average life yield. Reinvestment of prepayments may occur at higher or
lower interest rates than the original investment, thus affecting the yield of a
Fund.

Government and Government-Related Guarantors. The principal government guarantor
of mortgage-backed securities is the Government National Mortgage Association
("GNMA"), a wholly-owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA and backed by pools of FHA-insured or VA-guaranteed mortgages.

The Federal National Mortgage Association ("FNMA") is a government-sponsored
corporation owned entirely by private stockholders that is subject to general
regulation by the Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller-servicers. The Federal Home
Loan Mortgage Corporation ("FHLMC") is a corporate instrumentality of the United
States Government that was created by Congress in 1970 for the purpose of
increasing the availability of mortgage credit for residential housing. Its
stock is owned by the twelve Federal Home Loan Banks. FHLMC issues Participation
Certificates ("PCs") which represent interests in mortgages from FHLMC's
national portfolio. FNMA and FHLMC each guarantee the payment of principal and
interest on the securities they issue. These securities, however, are not backed
by the full faith and credit of the United States Government.

Privately Issued Mortgage-backed securities. Mortgage-backed securities offered
by private issuers include pass-through securities comprised of pools of
conventional mortgage loans; mortgage-backed bonds which are considered to be
debt obligations of the institution issuing the bonds and which are
collateralized by mortgage loans; and collateralized mortgage obligations.

Mortgage-backed securities issued by non-governmental issuers may offer a higher
rate of interest than securities issued by government issuers because of the
absence of direct or indirect government guarantees of payment. Many non-
governmental issuers or servicers of mortgage-backed securities, however,
guarantee timely payment of interest and principal on such securities. Timely
payment of interest and principal may also be supported by various forms of
insurance, including individual loan, title, pool and hazard policies. There can
be no assurance that the private issuers or insurers will be able to meet their
obligations under the relevant guarantees and insurance policies.

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Adjustable Rate Mortgage-backed securities. Adjustable rate mortgage-backed
securities ("ARMs") are securities that have interest rates that are reset at
periodic intervals, usually by reference to some interest rate index or market
interest rate. Although the rate adjustment feature may act as a buffer to
reduce sharp changes in the value of adjustable rate securities, these
securities are still subject to changes in value based on changes in market
interest rates or changes in the issuer's creditworthiness. Because of the
resetting of interest rates, adjustable rate securities are less likely than
non-adjustable rate securities of comparable quality and maturity to increase
significantly in value when market interest rates fall. Also, most adjustable
rate securities (or the underlying mortgages) are subject to caps or floors.
"Caps" limit the maximum amount by which the interest rate paid by the borrower
may change at each reset date or over the life of the loan and, accordingly,
fluctuation in interest rates above these levels could cause such mortgage
securities to "cap out" and to behave more like long-term, fixed-rate debt
securities.

ARMs may have less risk of a decline in value during periods of rapidly rising
rates, but they may also have less potential for capital appreciation than other
debt securities of comparable maturities due to the periodic adjustment of the
interest rate on the underlying mortgages and due to the likelihood of increased
prepayments of mortgages as interest rates decline. Furthermore, during periods
of declining interest rates, income to a Fund will decrease as the coupon rate
resets to reflect the decline in interest rates. During periods of rising
interest rates, changes in the coupon rates of the mortgages underlying a Fund's
ARMs may lag behind changes in market interest rates. This may result in a
slightly lower net value until the interest rate resets to market rates. Thus,
investors could suffer some principal loss if they sold Fund Shares before the
interest rates on the underlying mortgages were adjusted to reflect current
market rates.

Collateralized Mortgage Obligations. Collateralized Mortgage Obligations
("CMOs") are debt obligations that are collateralized by mortgages or mortgage
pass-through securities issued by GNMA, FHLMC or FNMA or by pools of
conventional mortgages ("Mortgage Assets"). CMOs may be privately issued or U.S.
Government Securities. Payments of principal and interest on the Mortgage Assets
are passed through to the holders of the CMOs on the same schedule as they are
received, although, certain classes (often referred to as tranches) of CMOs have
priority over other classes with respect to the receipt of payments. Multi-class
mortgage pass-through securities are interests in trusts that hold Mortgage
Assets and that have multiple classes similar to those of CMOs. Unless the
context indicates otherwise, references to CMOs include multi-class mortgage
pass-through securities. Payments of principal of and interest on the underlying
Mortgage Assets (and in the case of CMOs, any reinvestment income thereon)
provide funds to pay debt service on the CMOs or to make scheduled distributions
on the multi-class mortgage pass-through securities. Parallel pay CMOs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating the
stated maturity date or final distribution date of each class, which, as with
other CMO structures, must be retired by its stated maturity date or final
distribution date but may be retired earlier. Planned amortization class
mortgage-based securities ("PAC Bonds") are a form of parallel pay CMO. PAC
Bonds are designed to provide relatively predictable payments of principal
provided that, among other things, the actual prepayment experience on the
underlying mortgage loans falls within a contemplated range. If the actual
prepayment experience on the underlying mortgage loans is at a rate faster or
slower than the contemplated range, or if deviations from other assumptions
occur, principal payments on a PAC Bond may be greater or smaller than
predicted. The magnitude of the contemplated range varies from one PAC Bond to
another; a narrower range increases the risk that prepayments will be greater or
smaller than contemplated. CMOs may have complicated structures and generally
involve more risks than simpler forms of mortgage-backed securities.

The final tranche of a CMO may be structured as an accrual bond (sometimes
referred to as a Z-tranche). Holders of accrual bonds receive no cash payments
for an extended period of time. During the time that earlier tranches are
outstanding, accrual bonds receive accrued interest which is a credit for
periodic interest payments that increases the face amount of the security at a
compounded rate, but is not paid to the bond holder. After all previous tranches
are retired, accrual bond holders start receiving cash payments that include
both principal and continuing interest. The market value of accrual bonds can
fluctuate widely and their average life depends on the other aspects of the CMO
offering. Interest on accrual bonds is taxable when accrued even though the
holders receive no accrual payment. The Funds distribute all of their net
investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the Adviser would not have chosen
to sell such securities and which may result in a taxable gain or loss.

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Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are
classes of mortgage-backed securities that receive different proportions of the
interest and principal distributions from the underlying Mortgage Assets. They
may be may be privately issued or U.S. Government Securities. In the most
extreme case, one class will be entitled to receive all or a portion of the
interest but none of the principal from the Mortgage Assets (the interest-only
or "IO" class) and one class will be entitled to receive all or a portion of the
principal, but none of the interest (the "PO" class). Currently, no fund may
purchase IOs or POs.

Asset-Backed Securities

Balanced Funds, Intermediate U.S. Government Fund, Managed Fixed Income Fund.
Asset-backed securities represent direct or indirect participations in, or are
secured by and payable from, assets other than mortgage-backed assets such as
motor vehicle installment sales contracts, installment loan contracts, leases of
various types of real and personal property and receivables from revolving
credit (credit card) agreements. No Fund may invest more than 10 percent of its
net assets in asset-backed securities that are backed by a particular type of
credit, for instance, credit card receivables. Asset-backed securities,
including adjustable rate asset-backed securities, have yield characteristics
similar to those of mortgage-backed securities and, accordingly, are subject to
many of the same risks.

Assets are securitized through the use of trusts and special purpose
corporations that issue securities that are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of
principal and interest may be guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution. Asset-
backed securities do not always have the benefit of a security interest in
collateral comparable to the security interests associated with mortgage-backed
securities. As a result, the risk that recovery on repossessed collateral might
be unavailable or inadequate to support payments on asset-backed securities is
greater for asset-backed securities than for mortgage-backed securities. In
addition, because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of an interest rate or economic cycle has not been
tested.

Foreign Exchange Contracts and Foreign Currency Forward Contracts

Small Company Growth Fund, Large Company Growth Fund, International Fund,
Balanced Funds, Managed Fixed Income Fund. Changes in foreign currency exchange
rates will affect the U.S. dollar values of securities denominated in currencies
other than the U.S. dollar. The rate of exchange between the U.S. dollar and
other currencies fluctuates in response to forces of supply and demand in the
foreign exchange markets. These forces are affected by the international balance
of payments and other economic and financial conditions, government
intervention, speculation and other factors. When investing in foreign
securities a Fund usually effects currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign exchange market.
The Fund incurs foreign exchange expenses in converting assets from one currency
to another.

A Fund may enter into foreign currency forward contracts or currency futures or
options contracts for the purchase or sale of foreign currency to "lock in" the
U.S. dollar price of the securities denominated in a foreign currency or the
U.S. dollar value of interest and dividends to be paid on such securities, or to
hedge against the possibility that the currency of a foreign country in which a
Fund has investments may suffer a decline against the U.S. dollar. The Funds
have no present intention to enter into currency futures or options contracts
but may do so in the future. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. This method of attempting to hedge the
value of a Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. Although the strategy of engaging in foreign currency transactions
could reduce the risk of loss due to a decline in the value of the hedged
currency, it could also limit the potential gain from an increase in the value
of the currency. The Funds do not intend to maintain a net exposure to such
contracts where the fulfillment of the Fund's obligations under such contracts
would obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities or other assets denominated in that
currency. A Fund will not enter into these contracts for speculative purposes
and will not enter into non-hedging currency contracts. These contracts involve
a risk of loss if the Adviser fails to predict currency values correctly.

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Futures Contracts and Options

Balanced Funds, Intermediate U.S. Government Fund, Managed Fixed Income Fund,
Stable Income Fund, Index Fund. A Fund may seek to enhance its return through
the writing (selling) and purchasing of exchange-traded and over-the-counter
options on fixed income securities or indices. A Fund may also to attempt to
hedge against a decline in the value of securities owned by it or an increase in
the price of securities which it plans to purchase through the use of those
options and the purchase and sale of interest rate futures contracts and options
on those futures contracts. A Fund may only write options that are covered. An
option is covered if, so long as the Fund is obligated under the option, it owns
an offsetting position in the underlying security or futures contract or
maintains cash, U.S. Government Securities or other liquid, high-grade debt
securities in a segregated account with a value at all times sufficient to cover
the Fund's obligation under the option. Certain futures strategies employed by a
Balanced Fund in making temporary allocations may not be deemed to be for bona
fide hedging purposes, as defined by the Commodity Futures Trading Commission. A
Fund may enter into these futures contracts only if the aggregate of initial
margin deposits for open futures contract positions does not exceed 5 percent of
the Fund's total assets.

Risk Considerations. The Fund's use of options and futures contracts subjects
the Fund to certain investment risks and transaction costs to which it might not
otherwise be subject. These risks include: (1) dependence on the Adviser's
ability to predict movements in the prices of individual securities and
fluctuations in the general securities markets; (2) imperfect correlations
between movements in the prices of options or futures contracts and movements in
the price of the securities hedged or used for cover which may cause a given
hedge not to achieve its objective; (3) the fact that the skills and techniques
needed to trade these instruments are different from those needed to select the
other securities in which the Fund invests; (4) lack of assurance that a liquid
secondary market will exist for any particular instrument at any particular
time, which, among other things, may hinder a Fund's ability to limit exposures
by closing its positions; (5) the possible need to defer closing out of certain
options, futures contracts and related options to avoid adverse tax
consequences; and (6) the potential for unlimited loss when investing in futures
contracts or writing options for which an offsetting position is not held.

Other risks include the inability of the Fund, as the writer of covered call
options, to benefit from any appreciation of the underlying securities above the
exercise price and the possible loss of the entire premium paid for options
purchased by the Fund. In addition, the futures exchanges may limit the amount
of fluctuation permitted in certain futures contract prices during a single
trading day. A Fund may be forced, therefore, to liquidate or close out a
futures contract position at a disadvantageous price.

There can be no assurance that a liquid market will exist at a time when a Fund
seeks to close out a futures position or that a counterparty in an over-the-
counter option transaction will be able to perform its obligations. There are a
limited number of options on interest rate futures contracts and exchange traded
options contracts on fixed income securities. Accordingly, hedging transactions
involving these instruments may entail "cross-hedging." As an example, a Fund
may wish to hedge existing holdings of mortgage-backed securities, but no listed
options may exist on those securities. In that event, the Adviser may attempt to
hedge the Fund's securities by the use of options with respect to similar fixed
income securities. The Fund may use various futures contracts that are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market in those contracts
will develop or continue to exist.

Limitations. Except for the futures contracts strategies of the Balanced Funds
used for making temporary allocations among fixed-income and equity securities,
the Funds have no current intention of investing in futures contracts and
options thereon for purposes other than hedging. No Fund may purchase any call
or put option on a futures contract if the premiums associated with all such
options held by the Fund would exceed 5 percent of the Fund's total assets as of
the date the option is purchased. No Fund may sell a put option if the exercise
value of all put options written by the Fund would exceed 50 percent of the
Fund's total assets or sell a call option if the exercise value of all call
options written by the Fund would exceed the value of the Fund's assets. In
addition, the current market value of all open futures positions held by a Fund
will not exceed 50 percent of its total assets.

Options on Securities. A call option is a contract pursuant to which the
purchaser of the call option, in return for a premium paid, has the right to buy
the security underlying the option at a specified exercise price at any time
during the term of the option. The writer of the call option, who receives the
premium, has the obligation upon exercise of

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the option to deliver the underlying security against payment of the exercise
price during the option period. A put option gives its purchaser, in return
for a premium, the right to sell the underlying security at a specified price
during the term of the option. The writer of the put, who receives the
premium, has the obligation to buy the underlying security, upon exercise at
the exercise price during the option period. The amount of premium received
or paid is based upon certain factors, including the market price of the
underlying security or index, the relationship of the exercise price to the
market price, the historical price volatility of the underlying security or
index, the option period, supply and demand and interest rates.

Options on Stock Indexes. A stock index assigns relative values to the stock
included in the index, and the index fluctuates with changes in the market
values of the stocks included in the index. Stock index options operate in the
same way as the more traditional stock options except that exercises of stock
index options are effected with cash payments and do not involve delivery of
securities. Thus, upon exercise of stock index options, the purchaser will
realize and the writer will pay an amount based on the differences between the
exercise price and the closing price of the stock index.

Index Futures Contracts. Bond and stock index futures contracts are bilateral
agreements pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the bond or stock index value at the close of trading of the contract and the
price at which the futures contract is originally struck. No physical delivery
of the securities comprising the index is made. Generally, these futures
contracts are closed out prior to the expiration date of the contract.

Options on Futures Contracts. Options on futures contracts are similar to stock
options except that an option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract rather than to purchase or sell stock, at a specified exercise price at
any time during the period of the option. Upon exercise of the option, the
delivery of the futures position to the holder of the option will be accompanied
by transfer to the holder of an accumulated balance representing the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
future.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF FUND SHARES,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT
LAWFULLY BE MADE.

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DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
INCOME EQUITY FUND
INTERNATIONAL FUND

A SHARES
B SHARES

Account Information and
Shareholder Servicing:
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 or 800-338-1348

PROSPECTUS
March 1, 1996

This prospectus offers A Shares and B Shares of Diversified Equity Fund, Growth
Equity Fund, Income Equity Fund and International Fund (each a "Fund" and
collectively the "Funds"). The Funds are separate diversified equity portfolios
of Norwest Advantage Funds (the "Trust"), which is a registered open-end
management investment company.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission (the "SEC") a Statement of
Additional Information ("SAI") dated March 1, 1996, as amended from time to
time, which contains more detailed information about the Trust and each of the
Funds and is incorporated into this Prospectus by reference. An investor may
obtain a copy of the SAI without charge by contacting the Trust's distributor,
Forum Financial Services, Inc., at Two Portland Square, Portland, Maine 04101 or
by calling 207-879-1900. Investors should read this Prospectus and retain it for
future reference.

International Fund seeks to achieve its investment objective by investing all of
its investable assets in International Portfolio (the "Portfolio"), a separate
portfolio of a registered open-end management investment company with an
identical investment objective. See "Prospectus Summary" and "Other Information
- - Core Trust Structure."

NORWEST ADVANTAGE FUNDS IS A FAMILY OF OPEN-END INVESTMENT COMPANIES COMMONLY
KNOWN AS MUTUAL FUNDS. THE SHARES OF MUTUAL FUNDS ARE NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY OTHER
GOVERNMENT AGENCY. THE SHARES ALSO ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF,
OR ENDORSED OR GUARANTEED BY NORWEST BANK MINNESOTA, N.A. OR ANY OTHER BANK OR
BANK AFFILIATE.

AN INVESTMENT IN SHARES OF ANY MUTUAL FUND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

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1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

INVESTMENT OBJECTIVES AND POLICIES

DIVERSIFIED EQUITY FUND seeks long-term capital appreciation while moderating
annual return volatility by diversifying its investments in accordance with five
different equity investment styles.

GROWTH EQUITY FUND seeks a high level of long-term capital appreciation while
moderating annual return volatility by diversifying its investments in
accordance with three different investment styles. The Fund assumes a higher
level of risk than Diversified Equity Fund in order to seek increased returns.

INCOME EQUITY FUND seeks long-term capital appreciation in line with that of the
overall equity securities markets and to provide above average dividend income.

INTERNATIONAL FUND seeks long-term capital appreciation. This objective is
pursued by investing, directly or indirectly, in high quality companies based
outside the United States. The Fund currently seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio, a series
of Core Trust (Delaware) ("Core Trust"), itself a registered open-end management
investment company. Accordingly, the investment experience of the Fund will
correspond directly with the investment experience of the Portfolio. See "Other
Information - Core Trust Structure." The Portfolio has the same investment
objective and policies as the Fund.

INVESTMENT ADVISERS
The Funds' investment adviser (the "Adviser") is Norwest Investment Management,
a part of Norwest Bank Minnesota, N.A. ("Norwest"). The Adviser provides
investment advice to various institutions, pension plans and other accounts and,
as of December 31, 1995, managed assets totaling approximately $22.7 billion..
See "Management - Investment Advisory Services." The Adviser makes investment
decisions for the Funds and continuously reviews, supervises and administers
each Fund's investment program.

The Adviser may, in the process of providing investment advice to the Funds,
utilize different equity investment styles employed by other funds of the Trust
(Index Fund, Large Company Growth Fund, Small Company Stock Fund, Small Company
Growth Fund and International Fund). These Funds are offered by separate
prospectus to fiduciary, agency and custodial clients of bank trust departments,
trust companies and their affiliates (See "Shares of the Funds"). The use of
different equity investment styles is intended to reduce the risk associated
with the use of a single style, which may move in and out of favor during the
course of a market cycle. The percentage of a Fund's assets invested using a
specified investment style may be changed at any time by the Adviser in response
to market or other conditions. For a further description of each Fund's
investments and investment techniques and additional risk considerations
associated with those investments, see the discussion below, "Investment
Objectives and Policies - Investment Styles", "Additional Investment Policies
and Risk Considerations" and the SAI.

INTERNATIONAL FUND. As International Fund invests all of its assets in the
Portfolio, the Fund does not actively employ the Adviser to manage an investment
portfolio. Rather, all investment advisory services are conducted for the
Portfolio by Schroder Capital Management International Inc. ("Schroder"), the
Portfolio's investment adviser. Schroder, a registered investment adviser under
the Investment Advisers Act of 1940, specializes in providing international
investment advice to various clients. See "Management - Investment Advisory
Services."

Subject to the Adviser's general oversight, Crestone Capital Management, Inc.
("Crestone"), a subsidiary of Norwest, acts as investment subadviser to Small
Company Stock Fund. Subject to the Adviser's general oversight, Schroder acts as
investment subadviser to Diversified Equity Fund and Growth Equity Fund
(Crestone, Schroder and the Adviser, collectively, are sometimes referred to as
the "Advisers").

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<PAGE>

Norwest serves as the Trust's transfer agent, dividend disbursing agent and
custodian. See "Management - Shareholder Servicing and Custody."

FUND MANAGEMENT
The manager of the Trust and distributor of its shares is Forum Financial
Services, Inc. ("Forum"), a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. Norwest provides certain administrative
services to International Fund. See "Management - Management and Distribution
Services."

SHARES OF THE FUNDS
Each Fund currently offers three separate classes of shares: A class ("A
Shares"), B class ("B Shares") and I class ("I Shares"). A Shares and B Shares
are sold through this Prospectus and are collectively referred to as the
"Shares."

A SHARES. A Shares are offered at a price equal to their net asset value
plus a sales charge imposed at the time of purchase or, in some cases, a
contingent deferred sales charge imposed on redemptions made within two years of
purchase.

B SHARES. B Shares are offered at a price equal to their net asset value
plus a contingent deferred sales charge imposed on most redemptions made within
six years of purchase. B Shares pay a distribution services fee at an annual
rate of up to 0.75%, and a maintenance fee in an amount equal to 0.25%, of the B
Shares' average daily net assets. B Shares automatically convert to A Shares of
the same Fund seven years after the end of the calendar month in which the B
Shares were originally purchased.

The choice of A Shares or B Shares permits each investor to purchase those
shares that the investor believes to be most beneficial given the amount
purchased, the length of time the investor expects to hold the shares and other
circumstances. A Shares will normally be more beneficial to the investor who
qualifies for reduced initial sales charges as described below. See "How to Buy
Shares - Alternative Distribution Arrangements."

I Shares are offered by a separate prospectus to fiduciary, agency and custodial
clients of bank trust departments, trust companies and their affiliates. Shares
of each class of a Fund have identical interests in the investment portfolio of
the Fund and, with certain exceptions, have the same rights. See "Other
Information - The Trust and Its Shares."

HOW TO BUY AND SELL SHARES
Shares may be purchased or redeemed by mail, by bank wire and through an
investor's broker-dealer or other financial institution. The minimum initial
investment in Shares is $1,000. The minimum subsequent investment is $100. See
"How to Buy Shares" and "How to Sell Shares."

EXCHANGES
Shareholders may exchange A Shares and B Shares for A Shares and B Shares,
respectively, of certain other funds of the Trust. In addition, A Shares may be
exchanged for investor class shares of certain money market funds of the Trust
and B Shares may be exchanged for exchange class shares of Ready Cash Investment
Fund of the Trust. See "Other Shareholder Services - Exchanges."

SHAREHOLDER FEATURES
Each Fund offers an Automatic Investment Plan, Automatic Withdrawal Plan and
Directed Dividend Option. Purchases of A Shares may be subject to Rights of
Accumulation, Cumulative Quantity Discounts or a Reinstatement Privilege. See
"Other Shareholder Services" and "How to Buy Shares - Alternative Distribution
Arrangements."

DIVIDENDS
Dividends of net investment income are declared and paid quarterly. Each Fund's
net capital gain, if any, is distributed annually. All dividends and
distributions are reinvested in additional Fund shares unless the shareholder
elects to have them paid in cash. See "Dividends and Tax Matters."

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS
There can be no assurance that any Fund will achieve its investment objective,
and a Fund's net asset value and total return will fluctuate based upon changes
in the value of its portfolio securities. Upon redemption, an investment in a

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<PAGE>

Fund may be worth more or less than its original value. The policy of investing
in smaller companies that is employed by certain Funds entails certain risks in
addition to those normally associated with investments in equity securities.

An investment in any Fund involves certain risks, depending on the types of
investments made and the types of investment techniques employed. All
investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as investments in
issuers with limited market capitalization. The use of leverage by certain Funds
through borrowings, securities lending and other investment techniques involves
additional risks. See "Investment Objectives and Policies - Additional
Investment Policies and Risk Considerations."

International Fund's policy of investing directly or indirectly in foreign
issuers entails certain risks in addition to those normally associated with
investments in equity securities. See "Investment Objectives and Policies -
International Fund - Foreign Investment Considerations and Risk Factors." By
investing solely in the Portfolio, International Fund may achieve certain
efficiencies and economies of scale. Nonetheless, this investment could also
have potential adverse effects on the Fund. Investors in the Fund should
consider these risks, as described under "Other Information - Core Trust
Structure."

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<PAGE>

EXPENSE INFORMATION

The purpose of the following tables is to assist investors in understanding the
expenses that an investor in Shares of a Fund will bear directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES(1)
(applicable to each Fund)
A Shares B Shares
-------- --------
Maximum sales charge imposed on
purchases (as a percentage of public
offering price) 4.5% Zero

Maximum deferred sales charge (as a
percentage of the lesser of original
purchase price or redemption proceeds) Zero(2) 4.0%

Exchange Fee Zero Zero

ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)

Diversified Equity Growth Equity Income Equity
Fund Fund Fund
----------------- ------------------ ------------------
A Shares B Shares A Shares B Shares A Shares B Shares
-------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees 0.65% 0.65% 0.90% 0.90% 0.65% 0.65%
Rule 12b-1 Fees(4) None 0.75% None 0.75% None 0.75%
Other Expenses 0.30% 0.30% 0.35% 0.36% 0.35% 0.35%
Total Operating Expenses 1.00% 1.75% 1.25% 2.01% 1.00% 1.75%

International Fund
------------------
A Shares B Shares
-------- --------
Investment Advisory Fees 0.45% 0.45%
Rule 12b-1 Fees(4) None 0.75%
Other Expenses 1.05% 1.05%
Total Operating Expenses 1.50% 2.25%

</TABLE>

(1) Sales charge waivers and reduced sales charge plans are available for A
Shares. The maximum 3.0% contingent deferred sales charge on B Shares applies
to redemptions during the first year after purchase; the charge declines
thereafter, becoming 3.0% during the second and third years, 2.0% during the
fourth and fifth years, 1.0% during the sixth year and reaches zero the
following year. See "How to Buy Shares - Alternative Distribution
Arrangements."

(2) If A Shares purchased without an initial sales charge (purchases of
$1,000,000 or more) are redeemed within two years after purchase, a contingent
deferred sales charge of up to 1.0% will be applied to the redemption. See "How
to Buy Shares - Alternative Distribution Arrangements."

(3) For a further description of the various expenses associated with Shares,
see "Management." Expenses associated with the I Shares of a Fund differ from
those of Shares listed in the table shown above. Except with respect to Income
Equity Fund's Investment Advisory Fee, the amounts of estimated expenses for
Diversified Equity Fund, Growth Equity Fund, Income Equity Fund and
International Fund are based on amounts incurred during the Funds' first fiscal
year ended October 31, 1995. The table reflects an increase in Income Equity
Fund's advisory fee from 0.50% which is expected to be approved by that Fund's
shareholders at a meeting to be held on ____________.

With respect to A Shares, absent estimated expense reimbursements and fee
waivers the expenses of Diversified Equity Fund, Growth Equity Fund and Income
Equity Fund are expected to be: Other Expenses, 0.35%, 0.42%, and 0.59%,
respectively; and Total Operating Expenses, 1.07%, 1.32%, and 1.24%,
respectively. Absent actual expense

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<PAGE>

reimbursements and fee waivers, the Other Expenses and Total Operating
Expenses of A Shares of International Fund would have been: 1.11% and 1.56%,
respectively. With respect to B Shares, absent estimated expense
reimbursements and fee waivers the expenses of Diversified Equity Fund,
Growth Equity Fund, and Income Equity Fund are expected to be: Other
Expenses, 0.35%, 0.42%, and 0.59%, respectively; and Total Operating
Expenses, 2.07%, 2.32%, and 2.24%, respectively. Absent actual expense
reimbursements and fee waivers, the Other Expenses and Total Operating
Expenses of A Shares of International Fund would have been: 1.11% and 2.56%,
respectively.

(4) Absent waivers, the Rule 12b-1 Fees would be 1.00% for B Shares of each
Fund. Long-term shareholders of B Shares may pay aggregate sales charges
totaling more than the economic equivalent of the maximum front-end sales
charges permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of expenses
that an investor would pay, assuming a $1,000 investment in a Fund's Shares, a 5
% annual return and reinvestment of all dividends and distributions:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Diversified Equity Fund
A Shares 55 75 98 162
B Shares
Assuming redemption at the end of the period 58 85 115 -
Assuming no redemption 18 55 95 -

Growth Equity Fund
A Shares 57 83 111 189
B Shares
Assuming redemption at the end of the period 60 93 128 -
Assuming no redemption 20 63 108 -

Income Equity Fund
A Shares 55 75 98 162
B Shares
Assuming redemption at the end of the period 56 80 107 -
Assuming no redemption 16 50 87 -

International Fund
A Shares 60 90 123 216
B Shares
Assuming redemption at the end of the period 63 100 140 -
Assuming no redemption 23 70 120 -

</TABLE>

The example is based on the expenses listed in the expense table. The 5% annual
return is not predictive of and does not represent the Funds' projected returns;
rather, it is required by government regulation. The example assumes deduction
of the maximum initial sales charge for A Shares, deduction of the contingent
deferred sales charge for B Shares applicable to a redemption at the end of the
period and the conversion of B Shares to A Shares at the end of seven years.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN INDICATED.

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<PAGE>

2. FINANCIAL HIGHLIGHTS

The following table provides financial highlights for International Fund. This
information represents selected data for a single outstanding A Share of that
Fund for the period shown. Information for the period ended October 31, 1995
was audited by KPMG Peat Marwick LLP, independent auditors. The Fund's
financial statements for the fiscal period ended October 31, 1995 and
independent auditors' report thereon are contained in the Fund's Annual Report
and are incorporated by reference into the SAI. Further information about each
Fund's performance is contained in the Annual Report, which may be obtained from
the Trust without charge. As the A Shares and B Shares of the other Funds had
not yet commenced operations as of the date of this Prospectus, no financial
highlights are presented with respect to those Funds and classes.

Period Ended
October 31
1995(a)
-----------
Beginning Net Asset Value per Share $ 16.50
Net Investment Income (Loss) 0.01
Net Realized and Unrealized
Gain (Loss) on Investments,
Foreign Currency Transactions
and Futures Transactions 1.46
Dividends from Net
Investment Income -.-
Distributions from Net
Realized Gains -.-
-----------
Ending Net Asset Value per Share $ 17.97
-----------
-----------
Ratios to Average Net Assets:
Expenses (b) 1.32%(c)(d)
Net Investment Income (Loss) 0.26%(c)
Total Return 8.91%
Portfolio Turnover Rate N/A
Net Assets at the End of
Period/Year (000's Omitted) $216

(a) The Fund commenced operations on November 11, 1994 and the offering of A
Shares and B Shares on April 1, 1995.

Expenses 20.95%(b)(c)

(d) Includes expenses allocated from International Portfolio of Core Trust of
0.80%, net of waivers of 0.10%.

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<PAGE>

3. INVESTMENT OBJECTIVES AND POLICIES

To achieve their investment objectives, the funds invest primarily in common
stocks and other equity securities. The domestic securities in which a Fund
invests are generally listed on a securities exchange or included in the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System but may be traded in the over-the-counter securities market. Under
normal circumstances, each of the Funds will invest substantially all of its
assets, but not less than 65 percent of its net assets, in equity securities.
Diversified Equity Fund and Growth Equity Fund each invest specified percentages
of their assets in accordance with different equity investment styles.

INVESTMENTS IN CORE TRUST. International Fund currently invests all of its
assets in International Portfolio, a portfolio of Core Trust. In addition, The
Trust has received an exemptive order from the SEC under which Diversified
Equity Fund and Growth Equity Fund (the "Blended Funds") currently invest the
portions of their assets that are managed in a small company, an index and an
international investment style, respectively, in Small Company Portfolio, Index
Portfolio, and International Portfolio II (the "Blended Portfolios"). The
Blended Portfolios are each separate portfolios of Core Trust, a registered
investment company organized as a business trust under Delaware law.. By pooling
their assets in the Blended Portfolios, the Funds may be able to achieve
benefits that they could not achieve by investing directly in securities. See
"Other Information - Core Trust Structure." The conditions of the Trust's
exemptive order do not permit a Fund to invest all of its assets in a Blended
Portfolio. Thus, International Fund does not invest in International Portfolio
II.

The investment objective of each of International Portfolio and International
Portfolio II is the same as International Fund: to provide long-term capital
appreciation by investing directly or indirectly in high-quality companies based
outside the United States. The investment objective of Index Portfolio is to
duplicate the return of the Standard & Poor's 500 Composite Stock Price Index.
The investment objective of Small Company Portfolio is to provide long-term
capital appreciation by investing primarily in small and medium-sized domestic
companies that are either growing rapidly or completing a period of significant
change. This Portfolio invests its assets in three different small company
investment policies described below and, in the future, may invest its assets in
accordance with additional small company investment styles.

DIVERSIFIED EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek long-term
capital appreciation while moderating annual return volatility by diversifying
its investments in accordance with five different equity investment styles.

INVESTMENT POLICIES. Diversified Equity Fund is designed to minimize the
volatility and risk of investing in equity securities. The Fund's portfolio
combines five different equity investment styles - the Large Company Growth
style, the International style, the Income Equity style, the Index style and the
Small Company style. The Small Company style reflects a mix of three additional
investment styles: the Small Company Stock style, the Small Company Growth style
and the Small Company Value investment style. The Fund utilizes different equity
investment styles in order to reduce the risk of price and return volatility
associated with reliance on a single investment style. Because Diversified
Equity Fund blends five equity investment styles, it is anticipated that its
price and return volatility will be less than that of Growth Equity Fund, which
blends three equity investment styles. The Fund will generally invest the
following percentages of its total assets in accordance with the indicated
investment styles:

Diversified Equity Fund Allocation

Index style 25%
Income Equity style 25%
Large Company Growth style 25%
Small Company style 10%
International style 15%

TOTAL FUND ASSETS 100%

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<PAGE>

Investors should refer to the descriptions of the investment styles below for a
discussion of the investments and investment techniques of those styles and,
accordingly, of the portions of Diversified Equity Fund invested in those
styles. The management of the Fund's assets is divided among the Fund's six
portfolio managers, including three who jointly co-manage the assets allocated
to Small Company investment style.

INVESTMENT STYLES

INDEX STYLE. The Index style is designed to duplicate the return of the Standard
& Poor's 500 Composite Stock Index (the "Index") with minimum tracking error,
while also minimizing transaction costs. Under normal circumstances, the portion
of a Fund that invests in accordance with the Index style will hold stocks
representing 96 percent or more of the capitalization-weighted market values of
the Index. Portfolio transactions with respect to the Index style generally are
executed only to duplicate the composition of the Index, to invest cash received
from portfolio security dividends or shareholder investments in the Fund, and to
raise cash for fund management purposes. Consistent with this style, cash or
cash equivalents may be held by Diversified Equity Fund while awaiting
investment in securities contained in the Index and for the purpose of
facilitating payment of expenses or funding redemptions. For these and other
reasons, assets allocated to this investment style can be expected to
approximate but not be equal to that of the Index.

In managing assets allocated to this style, the Adviser may utilize index
futures contracts to a limited extent. Index futures contracts are bilateral
agreements pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the index value at the close of trading of the contract and the price at which
the futures contract is originally struck. As no physical delivery of the
securities comprising the index is made, a purchaser of index futures contracts
may participate in the performance of the securities contained in the index
without the required capital commitment.

Index futures contracts may be used for several reasons: to simulate full
investment in the underlying index while retaining a cash balance for fund
management purposes, to facilitate trading or to reduce transactions costs. For
a description of futures contracts and their risks see "Additional Investment
Policies and Risk Considerations - Futures Contracts."

The Index style is not sponsored, endorsed or promoted by S&P, nor does S&P make
any representation or warranty, implied or express, to the purchasers of any
Fund using the Index style or any member of the public regarding the
advisability of investing in index funds or the ability of the Index to track
general stock market performance. S&P does not guarantee the accuracy and/or the
completeness of the Index or any data included therein.

S&P makes no warranty, express or implied, as to the results to be obtained by a
Fund using the Index style, any person or any entity from the use of the Index
or any data included therein. S&P makes no express or implied warranties and
hereby expressly disclaims all such warranties of merchantability or fitness for
a particular purpose for use with respect to the Index or any data included
therein.

INCOME EQUITY STYLE. Assets allocated to the Income Equity style will be
invested in accordance with the investment objective and policies of Income
Equity Fund, which are described below under "Investment Objectives and Policies
- - Index Fund."

LARGE COMPANY GROWTH STYLE. Assets allocated to the Large Company Growth style
will be invested primarily in the common stock of large, high-quality domestic
companies that have superior growth potential. Large companies are those whose
market capitalization is at least $500 million at the time of investment and
whose equity trading volume

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<PAGE>

would permit the sale or purchase of a large position in the securities of the
company in 2 or 3 trading days. Market capitalization refers to the total
market value of a company's outstanding shares of common stock. In selecting
securities for investment, this investment style seeks issuers whose stock is
attractively valued and whose fundamental characteristics both are
significantly better than the market average and which support internal
earnings growth capability. The investments may also include the securities
of companies whose growth potential is generally unrecognized or misperceived
by the market.

SMALL COMPANY INVESTMENT STYLE. In investing assets allocated to the Small
Company investment style, the Adviser uses the Small Company Growth style, Small
Company Stock style and the Small Company Value investment style. Assets
allocated to the Small Company style are invested 1/3 in the Small Company
Growth style, 1/3 in the Small Company Stock style an 1/3 in the Small Company
Value investment style.

Prior to December 11, 1995 the Small Company investment style did not allocate
any assets to the Small Company Value investment style. The Small Company
investment style is expected to be allocated completely in this manner by June
1, 1996. The Small Company investment style may in the future allocate its
assets to additional investment styles.

In selecting securities for the SMALL COMPANY GROWTH STYLE, the Adviser seeks to
identify companies that are rapidly growing (usually with relatively short
operating histories) or that are emerging from a period of investor neglect by
undergoing a dramatic change. These changes may involve a sharp increase in
earnings, the hiring of new management or measures taken to close the gap
between its share price and takeover/asset value. The Adviser may invest up to
10 percent of assets in foreign securities and in American Depository Receipts,
European Depository Receipts and other similar securities of foreign issuers.
See "Investment Objectives and Policies - International Fund - Foreign
Investment Risks and Considerations." The Fund may not invest more than 10% of
its total assets in the securities of a single issuer. The Fund does not
currently invest in preferred stock and securities convertible into common stock
but reserves the right to do so in the future.

In selecting securities in accordance with the SMALL COMPANY STOCK STYLE, the
Adviser seeks securities with significant price appreciation potential and
attempts to identify companies that show above average growth, as compared to
long term overall market growth. In investing assets allocated to this
investment style, the Adviser may invest in preferred stock and securities
convertible into common stock and may invest up to 20 percent of total assets
allocated to this style in foreign securities and in American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers.

SMALL COMPANY INVESTMENT RISKS AND CONSIDERATIONS. The companies in which a Fund
investing in the Small Company investment style may invest may be in a
relatively early stage of development or may produce goods and services which
have favorable prospects for growth due to increasing demand or developing
markets. Frequently, such companies have a small management group and single
product or product line expertise. These characteristics may result in an
enhanced entrepreneurial spirit and greater focus which may make those companies
successful. The Adviser believes that such companies may develop into
significant business enterprises and that an investment in such companies offers
a greater opportunity for capital appreciation than an investment in larger more
established entities. Small companies frequently retain a large part of their
earnings for research, development and investment in capital assets, however, so
that the prospects for immediate dividend income are limited.

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<PAGE>

securities is greater than the short-term price volatility of the securities
of larger, more established companies that are widely held. The securities of
small companies may also be more sensitive to market changes generally than
the securities of large companies. In addition, securities that are traded in
the over-the-counter market or on a regional securities exchange may not be
traded every day or in the volume typical of securities traded on a national
securities exchange. As a result, disposition of a portfolio security, to
meet redemptions by shareholders or otherwise, may require a Fund to sell the
security at a discount from market prices, to sell during periods when
disposition is not desirable, or to make many small sales over an extended
period.

INTERNATIONAL STYLE. Assets allocated to the International style will be
invested in accordance with the investment objective and policies of
International Fund, which are described below under "Investment Objectives and
Policies - International Fund."

GROWTH EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek a high
level of long-term capital appreciation while moderating annual return
volatility by diversifying its investments in accordance with three different
investment styles. The Fund assumes a higher level of risk than Diversified
Equity Fund in order to seek increased returns.

INVESTMENT POLICIES. Growth Equity Fund is designed to reduce the volatility and
risk of investing in equity securities. The Fund's portfolio combines three
different equity investment styles - the Large Company Growth style, the
International style and the Small Company style. The Small Company style
reflects a mix of three additional investment styles: the Small Company Stock
style, the Small Company Growth style and the Small Company Value investment
style. The Fund utilizes different equity investment styles in order to reduce
the risk of price and return volatility associated with reliance on a single
equity investment style. It is anticipated that the Fund's price and return
volatility will be somewhat greater than those of Diversified Equity Fund, which
blends five equity investment styles. The Fund will generally invest the
following percentages of its total assets in accordance with the indicated
investment styles:

Growth Equity Fund Allocation

Large Company Growth style 35%
Small Company style 35%
International style 30%

TOTAL FUND ASSETS 100%

Investors should refer to the descriptions of each of the foregoing investment
styles for a discussion of the objectives, policies and risks involved in the
investments and investment techniques of those styles and, accordingly, of the
portions of Growth Equity Fund invested using those styles. The management of
the Fund's assets is divided among the Fund's five portfolio managers, who are
also the portfolio managers for the assets allocated to the above-referenced
investment styles.

INCOME EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek long-term
capital appreciation in line with that of the overall equity securities markets
and to provide above average dividend income.

INVESTMENT POLICIES. Income Equity Fund invests primarily in the common stock of
large, high-quality domestic companies which have above-average return potential
based on current market valuations. Primary emphasis is placed on investing in
securities of companies with above-average dividend income. In selecting
securities for the

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<PAGE>

Fund, the Adviser uses various valuation measures, including above-average
dividend yields and below industry average price to earnings, price to book
and price to sales ratios. The Fund considers large companies to be those
whose market capitalization is at least $600 million at the time of the
Fund's purchase. Market capitalization refers to the total market value of a
company's outstanding shares of common stock. The Fund may also invest in
preferred stock and securities convertible into common stock and may purchase
American Depository Receipts, European Depository Receipts and other similar
securities of foreign issuers. See "Investment Policies - Equity Funds
- -International Fund - Foreign Investment Risks and Considerations." Under
normal circumstances, the Fund will not invest more than 10 percent of its
total assets in the securities of a single issuer.

INTERNATIONAL FUND

The Fund is designed for investors who desire to achieve international
diversification of their investments by participating in foreign securities
markets. Because international investments generally involve risks in addition
to those risks associated with investments in the United States, the Fund should
be considered only as a vehicle for international diversification and not as a
complete investment program. The following investment objective and policies are
those of the Fund and of the Portfolio. As the Fund has the same investment
policies as the Portfolio and currently invests all of its assets in the
Portfolio, investment policies are discussed with respect to the Portfolio only.

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide long-
term capital appreciation by investing directly or indirectly in high quality
companies based outside the United States. The Fund currently pursues its
investment objective by investing all of its investable assets in the Portfolio,
which has the same investment objective. There can be no assurance that the Fund
or the Portfolio will achieve its investment objective.

INVESTMENT POLICIES. Under normal circumstances, the Portfolio will invest
substantially all of its assets, but not less than 65% of its net assets, in
equity securities of companies domiciled outside the United States. The
Portfolio selects its investments on the basis of their potential for capital
appreciation without regard to current income. The Portfolio may also invest in
the securities of domestic closed-end investment companies investing primarily
in foreign securities and may invest in debt obligations of foreign governments
or their political subdivisions, agencies or instrumentalities, of supranational
organizations and of foreign corporations. The Portfolio's investments will be
diversified among securities of issuers in foreign countries including, but not
limited to, Japan, Germany, the United Kingdom, France, the Netherlands, Hong
Kong, Singapore and Australia. In general, the Portfolio will invest only in
securities of companies and governments in countries that Schroder, in its
judgment, considers both politically and economically stable. The Portfolio has
no limit on the amount of its assets which may be invested in any one type of
foreign instrument or in any foreign country; however, to the extent the
Portfolio concentrates its assets in a foreign country, it will incur greater
risks.

The Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock, and may purchase American Depository
Receipts, European Depository Receipts or other similar securities of foreign
issuers. The Portfolio may also enter into foreign exchange contracts, including
forward contracts to purchase or sell foreign currencies, in anticipation of its
currency requirements and to protect against possible adverse movements in
foreign exchange rates. Although such contracts may reduce the risk of loss to
the Portfolio from adverse movements in currency values, the contracts also
limit possible gains from favorable movements.

Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to
shareholders; commission rates payable on foreign transactions are generally
higher than in the United States; foreign accounting, auditing and financial
reporting standards differ from those in the United States and, accordingly,
less information may be available about foreign companies than is available

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about issuers of comparable securities in the United States; and foreign
securities may trade less frequently and with lower volume and may exhibit
greater price volatility than United States securities.

Changes in foreign exchange rates will also affect the value in U.S. dollars of
all foreign currency-denominated securities held. Exchange rates are influenced
generally by the forces of supply and demand in the foreign currency markets and
by numerous other political and economic events occurring outside the United
States, many of which may be difficult, if not impossible, to predict.

Income from foreign securities will be received and realized in foreign
currencies, and each Fund is required to compute and distribute income in U.S.
dollars. Accordingly, a decline in the value of a particular foreign currency
against the U.S. dollar will reduce the dollars available to make a
distribution. Similarly, if the exchange rate declines between the time after
the Fund's income has been earned and computed in U.S. dollars and the time it
is paid may require the Fund to liquidate portfolio securities to acquire
sufficient U.S. dollars to make a distribution. Similarly, if the exchange rate
declines between the time a Fund incurs expenses in U.S. dollars and the time
such expenses are paid, the Fund may be required to liquidate additional foreign
securities to purchase the U.S. dollars required to meet such expenses.

ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS.

Each Fund's investment objective and all investment policies of the Funds that
are designated as fundamental may not be changed without approval of the holders
of a majority of the outstanding voting securities of the Fund . A majority of
outstanding voting securities means the lesser of 67% of the shares present or
represented at a shareholders' meeting at which the holders of more than 50% of
the outstanding shares are present or represented, or more than 50% of the
outstanding shares. Except as otherwise indicated, investment policies of the
Funds are not deemed to be fundamental and may be changed by the Board of
Trustees of the Trust (the "Board") without shareholder approval. For more
information concerning shareholder voting, see "Other Information - The Trust
and Its Shares - Shareholder Voting and Other Rights" and "Other Information -
Core Trust Structure." A further description of the Funds' investment policies,
including additional fundamental policies, is contained in the SAI.

Each investment adviser monitors the creditworthiness of counterparties to the
Funds' transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal credit risks and the benefits
from the transaction justify the attendant risks.

BORROWING. As a fundamental policy, each Fund may borrow money for temporary or
emergency purposes, including the meeting of redemption requests, and will limit
borrowings to amounts not in excess of 33 1/3% of the value of the Fund's total
assets, as computed immediately after the borrowing. No Fund may purchase
securities for investment while any borrowing equal to 5 percent or more of the
Fund's total assets is outstanding or borrow for purposes other than meeting
redemptions in an amount exceeding 5 percent of the value of the Fund's total
assets. A Fund's use of borrowed proceeds to make investments would subject the
Fund to the risks of leveraging. Borrowing involves special risk considerations.
Interest costs on borrowings may fluctuate with changing market rates of
interest and may partially offset or exceed the return earned on borrowed funds
(or on the assets that were retained rather than sold to meet the needs for
which funds were borrowed). Under adverse market conditions, a Fund might have
to sell portfolio securities to meet interest or principal payments at a time
when investment considerations would not favor such sales. When a Fund
establishes a separate account to limit the amount of leveraging of the Fund
with respect to certain investment techniques, the Fund does not treat those
techniques as involving borrowings (although they may have characteristics and
risks similar to borrowings and result in the Fund's assets being leveraged).
The use of these techniques in connection with a segregated account may result
in a Fund's assets being 100 percent leveraged. See "Techniques Involving
Leverage". As a fundamental policy, no Fund may make loans except for loans of
portfolio securities, through the use of repurchase agreements that are
otherwise permitted investments for the Fund.

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technique is used to make additional portfolio investments. The Funds use
these investment techniques only when the Adviser to a Fund believes that the
leveraging and the returns available to the Fund from investing the cash will
provide shareholders a potentially higher return.

The risks of leverage include a higher volatility of the net asset value of the
Fund's shares and the relatively greater effect on the net asset value of the
shares caused by favorable or adverse market movements or changes in the cost of
cash obtained by leveraging and the yield obtained from investing the cash. So
long as a Fund is able to realize a net return on its investment portfolio that
is higher than interest expense incurred, if any, leverage will result in higher
current net investment income being realized by the Fund than if the Fund were
not leveraged. On the other hand, interest rates change from time depending upon
such factors as supply and demand, monetary and tax policies and investor
expectations. Changes in these factors could cause the relationship between the
cost of leveraging and the yield to change so that rates involved in the
leveraging arrangement may substantially increase relative to the yield on the
obligations in which the proceeds of the leveraging have been invested. To the
extent that the interest expense involved in leveraging approaches the net
return on the Fund's investment portfolio, the benefit of leveraging will be
reduced, and, if the interest expense on borrowings were to exceed the net
return to shareholders, the Fund's use of leverage would result in a lower rate
of return than if the Fund were not leveraged. Similarly, the effect of leverage
in a declining market could be a greater decrease in net asset value per share
than if the Fund were not leveraged. In an extreme case, if the Fund's current
investment income were not sufficient to meet the interest expense of
leveraging, it could be necessary for the Fund to liquidate certain of its
investments at an inappropriate time. The use of leverage may be considered
speculative.

SEGREGATED ACCOUNT. In order to limit the risks involved in various transactions
involving leverage, the Trust's custodian will set aside and maintain in a
segregated account cash, U.S. Government Securities and other liquid, high-grade
debt securities in accordance with SEC guidelines. The accounts value, which is
marked to market daily, will be at least equal to a Fund's commitments under
these transactions. A Fund's commitments may include the Fund's obligations to
settle when-issued and forward commitment transactions. The use of a segregated
account in connection with leveraged transactions may result in a Fund's
portfolio being 100 percent leveraged.

DIVERSIFICATION AND CONCENTRATION. Each Fund is diversified as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"). As a fundamental
policy, with respect to 75% of its assets, no Fund may purchase a security
(other than a U.S. Government Security) if, as a result, (i) more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
(ii) the Fund would own more than 10% of the outstanding voting securities of
any single issuer. Each Fund reserves the right to invest all or a portion of
its assets in another diversified, open-end investment company with
substantially the same investment objective and policies as the Fund. Each Fund
is prohibited from concentrating its assets in the securities of issuers in any
industry. As a fundamental policy, no Fund may purchase securities if,
immediately after the purchase, more than 25% of the value of the Fund's total
assets would be invested in the securities of issuers conducting their principal
business activities in the same industry. This limit does not apply to
investments in U.S. Government Securities, foreign government securities or
repurchase agreements covering U.S. Government Securities or investment company
securities. It is currently anticipated that the Funds will not concentrate in
securities issued by any single foreign government.

COMMON AND PREFERRED STOCK. The Funds may invest in common and preferred stock.
Common stockholders are the owners of the company issuing the stock and,
accordingly, vote on various corporate governance matters such as mergers. They
are not creditors of the company, but rather, upon liquidation of the company,
are entitled to their pro rata share of the company's assets after creditors
(including fixed income security holders) and, if applicable, preferred
stockholders are paid. Preferred stock is a class of stock having a preference
over common stock as to dividends and, in the alternative, as to the recovery of
investment. A preferred stockholder is a shareholder in the company and not a
creditor of the company as is a holder of the company's fixed income securities.
Dividends paid to common and preferred stockholders are distributions of the
earnings of the company and not interest payments, which are expenses of the
company. The market value of all securities, including equity securities, is
based upon the

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market's perception of value and not necessarily the book value of an issuer
or other objective measure of a company's worth.

The Funds may invest in warrants, which are options to purchase an equity
security at a specified price (usually representing a premium over the
applicable market value of the underlying equity security at the time of the
warrant's issuance) and usually during a specified period of time. Unlike
convertible securities and preferred stocks, warrants do not pay a fixed
dividend. Investments in warrants involve certain risks, including the possible
lack of a liquid market for the resale of the warrants, potential price
fluctuations as a result of speculation or other factors and failure of the
price of the underlying security to reach a level at which the warrant can be
prudently exercised (in which case the warrant may expire without being
exercised, resulting in the loss of the Fund's entire investment therein).

CONVERTIBLE SECURITIES. The Funds may invest in convertible securities that are
investment grade, including convertible debt and convertible preferred stock,
which may be rated by a nationally recognized statistical rating organization
("NRSRO") or may be unrated. Convertible securities are fixed income securities
or preferred stock which may be converted at a stated price within a specific
amount of time into a specified number of shares of common stock. A convertible
security entitles the holder to receive interest paid or accrued on debt or the
dividend paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, convertible securities have
characteristics similar to nonconvertible debt securities in that they
ordinarily provide a stream of income with generally higher yields than those of
common stocks of the same or similar issuers. Convertible securities rank senior
to common stock in a corporation's capital structure but are usually subordinate
to comparable nonconvertible securities. In general, the value of a convertible
security is the higher of its investment value (its value as a fixed income
security) and its conversion value (the value of the underlying shares of common
stock if the security is converted). As a fixed income security, the value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. The value of convertible
securities, however, is also influenced by the value of the underlying common
stock.

The rating categories for convertible securities range from Aaa to C, in the
case of Moody's Investors Service, Inc. ("Moody's"), and from AAA to D, in the
case of Standard & Poor's Corporation ("S&P"), and for preferred stock range
from aaa to c, in the case of Moody's, and from AAA to D, in the case of S&P.
Securities in the lowest rating categories are characterized by Moody's as
having extremely poor prospects of ever attaining any real investment standing
and by S&P as being in default, in the case of debt, and non-paying with debt in
default, in the case of preferred stock. Unrated securities may not be as
actively traded as rated securities. A further description of the ratings used
by Moody's, S&P and certain other NRSROs is contained in the SAI.

FOREIGN EXCHANGE CONTRACTS AND FOREIGN CURRENCY FORWARD CONTRACTS. Changes in
foreign currency exchange rates will affect the U.S. dollar values of securities
denominated in currencies other than the U.S. dollar. The rate of exchange
between the U.S. dollar and other currencies fluctuates in response to forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. When
investing in foreign securities a fund usually effects currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market. The fund incurs foreign exchange expenses in converting
assets from one currency to another.

In managing the investments of International Fund and the International Style,
Schroder may enter into foreign currency forward contracts or currency futures
or options contracts for the purchase or sale of foreign currency to "lock in"
the U.S. dollar price of the securities denominated in a foreign currency or the
U.S. dollar value of interest and dividends to be paid on such securities, or to
hedge against the possibility that the currency of a foreign country in which
the style invests may suffer a decline against the U.S. dollar. There is no
present intention to enter into currency futures or options contracts with
respect to assets allocated to this style but the style may include the use of
these practices in the future. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. This method of attempting to hedge the
value of portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities. Although
the strategy of engaging in foreign currency transactions could reduce the risk
of loss due to a decline in the value of

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the hedged currency, it could also limit the potential gain from an increase
in the value of the currency. With respect to assets allocated to this style,
there is no present intention to maintain a net exposure to such contracts
where the fulfillment of the Fund's obligations under such contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities or other assets denominated in that
currency. A Fund will not enter into these contracts for speculative purposes
and will not enter into non-hedging currency contracts. These contracts
involve a risk of loss if the Adviser fails to predict currency values
correctly.

AMERICAN DEPOSITORY RECEIPTS; EUROPEAN DEPOSITORY RECEIPTS. The Funds may invest
in sponsored and unsponsored American Depository Receipts ("ADRs"), which are
receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. ADRs, in registered form, are
designed for use in U.S. securities markets. Unsponsored ADRs may be created
without the participation of the foreign issuer. Holders of these ADRs generally
bear all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights. The Funds may also invest in European Depository Receipts ("EDRs"),
which are receipts issued by a European financial institution evidencing an
arrangement similar to that of ADRs, and in other similar instruments
representing securities of foreign companies. EDRs, in bearer form, are designed
for use in European securities markets.

U.S. GOVERNMENT SECURITIES. As used in this Prospectus, the term U.S. Government
Securities means obligations issued or guaranteed as to principal and interest
by the U.S. Government, its agencies or instrumentalities. The U.S. Government
Securities in which a Fund may invest include U.S. Treasury Securities and
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities and backed by the full faith and credit of the U.S.
Government, such as those guaranteed by the Small Business Administration or
issued by the Government National Mortgage Association. In addition, the U.S.
Government Securities in which the Funds may invest include securities supported
primarily or solely by the creditworthiness of the issuer, such as securities of
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Tennessee Valley Authority. There is no guarantee that the
U.S. Government will support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. Each Fund may seek
additional income by entering into repurchase agreements or by lending
securities from its portfolio to brokers, dealers and other financial
institutions. These investments may entail certain risks not associated with
direct investments in securities. For instance, in the event that bankruptcy or
similar proceedings were commenced against a counterparty in these transactions
or a counterparty defaulted on its obligations, a Fund might suffer a loss.

Repurchase agreements are transactions in which a Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed-upon
price on an agreed-upon future date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. When a Fund lends a security
it receives interest from the borrower or from investing cash collateral. The
Trust maintains possession of the purchased securities and any underlying
collateral in these transactions, the total market value of which on a
continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. International Portfolio and, with
respect to the portion of their assets managed in the International style,
Diversified Equity Fund and Growth Equity Fund may enter into repurchase
agreements with foreign entities. The Funds may pay fees to arrange securities
loans and each Fund will, as a fundamental policy, limit securities lending to
not more than 33 1/3% of the value of its total assets.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each of the Funds may purchase
securities offered on a "when-issued" basis and may purchase securities on a
"forward commitment" basis. When such transactions are negotiated, the price is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. Normally, the settlement date occurs
within three months after the transaction, but delayed settlements beyond three
months may be negotiated. During the period between a commitment and settlement,
no payment is made for the securities purchased and, thus, no interest accrues
to the Fund. At the time a Fund makes a commitment to purchase securities in
this manner, however, the Fund immediately assumes the risk of ownership,

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including price fluctuation. Failure by the other party to deliver a security
purchased by a Fund may result in a loss or a missed opportunity to make an
alternative investment.

The use of when-issued transactions and forward commitments enables a Fund to
hedge against anticipated changes in interest rates and prices. If the Adviser
or Schroder were to forecast incorrectly the direction of interest rate
movements, however, a Fund might be required to complete these transactions when
the value of the security is lower than the price paid by the Fund. No Fund will
purchase securities on a when-issued or forward commitment basis if, as a
result, more than 15 percent of the value of the Fund's total assets would be
committed to such transactions.

When-issued securities and forward commitments may be sold prior to the
settlement date, but the Funds purchase securities on a when-issued and forward
commitment basis only with the intention of actually receiving the securities.
Commitment of a Fund's assets to the purchase of securities on a when-issued or
forward commitment basis will tend to increase the volatility of the Fund's net
asset value per share.

ILLIQUID SECURITIES. No Fund may invest more than 15% of its net assets in
illiquid securities. Illiquid securities are securities that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which the Fund has valued the securities and includes, among other
things, repurchase agreements not entitling the holder to payment within seven
days and restricted securities (other than those determined to be liquid
pursuant to guidelines established by the Board or, with respect to assets
allocated to a Blended Portfolio, Core Trust's board of trustees). Limitations
on resale may have an adverse effect on the marketability of portfolio
securities, and a Fund might also have to register restricted securities in
order to dispose of them, resulting in expense and delay. A Fund might not be
able to dispose of restricted or other securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions. There can
be no assurance that a liquid market will exist for any security at any
particular time.

A domestic institutional market has developed for certain securities that are
not registered under the Securities Act of 1933 (the "1933 Act"), including
repurchase agreements and foreign securities. Institutional investors depend on
an efficient institutional market in which the unregistered security can be
readily resold or on the issuer's ability to honor a demand for repayment of the
unregistered security. A security's contractual or legal restrictions on resale
to the general public or to certain institutions may not be indicative of the
liquidity of the security. If such securities are eligible for purchase by
institutional buyers in accordance with Rule 144A under the 1933 Act, the
investment advisers may determine that such securities are not illiquid
securities under guidelines adopted by the Board (or, with respect to assets
allocated to a Blended Portfolio, Core Trust's board of trustees). These
guidelines take into account trading activity in the securities and the
availability of reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, a Fund's holdings
of that security may be illiquid.

FUTURES CONTRACTS. A Fund using the Index style may invest in index futures
contracts to a limited extent. Index futures contracts are bilateral agreements
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the bond or
stock index value at the close of trading of the contract and the price at which
the futures contract is originally struck. No physical delivery of the
securities comprising the index is made. Generally, these futures contracts are
closed out prior to the expiration date of the contract.

RISK CONSIDERATIONS. A Fund's investment in futures contracts under the Index
style subjects the Fund to certain investment risks and transaction costs to
which it might not otherwise be subject. These risks include: (1) imperfect
correlations between movements in the prices of futures contracts and movements
in the price of the securities hedged which may cause a given hedge not to
achieve its objective; (2) the fact that the skills and techniques needed to
trade futures are different from those needed to select the other securities in
which the Fund invests; (3) lack of assurance that a liquid secondary market
will exist for any particular instrument at any particular time, which, among
other things, may hinder a Fund's ability to limit exposures by closing its
positions; and (4) the possible need to defer closing out of certain futures
contracts to avoid adverse tax consequences.

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Other risks of investing in futures contracts in accordance with the Index style
include the possibility that the futures exchanges may limit the amount of
fluctuation permitted in certain futures contract prices during a single trading
day. A Fund may be forced, therefore, to liquidate or close out a futures
contract position at a disadvantageous price.

There can be no assurance that a liquid market will exist at a time when a Fund
seeks to close out a futures position. The Fund may use various futures
contracts that are relatively new instruments without a significant trading
history. As a result, there can be no assurance that an active secondary market
in those contracts will develop or continue to exist.

The Funds have no current intention of investing in futures contracts for
purposes other than hedging. The current market value of all open futures
positions held by a Fund will not exceed 50 percent of its total assets.

TEMPORARY DEFENSIVE POSITION. When business or financial conditions warrant,
each Fund may assume a temporary defensive position and invest without limit in
cash or prime quality cash equivalents, including (i) short-term U.S. Government
Securities, (ii) certificates of deposit, bankers' acceptances and interest-
bearing savings deposits of commercial banks doing business in the United
States, (iii) commercial paper, (iv) repurchase agreements and (v) shares of
"money market funds" registered under the 1940 Act within the limits specified
therein. During periods when and to the extent that a Fund has assumed a
temporary defensive position, it may not be pursuing its investment objective.
Prime quality instruments are those that are rated in one of the two highest
short-term rating categories by an NRSRO or, if not rated, determined by the
Adviser to be of comparable quality. Apart from temporary defensive purposes, a
Fund may at any time invest a portion of its assets in cash and cash equivalents
as described above. Except during periods when a Fund assumes a temporary
defensive position, each Fund will have at least 65% of its total assets
invested in equity securities. With respect to the portion of their assets
managed by Schroder, Diversified Equity Fund and Growth Equity Fund may hold
cash and bank instruments denominated in any major foreign currency.

PORTFOLIO TRANSACTIONS. The investment advisers place orders for the purchase
and sale of assets they manage with brokers and dealers selected by and in the
discretion of the respective adviser. The investment advisers seek "best
execution" for all portfolio transactions, but a Fund may pay higher than the
lowest available commission rates when an investment adviser believes it is
reasonable to do so in light of the value of the brokerage and research services
provided by the broker effecting the transaction.

Commission rates for brokerage transactions are fixed on many foreign securities
exchanges, and this may cause higher brokerage expenses to accrue to a Fund that
invests in foreign securities than would be the case for comparable transactions
effected on United States securities exchanges.

Subject to the Funds' policy of obtaining "best execution" each investment
adviser may employ broker-dealer affiliates of the investment adviser
(collectively "Affiliated Brokers") to effect brokerage transactions for the
Funds. The Funds' payment of commissions to Affiliated Brokers is subject to
procedures adopted by the Board (and, with respect to assets allocated to a
Blended Portfolio, Core Trust's board of trustees) to provide that the
commissions will not exceed the usual and customary broker's commissions charged
by unaffiliated brokers. No specific portion of a Fund's brokerage will be
directed to Affiliated Brokers and in no event will a broker affiliated with the
investment adviser directing the transaction receive brokerage transactions in
recognition of research services provided to the adviser.

The frequency of portfolio transactions of a Fund (the portfolio turnover rate)
will vary from year to year depending on many factors. The Funds' portfolio
turnover is reported under "Financial Highlights." From time to time a Fund may
engage in active short-term trading to take advantage of price movements
affecting individual issues, groups of issues or markets. Tax rules applicable
to short-term trading may affect the timing of a Fund's transactions or its
ability to realize short-term profits or establish short-term positions.

Schroder anticipates that the annual portfolio turnover rate in the Portfolio
will be less than 100%. An annual portfolio turnover rate of 100% would occur if
all of the securities in the Portfolio were replaced once in a period of one
year. Higher portfolio turnover rates may result in increased brokerage costs to
the Funds or Portfolio and a possible increase in short-term capital gains or
losses.

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4. MANAGEMENT

The business of the Trust is managed under the direction of the Board of
Trustees (the "Board"), and the business of Core Trust is managed under the
direction of Core Trust's Board of Trustees. The Board formulates the general
policies of the Funds and meets periodically to review the results of the Funds,
monitor investment activities and practices and discuss other matters affecting
the Funds and the Trust. The SAI contains general background information about
the Trustees and Officers of the Trust and of Core Trust. The Board consists of
eight persons.

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest Investment Management makes investment decisions for the Funds and
continuously reviews, supervises and administers each Fund's investment program
or oversees the investment decisions of the investment subadviser, as
applicable. The Adviser is a part of Norwest, a subsidiary of Norwest
Corporation, which is a multi-bank holding company that was incorporated under
the laws of Delaware in 1929. As of December 31, 1995, Norwest Corporation was
the 11th largest bank holding company in the United States in terms of assets.
As of that date, the Adviser managed or provided investment advice with respect
to assets totaling approximately $22.7 billion.

The Adviser provides investment management services to each Fund pursuant to an
investment advisory agreement between Norwest and the Trust. For the Adviser's
services, Norwest receives an advisory fee with respect to Diversified Equity
Fund, Growth Equity Fund and Income Equity Fund at the following annual rates:
0.65%, 0.90% and 0.65%, respectively, based on the average daily net assets of
the respective Fund.

Advisory fees are accrued daily and paid monthly. The advisory fees for the
Funds are higher than those paid by most investment companies of all types to
their advisers, but the Board believes that the fees are appropriate for equity
funds.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. Subject to the Adviser's general
oversight, Schroder, through its London, England branch, acts as investment
subadviser to Diversified Equity Fund and Growth Equity Fund pursuant to
investment subadvisory agreements among the Trust, Norwest and Schroder. Under
these agreements, Schroder makes investment decisions for each Fund and
continuously reviews, supervises and administers each Fund's investment program
with respect to that portion, if any, of the respective Fund's portfolio that
the Adviser believes should be invested using the International style. Each
investment subadvisory agreement is the same in all material respects.

Schroder, whose principal business address is 787 Seventh Avenue, New York, New
York 10019, is a wholly-owned U.S. subsidiary of Schroders Incorporated, the
wholly-owned U.S. holding company subsidiary of Schroders plc. Schroders plc is
the holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in seventeen countries
worldwide. The Schroder Group specializes in providing investment management
services and as of October 31, 1995, had assets under management in excess of
$100 billion.

Pursuant to the Fund's investment subadvisory agreement, the Adviser (and not
the Trust) pays Schroder a fee for its investment subadvisory services. This
compensation does not increase the amount paid by the Trust to the Adviser
pursuant to the Adviser's investment advisory agreement.

CORE TRUST BLENDED PORTFOLIOS. As noted under "Investment Objectives And
Policies - Investments in Core Trust," Diversified Equity Fund and Growth Equity
Fund invest their assets which are managed in a small company, index and
international investment style in three Blended Portfolios of Core Trust - Small
Company Portfolio, Index Portfolio and International Portfolio II. Each Fund may
withdraw its investment from a Blended Portfolio at any time that the Board
determines it is in the best interests of the Fund and its shareholders to do
so. See "Other Information - Core Trust Structure." Norwest serves as investment
adviser to Small Company Portfolio and Index Portfolio and Schroder serves as
investment adviser to International Portfolio II pursuant to separate advisory
agreements with Core Trust. Subject to the general supervision of Core Trust's
board of trustees, Norwest and Schroder perform

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services for the Blended Portfolios similar to those performed for the Trust
under its investment advisory agreements.

PORTFOLIO MANAGERS. Many persons on the advisory staff of each of the Adviser,
Crestone and Schroder contribute to the investment advisory services provided to
the Funds, International Portfolio and the three Blended Portfolios of Core
Trust, as applicable. The following persons, however, are primarily responsible
for the day-to-day management of the Funds:

INCOME EQUITY FUND - David L. Roberts, Senior Vice President of Norwest since
1991. Mr. Roberts has been associated with Norwest for 20 years in various
investment related capacities.

INTERNATIONAL FUND - The investment management team of Mark J. Smith, a First
Vice President of Schroder since April 1990 and a Director thereof since April
1993, and Laura Luckyn-Malone, a Senior Vice President and Director of Schroder
since 1990, with the assistance of an investment committee, is primarily
responsible for managing the day-to-day operations of the Fund. Mr. Smith has
been employed by various Schroder Group companies in the investment research and
portfolio management areas since 1983. Prior to joining the Schroder Group, Ms.
Luckyn-Malone was a Principal of Scudder, Stevens & Clark, Inc. Mr. Smith has
served as portfolio manager of the Fund since its inception; Ms. Luckyn-Malone
joined the Fund's investment management team in 1995.

INVESTMENT STYLES UTILIZED BY DIVERSIFIED EQUITY FUND AND GROWTH EQUITY FUND

INDEX STYLE - No single person at the Adviser acts as portfolio manager of this
investment style.

LARGE COMPANY GROWTH STYLE - John S. Dale, Senior Portfolio Manager and an
Officer of Norwest and Senior Vice President of Peregrine Capital Management,
Inc. Mr. Dale has held various investment management positions with Norwest or
its affiliates, including Peregrine, since 1968. From 1984 to 1987 he was a
Senior Vice President and Manager of Equity Advisors for Norwest.

SMALL COMPANY STYLE/SMALL COMPANY PORTFOLIO - Robert B. Mersky, Kirk McCown and
Thomas H. Forester. Mr. Mersky has held various investment management positions
with Norwest or its affiliates, including Peregrine, since 1977. From 1980 to
1984 he was head of investments for Norwest. Mr. McCown is founder, President
and a Director of Crestone Capital Management, Inc., a subsidiary of Norwest
which is investment subadviser to Small Company Stock Fund, another fund of the
Trust. Prior thereto, Mr. McCown was Senior Vice President of Reich & Tang, L.P.
Mr.Mersky, Senior Portfolio Manager and an officer of Norwest and President of
Peregrine Capital Management, Inc. Mr. Forester is an officer of Norwest and
Senior Vice President of Peregrine Capital Management, Inc. Mr. Forester joined
Peregrine in 1995. From 1992 to 1995 he was Vice President of Lord Asset
Management, an investment adviser.

Mr. Mersky has served as a portfolio manager of this investment style since its
inception. Mr. McCown commenced serving as a portfolio manager of this style in
June 1995; Mr. Forester commenced serving as a portfolio manager of this style
in December 1995.

INTERNATIONAL STYLE/INTERNATIONAL PORTFOLIO - Mark J. Smith and Laura Luckyn-
Malone. See International Fund above.

The day-to-day management of the portfolios of Diversified Equity Fund and
Growth Equity Fund is performed by the portfolio managers listed above with
respect to the portion of the Fund's portfolio that is invested using an
investment style.

As an example, there are five portfolio managers of Growth Equity Fund: Mr.
Mersky. Mr. McCown and Mr. Forester are responsible for the Fund's assets
invested in the Small Company style, Mr. Dale is responsible for the Fund's
assets invested in the Large Company Growth style and Mr. Smith of Schroder is
responsible for the Fund's assets invested in the International style.

Cash balances of each Fund are managed by Mr. Sylvester and Ms. White, the
portfolio managers for Ready Cash Investment Fund, a separate series of the
Trust that is offered by a separate prospectus.

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MANAGEMENT AND DISTRIBUTION SERVICES

Forum supervises the overall management of the Trust (including the Trust's
receipt of services for which the Trust is obligated to pay) and provides the
Trust with general office facilities pursuant to a Management Agreement with the
Trust. Forum provides persons satisfactory to the Board to serve as officers of
the Trust. Those officers, as well as certain other officers and Trustees of the
Trust, may be directors, officers or employees of (and persons providing
services to the Trust may include) Forum, its affiliates or certain non-banking
affiliates of Norwest. As of the date of this Prospectus, Forum provided
management and administrative services to registered investment companies and
collective investment funds with assets of approximately $11 billion. Forum is a
registered broker-dealer and investment adviser and is a member of the National
Association of Securities Dealers, Inc. As of the date of this Prospectus, Forum
is controlled by John Y. Keffer, President and Chairman of the Trust and Core
Trust. For its services and facilities, Forum receives from each Fund a
management fee at an annual rate of 0.10% of the average daily net assets
attributable to each class of the Fund. From its own resources, Forum may pay a
fee to broker-dealers or other persons for distribution or other services
related to the Funds.

Forum also serves as administrator of Core Trust and provides administrative
services for each Blended Portfolio that are similar to those provided to the
Funds. For its administrative services Forum is compensated by Core Trust at an
annual rate of 0.10% of the average daily net assets of each Blended Portfolio.

Forum may subcontract any or all of its duties to one or more qualified
subadministrators who agree to comply with the terms of Forum's management
agreement. Forum may compensate those agents for their services; however, no
such compensation may increase the aggregate amount of payments by the Trust to
Forum pursuant to the management agreement.

Forum also acts as the distributor of the Shares pursuant to a distribution
services agreement with the Trust and in accordance therewith receives and may
reallow the initial sales charge assessed on purchases of A Shares of a Fund. As
authorized by a distribution plan with respect to B Shares of each Fund and
pursuant to the distribution services agreement, Forum receives a distribution
services fee as compensation for its distribution expenses with respect to B
Shares and a maintenance fee for its or certain broker-dealer's shareholder
services with respect to B Shares. For further information about the
distribution services agreement and the distribution plan, including the fees
payable thereunder, see "How to Buy Shares - Alternative Distribution
Arrangements." Pursuant to separate agreements, Forum also provides portfolio
accounting services to each Fund.

SHAREHOLDER SERVICING AND CUSTODY

Norwest serves as transfer agent and dividend disbursing agent for the Trust (in
this capacity, the "Transfer Agent") pursuant to a Transfer Agency Agreement
with the Trust. The Transfer Agent maintains an account for each shareholder of
the Trust (unless such accounts are maintained by sub-transfer agents or
processing agents), performs other transfer agency functions and acts as
dividend disbursing agent for the Trust. The Transfer Agent is permitted to
subcontract any or all of its functions with respect to all or any portion of
the Trust's shareholders to one or more qualified sub-transfer agents or
processing agents, which may be affiliates of the Transfer Agent or Forum, who
agree to comply with the terms of the Transfer Agency Agreement. Sub-transfer
agents and processing agents may be "Processing Organizations" as described
under "How to Buy Shares - Purchase Procedures." The Transfer Agent is permitted
to compensate those agents for their services; however, that compensation may
not increase the aggregate amount of payments by the Trust to the Transfer
Agent. For its transfer agency services, the Transfer Agent receives from each
Fund a fee at an annual rate of 0.25% of the average daily net assets
attributable to each class of the Fund.

Norwest also serves as the Trust's custodian and may appoint subcustodians for
the foreign securities and other assets held in foreign countries. Norwest
currently receives no additional compensation for its custodial services, but
the Funds will incur the expenses and costs of any subcustodian. The Chase
Manhattan Bank, N.A. serves as custodian of International Portfolio II and is
paid a fee by Core Trust for its services. Norwest serves as custodian of Small
Company Portfolio and Index Portfolio and currently receives no additional
compensation for its custodial services with respect to those Portfolios.

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EXPENSES OF THE FUNDS

The Funds' expenses include Trust expenses attributable to the Funds, which are
allocated to each Fund, and expenses not specifically attributable to any Fund
of the Trust, which are allocated among the Funds and all other funds of the
Trust in proportion to their average net assets. Each investment adviser, Forum
and the Transfer Agent may each elect to waive (or continue to waive) all or a
portion of their fees, which are accrued daily and paid monthly. Any such
waivers will have the effect of increasing a Fund's performance for the period
during which the waiver is in effect. No fee waivers may be recouped at a later
date. Other than investment advisory fees, any fee paid by the Trust may be
increased by the Board without shareholder approval

Norwest and Forum and their agents and affiliates may also act in various
capacities for, and receive compensation from, their customers who are
shareholders of a Fund. Under agreements with those customers, Norwest and Forum
may elect to credit against the fees payable to them by their customers or to
rebate to customers all or a portion of any fee received from the Trust with
respect to assets of those customers invested in a Fund.

Subject to the obligation of Norwest to reimburse the Trust for certain expenses
under the Investment Advisory Agreement, the Trust has confirmed its obligation
to pay all the Trust's expenses, including: interest charges, taxes, brokerage
fees and commissions; certain insurance premiums; fees, interest charges and
expenses of the Trust's transfer agent and dividend disbursing agent and
providers of pricing, credit analysis and dividend services; telecommunications
expenses; auditing, legal and compliance expenses; costs of maintaining
corporate existence; costs of preparing and printing the Funds' prospectuses,
SAIs, account application forms and shareholder reports and delivering them to
existing shareholders; costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares of the Funds; costs of reproduction,
stationery and supplies; compensation of trustees, officers and employees of the
Funds or the Trust who are not employees of Norwest, Forum or their affiliates
and costs of other personnel performing services for the Fund; costs of meetings
of the Trust; SEC registration fees and related expenses; state securities laws
registration fees and expenses; fees and out of pocket expenses payable to
Norwest, Schroder and Forum; and fees and expenses paid by the Funds pursuant to
the distribution plan.

5. HOW TO BUY SHARES

MINIMUM INVESTMENT

There is a $1,000 minimum for initial purchases and a $100 minimum for
subsequent purchases of Shares of the Funds. A Fund may in its discretion waive
the investment minimums. Shareholders who elect electronic share purchase
privileges such as the Automatic Investment Plan or the Directed Dividend Option
are not subject to the initial investment minimum. See "Other Shareholder
Services - Automatic Investment Plan" and "Dividends and Tax Matters."

Except as set forth below with respect to purchases through Processing
Organizations, an investor's order will not be accepted or invested by a Fund
during the period before the Fund's receipt of Federal funds. Fund shares become
entitled to receive dividends and distributions on the next Fund Business Day
after the order is accepted.

The Funds reserve the right to reject any subscription for the purchase of their
shares. Share certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.

PURCHASE PROCEDURES

INITIAL PURCHASES
THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

1. BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application form to the Trust at the address listed under
"Account Application" on page ___. Checks are accepted at full value subject to
collection. Payment by a check drawn on any member of the Federal Reserve System
can normally be

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converted into Federal funds within two business days after receipt of the
check. Checks drawn on some non-member banks may take longer.

2. BY BANK WIRE. Investors may make an initial investment in a Fund using the
wire system for transmittal of money among banks. The investor should first
telephone the Transfer Agent at 612-667-8833 or 800-338-1348 to obtain an
account number. The investor should then instruct a bank to wire the investor's
money immediately to:
Norwest Bank Minnesota, N.A.
ABA 091 000 019
For Credit to: Norwest Advantage Funds
0844-131
Re: [Name of Fund]
[Designate A Shares or B Shares]
Account No.:
Account Name:

3. THROUGH FINANCIAL INSTITUTIONS. SHARES MAY BE PURCHASED AND REDEEMED
THROUGH CERTAIN BROKER-DEALERS, BANKS AND OTHER FINANCIAL INSTITUTIONS
("Processing Organizations"). The Transfer Agent, Forum and their affiliates may
be Processing Organizations. Processing Organizations may receive as a broker-
dealer's reallowance a portion of the sales charge paid by their customers who
purchase A Shares of a Fund, may receive payments from Forum with respect to
sales of B Shares and may receive payments as a processing agent from the
Transfer Agent. In addition, financial institutions, including Processing
Organizations, may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.

Investors who purchase shares through a Processing Organization will be subject
to the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Customers who purchase a Fund's
shares through a Processing Organization may or may not be the shareholder of
record and, subject to their institution's and the Funds' procedures, may have
Fund shares transferred into their name. There is typically a three-day
settlement period for purchases and redemptions through broker-dealers. Certain
Processing Organizations may also enter purchase orders with payment to follow.

Certain shareholder services may not be available to shareholders who have
purchased shares through a Processing Organization. These shareholders should
contact their Processing Organization for further information. The Trust may
confirm purchases and redemptions of a Processing Organization's customers
directly to the Processing Organization, which in turn will provide its
customers with confirmations and periodic statements. The Trust is not
responsible for the failure of any Processing Organization to carry out its
obligations to its customer. Certain states, such as Texas, permit shares of the
Funds to be purchased and redeemed only through registered broker-dealers,
including the Funds' distributor.

SUBSEQUENT PURCHASES
SUBSEQUENT PURCHASES MAY BE MADE BY MAILING A CHECK, BY SENDING A BANK WIRE OR
THROUGH THE SHAREHOLDER'S PROCESSING ORGANIZATION AS INDICATED ABOVE. All
payments should clearly indicate the shareholder's name and account number.

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ACCOUNT APPLICATION

Investors may obtain the account application form necessary to open an account
by writing the Trust at the following address:

Norwest Advantage Funds
[Name of Fund]
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040

GENERAL INFORMATION

FUND SHARES ARE CONTINUOUSLY SOLD ON EVERY WEEKDAY EXCEPT CUSTOMARY NATIONAL
BUSINESS HOLIDAYS AND GOOD FRIDAY ("Fund Business Day"). The purchase price for
Fund shares equals their net asset value next-determined after acceptance of an
order plus, in the case of the A Shares, any applicable sales charge imposed at
the time of purchase.

Investments in a Fund may be made either through certain financial institutions
or by an investor directly. An investor who invests in a Fund directly will be
the shareholder of record. All transactions in Fund shares are effected through
the Transfer Agent which accepts orders for redemptions and for subsequent
purchases only from shareholders of record. Shareholders of record will receive
from the Trust periodic statements listing all account activity during the
statement period.

ALTERNATIVE DISTRIBUTION ARRANGEMENTS

INVESTORS SHOULD COMPARE SALES CHARGES AND FEES BEFORE SELECTING A PARTICULAR
CLASS OF SHARES. Investors should consider whether, during the anticipated life
of their investment in a Fund, the accumulated distribution services fee and
maintenance fee and contingent deferred sales charges on B Shares prior to
conversion would be less than the initial sales charge on A Shares purchased at
the same time and whether that differential would be offset by the higher yield
of A Shares. A summary of the charges applicable to shares of each Fund is
listed under "Prospectus Summary - Expense Information." Sales personnel of
selected broker-dealers distributing a Fund's shares may receive differing
compensation for selling A Shares and B Shares.

Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge were
not deducted and, accordingly, do not have the entire purchase price invested.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
whether, in light of the initial sales charge and its effect on the amount of
the purchase price invested, purchases of A Shares are more or less advantageous
than purchases of B Shares with their associated accumulated continuing
distribution and maintenance charges. For example, based on estimated current
fees and expenses, an investor subject to the 4.5% initial sales charge who
elects to reinvest all dividends and distributions would have to hold the
shareholder's investment approximately six years for the B Shares' distribution
services fee and maintenance fee to exceed the initial sales charge. The
foregoing example does not take into account the time value of money,
fluctuations in net asset value or the effects of different performance
assumptions.

A SHARES

THE PUBLIC OFFERING PRICE OF EACH FUND'S A SHARES IS THEIR NEXT-DETERMINED NET
ASSET VALUE PLUS AN INITIAL SALES CHARGE assessed as follows (no sales charge is
assessed on the reinvestment of dividends or distributions):

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Broker-
Dealers'
Reallowance
Sales Charge As a As a
Percentage of Percentage of
Amount of Purchase Offering Price Net Asset Value* Offering Price
- ------------------ -------------- ---------------- --------------

Less than $50,000 4.50% 4.71% 4.05%
$50,000 to $99,999 3.50 3.63 3.15
$100,000 to $499,000 2.50 2.56 2.25
$500,000 to $999,000 2.00 2.04 1.80
$1,000,000 and over None None None

* Rounded to the nearest one-hundredth percent

Forum may pay a broker-dealers' reallowance to selected broker-dealers
purchasing shares as principal or agent, which may include banks, bank
affiliates and Processing Organizations. Normally, Forum will reallow discounts
to selected broker-dealers in the amounts indicated in the table above. In
addition, Forum may elect to reallow the entire sales charge to selected broker-
dealers for all sales with respect to which orders are placed with Forum. The
broker-dealers' reallowance may be changed from time to time. Forum may make
additional payments (out of its own resources) to selected broker-dealers of up
to 1.00% of the value of Fund shares purchased at net asset value.

No sales charge is assessed on purchases by: (a) any bank, trust company or
other institution acting on behalf of its fiduciary customer accounts or any
other account maintained by its trust department (including a pension, profit
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code of 1986, as amended) and (b)
trustees and officers of the Trust; directors, officers and full-time employees
of Forum, of Norwest Corporation or of any of their affiliates; the spouse,
direct ancestor or direct descendant (collectively, "relatives") of any such
person; any trust or individual retirement account or self-employed retirement
plan for the benefit of any such person or relative; or the estate of any such
person or relative. These shares may not be resold except to the Funds and share
purchases under clause (b) must be made for investment purposes.

In addition, no sales charge is assessed on purchases (a) by any registered
investment adviser with whom Forum has entered into a Share purchase agreement
and which is acting on behalf of its fiduciary customer accounts, or (b) of A
Shares of a Fund made through the Directed Dividend Option from a fund that
charges a front-end sales charge. See "Dividends and Tax Matters."

REINSTATEMENT PRIVILEGE. An investor who has redeemed A Shares of a Fund may,
within 60 days following the redemption, purchase without a sales charge A
Shares in an amount up to the amount of the redemption. Investors who desire to
exercise this "Reinstatement Privilege" should contact the Trust for further
information.

INVESTORS IN OTHER FUND FAMILIES. No sales charge is assessed on purchases of A
Shares of a Fund with the proceeds of a redemption at net asset value, within
the preceding 60 days, of shares of a mutual fund that does not impose on the
redeemed shares at the time of their purchase a sales charge equal to or greater
than that applicable to the A Shares of that Fund. Investors should contact the
Trust for further information and to obtain the necessary forms.

REDUCED INITIAL SALES CHARGES. To qualify for a reduced sales charge, an
investor or the investor's Processing Organization must notify the Transfer
Agent at the time of purchase of the investor's intention to qualify and must
provide the Transfer Agent with sufficient information to verify that the
purchase qualifies for the reduced sales charge. Reduced sales charges may be
modified or terminated at any time and are subject to confirmation of an
investor's holdings. Further information about reduced sales charges is
contained in the SAI.

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SELF-DIRECTED 401(k) PROGRAMS. Purchases of A Shares of a Fund through self-
directed 401(k) programs and other qualified retirement plans offered by
Norwest, Forum or their affiliates in accumulated amounts of less than $100,000
are subject to a reduced sales charge applicable to a single purchase of
$100,000.

CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An investor's purchase of
additional A Shares of a Fund may qualify for rights of accumulation ("ROA")
under which the applicable sales charge will be based on the total of the
investor's current purchase and the net asset value (at the end of the previous
Fund Business Day) of all A Shares of that Fund held by the investor. For
example, if an investor owned A Shares of a Fund worth $500,000 at the then
current net asset value and purchased A Shares of that Fund worth an additional
$50,000, the sales charge for the $50,000 purchase would be at the 2.0% rate
applicable to a $550,000 purchase, rather than at the 3.5% rate applicable to a
$50,000 purchase.

In addition, an investor in a Fund that has previously purchased A Shares of any
other fund of the Trust that is sold with a sales charge equal to or greater
than the sales charge imposed on the A Shares of the Fund ("Eligible Fund") may
also qualify for ROA and may aggregate existing investments in A Shares of
Eligible Funds with current purchases of A Shares of the Fund to determine the
applicable sales charge. In addition, purchases of A Shares of a Fund by an
investor and the investor's spouse, direct ancestor or direct descendant may be
combined for purposes of ROA.

STATEMENT OF INTENTION. A Shares investors may also obtain reduced sales charges
based on cumulative purchases by means of a written Statement of Intention,
expressing the investor's intention to invest $50,000 or more in A Shares of a
Fund within a period of 13 months. Each purchase of shares under a Statement of
Intention will be made at net asset value plus the sales charge applicable at
the time of the purchase to a single transaction of the dollar amount indicated
in the Statement.

Investors wishing to enter into a Statement of Intention in conjunction with
their initial investment in shares of a Fund should complete the appropriate
portion to the account application form. Current Fund shareholders can obtain a
Statement of Intention form by contacting the Transfer Agent.

CONTINGENT DEFERRED SALES CHARGE. A Shares of a Fund on which no initial sales
charge was assessed due to the amount purchased in a single transaction or
pursuant to the Cumulative Quantity Discount or a Statement of Intention and
that are redeemed (including certain redemptions in connection with an exchange)
within specified periods after the purchase date of the shares will be subject
to contingent deferred sales charges equal to the percentages set forth below of
the dollar amount subject to the charge. The charge will be assessed on an
amount equal to the lesser of the cost of the shares being redeemed and their
net asset value at the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial purchase price. In
addition, no charge will be assessed on shares derived from the reinvestment of
dividends and distributions.

Contingent Deferred Sales
Charge as a % of Dollar
Amount of Purchase Period Shares Held Amount Subject to Charge
- ------------------ ------------------ --------------------------
$1,000,000 to $2,499,999 Less than one year 1.00%
One to two years 0.75%
$2,500,000 to $4,999,999 Less than one year 0.50%
Over $5,000,000 Less than one year 0.25%

No contingent deferred sales charge is charged on redemptions to the same extent
as described under "B Shares - Contingent Deferred Sales Charge" below. The
contingent deferred sales charge on shares purchased through an exchange from
another fund of the Trust is based upon the original purchase date and price of
the other Fund's shares. For A shareholders with a Statement of Intention that
do not purchase $1,000,000 of a Fund's A Shares pursuant to their Statement, no
contingent deferred sales charge is imposed. The Statement of Intention provides
for a contingent deferred sales charge in certain other cases. Further
information about the contingent deferred sales charge is contained in the SAI.

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B SHARES

DISTRIBUTION PLAN. B SHARES OF A FUND ARE SOLD AT THEIR NET ASSET VALUE PER
SHARE WITHOUT THE IMPOSITION OF A SALES CHARGE AT THE TIME OF PURCHASE. With
respect to B Shares, each Fund has adopted a distribution plan pursuant to Rule
12b-1 (the "Plan") under the 1940 Act providing for distribution payments, at an
annual rate of up to 0.75% of the average daily net assets of the Fund
attributable to the B Shares (the "distribution services fee"), by each Fund to
Forum, to compensate Forum for its distribution activities. The distribution
payments due to Forum from each Fund comprise (i) sales commissions at levels
set from time to time by the Board ("sales commissions") and (ii) an interest
fee calculated by applying the rate of 1% over the prime rate to the outstanding
balance of uncovered distribution charges (as described below). The current
sales commission rate is 4.0% and Forum currently expects to pay sales
commissions to each broker-dealer at the time of sale of up to 4.0% of the
purchase price of B Shares of each Fund sold by the broker-dealer.

Under the distribution services agreement between Forum and the Trust, Forum
will receive, in addition to the distribution services fee, all contingent
deferred sales charges due upon redemptions of B Shares. The combined contingent
deferred sales charge and distribution services fee on B Shares are intended to
finance the distribution of those shares by permitting an investor to purchase
shares through broker-dealers without the assessment of an initial sales charge
and, at the same time, permitting Forum to compensate broker-dealers in
connection with the sales of the shares. Proceeds from the contingent deferred
sales charge with respect to a Fund are paid to Forum to defray the expenses
related to providing distribution-related services in connection with the sales
of B Shares, such as the payment of compensation to broker-dealers selling B
Shares. Forum may spend the distribution services fees it receives as it deems
appropriate on any activities primarily intended to result in the sale of those
shares.

Under the Plan, a Fund will make distribution services fee payments to Forum
only for periods during which there are outstanding uncovered distribution
charges attributable to that Fund. Uncovered distribution charges are equivalent
to all sales commissions previously due (plus interest), less amounts received
pursuant to the Plan and all contingent deferred sales charges previously paid
to Forum. As of the date of this Prospectus, there are no uncovered distribution
expenses for any of the Fund's net assets attributable to B Shares.

The amount of distribution services fees and contingent deferred sales charge
payments received by Forum with respect to a Fund is not related directly to the
amount of expenses incurred by Forum in connection with providing distribution
services to the B Shares and may be higher or lower than those expenses. Forum
may be considered to have realized a profit under the Plan if, at any time, the
aggregate amounts of all distribution services fees and contingent deferred
sales charge payments previously made to Forum exceed the total expenses
incurred by Forum in distributing B Shares.

Pursuant to the Plan, each Fund has agreed also to pay Forum a maintenance fee
in an amount equal to 0.25% of the average daily net assets of the Fund
attributable to B Shares for providing personal services to shareholder
accounts. The maintenance fee may be paid by Forum to broker-dealers in an
amount not to exceed 0.25% of the value of the B Shares held by the customers of
the broker-dealers. The distribution services fee and the maintenance fee are
each accrued daily and paid monthly and will cause a Fund's B Shares to have a
higher expense ratio and to pay lower dividends than A Shares of that Fund.
Notwithstanding the discontinuation of distribution services fees with respect
to a Fund, the Fund may continue to pay maintenance fees.

The distribution services fees payable to Forum by a Fund with respect to each
day are accrued on that day as a liability of the Fund with respect to the B
Shares and as a result of the accrual reduce the net assets of the B Shares.
However, a Fund does not accrue future distribution services fees as a liability
of the Fund with respect to the B Shares or reduce the Fund's current net assets
in respect of distribution services fees which may become payable under the Plan
in the future.

In the event that (i) the Plan is not terminated but Forum (or any subsequent
distributor) is replaced or terminated as distributor of a Fund's B Shares, (ii)
the Plan is terminated and a Fund adopts a distribution plan relating to a class
of shares of the Fund that has a sales load structure substantially similar (as
defined in the Plan) to that of the B Shares, or (iii) the Plan is terminated
and the Trust alters the terms of the contingent deferred sales charges
applicable to B Shares of a Fund outstanding at the time of such termination,
the Fund will continue to pay distribution service fees

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to Forum (or any subsequent distributor of the Fund's B Shares) but only with
respect to sales that occurred prior to any replacement or termination.
Except as described above, in the event that the Plan is terminated with
respect to a Fund, the Fund will cease paying any distribution services fees.

Periods with a high level of sales of B Shares of a Fund accompanied by a low
level of redemptions of those shares that are subject to contingent deferred
sales charges will tend to increase uncovered distribution charges. Conversely,
periods with a low level of sales of B Shares of a Fund accompanied by a high
level of redemptions of those shares that are subject to contingent deferred
sales charges will tend to reduce uncovered distribution charges. A high level
of sales of B Shares during the first few years of operations, coupled with the
limitation on the amount of distribution services fees payable by a Fund with
respect to B Shares during any fiscal year, would cause a large portion of the
distribution services fees attributable to a sale of the B Shares to be accrued
and paid by the Fund to Forum with respect to those shares in fiscal years
subsequent to the years in which those shares were sold. The payment delay would
in turn result in the incurrence and payment of increased interest fees under
the Plan.

Contingent Deferred Sales Charge. B Shares of a Fund which are redeemed within
six years of purchase will be subject to contingent deferred sales charges equal
to the percentages set forth below of the dollar amount subject to the charge.
The amount of the contingent deferred sales charge, if any, will vary depending
on the number of years between the payment for the purchase of B Shares of a
Fund and their redemption.

The contingent deferred sales charge will be assessed on an amount equal to the
lesser of the cost of the shares being redeemed and their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed on increases in
net asset value above the initial purchase price. In addition, no charge will be
assessed on shares derived from the reinvestment of dividends and distributions.

Contingent Deferred Sales
Charge as a % of Dollar
Year Since Purchase Amount Subject to Charge
- ------------------- ------------------------
First 4.0%
Second 3.0%
Third 3.0%
Fourth 2.0%
Fifth 2.0%
Sixth 1.0%
Seventh None

Redemptions of shares will be effected in the manner that results in the
imposition of the lowest deferred sales charge. Redemptions with respect to a
shareholder's investment in a Fund will automatically be made first from any A
Shares in the Fund, second from B Shares of the Fund acquired pursuant to
reinvestment of dividends and distributions, third from B Shares of the Fund
held for over six years and fourth from the longest outstanding B Shares of the
Fund held for less than six years.

No contingent deferred sales charge is imposed on (i) redemptions of shares
acquired through the reinvestment of dividends and distributions, (ii)
involuntary redemptions by a Fund of shareholder accounts with low account
balances, (iii) redemptions of shares following the death or disability of a
shareholder if the Fund is notified within one year of the shareholder's death
or disability and (iv) redemptions to effect a distribution (other than a lump
sum distribution) from an IRA, Keogh plan or Section 403(b) custodial account or
from a qualified retirement plan. See the SAI for further information.

CONVERSION FEATURE. After seven years from the end of the calendar month in
which the shareholder's purchase order for B shares was accepted, the Shares
will automatically convert to A Shares of that Fund. The conversion will be on
the basis of the relative net asset values of the Shares, without the imposition
of any sales load, fee or other charge. For purposes of conversion, B Shares of
a Fund purchased by a shareholder through the reinvestment of dividends and
distributions will be considered to be held in a separate sub-account. Each time
any B Shares in the shareholder's account (other than those in the sub-account)
convert, an equal pro rata portion of those shares in the

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sub-account will also convert. The conversion of B Shares to A Shares is
subject to the continuing availability of certain opinions of counsel and the
conversion of a Fund's B Shares to A Shares may be suspended if such an
opinion is no longer available at the time the conversion is to occur. In
that event, no further conversions of the Fund's B Shares would occur, and
shares might continue to be subject to a distribution services and
maintenance fee for an indefinite period.

6. HOW TO SELL SHARES

GENERAL INFORMATION

Fund Shares may be sold (redeemed) at their net asset value on any Fund Business
Day subject to a contingent deferred sales charge imposed, in the case of A
Shares, on some redemptions made within two years of purchase and, in the case
of B Shares, on most redemptions made within six years of purchase. There is no
minimum period of investment and no restriction on the frequency of redemptions.

Fund shares are redeemed as of the next determination of the Fund's net asset
value following acceptance by the Transfer Agent of the redemption order in
proper form (and any supporting documentation which the Transfer Agent may
require). Redeemed shares are not entitled to receive dividends declared after
the day the redemption becomes effective.

Normally, redemption proceeds are paid immediately, but in no event later than
seven days following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check to purchase
the shares being redeemed has been cleared by the shareholder's bank, which may
take up to 15 days. This delay may be avoided by paying for shares through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment date postponed for more than seven days after
the tender of the shares to a Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings, for any period during which an emergency
exists as a result of which disposal by the Fund of its portfolio securities or
determination by the Fund of the value of its net assets is not reasonably
practicable and for such other periods as the SEC may permit.

REDEMPTION PROCEDURES

Shareholders who have invested directly in a Fund may redeem their Shares as
described below. Shareholders who have invested through a Processing
Organization may redeem their shares through the Processing Organization as
described above under "How to Buy Shares - Purchase Procedures - Through
Financial Institutions." Shareholders who wish to redeem shares by telephone or
receive redemption proceeds by bank wire must elect these options by properly
completing the appropriate sections of their account application form. These
privileges may not be available until several weeks after a shareholder's
application is received. Shares for which certificates have been issued may not
be redeemed by telephone.

1. BY MAIL. Shareholders may redeem shares by sending a written request to the
Transfer Agent accompanied by any share certificate that may have been issued to
the shareholder to evidence the shares being redeemed. All written requests for
redemption must be signed by the shareholder with signature guaranteed, and all
certificates submitted for redemption must be endorsed by the shareholder with
signature guaranteed. See "How to Sell Shares - Other Redemption Matters."

2. BY TELEPHONE. A shareholder who has elected telephone redemption privileges
may make a telephone redemption request by calling the Transfer Agent at 800-
338-1348 or 612-667-8833 and providing the shareholder's account number, the
exact name in which his shares are registered and the shareholder's social
security or taxpayer identification number. In response to the telephone
redemption instruction, the Trust will mail a check to the shareholder's record
address or, if the shareholder has elected wire redemption privileges, wire the
proceeds. See "How to Sell Shares - Other Redemption Matters."

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3. BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has
elected wire redemption privileges may request a Fund to transmit the redemption
proceeds by Federal funds wire to a bank account designated in writing by the
shareholder. To request bank wire redemptions by telephone, the shareholder also
must have elected the telephone redemption privilege. Redemption proceeds are
transmitted by wire on the day after a redemption request in proper form is
received by the Transfer Agent.

OTHER REDEMPTION MATTERS

SIGNATURE GUARANTEE. A signature guarantee is required for the following: any
endorsement on a share certificate and for instructions to change a
shareholder's record name or address, designated bank account for wire
redemptions, Automatic Investment or Withdrawal Plan, dividend election,
telephone redemption or exchange option election or any other option election in
connection with the shareholder's account. Signature guarantees may be provided
by any bank, broker-dealer, national securities exchange, credit union, savings
association or other eligible institution that is authorized to guarantee
signatures, and is acceptable to the Transfer Agent. Whenever a signature
guarantee is required, the signature of each person required to sign for the
account must be guaranteed.

Shareholders who wish to accomplish redemptions or exchanges by telephone must
elect those privileges. The Trust, the Transfer Agent and Forum, will employ
reasonable procedures in order to verify that telephone requests are genuine,
including recording telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the Trust did not
employ such procedures, it could be liable for losses arising from unauthorized
or fraudulent telephone instructions. Shareholders should verify the accuracy of
telephone instructions immediately upon receipt of confirmation statements.
During times of drastic economic or market changes, telephone redemption and
exchange privileges may be difficult to implement. In the event that a
shareholder is unable to reach the Transfer Agent by telephone, requests may be
mailed or hand-delivered to the Transfer Agent.

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account whose aggregate net asset value is less than $1,000 immediately
following any redemption. The Trust will not redeem accounts that fall below
that amount solely as a result of a reduction in net asset value.

7. OTHER SHAREHOLDER SERVICES

EXCHANGES

Shareholders of A Shares and B Shares may exchange their shares for A Shares and
B Shares, respectively, of the other funds of the Trust that offer those shares.
As of the date of this Prospectus, the funds of the Trust that offer A Shares
and B Shares, which are offered through separate prospectuses, are Adjustable
U.S. Government Reserve Fund, Government Income Fund, Income Fund, Total Return
Bond Fund, Intermediate U.S. Government Fund and Stable Income Fund (each a
fixed-income fund); Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota
Tax-Free Fund (each a tax-free fixed-income fund); and Income Stock Fund,
ValuGrowth Stock Fund, Small Company Stock Fund and Contrarian Stock Fund (each
an equity fund). It is anticipated that the Trust may in the future create
additional funds that will offer Shares which will be exchangeable with the
Funds' Shares. In addition, A Shares may be exchanged for Investor Shares of
Ready Cash Investment Fund and Municipal Money Market Fund of the Trust. B
Shares may be exchanged for Exchange Shares of Ready Cash Investment Fund.
Prospectuses for the shares of the funds listed above, as well as a current list
of the funds of the Trust that offer shares exchangeable with the Shares of the
Funds, can be obtained through Forum by contacting the Transfer Agent.

The Funds do not charge for exchanges, and there is currently no limit on the
number of exchanges a shareholder may make. The Funds reserve the right,
however, to limit excessive exchanges by any shareholder. Exchanges are subject
to the fees (other than contingent deferred sales charges) charged by, and the
limitations (including minimum investment restrictions) of, the fund into which
a shareholder is exchanging.

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registration and the same shareholder privileges as the account from which
the exchange is being made. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of
residence.

The Funds and Federal tax law treat an exchange as a redemption and a purchase.
Accordingly, a shareholder may realize a capital gain or loss depending on
whether the value of the shares redeemed is more or less than the shareholder's
basis in the shares at the time of the exchange transaction. Exchange procedures
may be amended materially or terminated by the Trust at any time upon 60 days'
notice to shareholders. See "Additional Purchase and Redemption Information" in
the SAI.

SALES CHARGES. The exchange of A Shares may result in additional sales charges.
If an exchange of A Shares is made into a fund that imposes an initial sales
charge, the shareholder is required to pay an amount equal to any excess of that
Fund's initial sales charge attributable to the number of shares being acquired
in the exchange over any initial sales charge paid by the shareholder for the
shares being exchanged. For example, if a shareholder paid a 2% initial sales
charge in connection with a purchase of shares and then exchanged those shares
into A Shares of another fund with a 3% initial sales charge, the shareholder
would pay an additional 1% sales charge on the exchange. A Shares acquired
through the reinvestment of dividends or distributions are deemed to have been
acquired with a sales charge rate equal to that applicable to the shares on
which the dividends or distributions were paid.

Shares of a Fund ("Original Shares") may be exchanged without the payment of any
contingent deferred sales charge. A and B Shares acquired as a result of such
exchange ("New Shares") and subsequently redeemed will nonetheless be subject to
the contingent deferred sales charge applicable to the Original Shares as if
those shares were being redeemed at that time. For purposes of computing both
the contingent deferred sales charge payable upon redemption of the New Shares
and, in the case of B Shares, the time remaining before the New B Shares convert
to A Shares of that Fund, the deferred sales charge and the time remaining
applicable to the Original Shares will apply to the New Shares rather than the
deferred sales charge and time remaining that would otherwise apply. The
deferred sales charge and time remaining applicable to Shares first purchased by
a shareholder will apply to New Shares resulting from both an initial and any
subsequent exchanges.

1. EXCHANGES BY MAIL. Exchanges may be made by sending a written request to
the Transfer Agent accompanied by any share certificates for the shares to be
exchanged. All written requests for exchanges must be signed by the shareholder,
and all certificates submitted for exchange must be endorsed by the shareholder
with signature guaranteed. See "How to Sell Shares - Other Redemption Matters."

2. EXCHANGES BY TELEPHONE. A shareholder who has elected telephone exchange
privileges may make a telephone exchange request by calling the Transfer Agent
at 800-338-1348 or 612-667-8833 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. See "How to
Sell Shares - Other Redemption Matters."

AUTOMATIC INVESTMENT PLAN

Under the Funds' Automatic Investment Plan, shareholders may authorize monthly
amounts of $50 or more to be withdrawn automatically from the shareholder's
designated bank account (other than passbook savings) and sent to the Transfer
Agent for investment in either A or B Shares of a Fund. Shareholders wishing to
use this plan must complete an application which may be obtained by writing or
calling the Transfer Agent. The Trust may modify or terminate the automatic
investment plan with respect to any shareholder in the event that the Trust is
unable to settle any transaction with the shareholder's bank. If the Automatic
Investment Plan is terminated before the shareholder's account totals $1,000,
the Trust reserves the right to close the account in accordance with the
procedures described under "How to Sell Shares - Other Redemption Matters."

INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). An IRA account application form
may be obtained by contacting the Trust at 800-338-1348 or 612-667-8833.
Individuals may make tax-deductible IRA contributions of up to a maximum of
$2,000 annually. However, the deduction will be reduced if the individual or, in
the case of a married individual filing jointly, either the individual

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or the individual's spouse is an active participant in an employer-sponsored
retirement plan and has adjusted gross income above certain levels.

AUTOMATIC WITHDRAWAL PLAN

A shareholder whose Shares in a single account total $1,000 or more may
establish a withdrawal plan to provide for the preauthorized payment from the
shareholder's account of $250 or more on a monthly, quarterly, semi-annual or
annual basis. Under the withdrawal plan, sufficient shares in the shareholder's
account are redeemed to provide the amount of the periodic payment and any
taxable gain or loss is recognized by the shareholder upon redemption of the
shares. Shareholders wishing to utilize the withdrawal plan may do so by
completing an application which may be obtained by writing or calling the
Transfer Agent. The Trust may suspend a shareholder's withdrawal plan without
notice if the account contains insufficient funds to effect a withdrawal or if
the account balance is less than $1,000 at any time.

REOPENING ACCOUNTS

A shareholder may reopen an account, without filing a new account application
form, at any time within one year after the shareholder's account is closed,
provided that the information on the account application form on file with the
Trust is still applicable.

8. DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of Diversified Equity Fund's, Growth Equity Fund's and Income Equity
Fund's net investment income are declared and paid quarterly. Distributions of
net capital gain, if any, realized by a Fund are distributed annually. Dividends
paid by a Fund with respect to each class of shares of the Fund will be
calculated in the same manner at the same time on the same day. The per share
dividends on a Fund's B Shares will be lower than the per share dividends on A
Shares as a result of the distribution services fees and maintenance fees
applicable to B Shares.

Shareholders may choose to have dividends and distributions of a Fund reinvested
in shares of that Fund (the "Reinvestment Option"), to receive dividends and
distributions in cash (the "Cash Option") or to direct dividends and
distributions to be reinvested in shares of another fund of the Trust (the
"Directed Dividend Option"). All dividends and distributions are treated in the
same manner for Federal income tax purposes whether received in cash or
reinvested in shares of a fund.

Under the Reinvestment Option, all dividends and distributions of a Fund are
automatically invested in additional shares of that Fund. All dividends and
distributions are reinvested at a Fund's net asset value as of the payment date
of the dividend or distribution. Shareholders are assigned this option unless
one of the other two options is selected. Under the Cash Option, all dividends
and distributions are paid to the shareholder in cash. Under the Directed
Dividend Option, shareholders of a Fund whose shares in a single account of that
Fund total $10,000 or more may elect to have all dividends and distributions
reinvested in shares of another fund of the Trust, provided that those shares
are eligible for sale in the shareholder's state of residence. For further
information concerning the Directed Dividend Option, shareholders should contact
the Transfer Agent.

TAXES

Each Fund intends to continue to qualify for each fiscal year to be taxed as a
"regulated investment company" under the Internal Revenue Code of 1986 (the
"Code"). As such, the Funds will not be liable for Federal income and excise
taxes on the net investment income and capital gain distributed to their
shareholders. Because each Fund intends to distribute all of its net investment
income and net capital gain each year, each Fund should thereby avoid all
Federal income and excise taxes.

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Dividends paid by a Fund out of its net investment income (including realized
net short-term capital gain) are taxable to shareholders of the Fund as ordinary
income notwithstanding that the dividends are reinvested in additional shares of
the Fund.

Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of the shares by the amount of
the dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to the
shareholder as described above.

It is expected that a portion of each Fund's dividends from net investment
income will be eligible for the dividends received deduction for corporations.

Each Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemptions) paid
to a shareholder who fails to provide the Fund with a correct taxpayer
identification number or to make required certifications, or who is subject to
backup withholding.

Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by each Fund will
be mailed to shareholders shortly after the close of each year.

9. OTHER INFORMATION

BANKING LAW MATTERS

Federal banking laws and regulations generally permit a bank or bank affiliate
to act as investment adviser, transfer agent, or custodian to an investment
company and to purchase shares of the investment company as agent for and upon
the order of a customer and, in connection therewith, to retain a sales charge
or similar payment. Counsel to the Trust believes that Norwest and any other
bank or bank affiliate that may serve as a Processing Organization or perform
sub-transfer agent or similar services or purchase shares as agent for its
customers may perform the services described in this Prospectus for the Trust
and its shareholders without violating applicable Federal banking laws or
regulations.

Federal or state statutes or regulations and judicial or administrative
decisions or interpretations relating to the activities of banks and their
affiliates, however, could prevent a bank or bank affiliate from continuing to
perform all or a part of the activities contemplated by this Prospectus. If a
bank or bank affiliate were prohibited from so acting, changes in the operation
of the Trust could occur and a shareholder serviced by a bank or bank affiliate
may no longer be able to avail itself of those services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.

DETERMINATION OF NET ASSET VALUE

The Trust determines the net asset value per share of each Fund as of 4:00 P.M.,
Eastern time, on each Fund Business Day by dividing the value of the Fund's net
assets (i.e., the value of its securities and other assets less its liabilities)
by the number of shares outstanding at the time the determination is made.
Securities owned by a Fund for which market quotations are readily available are
valued at current market value or, in their absence, at fair value as determined
by the Board. The Trust does not determine net asset value on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas.

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The per share net asset values of each class of shares of a Fund are expected to
be substantially the same. Under certain circumstances, however, the per share
net asset value of each class may vary. Due to the higher expenses of B Shares,
the net asset value of B Shares will generally be lower than the net asset value
of the other classes. The per share net asset value of each class of a Fund
eventually will tend to converge immediately after the payment of dividends,
which will differ by approximately the amount of the expense accrual
differential among the classes.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Fund Business Day. In addition, trading in
foreign securities generally or in a particular country or countries may not
take place on all Fund Business Days. Trading does take place in various foreign
markets, however, on days on which the Fund's net asset value is not calculated.
Calculation of the net asset value per share of the Fund may not occur
contemporaneously with the determination of the prices of the foreign securities
used in the calculation. Events affecting the values of foreign securities that
occur after the time their prices are determined and before the Fund's
determination of net asset value will not be reflected in the Fund's calculation
of net asset value unless the Adviser or Schroder determines that the particular
event would materially affect net asset value, in which case an adjustment will
be made.

All assets and liabilities of a Fund denominated in foreign currencies are
converted into United States dollars at the mean of the bid and asked prices of
such currencies against the United States dollar last quoted by a major bank
prior to the time of conversion.

PERFORMANCE INFORMATION

A Fund's performance may be quoted in advertising in terms of yield or total
return. All performance information is based on historical results and is not
intended to indicate future performance. A Fund's yield is a way of showing the
rate of income the Fund earns on its investments as a percentage of the Fund's
share price. To calculate standardized yield, a Fund takes the interest income
it earned from its investments for a 30-day period (net of expenses), divides it
by the average number of shares entitled to receive dividends, and expresses the
result as an annualized percentage rate based on the Fund's share price at the
end of the 30-day period. A Fund's total return shows its overall change in
value, including changes in share price and assuming all the Fund's dividends
and distributions are reinvested. A cumulative total return reflects a Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual returns tend to smooth out
variations in the Funds' returns, shareholders should recognize that they are
not the same as actual year-by-year results. To illustrate the components of
overall performance, a Fund may separate its cumulative and average annual
returns into income results and capital gain or loss. Published yield quotations
are, and total return figures may be, based on amounts actually invested in a
Fund net of sales loads that may be paid by an investor. A computation of yield
or total return that does not take into account the sales load paid by an
investor will be higher than a computation based on the public offering price of
shares purchased that take into account payment of the sales load.

PERFORMANCE BENCHMARKS. Each of the Funds uses a benchmark securities index as a
measure of the Fund's performance. These indices may be comprised of a composite
of various recognized securities indices to reflect the investment policies of
Diversified Equity Fund, Growth Equity Fund and Income Equity Fund, which invest
their assets using different investment styles. These indices are not used in
the management of the Fund but rather are standards by which the Advisers and
shareholders may compare the performance of a Fund to an unmanaged composite of
securities with similar, but not identical, characteristics as the Fund. The
Funds may from time to time advertise a comparison of their performance against
any of these or other indices.

The Funds' advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Inc., Lipper
Analytical Services, Inc. and IBC/Donoghue, Inc. In addition, the performance of
the Funds may be compared to recognized indices of market performance. The
comparative material found in the Funds' advertisements, sales literature or
reports to shareholders may contain performance ratings. This material is not to
be considered representative or indicative of future performance. All
performance information for a Fund is calculated on a class basis.

THE TRUST AND ITS SHARES

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The Trust was originally organized under the name "Prime Value Funds, Inc." as a
Maryland corporation on August 29, 1986, and on July 30, 1993, was reorganized
as a Delaware business trust under the name "Norwest Funds." The Trust has an
unlimited number of authorized shares of beneficial interest. The Board may,
without shareholder approval, divide the authorized shares into an unlimited
number of separate portfolios or series (such as the Funds) and may divide
portfolios or series into classes of shares (such as A Shares and B Shares), and
the costs of doing so will be borne by the Trust. Currently the authorized
shares of the Trust are divided into thirty separate series.

OTHER CLASSES OF SHARES. In addition to the Shares, each Fund may create and
issue shares of other classes of securities. Each Fund currently offers three
classes of shares: A Shares; B Shares; and I Shares. I Shares are offered to
fiduciary, agency and custodial clients of bank trust departments, trust
companies and their affiliates without any sales charges or distribution service
or maintenance fees. Each class of a Fund may have a different expense ratio and
different sales charges (including distribution fees) and each class'
performance will be affected by its expenses and sales charges. For more
information on any other class of shares of the Funds investors may contact the
Transfer Agent at 612-667-8833 or 800-338-1348. Investors may also contact their
Norwest sales representative or the Funds' distributor to obtain information
about the other classes. Sales personnel of broker-dealers and other financial
institutions selling the Fund's shares may receive differing compensation for
selling A Shares, B Shares and I Shares of the Funds.

SHAREHOLDER VOTING AND OTHER RIGHTS. Each share of each fund of the Trust and
each class of shares has equal dividend, distribution, liquidation and voting
rights, and fractional shares have those rights proportionately, except that
expenses related to the distribution of the shares of each class (and certain
other expenses such as transfer agency and administration expenses) are borne
solely by those shares and each class votes separately with respect to the
provisions of any Rule 12b-1 plan which pertain to the class and other matters
for which separate class voting is appropriate under applicable law. Generally,
shares will be voted in the aggregate without reference to a particular
portfolio or class, except if the matter affects only one portfolio or class or
voting by portfolio or class is required by law, in which case shares will be
voted separately by portfolio or class, as appropriate. Delaware law does not
require the Trust to hold annual meetings of shareholders, and it is anticipated
that shareholder meetings will be held only when specifically required by
Federal or state law. Shareholders have available certain procedures for the
removal of Trustees. There are no conversion or preemptive rights in connection
with shares of the Trust. All shares when issued in accordance with the terms of
the offering will be fully paid and nonassessable. Shares are redeemable at net
asset value, at the option of the shareholders, subject to any contingent
deferred sales charge that may apply. A shareholder in a portfolio is entitled
to the shareholder's pro rata share of all dividends and distributions arising
from that portfolio's assets and, upon redeeming shares, will receive the
portion of the portfolio's net assets represented by the redeemed shares.

From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

The Blended Portfolios normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in a Blended Portfolio will be entitled
to vote in proportion to its relative beneficial interest in the Blended
Portfolio. On most issues subject to a vote of investors, as required by the
1940 Act and other applicable law, the Fund will solicit proxies from
shareholders of the Fund and will vote its interest in the Blended Portfolio in
proportion to the votes cast by its shareholders. If there are other investors
in the Blended Portfolio, there can be no assurance that any issue that receives
a majority of the votes cast by Fund shareholders will receive a majority of
votes cast by all investors in the Blended Portfolio; indeed, if other investors
hold a majority interest in the Blended Portfolio, they could hold have voting
control of the Blended Portfolio.

CORE TRUST STRUCTURE

THE BLENDED FUNDS

Pursuant to an exemptive order issued by the SEC, the Blended Funds invest
portions of their assets in Small Company Portfolio, International Portfolio II
and Index Portfolio of Core Trust. Core Trust currently consists of only these
three diversified portfolios and one other, International Portoflio, in which
another portfolio of the Trust

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invests all of its assets. The assets of each Portfolio of Core Trust belong
only to, and the liabilities of each Portfolio are borne solely by, the
respective Portfolio and no other Portfolio of Core Trust.

The Blended Funds are permitted to invest a portion of their assets which are
managed by using the small company, index and international investment styles in
Small Company Portfolio, Index Portfolio, and International Portfolio II
pursuant to an exemptive order obtained from the SEC. The conditions of the
Trust's exemptive order do not permit a Fund to invest all of its assets in a
Blended Portfolio.

The Trust's exemptive order imposes several substantive conditions. On behalf of
each Blended Fund, the Board is required to review at least annually reports
identifying all instances in which a Portfolio in which the Fund invests buys a
security at approximately the same time that another Portfolio in which the Fund
invests sells the same security. The Board will consider whether the duplication
of brokerage costs resulting from these transactions is significant. If the
duplication of brokerage costs becomes significant, the Board will adopt
procedures designed to limit duplication. The Board will determine, at least
annually, that investment in the Portfolios is in the best interests of the
shareholders of each Blended Fund.

INTERNATIONAL FUND

International Fund invests all of its assets in the Portfolio, a separate series
of Core Trust, a business trust organized under the laws of the State of
Delaware in September 1994. Accordingly, the Portfolio directly acquires its own
investment securities and the Fund acquires an indirect interest in those
securities. Core Trust is registered under the 1940 Act as an open-end
management investment company and currently has seven separate portfolios. The
assets of the Portfolio, a diversified portfolio, belong only to, and the
liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust.

The Portfolio. The investment objective and fundamental investment policies of
International Fund and the Portfolio can be changed only with shareholder
approval. See "Prospectus Summary," "Investment Objectives and Policies," and
"Management" for a complete description of the Portfolio's investment objective,
policies, restrictions, management, and expenses.

International Fund's investment in the Portfolio is in the form of a non-
transferable beneficial interest. As of the date of this Prospectus, the Fund is
the only institutional investor that has invested all of its assets in the
Portfolio. The Portfolio may permit other investment companies or institutional
investors to invest in it. All investors in the Portfolio will invest on the
same terms and conditions as the Fund and will pay a proportionate share of the
Portfolio's expenses.

The Portfolio will not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund, could have
different advisory and other fees and expenses than the Fund. Therefore, Fund
shareholders may have different returns than shareholders in another investment
company that invests exclusively in the Portfolio. There is currently no such
other investment company that offers its shares to members of the general
public. Information regarding any such funds in the future will be available
from Core Trust by calling 207-879-1900.

Certain Risks of Investing in the Portfolio. The Fund's investment in the
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if the Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, the Portfolio's remaining
investors (including the Fund) might, as a result, experience higher pro rata
operating expenses, thereby producing lower returns.

The Fund may withdraw its entire investment from the Portfolio at any time, if
the Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if there were other
investors in the Portfolio with power to, and who did by a vote of the
shareholders of all investors (including the Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable to the Board.
A withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. That distribution could result
in a less diversified portfolio of investments for the Fund and could affect

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<PAGE>

adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it usually would incur brokerage fees or other
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
Adviser and Schroder, the Fund's investment adviser and subadviser,
respectively, or the investment of all of the Fund's investable assets in
another pooled investment entity having substantially the same investment
objective as the Fund. The inability of the Fund to find a suitable replacement
investment, in the event the Board decided not to permit the Adviser and
Schroder to manage the Fund's assets, could have a significant impact on
shareholders of the Fund.

Each investor in the Portfolio, including the Fund, will be liable for all
obligations of the Portfolio, but not any other portfolio of Core Trust. The
risk to an investor in the Portfolio of incurring financial loss on account of
such liability, however, would be limited to circumstances in which the
Portfolio was unable to meet its obligations. Upon liquidation of the Portfolio,
investors would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION AND THE FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF THE FUNDS' SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO
ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.

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<PAGE>

INTERMEDIATE U.S. GOVERNMENT FUND
STABLE INCOME FUND
A SHARES
B SHARES

Account Information and
Shareholder Servicing:
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 or 800-338-1348

PROSPECTUS

March 1, 1996

This prospectus offers A Shares and B Shares of Intermediate U.S. Government
Fund and Stable Income (each a "Fund" and collectively the "Funds"). The Funds
are separate diversified fixed income portfolios of Norwest Advantage Funds (the
"Trust"), which is a registered open-end management investment company.

AN INVESTMENT IN SHARES OF ANY MUTUAL FUND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

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<PAGE>

1. PROSPECTUS SUMMARY

Highlights of the Funds

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

Investment Objectives and Policies

INTERMEDIATE U.S. GOVERNMENT FUND seeks income and safety of principal by
investing primarily in U.S. Government Securities. The Fund seeks to moderate
its volatility by using a conservative approach to structuring the maturities
of its investment portfolio.

STABLE INCOME FUND seeks to maintain safety of principal and provide low
volatility total return by investing primarily in short and intermediate
maturity, investment grade fixed income securities.

Investment Adviser

The Funds' investment adviser (the "Adviser") is Norwest Investment
Management, a part of Norwest Bank Minnesota, N.A. ("Norwest"). The Adviser
provides investment advice to various institutions, pension plans and other
accounts and, as of December 31, 1995, managed assets totaling approximately
$22.7 billion. See "Management - Investment Advisory Services." Norwest
serves as the Trust's transfer agent, dividend disbursing agent and
custodian. See "Management - Shareholder Servicing and Custody."

Fund Management

The manager of the Trust and distributor of its shares is Forum Financial
Services, Inc. ("Forum"), a registered broker-dealer and member of the
National Association of Securities Dealers, Inc. See "Management - Management
and Distribution Services."

Shares of the Funds

Each Fund currently offers three separate classes of shares: A class ("A
Shares"), B class ("B Shares") and I class ("I Shares"). A Shares and B
Shares are sold through this Prospectus and are collectively referred to as
the "Shares."

A Shares. A Shares are offered at a price equal to their net asset value
plus a sales charge imposed at the time of purchase or, in some cases, a
contingent deferred sales charge imposed on redemptions made within two years
of purchase.

B Shares. B Shares are offered at a price equal to their net asset value
plus a contingent deferred sales charge imposed on most redemptions made
within four years of purchase. B Shares pay a distribution services fee at an
annual rate of up to 0.75%, and a maintenance fee in an amount equal to 0.25%
of the B Shares' average daily net assets. B Shares of Adjustable U.S.
Government Fund automatically convert to A Shares of that Fund six years
after the end of the calendar month in which the B Shares were originally
purchased. B Shares of Stable Income Fund automatically convert to A Shares
of that Fund four years after the end of the calendar month in which the B
Shares were originally purchased.

The choice of A Shares or B Shares permits each investor to purchase those
shares that the investor believes to be most beneficial given the amount
purchased, the length of time the investor expects to hold the shares and
other circumstances. A Shares will normally be more beneficial to the
investor who qualifies for reduced initial sales charges as described below.
See "How to Buy Shares - Alternative Distribution Arrangements."

I Shares are offered by a separate prospectus to fiduciary, agency and
custodial clients of bank trust departments, trust companies and their
affiliates. Shares of each class of a Fund have identical interests in the
investment portfolio of the Fund and, with certain exceptions, have the same
rights. See "Other Information - The Trust and Its Shares."

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<PAGE>

How to Buy and Sell Shares

Shares may be purchased or redeemed by mail, by bank wire and through an
investor's broker-dealer or other financial institution. The minimum initial
investment in Shares is $1,000. The minimum subsequent investment is $100.
See "How to Buy Shares" and "How to Sell Shares."

Exchanges

Shareholders may exchange A Shares and B Shares for A Shares and B Shares,
respectively, of certain other funds of the Trust. In addition, A Shares may
be exchanged for investor class shares of certain money market funds of the
Trust and B Shares may be exchanged for exchange class shares of Ready Cash
Investment Fund, a money market fund of the Trust. See "Other Shareholder
Services - Exchanges."

Shareholder Features

Each Fund offers an Automatic Investment Plan, Automatic Withdrawal Plan and
Directed Dividend Option. Purchases of A Shares may be subject to Rights of
Accumulation, Cumulative Quantity Discounts or a Reinstatement Privilege. See
"Other Shareholder Services" and "How to Buy Shares - Alternative
Distribution Arrangements."

Dividends

Dividends of each Fund's net investment income are declared and paid monthly.
Each Fund's net capital gain, if any, is distributed annually. All dividends
and distributions are reinvested in additional Fund shares unless the
shareholder elects to have them paid in cash. See "Dividends and Tax Matters."

Certain Investment Considerations and Risk Factors

There can be no assurance that any Fund will achieve its investment
objective, and a Fund's net asset value and total return will fluctuate based
upon changes in the value of its portfolio securities. Normally, the value of
a Fund's investments varies inversely with changes in interest rates. The
potential for appreciation in a Fund in the event of a decline in interest
rates may be limited or negated by increased principal prepayments on certain
mortgage-backed securities held by the Fund. Upon redemption, an investment
in a Fund may be worth more or less than its original value. The Funds'
investments are subject to "credit risk" relating to the financial condition
of the issuers of the securities that each Fund holds. Each Fund, however,
invests only in investment grade securities (those rated in the top four
grades by a nationally recognized statistical rating organization ("NRSRO")
such as Standard & Poor's Corporation).

All investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as the
potential use of leverage by certain Funds through borrowings, securities
lending, swap transactions and other investment techniques. See "Investment
Objectives and Policies - Additional Investment Policies and Risk
Considerations." Similarly, a Fund's use of mortgage- and asset-backed
securities entails certain risks. See "Investment Objectives and Policies -
Additional Investment Policies and Risk Considerations - Mortgage-Backed
Securities" and "- Asset-Backed Securities."

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<PAGE>

EXPENSE INFORMATION

The purpose of the following tables is to assist investors in understanding
the expenses that an investor in Shares of a Fund will bear directly or
indirectly.

SHAREHOLDER TRANSACTION EXPENSES(1)
(applicable to each Fund)

<TABLE>
<CAPTION>
Stable Income Intermediate U.S.
Fund Government Fund
A Shares B Shares A Shares B Shares
<S> <C> <C> <C> <C>
Maximum sales charge imposed on purchases (as
a percentage of public offering price) 1.5% Zero 3.75 Zero
Maximum deferred sales charge (as a
percentage of the lesser of original purchase
price or redemption proceeds) Zero(2) 1.5% Zero 3.0%
Exchange Fee Zero Zero Zero Zero
</TABLE>

ANNUAL OPERATING EXPENSES(3)

(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)

<TABLE>
<CAPTION>
Stable Income Intermediate U.S.
Fund Government Fund
A Shares B Shares A Shares B Shares
<S> <C> <C> <C> <C>
Investment Advisory Fees 0.30% 0.30% 0.33% 0.33%
Rule 12b-1 Fees(4) None 0.75% None 0.75%
Other Expenses 0.35% 0.35% 0.35% 0.35%
Total Operating Expenses 0.65% 1.40% 0.68% 1.43%
</TABLE>

(1) Sales charge waivers and reduced sales charge plans are available for A
Shares. The maximum 4.0% contingent deferred sales charge on B Shares
applies to redemptions during the first year after purchase; the charge
declines thereafter, becoming 3.0% during the second and third years, 2.0%
during the fourth and fifth years, 1.0% during the sixth year and reaches
zero the following year. See "How to Buy Shares - Alternative Distribution
Arrangements."

(2) If A Shares purchased without an initial sales charge (purchases of
$1,000,000 or more) are redeemed within two years after purchase, a
contingent deferred sales charge of up to 1.0% will be applied to the
redemption. See "How to Buy Shares - Alternative Distribution Arrangements."

(3) For a further description of the various expenses associated with Shares,
see "Management." Expenses associated with the I Shares of a Fund differ
from those of Shares listed in the table shown above. The amounts of
expenses for Diversified Equity Fund, Growth Equity Fund and Income Equity
Fund are based on amounts incurred during the Funds' first fiscal year ended
October 31, 1995.

With respect to A Shares, absent expense reimbursements and fee waivers the
expenses of Stable Income Fund and Intermediate U.S. Government Fund would
be: Other Expenses, 0.66% and 0.58%, respectively; and Total Operating
Expenses, 0.96% and 0.91%, respectively. With respect to B Shares, absent
expense reimbursements and fee waivers the expenses of Stable Income Fund and
Intermediate U.S. Government Fund would be: Other Expenses, 0.66% and 0.58%,
respectively; and Total Operating Expenses, 1.96% and 1.91%, respectively.
Other Expenses include transfer agency and custodial fees payable to Norwest
at a combined annual rate of up to 0.30% of each Fund's average daily net
assets attributable to A Shares and B Shares.

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<PAGE>

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of
expenses that an investor would pay, assuming a $1,000 investment in a Fund"s
Shares, a 5% annual return and reinvestment of all dividends and
distributions:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Stable Income Fund
A Shares 22 35 51 95
B Shares
Assuming redemption at the end of the period 29 44 - -
Assuming no redemption 14 44 - -
Intermediate U.S. Government Fund
A Shares 44 58 74 119
B Shares
Assuming redemption at the end of the
period 45 65 78 -
Assuming no redemption 15 45 78 -
</TABLE>

The example is based on the expenses listed in the expense table. The 5%
annual return is not predictive of and does not represent the Funds'
projected returns; rather, it is required by government regulation. The
example assumes deduction of the maximum initial sales charge for A Shares,
deduction of the contingent deferred sales charge for B Shares applicable to
a redemption at the end of the period and the conversion of B Shares to A
Shares at the end of seven years. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND
RETURN MAY BE GREATER OR LESS THAN INDICATED.

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<PAGE>

2. INVESTMENT OBJECTIVES AND POLICIES

The Funds invest primarily in fixed income securities pursuant to the
investment policies listed below. Stable Income Fund may invest in foreign
issuers. These investments may involve certain risks. See "Additional
Investment Policies and Risk Considerations - Foreign Investment Risks and
Considerations".

INTERMEDIATE U.S. GOVERNMENT FUND

INVESTMENT OBJECTIVE. Intermediate U.S. Government Fund's investment
objective is to provide income and safety of principal by investing primarily
in U.S. Government Securities.

INVESTMENT POLICIES. Intermediate U.S. Government Fund seeks to attain its
investment objective by investing primarily in fixed and variable rate U.S.
Government Securities. Under normal circumstances, the Fund intends to invest
at least 65 percent of its assets in U.S. Government Securities and may
invest up to 35 percent of its assets in fixed income securities that are not
U.S. Government Securities. The Fund emphasizes the use of intermediate
maturity securities to lessen interest rate risk, while employing low risk
yield enhancement techniques to add to the Fund's return over a complete
economic or interest rate cycle.

The securities in which the Fund invests include mortgage-backed and other
asset-backed securities, although the Fund limits these investments to not
more than 50 percent and 25 percent, respectively, of its total assets. As
part of its mortgage-backed securities investments, the Fund may enter into
"dollar roll" transactions. Certain fixed income securities are "zero-coupon"
securities and the Fund will limit its investment in these securities, except
those issued through the U.S. Treasury's STRIPS program, to not more than 10
percent of the Fund's total assets. The Fund may also invest in securities
that are restricted as to disposition under the Federal securities laws
(sometimes referred to as "private placements" or "restricted securities").
In addition, the Fund may not invest more than 25 percent of its total assets
in securities issued or guaranteed by any single agency or instrumentality of
the U.S. Government, except the U.S. Treasury. The Fund may make short sales
and may purchase securities on margin (borrow money in order to purchase
securities), which are considered speculative investment techniques. See
"Additional Investment Policies and Risk Considerations - Short Sales" and "-
Purchasing Securities on Margin."

The Fund will only purchase securities that are rated, at the time of
purchase, within the two highest rating categories assigned by a Nationally
Recognized Statistical Rating Organization, such as Moody's Investors
Service, Inc., Standard & Poor's Corporation or Fitch Investors Services,
Inc., or which are unrated and determined by the Adviser to be of comparable
quality.

The Fund primarily will invest in debt obligations with maturities (or
average life in the case of mortgage-backed and similar securities) ranging
from short-term (including overnight) to 12 years. Under normal
circumstances, the Fund's portfolio of securities will have an average
dollar-weighted maturity of between 3 and 7 years. Under normal
circumstances, the Fund's portfolio of securities will have a duration of
between 75 percent and 125 percent of the duration of the Lehman Intermediate
Government Bond Index, which is used as the Fund's benchmark index as
described under "Other Information - Fund Performance." Duration is a measure
of a debt security's average life that reflects the present value of the
security's cash flow and, accordingly, is a measure of price sensitivity to
interest rate changes ("duration risk"). Because earlier payments on a debt
security have a higher present value, duration of a security, except a
zero-coupon security, will be less than the security's stated maturity.

In order to manage its exposure to different types of investments, the Fund
may enter into interest rate and mortgage swap agreements and may purchase
and sell interest rate caps, floors and collars. The Fund may also engage in
certain strategies involving options (both exchange-traded and
over-the-counter) to attempt to enhance the Fund's return and may attempt to
reduce the overall risk of its investments ("hedge") by using options and
futures contracts. The Fund's ability to use these strategies may be limited
by market considerations, regulatory limits and tax considerations. The Fund
may write covered call and put options, buy put and call options, buy and
sell interest rate futures contracts, and buy options and write covered
options on those futures contracts. An option is covered if, so long as the
Fund is obligated under the option, it owns an offsetting position in the
underlying security or futures contract or maintains a segregated account of
liquid, high-grade debt instruments with a value at all times sufficient to
cover the Fund's obligations under the option.

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<PAGE>

STABLE INCOME FUND

INVESTMENT OBJECTIVES. Stable Income Fund's investment objective is to
maintain safety of principal while providing low-volatility total return.

INVESTMENT POLICIES. Stable Income Fund seeks to maintain safety of principal
while providing low volatility total return by investing primarily in
investment grade short-term obligations. The Fund invests in a diversified
portfolio of fixed and variable rate U.S. dollar denominated fixed income
securities of a broad spectrum of United States and foreign issuers,
including U.S. Government Securities and the debt securities of financial
institutions, corporations, and others.

The securities in which the Fund invests include mortgage-backed and other
asset-backed securities, although the Fund limits these investments to not
more than 60 percent and 25 percent, respectively, of its total assets. In
addition, the Fund limits its holdings of mortgage-backed securities that are
not U.S. Government Securities to 25 percent of its total assets. The Fund
may invest any amount of its assets in U.S. Government Securities, but under
normal circumstances less than 50 percent of the Fund's total assets are so
invested. The Fund may not invest more than 25 percent of its total assets in
the securities issued or guaranteed by any single agency or instrumentality
of the U.S. Government, except the U.S. Treasury, and may not invest more
than 10 percent of its total assets in the securities of any other issuer. In
addition, the Fund may invest in securities that are restricted as to
disposition under the Federal securities laws (sometimes referred to as
"private placements" or "restricted securities")

The Fund only purchases those securities that are rated, at the time of
purchase, within the three highest long-term or two highest short-term rating
categories assigned by a Nationally Recognized Statistical Rating
Organization, such as Moody's Investors Service, Inc., Standard & Poor's
Corporation or Fitch Investors Services, Inc., or which are unrated and
determined by the Adviser to be of comparable quality.

The Fund invests in debt obligations with maturities (or average life in the
case of mortgage-backed and similar securities) ranging from short-term
(including overnight) to 12 years and seeks to maintain an average
dollar-weighted portfolio maturity of between 2 and 5 years.

In order to manage its exposure to different types of investments, the Fund
may enter into interest rate and mortgage swap agreements and may purchase
and sell interest rate caps, floors and collars. The Fund may also engage in
certain strategies involving options (both exchange-traded and
over-the-counter) to attempt to enhance the Fund's income and may attempt to
reduce the overall risk of its investments or limit the uncertainty in the
level of future foreign exchange rates (hedge) by using options and futures
contracts and foreign currency forward contracts. The Fund's ability to use
these strategies may be limited by market considerations, regulatory limits
and tax considerations. The Fund may write covered call and put options, buy
put and call options, buy and sell interest rate and foreign currency futures
contracts and buy options and write covered options on those futures
contracts. An option is covered if, so long as the Fund is obligated under
the option, it owns an offsetting position in the underlying security or
futures contract or maintains a segregated account of liquid, high-grade debt
instruments with a value at all times sufficient to cover the Fund's
obligations under the option.

ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS

Each Fund's investment objective and all investment policies of the Funds
that are designated as fundamental may not be changed without approval of the
holders of a majority of that Fund's outstanding voting securities. A
majority of a Fund's outstanding voting securities means the lesser of 67% of
the shares of a Fund present or represented at a shareholders' meeting at
which the holders of more than 50% of the shares are present or represented,
or more than 50% of the outstanding shares of a Fund. Except as otherwise
indicated, investment policies of the Funds are not deemed to be fundamental
and may be changed by the Board of Trustees of the Trust (the "Board")
without shareholder approval. A further description of the Funds' investment
policies, including additional fundamental policies, is contained in the SAI.

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<PAGE>

The Adviser monitors the creditworthiness of counterparties to the Funds'
transactions and intends to enter into a transaction only when it believes
that the counterparty presents minimal credit risks and the benefits from the
transaction justify the attendant risks. No Fund may invest more than 15% of
its net assets in illiquid securities, including repurchase agreements not
entitling the Fund to payment within seven days. As used herein, the term
U.S. Government Securities means obligations issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities.

BORROWING. As a fundamental policy, each Fund may borrow money from banks or
by entering into reverse repurchase agreements and will limit borrowings to
amounts not in excess of 33 1/3% of the value of the Fund's total assets.
Borrowings for other than temporary or emergency purposes or meeting
redemption requests may not exceed 5% of the value of a Fund's assets. Each
Fund may enter into reverse repurchase agreements, transactions in which a
Fund sells a security and simultaneously commits to repurchase that security
from the buyer at an agreed upon price on an agreed upon future date.

MARGIN AND SHORT SALES. Intermediate U.S. Government Fund may purchase
securities on margin or make short sales of securities. Stable Income Fund
may make short sales against the box. The Funds may use short-term credits as
necessary for the clearance of portfolio transactions and may make margin
deposits in connection with permitted transactions in options and futures
contracts.

DIVERSIFICATION AND CONCENTRATION. Each Fund is diversified as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"). As a
fundamental policy, with respect to 75% of its assets, no Fund may purchase a
security (other than a U.S. Government Security or shares of investment
companies) if, as a result, (i) more than 5% of the Fund's total assets would
be invested in the securities of a single issuer or (ii) the Fund would own
more than 10% of the outstanding voting securities of any single issuer. Each
Fund reserves the right to invest all or a portion of its assets in another
diversified, open-end investment company with substantially the same
investment objective and policies as the Fund. Each Fund is prohibited from
concentrating its assets in the securities of issuers in any industry. As a
fundamental policy, no Fund may purchase securities if, immediately after the
purchase, more than 25% of the value of the Fund's total assets would be
invested in the securities of issuers conducting their principal business
activities in the same industry. This limit does not apply to investments in
U.S. Government Securities, foreign government securities or repurchase
agreements covering U.S. Government Securities. It is currently anticipated
that the Funds will not concentrate in securities issued by any single
foreign government.

FIXED INCOME SECURITIES AND THEIR CHARACTERISTICS. Although each Fund only
invests in investment grade fixed income securities, including money market
instruments, an investment in a Fund is subject to risk even if all fixed
income securities in the Fund's portfolio are paid in full at maturity. All
fixed income securities, including U.S. Government Securities, can change in
value when there is a change in interest rates or the issuer's actual or
perceived creditworthiness or ability to meet its obligations.

The market value of the interest-bearing debt securities held by the Funds
will be affected by changes in interest rates. There is normally an inverse
relationship between the market value of securities sensitive to prevailing
interest rates and actual changes in interest rates. In other words, an
increase in interest rates produces a decrease in market value. Moreover, the
longer the remaining maturity (and duration) of a security, the greater will
be the effect of interest rate changes on the market value of that security.
Changes in the ability of an issuer to make payments of interest and
principal and in the market's perception of an issuer's creditworthiness will
also affect the market value of the debt securities of that issuer. The
possibility exists that, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may become impaired.

RATING MATTERS. The Funds' investments are subject to "credit risk" relating
to the financial condition of the issuers of the securities that each Fund
holds. To limit credit risk, each Fund will generally buy securities that are
rated in the top four long-term rating categories by an NRSRO or in the top
two short-term rating categories by an NRSRO, although certain Funds have
greater restrictions. Accordingly, the lowest permissible long-term
investment grades for corporate bonds, including convertible bonds, are Baa
in the case of Moody's Investor Services, Inc. ("Moody's") and BBB in the
case of Standard & Poor's Corporation ("S&P") and Fitch Investors Service,
Inc. ("Fitch"); the lowest permissible long-term investment grades for
preferred stock are Baa in the case of Moody's and BBB in the

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<PAGE>

case of S&P and Fitch; and the lowest permissible short-term investment
grades for short-term debt, including commercial paper, are Prime-2 (P-2) in
the case of Moody's, A-2 in the case of S&P and F-2 in the case of Fitch.

The Funds also may purchase unrated securities if the Adviser determines the
security to be of comparable quality to a rated security that the Fund may
purchase. Unrated securities may not be as actively traded as rated
securities. Each Fund may retain a security whose rating has been lowered
below the Fund's lowest permissible rating category (or that are unrated and
determined by the Adviser to be of comparable quality to securities whose
rating has been lowered below the Fund's lowest permissible rating category)
if the Adviser determines that retaining the security is in the best
interests of the Fund. Because a downgrade often results in a reduction in
the market price of the security, sale of a downgraded security may result in
a loss.

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Funds
invest (including mortgage-backed securities) may have variable or floating
rates of interest. These securities pay interest at rates that are adjusted
periodically according to a specified formula, usually with reference to some
interest rate index or market interest rate (the "underlying index"). The
interest paid on these securities is a function primarily of the underlying
index upon which the interest rate adjustments are based. Such adjustments
minimize changes in the market value of the obligation and, accordingly,
enhance the ability of the Fund to maintain a stable net asset value. Similar
to fixed rate debt instruments, variable and floating rate instruments are
subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness. The rate of interest on securities
purchased by a Fund may be tied to various rates of interest or indices.
Certain variable rate securities (including mortgage-related securities) pay
interest at a rate that varies inversely to prevailing short-term interest
rates (sometimes referred to as inverse floaters). For instance, upon reset
the interest rate payable on a security may go down when the underlying index
has risen. During times when short-term interest rates are relatively low as
compared to long-term interest rates a Fund may attempt to enhance its yield
by purchasing inverse floaters. Certain inverse floaters have an interest
rate reset mechanism that multiplies the effects of changes in the underlying
index. This form of leverage may have the effect of increasing the volatility
of the security's market value while increasing the security's, and thus the
Fund's, yield.

There may not be an active secondary market for certain floating or variable
rate instruments (particularly inverse floaters and similar instruments)
which could make it difficult for a Fund to dispose of the instrument during
periods that the Fund is not entitled to exercise any demand rights it may
have. A Fund could, for this or other reasons, suffer a loss with respect to
an instrument. The Adviser monitors the liquidity of each Fund's investment
in variable and floating rate instruments, but there can be no guarantee that
an active secondary market will exist.

U.S. GOVERNMENT SECURITIES. As used in this Prospectus, the term U.S.
Government Securities means obligations issued or guaranteed as to principal
and interest by the United States Government, its agencies or
instrumentalities. The U.S. Government Securities in which a Fund may invest
include U.S. Treasury securities and obligations issued or guaranteed by U.S.
Government agencies and instrumentalities and backed by the full faith and
credit of the U.S. Government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association
("Ginnie Mae"). In addition, the U.S. Government Securities in which the
Funds may invest include securities supported primarily or solely by the
creditworthiness of the issuer, such as securities of the Federal National
Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage
Corporation ("Freddie Mac") and the Tennessee Valley Authority. There is no
guarantee that the U.S. Government will support securities not backed by its
full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity,
they may involve more risk than securities backed by the U.S. Government's
full faith and credit.

ZERO-COUPON SECURITIES. A Fund may invest in separately traded principal and
interest components of securities issued or guaranteed by the U.S. Treasury.
These components are traded independently under the Treasury's Separate
Trading of Registered Interest and Principal of Securities ("STRIPS") program
or as Coupons Under Book Entry Safekeeping ("CUBES"). The Funds may invest in
other types of related zero-coupon securities. For instance, a number of
banks and brokerage firms separate the principal and interest portions of
U.S. Treasury securities and sell them separately in the form of receipts or
certificates representing undivided interests in these instruments. These
instruments are generally held by a bank in a custodial or trust account on
behalf of the owners of the securities and are known by various names,
including Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs")

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and Certificates of Accrual on Treasury Securities ("CATS"). Zero-coupon
securities also may be issued by corporations and municipalities.

Zero-coupon securities are sold at original issue discount and pay no
interest to holders prior to maturity, but a Fund holding a zero-coupon
security must include a portion of the original issue discount of the
security as income. Because of this, zero-coupon securities may be subject to
greater fluctuation of market value than the other securities in which the
Funds may invest. The Funds distribute all of their net investment income,
and may have to sell portfolio securities to distribute imputed income, which
may occur at a time when the Adviser would not have chosen to sell such
securities and which may result in a taxable gain or loss.

CORPORATE DEBT SECURITIES. The corporate debt securities in which the Funds
may invest include corporate bonds and notes and short-term investments such
as commercial paper. Commercial paper (short-term promissory notes) is issued
by companies to finance their or an affiliates' current obligations and is
frequently unsecured.

Demand Notes. The Funds may purchase variable and floating rate demand notes
of corporations, which are unsecured obligations redeemable upon not more
than 30 days' notice. These obligations include master demand notes that
permit investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangement with the issuer of the instrument. The issuers
of these obligations often have the right, after a given period, to prepay
their outstanding principal amount of the obligations upon a specified number
of days' notice. These obligations generally are not traded, nor generally is
there an established secondary market for these obligations. To the extent a
demand note does not have a seven day or shorter demand feature and there is
no readily available market for the obligation, it is treated as an illiquid
security. Although a Fund would generally not be able to resell a master
demand note to a third party, the Fund is entitled to demand payment from the
issuer at any time. The Adviser continuously monitors the financial condition
of the issuer to determine the issuer's likely ability to make payment on
demand.

FINANCIAL INSTITUTION OBLIGATIONS. A Fund may invest in obligations of
financial institutions, including negotiable certificates of deposit,
bankers' acceptances and time deposits of U.S. banks (including savings banks
and savings associations), foreign branches of U.S. banks, foreign banks and
their non-U.S. branches (Eurodollars), U.S. branches and agencies of foreign
banks (Yankee dollars), and wholly-owned banking-related subsidiaries of
foreign banks.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft
which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the
stated maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand but may be subject to early withdrawal penalties which
could reduce the Fund's yield. Deposits subject to early withdrawal penalties
or that mature in more than 7 days are treated as illiquid securities if
there is no readily available market for the securities. A Fund's investments
in the obligations of foreign banks and their branches, agencies or
subsidiaries may be obligations of the parent, of the issuing branch, agency
or subsidiary, or both. Investments in foreign bank obligations are limited
to banks and branches located in countries which the Advisers believe do not
present undue risk.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES. Each Fund may invest up to 15
percent of its net assets in securities that at the time of purchase are
illiquid. Historically, illiquid securities have included securities subject
to contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 ("restricted securities"),
securities which are otherwise not readily marketable, such as
over-the-counter options, and repurchase agreements not entitling the holder
to payment of principal in 7 days. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a Fund might also
have to register restricted securities in order to dispose of them, resulting
in expense and delay. A Fund might not be able to dispose of restricted or
other securities promptly or at reasonable prices and might thereby
experience difficulty satisfying redemptions. There can be no assurance that
a liquid market will exist for any security at any particular time.

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investors depend on an efficient institutional market in which
the unregistered security can be readily resold or on the issuer's ability to
honor a demand for repayment of the unregistered security. A securities
contractual or legal restrictions on resale to the general public or to
certain institutions may not be indicative of the liquidity of the security.
If such securities are eligible for purchase by institutional buyers in
accordance with Rule 144A under the Securities Act of 1933 or other
exemptions, the Advisers may determine that such securities are not illiquid
securities, under guidelines or other exemptions adopted by the Board. These
guidelines take into account trading activity in the securities and the
availability of reliable pricing information, among other factors. If there
is a lack of trading interest in a particular Rule 144A security, a Fund's
holdings of that security may be illiquid.

TEMPORARY DEFENSIVE POSITION. When business or financial conditions warrant,
the Funds may assume a temporary defensive position and invest without limit
in cash or prime quality cash equivalents, including (i) short-term U.S.
Government Securities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of commercial banks doing business in the
United States, (iii) commercial paper, (iv) repurchase agreements and (v)
shares of "money market funds" registered under the Investment Company Act of
1940 (the "1940 Act") within the limits specified therein. Prime quality
instruments are those that are rated in one of the two highest short-term
rating categories by an NRSRO or, if not rated, determined by the Adviser to
be of comparable quality. During periods when and to the extent that a Fund
has assumed a temporary defensive position, it may not be pursuing its
investment objective. Apart from temporary defensive purposes, a Fund may at
any time invest a portion of its assets in cash and cash equivalents as
described above.

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. Each Fund may seek
additional income by entering into repurchase agreements or by lending
securities from its portfolio to brokers, dealers and other financial
institutions. These investments may entail certain risks not associated with
direct investments in securities. For instance, in the event that bankruptcy
or similar proceedings were commenced against a counterparty in these
transactions or a counterparty defaulted on its obligations, a Fund might
suffer a loss.

Repurchase agreements are transactions in which a Fund purchases a security
and simultaneously commits to resell that security to the seller at an
agreed-upon price on an agreed-upon future date, normally one to seven days
later. The resale price reflects a market rate of interest that is not
related to the coupon rate or maturity of the purchased security. When a Fund
lends a security it receives interest from the borrower or from investing
cash collateral. The Trust maintains possession of the purchased securities
and any underlying collateral in these transactions, the total market value
of which on a continuous basis is at least equal to the repurchase price or
value of securities loaned, plus accrued interest. The Funds may pay fees to
arrange securities loans and each Fund will, as a fundamental policy, limit
securities lending to not more than 33 1/3% of the value of its total assets.

REVERSE REPURCHASE AGREEMENTS. A Fund may enter into reverse repurchase
agreements, transactions in which the Fund sells a security and
simultaneously commits to repurchase that security from the buyer at an
agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain
demand agreements, there is no agreed upon repurchase date and interest
payments are calculated daily, often based upon the prevailing overnight
repurchase rate. Because certain of the incidents of ownership of the
security are retained by the Fund, reverse repurchase agreements may be
viewed as a form of borrowing by the Fund from the buyer, collateralized by
the security sold by the Fund. A Fund will use the proceeds of reverse
repurchase agreements to fund redemptions or to make investments. In most
cases these investments either mature or have a demand feature to resell to
the issuer on a date not later than the expiration of the agreement. Interest
costs on the money received in a reverse repurchase agreement may exceed the
return received on the investments made by the Fund with those monies. Any
significant commitment of a Fund's assets to the reverse repurchase
agreements will tend to increase the volatility of the Fund's net asset value
per share.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each Fund may purchase
securities offered on a "when-issued" basis and may purchase securities on a
"forward commitment" basis. When such transactions are negotiated, the price
is fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. Normally, the settlement date occurs
within three months after the transaction, but delayed settlements beyond
three months may be negotiated.

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During the period between a commitment and settlement, no payment is made for
the securities purchased and, thus, no interest accrues to the Fund. At the
time a Fund makes a commitment to purchase securities in this manner,
however, the Fund immediately assumes the risk of ownership, including price
fluctuation. Failure by the other party to deliver or pay for a security
purchased or sold by the Fund may result in a loss or a missed opportunity to
make an alternative investment. Any significant commitment of a Fund's assets
committed to the purchase of securities on a when-issued or forward
commitment basis may increase the volatility of its net asset value. Except
for dollar-roll transactions, a Fund will not purchase securities on a
when-issued or forward commitment basis if, as a result, more than 15 percent
of the value of the Fund's total assets would be committed to such
transactions.

The use of when-issued transactions and forward commitments enables a Fund to
hedge against anticipated changes in interest rates and prices. If the
Adviser were to forecast incorrectly the direction of interest rate
movements, however, a Fund might be required to complete when-issued or
forward transactions at prices inferior to the current market values. The
Funds enter into when-issued and forward commitments only with the intention
of actually receiving the securities, but a Fund may sell the securities
before the settlement date if deemed advisable. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition or to
dispose of its right to deliver or receive against a forward commitment, it
can incur a gain or loss.

PURCHASING SECURITIES ON MARGIN. When Intermediate U.S. Government Fund
purchases securities on margin, it only pays part of the purchase price and
borrows the remainder, typically from the Fund's broker. As a borrowing, a
Fund's purchase of securities on margin is subject to the limitations and
risks described in "Borrowing" above. In addition, if the value of the
securities purchased on margin decreases such that the Fund's borrowing with
respect to the security exceeds the maximum permissible borrowing amount, the
Fund will be required to make margin payments (additional payments to the
broker to maintain the level of borrowing at permissible levels). A Fund's
obligation to satisfy margin calls may require the Fund to sell securities at
an inappropriate time.

TECHNIQUES INVOLVING LEVERAGE. Utilization of leveraging involves special
risks and may involve speculative investment techniques. The Funds may borrow
for other than temporary or emergency purposes, lend their securities, enter
reverse repurchase agreements, and purchase securities on a when issued or
forward commitment basis. In addition, funds may engage in dollar roll
transactions and Intermediate U.S. Government Fund may purchase securities on
margin and sell securities short (other than against the box). Each of these
transactions involves the use of "leverage" when cash made available to the
Fund through the investment technique is used to make additional portfolio
investments. In addition, the use of swap and related agreements may involve
leverage. The Funds use these investment techniques only when the Adviser to
a Fund believes that the leveraging and the returns available to the Fund
from investing the cash will provide shareholders a potentially higher return.

The risks of leverage include a higher volatility of the net asset value of
the Fund's shares and the relatively greater effect on the net asset value of
the shares caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield obtained from investing the
cash. So long as a Fund is able to realize a net return on its investment
portfolio that is higher than the interest expense incurred, if any, leverage
will result in higher current net investment income being realized by the
Fund than if the Fund were not leveraged. On the other hand, yield and
interest rates on borrowingschange from time to time as does their
relationship to each other depending upon such factors as supply and demand,
monetary and tax policies and investor expectations. Changes in such factors
could cause the relationship between the cost of leveraging and the yield to
change so that rates involved in the leveraging arrangement may substantially
increase relative to the yield on the obligations in which the proceeds of
the leveraging have been invested. To the extent that the interest expense
involved in leveraging approaches the net return on the Fund's investment
portfolio, the benefit of leveraging will be reduced, and, if the interest
expense on borrowings were to exceed the net return to shareholders, the
Fund's use of leverage would result in a lower rate of return than if the
Fund were not leveraged. Similarly, the effect of leverage in a declining
market could be a greater decrease in net asset value per share than if the
Fund were not leveraged. In an extreme case, if the Fund's current investment
income were not sufficient to meet the interest expense of leveraging, it
could be

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necessary for the Fund to liquidate certain of its investments at an
inappropriate time. The use of leverage may be considered speculative.

Segregated Account. In order to limit the risks involved in various
transactions involving leverage, the Trust's custodian will set aside and
maintain in a segregated account cash, U.S. Government Securities and other
liquid, high-grade debt securities in accordance with SEC guidelines. The
accounts' value, which is marked to market daily, will be at least equal to
the Fund's commitments under these transactions. The Fund's commitments may
include (i) the Fund's obligations to repurchase securities under a reverse
repurchase agreement, settle when-issued and forward commitment transactions
and make payments under a cap or floor (see "Swap Agreements") and (ii) the
greater of the market value of securities sold short or the value of the
securities at the time of the short sale (reduced by any margin deposit). The
net amount of the excess, if any, of a Fund's obligations over its
entitlements with respect to each interest rate swap will be calculated on a
daily basis and an amount at least equal to the accrued excess will be
maintained in the segregated account. If the Fund enters into an interest
rate swap on other than a net basis, the Fund will maintain the full amount
accrued on a daily basis of the Fund's obligations with respect to the swap
in their segregated account. The use of a segregated account in connection
with leveraged transactions may result in a Fund's portfolio being 100
percent leveraged.

DOLLAR ROLL TRANSACTIONS. A Fund may enter into dollar roll transactions
wherein the Fund sells fixed income securities, typically mortgage-backed
securities, and makes a commitment to purchase similar, but not identical,
securities at a later date from the same party. Like a forward commitment,
during the roll period no payment is made for the securities purchased and no
interest or principal payments on the security accrue to the purchaser, but
the Fund assumes the risk of ownership. A Fund is compensated for entering
into dollar roll transactions by the difference between the current sales
price and the forward price for the future purchase, as well as by the
interest earned on the cash proceeds of the initial sale. Like other
when-issued securities or firm commitment agreements, dollar roll
transactions involve the risk that the market value of the securities sold by
the Fund may decline below the price at which a Fund is committed to purchase
similar securities. In the event the buyer of securities under a dollar roll
transaction becomes insolvent, the Fund's use of the proceeds of the
transaction may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to
repurchase the securities. The Funds will engage in roll transactions for the
purpose of acquiring securities for its portfolio and not for investment
leverage. Each Fund will limit its obligations on dollar roll transactions to
35% of the Fund's net assets.

SWAP AGREEMENTS. To manage their exposure to different types of investments,
each Fund may enter into interest rate and mortgage (or other asset) swap
agreements and may purchase interest rate caps, floors and collars. In a
typical interest rate swap agreement, one party agrees to make regular
payments equal to a floating interest rate on a specified amount (the
"notional principal amount") in return for payments equal to a fixed interest
rate on the same amount for a specified period. Mortgage swap agreements are
similar to interest rate swap agreements, except that the notional principal
amount is tied to a reference pool of mortgages. In a cap or floor, one party
agrees, usually in return for a fee, to make payments under particular
circumstances. For example, the purchaser of an interest rate cap has the
right to receive payments to the extent a specified interest rate exceeds an
agreed upon level; the purchaser of an interest rate floor has the right to
receive payments to the extent a specified interest rate falls below an
agreed upon level. A collar entitles the purchaser to receive payments to the
extent a specified interest rate falls outside an agreed upon range.

Swap agreements may involve leverage and may be highly volatile; depending on
how they are used, they may have a considerable impact on the Fund's
performance. Swap agreements involve risks depending upon the counterparty's
creditworthiness and ability to perform as well as the Fund's ability to
terminate its swap agreements or reduce its exposure through offsetting
transactions. The Adviser monitors the creditworthiness of counterparties to
these transactions and intends to enter into these transactions only when
they believe the counterparties present minimal credit risks and the income
expected to be earned from the transaction justifies the attendant risks.

SHORT SALES. Intermediate U.S. Government Fund is authorized to make short
sales of securities it owns or has the right to acquire at no added cost
through conversion or exchange of other securities it owns (referred to as
short sales "against the box") and to make short sales of securities which it
does not own or have the right to acquire. A short sale that is not made
"against the box" is a transaction in which a Fund sells a security it does
not own in anticipation

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of a decline in the market price for the security. When the Fund makes a
short sale, the proceeds it receives are retained by the broker until the
Fund replaces the borrowed security. In order to deliver the security to the
buyer, the Fund must arrange through a broker to borrow the security and, in
so doing, the Fund becomes obligated to replace the security borrowed at its
market price at the time of replacement, whatever that price may be.

Short sales that are not made "against the box" create opportunities to
increase the Fund's return but, at the same time, involve special risk
considerations and may be considered a speculative technique. Since the Fund
in effect profits from a decline in the price of the securities sold short
without the need to invest the full purchase price of the securities on the
date of the short sale, the Fund's net asset value per share, will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. Short
sales theoretically involve unlimited loss potential, as the market price of
securities sold short may continuously increase, although a Fund may mitigate
such losses by replacing the securities sold short before the market price
has increased significantly. Under adverse market conditions a Fund might
have difficulty purchasing securities to meet its short sale delivery
obligations and might have to sell portfolio securities to raise the capital
necessary to meet its short sale obligations at a time when fundamental
investment considerations would not favor those sales.

If the Fund makes a short sale "against the box", the Fund would not
immediately deliver the securities sold and would not receive the proceeds
from the sale. The seller is said to have a short position in the securities
sold until it delivers the securities sold, at which time it receives the
proceeds of the sale. The Fund's decision to make a short sale "against the
box" may be a technique to hedge against market risks when the Adviser
believes that the price of a security may decline, causing a decline in the
value of a security owned by the Fund or a security convertible into or
exchangeable for such security. In such case, any future losses in the Fund's
long position would be reduced by an offsetting future gain in the short
position. The Fund's ability to enter into short sales transactions is
limited by certain tax requirements. See "Dividends, Distributions and Taxes"
in the SAI.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an interest
in a pool of mortgages originated by lenders such as commercial banks,
savings associations and mortgage bankers and brokers. Mortgage-backed
securities may be issued by governmental or government-related entities or by
non-governmental entities such as special purpose trusts created by banks,
savings associations, private mortgage insurance companies or mortgage
bankers.

Interests in mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or on specified call dates. In
contrast, mortgage-backed securities provide monthly payments which consist
of interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on
their mortgage loans, net of any fees paid to the issuer or guarantor of the
securities or a mortgage loan servicer. Additional payments to holders of
these securities are caused by prepayments resulting from the sale or
foreclosure of the underlying property or refinancing of the underlying loans.

UNDERLYING MORTGAGES. Pools of mortgages consist of whole mortgage loans or
participations in mortgage loans. The majority of these loans are made to
purchasers of 1-4 family homes, but may be made to purchasers of mobile homes
or other real estate interests. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools. For
example, in addition to fixed-rate, fixed-term mortgages, the Fund may
purchase pools of variable rate mortgages, growing equity mortgages,
graduated payment mortgages and other types. Mortgage servicers impose
qualification standards for local lending institutions which originate
mortgages for the pools as well as credit standards and underwriting criteria
for individual mortgages included in the pools. In addition, many mortgages
included in pools are insured through private mortgage insurance companies.

LIQUIDITY AND MARKETABILITY. Generally, government and government-related
pass-through pools are highly liquid. While private conventional pools of
mortgages (pooled by non-government-related entities) have also achieved
broad market acceptance and an active secondary market has emerged, the
market for conventional pools is smaller and less liquid than the market for
government and government-related mortgage pools.

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AVERAGE LIFE AND PREPAYMENTS. The average life of a pass-through pool varies
with the maturities of the underlying mortgage instruments. In addition, a
pool's terms may be shortened by unscheduled or early payments of principal
and interest on the underlying mortgages. Prepayments with respect to
securities during times of declining interest rates will tend to lower the
return of the Fund and may even result in losses to the Fund if the
securities were acquired at a premium. The occurrence of mortgage prepayments
is affected by various factors including the level of interest rates, general
economic conditions, the location and age of the mortgage and other social
and demographic conditions. As prepayment rates of individual pools vary
widely, it is not possible to accurately predict the average life of a
particular pool. The assumed average life of pools of mortgages having terms
of 30 years or less is typically between five and 12 years.

YIELD CALCULATIONS. Yields on pass-through securities are typically quoted
based on the maturity of the underlying instruments and the associated
average life assumption. In periods of falling interest rates the rate of
prepayment tends to increase, thereby shortening the actual average life of a
pool of mortgages. Conversely, in periods of rising rates the rate of
prepayment tends to decrease, thereby lengthening the actual average life of
the pool. Actual prepayment experience may cause the yield to differ from the
assumed average life yield. Reinvestment of prepayments may occur at higher
or lower interest rates than the original investment, thus affecting the
yield of the Fund.

GOVERNMENT AND GOVERNMENT-RELATED GUARANTORS. The principal government
guarantor of mortgage-backed securities is Ginnie Mae, a wholly-owned United
States Government corporation within the Department of Housing and Urban
Development. Mortgage-backed securities are also issued by Fannie Mae, a
government-sponsored corporation owned entirely by private stockholders that
is subject to general regulation by the Secretary of Housing and Urban
Development, and Freddie Mac, a corporate instrumentality of the United
States Government. While Fannie Mae and Freddie Mac each guarantee the
payment of principal and interest on the securities they issue, unlike Ginnie
Mae securities, their securities are not backed by the full faith and credit
of the United States Government.

PRIVATELY ISSUED MORTGAGE-BACKED SECURITIES. Mortgage-backed securities
offered by private issuers include pass-through securities comprised of pools
of conventional mortgage loans; mortgage-backed bonds (which are considered
to be debt obligations of the institution issuing the bonds and which are
collateralized by mortgage loans); and collateralized mortgage obligations
("CMOs"). Mortgage-backed securities issued by non-governmental issuers may
offer a higher rate of interest than securities issued by government issuers
because of the absence of direct or indirect government guarantees of
payment. Many non-governmental issuers or servicers of mortgage-backed
securities, however, guarantee timely payment of interest and principal on
these securities. Timely payment of interest and principal may also be
supported by various forms of insurance, including individual loan, title,
pool and hazard policies.

Adjustable Rate Mortgage-Backed securities. Adjustable rate mortgage-backed
securities ("ARMs") are securities that have interest rates that are reset at
periodic intervals, usually by reference to some interest rate index or
market interest rate. Although the rate adjustment feature may act as a
buffer to reduce sharp changes in the value of adjustable rate securities,
these securities are still subject to changes in value based on changes in
market interest rates or changes in the issuer's creditworthiness. Because of
the resetting of interest rates, adjustable rate securities are less likely
than non-adjustable rate securities of comparable quality and maturity to
increase significantly in value when market interest rates fall. Also, most
adjustable rate securities (or the underlying mortgages) are subject to caps
or floors. "Caps" limit the maximum amount by which the interest rate paid by
the borrower may change at each reset date or over the life of the loan and,
accordingly, fluctuation in interest rates above these levels could cause
such mortgage securities to "cap out" and to behave more like long-term,
fixed-rate debt securities. ARMs may have less risk of a decline in value
during periods of rapidly rising rates, but they may also have less potential
for capital appreciation than other debt securities of comparable maturities
due to the periodic adjustment of the interest rate on the underlying
mortgages and due to the likelihood of increased prepayments of mortgages as
interest rates decline. Furthermore, during periods of declining interest
rates, income to the Fund will decrease as the coupon rate resets along with
the decline in interest rates. During periods of rising interest rates,
changes in the coupon rates of the mortgages underlying the Fund's ARMs may
lag behind changes in market interest rates. This may result in a lower value
until the interest rate resets to market rates.

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COLLATERALIZED MORTGAGE OBLIGATIONS. CMOs are debt obligations collateralized
by mortgages or mortgage pass-through securities issued by Ginnie Mae,
Freddie Mac or Fannie Mae or by pools of conventional mortgages ("Mortgage
Assets"). CMOs may be privately issued or U.S. Government Securities.
Payments of principal and interest on the Mortgage Assets are passed through
to the holders of the CMOs on the same schedule as they are received,
although, certain classes (often referred to as tranches) of CMOs have
priority over other classes with respect to the receipt of payments.
Multi-class mortgage pass-through securities are interests in trusts that
hold Mortgage Assets and that have multiple classes similar to those of CMOs.
Unless the context indicates otherwise, references to CMOs include
multi-class mortgage pass-through securities. Payments of principal of and
interest on the underlying Mortgage Assets (and in the case of CMOs, any
reinvestment income thereon) provide funds to pay debt service on the CMOs or
to make scheduled distributions on the multi-class mortgage pass-through
securities. Parallel pay CMOs are structured to provide payments of principal
on each payment date to more than one class. These simultaneous payments are
taken into account in calculating the stated maturity date or final
distribution date of each class, which, as with other CMO structures, must be
retired by its stated maturity date or final distribution date but may be
retired earlier. Planned amortization class mortgage-based securities ("PAC
Bonds") are a form of parallel pay CMO. PAC Bonds are designed to provide
relatively predictable payments of principal provided that, among other
things, the actual prepayment experience on the underlying mortgage loans
falls within a contemplated range. If the actual prepayment experience on the
underlying mortgage loans is at a rate faster or slower than the contemplated
range, or if deviations from other assumptions occur, principal payments on a
PAC Bond may be greater or smaller than predicted. The magnitude of the
contemplated range varies from one PAC Bond to another; a narrower range
increases the risk that prepayments will be greater or smaller than
contemplated. CMOs may have complicated structures and generally involve more
risks than simpler forms of mortgage-related securities.

The final tranche of a CMO may be structured as an accrual bond (sometimes
referred to as a Z-tranche). Holders of accrual bonds receive no cash
payments for an extended period of time. During the time that earlier
tranches are outstanding, accrual bonds receive accrued interest which is a
credit for periodic interest payments that increases the face amount of the
security at a compounded rate, but is not paid to the bond holder. After all
previous tranches are retired, accrual bond holders start receiving cash
payments that include both principal and continuing interest. The market
value of accrual bonds can fluctuate widely and their average life depends on
the other aspects of the CMO offering. Interest on accrual bonds is taxable
when accrued even though the holders receive no accrual payment. The Funds
distribute all of their net investment income, and may have to sell portfolio
securities to distribute imputed income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in
a taxable gain or loss.

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities are
classes of mortgage-backed securities that receive different proportions of
the interest and principal distributions from the underlying Mortgage Assets.
They may be may be privately issued or U.S. Government Securities. In the
most extreme case, one class will be entitled to receive all or a portion of
the interest but none of the principal from the Mortgage Assets (the
interest-only or "IO" class) and one class will be entitled to receive all or
a portion of the principal, but none of the interest (the "PO" class).
Currently, no fund may purchase IOs or POs.

ASSET-BACKED SECURITIES. Asset-backed securities represent direct or indirect
participations in, or are secured by and payable from, assets other than
mortgage-related assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements. No
Fund may invest more than 10% of its net assets in asset-backed securities
that are backed by a particular type of credit, for instance, credit card
receivables. Asset-backed securities, including adjustable rate asset-backed
securities, have yield characteristics similar to those of mortgage-related
securities and, accordingly, are subject to many of the same risks.

Assets are securitized through the use of trusts and special purpose
corporations that issue securities that are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of
principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit issued by a financial institution.
Asset-backed securities do not always have the benefit of a security interest
in collateral comparable to the security interests associated with
mortgage-related securities. As a result, the risk that recovery on
repossessed collateral might be unavailable or inadequate to support payments
on asset-backed securities is greater for asset-backed securities than for
mortgage-related securities. In addition, because asset-backed securities are

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relatively new, the market experience in these securities is limited and the
market's ability to sustain liquidity through all phases of an interest rate
or economic cycle has not been tested.

FUTURES CONTRACTS AND OPTIONS. The Funds may seek to enhance their return
through the writing (selling) and purchasing exchange-traded and
over-the-counter options on fixed income securities or indices. The Funds may
also to attempt to hedge against a decline in the value of securities owned
by them or an increase in the price of securities which they plan to purchase
through the use of those options and the purchase and sale of interest rate
futures contracts and options on those futures contracts. The Funds may only
write options that are covered. An option is covered if, so long as the Fund
is obligated under the option, it owns an offsetting position in the
underlying security or futures contract or maintains cash, U.S. Government
Securities or other liquid, high-grade debt securities in a segregated
account with a value at all times sufficient to cover the Fund's obligation
under the option. A Fund may enter into these futures contracts only if the
aggregate of initial deposits for open futures contract positions does not
exceed 5% of the Fund's total assets.

Risk Considerations. A Fund's use of options and futures contracts subjects
the Fund to certain investment risks and transaction costs to which it might
not otherwise be subject. These risks include: (1) dependence on the
Adviser's ability to predict movements in the prices of individual securities
and fluctuations in the general securities markets; (2) imperfect
correlations between movements in the prices of options or futures contracts
and movements in the price of the securities hedged or used for cover which
may cause a given hedge not to achieve its objective; (3) the fact that the
skills and techniques needed to trade these instruments are different from
those needed to select the other securities in which the Fund invests; (4)
lack of assurance that a liquid secondary market will exist for any
particular instrument at any particular time, which, among other things, may
limit a Fund's ability to limit exposures by closing its positions; (5) the
possible need to defer closing out of certain options, futures contracts and
related options to avoid adverse tax consequences; and (6) the potential for
unlimited loss when investing in futures contracts or writing options for
which an offsetting position is not held.

Other risks include the inability of a Fund, as the writer of covered call
options, to benefit from any appreciation of the underlying securities above
the exercise price and the possible loss of the entire premium paid for
options purchased by the Fund. In addition, the futures exchanges may limit
the amount of fluctuation permitted in certain futures contract prices during
a single trading day. A Fund may be forced, therefore, to liquidate or close
out a futures contract position at a disadvantageous price.

There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures position or that a counterparty in an
over-the-counter option transaction will be able to perform its obligations.
There are a limited number of options on interest rate futures contracts and
exchange traded options contracts on fixed income securities. Accordingly,
hedging transactions involving these instruments may entail "cross-hedging."
As an example, a Fund may wish to hedge existing holdings of mortgage-backed
securities, but no listed options may exist on those securities. In that
event, the Adviser may attempt to hedge the Fund's securities by the use of
options with respect to similar fixed income securities. The Fund may use
various futures contracts that are relatively new instruments without a
significant trading history. As a result, there can be no assurance that an
active secondary market in those contracts will develop or continue to exist.

LIMITATIONS. The Funds have no current intention of investing in futures
contracts and options thereon for purposes other than hedging. No Fund may
purchase any call or put option on a futures contract if the premiums
associated with all such options held by the Fund would exceed 5% of the
Fund's total assets as of the date the option is purchased. No Fund may sell
a put option if the exercise value of all put options written by the Fund
would exceed 50% of the Fund's total assets or sell a call option if the
exercise value of all call options written by the Fund would exceed the value
of the Fund's assets. In addition, the current market value of all open
futures positions held by a Fund will not exceed 50% of its total assets.

OPTIONS ON SECURITIES. A call option is a contract pursuant to which the
purchaser of the call option, in return for a premium paid, has the right to
buy the security underlying the option at a specified exercise price at any
time during the term of the option. The writer of the call option, who
receives the premium, has the obligation upon exercise of the option to
deliver the underlying security against payment of the exercise price during
the option period. A put option gives its purchaser, in return for a premium,
the right to sell the underlying security at a specified price during

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the term of the option. The writer of the put, who receives the premium, has
the obligation to buy the underlying security, upon exercise at the exercise
price during the option period. The amount of premium received or paid is
based upon certain factors, including the market price of the underlying
security or index, the relationship of the exercise price to the market
price, the historical price volatility of the underlying security or index,
the option period, supply and demand and interest rates.

OPTIONS ON STOCK INDEXES. A stock index assigns relative values to the stock
included in the index, and the index fluctuates with changes in the market
values of the stocks included in the index. Stock index options operate in
the same way as the more traditional stock options except that exercises of
stock index options are effected with cash payments and do not involve
delivery of securities. Thus, upon exercise of a stock index options, the
purchaser will realize and the writer will pay an amount based on the
differences between the exercise price and the closing price of the stock
index.

INDEX FUTURES CONTRACTS. Bond and stock index futures contracts are bilateral
agreements pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the bond or stock index value at the close of trading of the contract
and the price at which the futures contract is originally struck. No physical
delivery of the fixed income or equity securities comprising the index is
made. Generally, futures contracts are closed out prior to the expiration
date of the contract.

OPTIONS ON FUTURES CONTRACTS. Options on futures contracts are similar to
stock options except that an option on a futures contract gives the purchaser
the right, in return for the premium paid, to assume a position in a futures
contract rather than to purchase or sell stock, at a specified exercise price
at any time during the period of the option. Upon exercise of the option, the
delivery of the futures position to the holder of the option will be
accompanied by transfer to the holder of an accumulated balance representing
the amount by which the market price of the futures contract exceeds, in the
case of a call, or is less than, in the case of a put, the exercise price of
the option on the future.

Portfolio Transactions. The frequency of portfolio transactions of each Fund
(the portfolio turnover rate) will vary from year to year depending on many
factors. The Funds' portfolio turnover is reported under "Financial
Highlights." From time to time a Fund may engage in active short-term trading
to take advantage of price movements affecting individual issues, groups of
issues or markets. Tax rules applicable to short-term trading may affect the
timing of a Fund's transactions or its ability to realize short-term profits
or establish short-term positions.

It is each Fund's policy to obtain best net results in effecting portfolio
transactions. The Adviser may effect transactions for the Funds through
brokers who sell Fund shares. The Funds have no obligation to deal with any
specific broker or dealer in the execution of portfolio transactions.

The Advisers place orders for the purchase and sale of assets they manage
with brokers and dealers selected by and in the discretion of the respective
Adviser. The Advisers seek "best execution" for all portfolio transactions,
but a Fund may pay higher than the lowest available commission rates when an
Adviser believes it is reasonable to do so in light of the value of the
brokerage, research and other services provided by the broker effecting the
transaction.

Commission rates for brokerage transactions are fixed on many foreign
securities exchanges, and this may cause higher brokerage expenses to accrue
to each Fund that invests in foreign securities than would be the case for
comparable transactions effected on United States securities exchanges.

Subject to the Funds' policy of obtaining the best price consistent with
quality of execution of transactions, the Adviser may employ Norwest
Investment Services, Inc. and other broker-dealer affiliates of the Adviser
("Affiliated Brokers") to effect brokerage transactions for the Funds. The
Fund's payment of commissions to Affiliated Brokers is subject to procedures
adopted by the Board to provide that the commissions will not exceed the
usual and customary broker's commissions charged by unaffiliated brokers. No
specific portion of a Fund's brokerage will be directed to Affiliated Brokers
and in no event will a broker affiliated with an Adviser directing the
transaction receive brokerage transactions in recognition of research or
other services provided to the Adviser.

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The Adviser anticipates that the annual turnover rate in each Fund will be
less than 100 percent. An annual turnover rate of 100 percent would occur if
all of the securities in a Fund were replaced once in a period of 1 year.

3. MANAGEMENT

The business of the Trust is managed under the direction of the Board of
Trustees (the "Board"). The Board formulates the general policies of the
Funds and meets periodically to review the results of the Funds, monitor
investment activities and practices and discuss other matters affecting the
Funds and the Trust. The Board consists of eight persons.

Investment Advisory Services

Norwest Investment Management. Subject to the general supervision of the
Board, Norwest Investment Management makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's investment
program. The Adviser is a part of Norwest, a subsidiary of Norwest
Corporation, which is a multi-bank holding company that was incorporated
under the laws of Delaware in 1929. As of _______ ___, 1995, Norwest
Corporation was the ___th largest bank holding company in the United States
in terms of assets. As of that date, the Adviser managed or provided
investment advice with respect to assets totaling approximately $22.7 billion.

The Adviser provides investment management services to each Fund pursuant to
investment advisory agreements between Norwest and the Trust. For the
Adviser's services, Norwest receives an advisory fee with respect to
Intermediate U.S. Government Fund at an annual rate of 0.33% of the Fund's
average daily net assets and with respect to Stable Income Fund at an annual
rate of 0.30% of the Fund's average daily net assets.

PORTFOLIO MANAGERS. Many persons on the advisory staff of the Adviser
contribute to the investment services provided to the Funds. The following
persons, however, are primarily responsible for the day-to-day management of
the Funds:

INTERMEDIATE U.S. GOVERNMENT FUND - Marjorie H. Grace, Vice President of
Norwest since 1992. Ms. Grace was a portfolio manager of Norwest Bank
from 1992-1993; an Institutional Salesperson with Norwest Investment
Services, Inc. from 1991-1992; a portfolio manager with United Banks of
Colorado from 1989-1991; and Vice President and portfolio manager with
Colombia Savings and Loan from 1987-1989.

STABLE INCOME FUND - Karl P. Tourville, Vice President of Norwest since
1989. Mr. Tourville has been associated with Norwest since 1986. As of
December 31, 1994, Mr. Tourville was responsible for the management of
over $1.3 billion in pooled fixed income assets.

MANAGEMENT AND DISTRIBUTION SERVICES

Forum supervises the overall management of the Trust (including the Trust's
receipt of services for which the Trust is obligated to pay) and provides the
Trust with general office facilities pursuant to a Management Agreement with
the Trust. Forum provides persons satisfactory to the Board to serve as
officers of the Trust. Those officers, as well as certain other officers and
Trustees of the Trust, may be directors, officers or employees of (and
persons providing services to the Trust may include) Forum, its affiliates or
certain non-banking affiliates of Norwest. As of the date of this Prospectus,
Forum provided management and administrative services to registered
investment companies and collective investment funds with assets of
approximately $11 billion. Forum is a registered broker-dealer and investment
adviser and is a member of the National Association of Securities Dealers,
Inc. As of the date of this Prospectus, Forum is controlled by John Y.
Keffer, President and Chairman of the Trust. For its services and facilities,
Forum receives from each Fund a management fee at an annual rate of 0.10% of
the average daily net assets attributable to each class of the Fund. From its
own resources, Forum may pay a fee to broker-dealers or other persons for
distribution or other services related to the Funds.

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Forum also acts as the distributor of the Shares pursuant to a distribution
services agreement with the Trust and in accordance therewith receives and
may reallow the initial sales charge assessed on purchases of A Shares of a
Fund. As authorized by a distribution plan with respect to B Shares of each
Fund and pursuant to the distribution services agreement, Forum receives a
distribution services fee as compensation for its distribution expenses with
respect to B Shares and a maintenance fee for its or certain broker-dealer's
shareholder services with respect to B Shares. For further information about
the distribution services agreement and the distribution plan, including the
fees payable thereunder, see "How to Buy Shares - Alternative Distribution
Arrangements." Pursuant to a separate agreement, Forum also provides
portfolio accounting services to each Fund.

SHAREHOLDER SERVICING AND CUSTODY

Norwest serves as transfer agent and dividend disbursing agent for the Trust
(in this capacity, the "Transfer Agent") pursuant to a Transfer Agency
Agreement with the Trust. The Transfer Agent maintains an account for each
shareholder of the Trust (unless such accounts are maintained by sub-transfer
agents or processing agents), performs other transfer agency functions and
acts as dividend disbursing agent for the Trust. The Transfer Agent is
permitted to subcontract any or all of its functions with respect to all or
any portion of the Trust's shareholders to one or more qualified sub-transfer
agents or processing agents, which may be affiliates of the Transfer Agent or
Forum, who agree to comply with the terms of the Transfer Agency Agreement.
Sub-transfer agents and processing agents may be "Processing Organizations"
as described under "How to Buy Shares - Purchase Procedures." The Transfer
Agent is permitted to compensate those agents for their services; however,
that compensation may not increase the aggregate amount of payments by the
Trust to the Transfer Agent. For its transfer agency services, the Transfer
Agent receives from each Fund a fee at an annual rate of 0.25% of the average
daily net assets attributable to each class of the Fund.

EXPENSES OF THE FUNDS

Subject to the obligation of Norwest to reimburse the Trust for certain
expenses of the Funds, the Trust has confirmed its obligation to pay all the
Trust's expenses. The Funds' expenses include Trust expenses attributable to
the Funds, which are allocated to each Fund, and expenses not specifically
attributable to the Funds, which are allocated among the Funds and all other
funds of the Trust in proportion to their average net assets. Norwest, Forum
and the Transfer Agent may each elect to waive all or a portion of their
fees. Any such waiver may be reduced or terminated at any time. Waivers will
have the effect of increasing a Fund's performance for the period during
which the waiver is in effect. No fee waivers may be recouped at a later
date. Other than investment advisory fees, any fee paid by the Trust may be
increased by the Board without shareholder approval.

Norwest and Forum and their agents and affiliates may also act in various
capacities for, and receive compensation from, their customers who are
shareholders of a Fund. Under agreements with those customers, Norwest and
Forum may elect to credit against the fees payable to them by their customers
or to rebate to customers all or a portion of any fee received from the Trust
with respect to assets of those customers invested in a Fund.

4. HOW TO BUY SHARES

Minimum Investment

There is a $1,000 minimum for initial purchases and a $100 minimum for
subsequent purchases of Shares of the Funds. A Fund may in its discretion
waive the investment minimums. Shareholders who elect electronic share
purchase privileges such as the Automatic Investment Plan or the Directed
Dividend Option are not subject to the initial investment minimum. See "Other
Shareholder Services - Automatic Investment Plan" and "Dividends and Tax
Matters."

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Except as set forth below with respect to purchases through Processing
Organizations, an investor's order will not be accepted or invested by a Fund
during the period before the Fund's receipt of Federal funds. Fund shares
become entitled to receive dividends and distributions on the next Fund
Business Day after the order is accepted.

The Funds reserve the right to reject any subscription for the purchase of
their shares. Share certificates are issued only to shareholders of record
upon their written request and no certificates are issued for fractional
shares.

Purchase Procedures

Initial Purchases

There are three ways to purchase shares initially.

1. By Mail. Investors may send a check made payable to the Trust along with
a completed account application form to the Trust at the address listed under
"Account Application" on page ___. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.

2. By Bank Wire. Investors may make an initial investment in a Fund using
the wire system for transmittal of money among banks. The investor should
first telephone the Transfer Agent at 612-667-8833 or 800-338-1348 to obtain
an account number. The investor should then instruct a bank to wire the
investor's money immediately to:

Norwest Bank Minnesota, N.A.
ABA 091 000 019
For Credit to: Norwest Advantage Funds
0844-131
Re: [Name of Fund]
[Designate A Shares or B Shares]
Account No.:
Account Name:

The investor should then promptly complete and mail the account application
form. There may be a charge by the investor's bank for transmitting the money
by bank wire, and there also may be a charge for the use of Federal funds.
The Trust does not charge investors for the receipt of wire transfers.
Payment by bank wire is treated as a Federal funds payment when received.

3. Through Financial Institutions. Shares may be purchased and redeemed
through certain broker-dealers, banks and other financial institutions
("Processing Organizations"). The Transfer Agent, Forum and their affiliates
may be Processing Organizations. Processing Organizations may receive as a
broker-dealer's reallowance a portion of the sales charge paid by their
customers who purchase A Shares of a Fund, may receive payments from Forum
with respect to sales of B Shares and may receive payments as a processing
agent from the Transfer Agent. In addition, financial institutions, including
Processing Organizations, may charge their customers a fee for their services
and are responsible for promptly transmitting purchase, redemption and other
requests to the Funds.

Investors who purchase shares through a Processing Organization will be
subject to the procedures of their Processing Organization, which may include
charges, limitations, investment minimums, cutoff times and restrictions in
addition to, or different from, those applicable to shareholders who invest
in a Fund directly. These investors should acquaint themselves with their
institution's procedures and should read this Prospectus in conjunction with
any materials and information provided by their institution. Customers who
purchase a Fund's shares through a Processing Organization may or may not be
the shareholder of record and, subject to their institution's and the Funds'
procedures, may have Fund shares transferred into their name. There is
typically a three-day settlement period for purchases and redemptions through
broker-dealers. Certain Processing Organizations may also enter purchase
orders with payment to follow.

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Certain shareholder services may not be available to shareholders who have
purchased shares through a Processing Organization. These shareholders should
contact their Processing Organization for further information. The Trust may
confirm purchases and redemptions of a Processing Organization's customers
directly to the Processing Organization, which in turn will provide its
customers with confirmations and periodic statements. The Trust is not
responsible for the failure of any Processing Organization to carry out its
obligations to its customer. Certain states, such as Texas, permit shares of
the Funds to be purchased and redeemed only through registered
broker-dealers, including the Funds' distributor.

Subsequent Purchases

Subsequent purchases may be made by mailing a check, by sending a bank wire
or through a shareholder's Processing Organization as indicated above. All
payments should clearly indicate the shareholder's name and account number.

Account Application

Investors may obtain the account application form necessary to open an
account by writing the Trust at the following address:

Norwest Advantage Funds
[Name of Fund]
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040

To participate in shareholder services not referenced on the account
application form and to change information on a shareholder's account (such
as addresses), investors or existing shareholders should contact the Trust.
The Trust reserves the right in the future to modify, limit or terminate any
shareholder privilege upon appropriate notice to shareholders and to charge a
fee for certain shareholder services, although no such fees are currently
contemplated. Any privilege and participation in any program may be
terminated by the shareholder at any time by writing to the Trust.

General Information

Fund shares are continuously sold on every weekday except customary national
business holidays and Good Friday ("Fund Business Day"). The purchase price
for Fund shares equals their net asset value next-determined after acceptance
of an order plus, in the case of the A Shares, any applicable sales charge
imposed at the time of purchase.

Investments in the Funds may be made either through certain financial
institutions or by an investor directly. An investor who invests in a Fund
directly will be the shareholder of record. All transactions in Fund shares
are effected through the Transfer Agent which accepts orders for redemptions
and for subsequent purchases only from shareholders of record. Shareholders
of record will receive from the Trust periodic statements listing all account
activity during the statement period.

Alternative Distribution Arrangements

Investors should compare sales charges and fees before selecting a particular
class of shares. Investors should consider whether, during the anticipated
life of their investment in a Fund, the accumulated distribution services fee
and maintenance fee and contingent deferred sales charges on B Shares prior
to conversion would be less than the initial sales charge on A Shares
purchased at the same time and whether that differential would be offset by
the higher yield of A Shares. A summary of the charges applicable to shares
of each Fund is listed under "Prospectus Summary - Expense Information."
Sales personnel of selected broker-dealers distributing a Fund's shares may
receive differing compensation for selling A Shares and B Shares.

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Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge
were not deducted and, accordingly, do not have the entire purchase price
invested. Investors not qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time should
consider whether, in light of the initial sales charge and its effect on the
amount of the purchase price invested, purchases of A Shares are more or less
advantageous than purchases of B Shares with their associated accumulated
continuing distribution and maintenance charges. For example, based on
estimated current fees and expenses, an investor in each Fund other than
Stable Income Fund subject to the 3.75% initial sales charge who elects to
reinvest all dividends and distributions would have to hold the shareholder's
investment approximately five years for the B Shares' distribution services
fee and maintenance fee to exceed the initial sales charge. An investor in
Stable Income Fund subject to the 1.50% initial sales charge who elects to
reinvest all dividends and distributions would have to hold the shareholder's
investment approximately two years for the B Shares' distribution services
fee and maintenance fee to exceed the initial sales charge. The foregoing
examples do not take into account the time value of money, fluctuations in
net asset value or the effects of different performance assumptions.

A Shares

The public offering price of A Shares is their next-determined net asset
value plus an initial sales charge assessed as follows (no sales charge is
assessed on the reinvestment of dividends or distributions):

Stable Income Fund

Broker-Dealers'
Reallowance
Sales Charge As a As a
Percentage of Percentage of
Amount of Purchase Offering Price Net Asset Value* Offering Price
Less than $50,000 1.50% 1.52% 1.35%
$50,000 to $99,999 1.00 1.01 0.90
$100,000 to $499,000 0.75 0.76 0.70
$500,000 to $999,000 0.50 0.50 0.45
$1,000,000 and over None None None

* Rounded to the nearest one-hundredth percent

Intermediate U.S. Government Fund
Broker-Dealers'
Reallowance
Sales Charge As a As a
Percentage of Percentage of
Amount of Purchase Offering Price Net Asset Value* Offering Price
Less than $50,000 3.75% 3.90% 3.40%
$50,000 to $99,999 3.25 3.36 2.95
$100,000 to $499,000 2.25 2.30 2.05
$500,000 to $999,000 1.75 1.78 1.60
$1,000,000 and over None None None

* Rounded to the nearest one-hundredth percent

Forum may pay a broker-dealers' reallowance to selected broker-dealers
purchasing shares as principal or agent, which may include banks, bank
affiliates and Processing Organizations. Normally, Forum will reallow
discounts to selected broker-dealers in the amounts indicated in the table
above. In addition, Forum may elect to reallow the entire sales charge to
selected broker-dealers for all sales with respect to which orders are placed
with Forum. The broker-dealers' reallowance may be changed from time to time.
Forum may make additional payments (out of its own resources) to selected
broker-dealers of up to 0.75% ( 0.50% in the case of Stable Income Fund) of
the value of Fund shares purchased at net asset value.

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No sales charge is assessed on purchases by: (a) any bank, trust company or
other institution acting on behalf of its fiduciary customer accounts or any
other account maintained by its trust department (including a pension, profit
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code of 1986, as amended) and (b)
trustees and officers of the Trust; directors, officers and full-time
employees of Forum, of Norwest Corporation or of any of their affiliates; the
spouse, direct ancestor or direct descendant (collectively, "relatives") of
any such person; any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the estate
of any such person or relative. These shares may not be resold except to the
Funds and share purchases under clause (b) must be made for investment
purposes.

In addition, no sales charge is assessed on purchases (a) by any registered
investment adviser with whom Forum has entered into a Share purchase
agreement and which is acting on behalf of its fiduciary customer accounts,
or (b) of A Shares of a Fund made through the Directed Dividend Option from a
fund that charges a front-end sales charge. See "Dividends and Tax Matters."

Reinstatement Privilege. An investor who has redeemed A Shares of a Fund may,
within 60 days following the redemption, purchase without a sales charge A
Shares in an amount up to the amount of the redemption. Investors who desire
to exercise this "Reinstatement Privilege" should contact the Trust for
further information.

Investors in Other Fund Families. No sales charge is assessed on purchases of
A Shares of a Fund with the proceeds of a redemption at net asset value,
within the preceding 60 days, of shares of a mutual fund that does not impose
on the redeemed shares at the time of their purchase a sales charge equal to
or greater than that applicable to the A Shares of that Fund. Investors
should contact the Trust for further information and to obtain the necessary
forms.

Reduced Initial Sales Charges. To qualify for a reduced sales charge, an
investor or the investor's Processing Organization must notify the Transfer
Agent at the time of purchase of the investor's intention to qualify and must
provide the Transfer Agent with sufficient information to verify that the
purchase qualifies for the reduced sales charge. Reduced sales charges may be
modified or terminated at any time and are subject to confirmation of an
investor's holdings. Further information about reduced sales charges is
contained in the SAI.

Self-Directed 401(k) Programs. Purchases of A Shares of a Fund through
self-directed 401(k) programs and other qualified retirement plans offered by
Norwest, Forum or their affiliates in accumulated amounts of less than
$100,000 are subject to a reduced sales charge applicable to a single
purchase of $100,000.

Cumulative Quantity Discount (Right of Accumulation). An investor's purchase
of additional A Shares of a Fund may qualify for rights of accumulation
("ROA") under which the applicable sales charge will be based on the total of
the investor's current purchase and the net asset value (at the end of the
previous Fund Business Day) of all A Shares of that Fund held by the
investor. For example, if an investor in Intermediate U.S. Government Fund
owned A Shares of the Fund worth $500,000 at the then current net asset value
and purchased A Shares of that Fund worth an additional $50,000, the sales
charge for the $50,000 purchase would be at the 1.75% rate applicable to a
$550,000 purchase, rather than at the 3.25% rate applicable to a $50,000
purchase.

In addition, an investor in a Fund that has previously purchased A Shares of
any other fund of the Trust that is sold with a sales charge equal to or
greater than the sales charge imposed on the A Shares of the Fund ("Eligible
Fund") may also qualify for ROA and may aggregate existing investments in A
Shares of Eligible Funds with current purchases of A Shares of the Fund to
determine the applicable sales charge. In addition, purchases of A Shares of
a Fund by an investor and the investor's spouse, direct ancestor or direct
descendant may be combined for purposes of ROA.

Statement of Intention. A Shares investors may also obtain reduced sales
charges based on cumulative purchases by means of a written Statement of
Intention, expressing the investor's intention to invest $50,000 or more in A
Shares of a Fund within a period of 13 months. Each purchase of shares under
a Statement of Intention will be made at net asset value plus the sales
charge applicable at the time of the purchase to a single transaction of the
dollar amount indicated in the Statement.

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Investors wishing to enter into a Statement of Intention in conjunction with
their initial investment in shares of a Fund should complete the appropriate
portion to the account application form. Current Fund shareholders can obtain
a Statement of Intention form by contacting the Transfer Agent.

Contingent Deferred Sales Charge. A Shares of a Fund on which no initial
sales charge was assessed due to the amount purchased in a single transaction
or pursuant to the Cumulative Quantity Discount or a Statement of Intention
and that are redeemed (including certain redemptions in connection with an
exchange) within specified periods after the purchase date of the shares will
be subject to contingent deferred sales charges equal to the percentages set
forth below of the dollar amount subject to the charge. The charge will be
assessed on an amount equal to the lesser of the cost of the shares being
redeemed and their net asset value at the time of redemption. Accordingly, no
sales charge will be imposed on increases in net asset value above the
initial purchase price. In addition, no charge will be assessed on shares
derived from the reinvestment of dividends and distributions.

Stable Income Fund
Contingent Deferred Sales
Charge as a % of Dollar
Amount of Purchase Period Shares Held Amount Subject to Charge
$1,000,000 to $4,999,999 Less than one year 0.50%
One to two years 0.25%
Over $5,000,000 Less than one year 0.25%

Intermediate U.S. Government Fund

Contingent Deferred Sales
Charge as a % of Dollar
Amount of Purchase Period Shares Held Amount Subject to Charge
$1,000,000 to $2,499,999 Less than one year 0.75%
One to two years 0.50%
$2,500,000 to $4,999,999 Less than one year 0.50%
Over $5,000,000 Less than one year 0.25%

No contingent deferred sales charge is charged on redemptions to the same
extent as described under "B Shares - Contingent Deferred Sales Charge"
below. The contingent deferred sales charge on shares purchased through an
exchange from another fund of the Trust is based upon the original purchase
date and price of the other fund's shares. For A shareholders with a
Statement of Intention that do not purchase $1,000,000 of a Fund's A Shares
pursuant to their Statement, no contingent deferred sales charge is imposed.
The Statement of Intention provides for a contingent deferred sales charge in
certain other cases. Further information about the contingent deferred sales
charge is contained in the SAI.

B Shares

Distribution Plan. B Shares are sold at their net asset value per share
without the imposition of a sales charge at the time of purchase. With
respect to B Shares, each Fund has adopted a distribution plan pursuant to
Rule 12b-1 (the "Plan") under the 1940 Act providing for distribution
payments, at an annual rate of up to 0.75% of the average daily net assets of
the Fund attributable to B Shares (the "distribution services fee"), by each
Fund to Forum, to compensate Forum for its distribution activities. The
distribution payments due to Forum from each Fund comprise (i) sales
commissions at levels set from time to time by the Board ("sales
commissions") and (ii) an interest fee calculated by applying the rate of 1%
over the prime rate to the outstanding balance of uncovered distribution
charges (as described below). The current sales commission rate is 3% (1.5%
in the case of Stable Income Fund) and Forum currently expects to pay sales
commissions to each broker-dealer at the time of sale of up to 3% (1.5% in
the case of Stable Income Fund) of the purchase price of B Shares of each
Fund sold by the broker-dealer.

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those shares by permitting an investor to purchase shares through
broker-dealers without the assessment of an initial sales charge and, at the
same time, permitting Forum to compensate broker-dealers in connection with
the sales of the shares. Proceeds from the contingent deferred sales charge
with respect to a Fund are paid to Forum to defray the expenses related to
providing distribution-related services in connection with the sales of B
Shares, such as the payment of compensation to broker-dealers selling B
Shares. Forum may spend the distribution services fees it receives as it
deems appropriate on any activities primarily intended to result in the sale
of those shares.

Under the Plan, a Fund will make distribution services fee payments to Forum
only for periods during which there are outstanding uncovered distribution
charges attributable to that Fund. Uncovered distribution charges are
equivalent to all sales commissions previously due (plus interest), less
amounts received pursuant to the Plan and all contingent deferred sales
charges previously paid to Forum. As of the date of this Prospectus, there
are no uncovered distribution expenses for any of the Fund's net assets
attributable to B Shares.

The amount of distribution services fees and contingent deferred sales charge
payments received by Forum with respect to a Fund is not related directly to
the amount of expenses incurred by Forum in connection with providing
distribution services to the B Shares and may be higher or lower than those
expenses. Forum may be considered to have realized a profit under the Plan
if, at any time, the aggregate amounts of all distribution services fees and
contingent deferred sales charge payments previously made to Forum exceed the
total expenses incurred by Forum in distributing B Shares.

Pursuant to the Plan, each Fund has agreed also to pay Forum a maintenance
fee in an amount equal to 0.25% of the average daily net assets of the Fund
attributable to the B Shares for providing personal services to shareholder
accounts. The maintenance fee may be paid by Forum to broker-dealers in an
amount not to exceed 0.25% of the value of B Shares held by the customers of
the broker-dealers. The distribution services fee and the maintenance fee are
each accrued daily and paid monthly and will cause a Fund's B Shares to have
a higher expense ratio and to pay lower dividends than A Shares of that Fund.
Notwithstanding the discontinuation of distribution services fees with
respect to a Fund, the Fund may continue to pay maintenance fees.

A Fund does not accrue future distribution services fees as a liability of
the Fund with respect to the B Shares or reduce the Fund's current net assets
in respect of distribution services fees which may become payable under the
Plan in the future.

In the event that Forum is replaced or terminated as distributor of a Fund's
B Shares, the Fund will continue to pay distribution services fees to Forum
(but only with respect to sales that occurred prior to the termination or
discontinuance of the Plan). In deciding whether to purchase B Shares of a
Fund, investors should consider that payments of distribution services fees
could continue until such time as there are no uncovered distribution charges
under the Plan attributable to that Fund. In approving the Plan, the Board
determined that there was a reasonable likelihood that the Plan would benefit
each Fund and its B shareholders.

Periods with a high level of sales of B Shares of a Fund accompanied by a low
level of redemptions of those shares that are subject to contingent deferred
sales charges will tend to increase uncovered distribution charges.
Conversely, periods with a low level of sales of B Shares of a Fund
accompanied by a high level of redemptions of those shares that are subject
to contingent deferred sales charges will tend to reduce uncovered
distribution charges. A high level of sales of B Shares during the first few
years of operations, coupled with the limitation on the amount of
distribution services fees payable by a Fund with respect to B Shares during
any fiscal year, would cause a large portion of the distribution services
fees attributable to a sale of the B Shares to be accrued and paid by the
Fund to Forum with respect to those shares in fiscal years subsequent to the
years in which those shares were sold. The payment delay would in turn result
in the incurrence and payment of increased interest fees under the Plan.

Contingent Deferred Sales Charge. B Shares of a Fund which are redeemed
within four years of purchase will be subject to contingent deferred sales
charges equal to the percentages set forth below of the dollar amount subject
to the charge. The amount of the contingent deferred sales charge, if any,
will vary depending on the number of years between the payment for the
purchase of B Shares of a Fund and their redemption.

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The contingent deferred sales charge will be assessed on an amount equal to
the lesser of the cost of the shares being redeemed and their net asset value
at the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition,
no charge will be assessed on shares derived from the reinvestment of
dividends and distributions.

Contingent Deferred Sales Charge as a % of Dollar Amount Subject to Charge

Stable Intermediate U.S.
Year Since Purchase Income Fund Government Fund
First 1.5% 3.0%
Second 0.75% 2.0%
Third None 2.0%
Fourth None 1.0%
Fifth None None
Sixth None None

Redemptions of shares will be effected in the manner that results in the
imposition of the lowest deferred sales charge. Redemptions with respect to a
shareholder's investment in a Fund will automatically be made first from any
A Shares in the Fund, second from B Shares of the Fund acquired pursuant to
reinvestment of dividends and distributions, third from B Shares of the Fund
held for over four years, and fourth from the longest outstanding B Shares of
the Fund held for less than four years.

No contingent deferred sales charge is imposed on (i) redemptions of shares
acquired through the reinvestment of dividends and distributions, (ii)
involuntary redemptions by a Fund of shareholder accounts with low account
balances, (iii) redemptions of shares following the death or disability of a
shareholder if the Fund is notified within one year of the shareholder's
death or disability and (iv) redemptions to effect a distribution (other than
a lump sum distribution) from an IRA, Keogh plan or Section 403(b) custodial
account or from a qualified retirement plan. See the SAI for further
information.

Conversion Feature. After six years (four years in the case of Stable Income
Fund) from the end of the calendar month in which the shareholder's purchase
order for B shares was accepted, the Shares will automatically convert to A
Shares of that Fund. The conversion will be on the basis of the relative net
asset values of the Shares, without the imposition of any sales load, fee or
other charge. For purposes of conversion, B Shares of a Fund purchased by a
shareholder through the reinvestment of dividends and distributions will be
considered to be held in a separate sub-account. Each time any B Shares in
the shareholder's account (other than those in the sub-account) convert, an
equal pro rata portion of those shares in the sub-account will also convert.
The conversion of B Shares to A Shares is subject to the continuing
availability of certain opinions of counsel and the conversion of a Fund's B
Shares to A Shares may be suspended if such an opinion is no longer available
at the time the conversion is to occur. In that event, no further conversions
of the Fund's B Shares would occur, and shares might continue to be subject
to a distribution services and maintenance fee for an indefinite period.

5. HOW TO SELL SHARES

General Information

Fund Shares may be sold (redeemed) at their net asset value on any Fund
Business Day subject to a contingent deferred sales charge imposed, in the
case of A Shares, on some redemptions made within two years of purchase and,
in the case of B Shares, on most redemptions made within four years of
purchase. There is no minimum period of investment and no restriction on the
frequency of redemptions.

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Normally, redemption proceeds are paid immediately, but in no event later
than seven days following acceptance of a redemption order. Proceeds of
redemption requests (and exchanges), however, will not be paid unless any
check to purchase the shares being redeemed has been cleared by the
shareholder's bank, which may take up to 15 days. This delay may be avoided
by paying for shares through wire transfers. Unless otherwise indicated,
redemption proceeds normally are paid by check mailed to the shareholder's
record address. The right of redemption may not be suspended nor the payment
dates postponed for more than seven days after the tender of the shares to a
Fund except when the New York Stock Exchange is closed (or when trading
thereon is restricted) for any reason other than its customary weekend or
holiday closings, for any period during which an emergency exists as a result
of which disposal by the Fund of its portfolio securities or determination by
the Fund of the value of its net assets is not reasonably practicable and for
such other periods as the SEC may permit.

Redemption Procedures

Shareholders who have invested directly in a Fund may redeem their Shares as
described below. Shareholders who have invested through a Processing
Organization may redeem their shares through the Processing Organization as
described above. Shareholders who wish to redeem shares by telephone or
receive redemption proceeds by bank wire must elect these options by properly
completing the appropriate sections of their account application form. These
privileges may not be available until several weeks after a shareholder's
application is received. Shares for which certificates have been issued may
not be redeemed by telephone.

1. By Mail. Shareholders may redeem shares by sending a written request to
the Transfer Agent accompanied by any share certificate that may have been
issued to the shareholder to evidence the shares being redeemed. All written
requests for redemption must be signed by the shareholder with signature
guaranteed, and all certificates submitted for redemption must be endorsed by
the shareholder with signature guaranteed. See "How to Sell Shares - Other
Redemption Matters."

2. By Telephone. A shareholder who has elected telephone redemption
privileges may make a telephone redemption request by calling the Transfer
Agent at 800-338-1348 or 612-667-8833 and providing the shareholder's account
number, the exact name in which his shares are registered and the
shareholder's social security or taxpayer identification number. In response
to the telephone redemption instruction, the Trust will mail a check to the
shareholder's record address or, if the shareholder has elected wire
redemption privileges, wire the proceeds. See "How to Sell Shares - Other
Redemption Matters."

3. By Bank Wire. For redemptions of more than $5,000, a shareholder who has
elected wire redemption privileges may request a Fund to transmit the
redemption proceeds by Federal funds wire to a bank account designated in
writing by the shareholder. To request bank wire redemptions by telephone,
the shareholder also must have elected the telephone redemption privilege.
Redemption proceeds are transmitted by wire on the day after a redemption
request in proper form is received by the Transfer Agent.

Other Redemption Matters

Signature Guarantee. A signature guarantee is required for the following: any
endorsement on a share certificate and for instructions to change a
shareholder's record name or address, designated bank account for wire
redemptions, Automatic Investment or Withdrawal Plan, dividend election,
telephone redemption or exchange option election or any other option election
in connection with the shareholder's account. Signature guarantees may be
provided by any bank, broker-dealer, national securities exchange, credit
union, savings association or other eligible institution that is authorized
to guarantee signatures, and is acceptable to the Transfer Agent. Whenever a
signature guarantee is required, the signature of each person required to
sign for the account must be guaranteed.

Shareholders who wish to accomplish redemptions or exchanges by telephone
must elect those privileges. The Trust will employ reasonable procedures in
order to verify that telephone requests are genuine, including recording
telephone instructions and causing written confirmations of the resulting
transactions to be sent to shareholders. If the Trust did not employ such
procedures, it could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Shareholders should verify the accuracy of
telephone instructions immediately upon receipt of confirmation statements.
During times of drastic economic or market changes, telephone redemption and
exchange

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privileges may be difficult to implement. In the event that a shareholder is
unable to reach the Transfer Agent by telephone, requests may be mailed or
hand-delivered to the Transfer Agent.

6. OTHER SHAREHOLDER SERVICES

Exchanges

Shareholders of A Shares and B Shares may exchange their shares for A Shares
and B Shares, respectively, of the other funds of the Trust that offer those
shares. As of the date of this Prospectus, the funds of the Trust that offer
A Shares and B Shares, which are offered through separate prospectuses, are:
Adjustable U.S. Government Reserve Fund, Government Income Fund, Income Fund
and Total Return Bond Fund (each a fixed-income fund); Tax-Free Income Fund,
Colorado Tax-Free Fund and Minnesota Tax-Free Fund (each a tax-free
fixed-income fund); and Income Stock Fund, ValuGrowth Stock Fund, Small
Company Stock Fund, Contrarian Stock Fund, Diversified Equity Fund, Growth
Equity Fund, Income Equity Fund and International Fund (each an equity fund).
It is anticipated that the Trust may in the future create additional funds
that will offer Shares which will be exchangeable with the Funds' Shares. In
addition, A Shares may be exchanged for Investor Shares of Ready Cash
Investment Fund and Municipal Money Market Fund of the Trust. B Shares may be
exchanged for Exchange Shares of Ready Cash Investment Fund. Prospectuses for
the shares of the funds listed above, as well as a current list of the funds
of the Trust that offer shares exchangeable with the Shares of the Funds, can
be obtained through Forum by contacting the Transfer Agent.

The Funds do not charge for exchanges, and there is currently no limit on the
number of exchanges a shareholder may make. The Funds reserve the right,
however, to limit excessive exchanges by any shareholder. Exchanges are
subject to the fees (other than contingent deferred sales charges) charged
by, and the limitations (including minimum investment restrictions) of, the
fund into which a shareholder is exchanging.

The Funds and Federal tax law treat an exchange as a redemption and a
purchase. Accordingly, a shareholder may realize a capital gain or loss
depending on whether the value of the shares redeemed is more or less than
the shareholder's basis in the shares at the time of the exchange
transaction. Exchange procedures may be amended materially or terminated by
the Trust at any time upon 60 days' notice to shareholders. See "Additional
Purchase and Redemption Information" in the SAI.

Sales Charges. The exchange of A Shares may result in additional sales
charges. If an exchange of A Shares is made into a fund that imposes an
initial sales charge, the shareholder is required to pay an amount equal to
any excess of that fund's initial sales charge attributable to the number of
shares being acquired in the exchange over any initial sales charge paid by
the shareholder for the shares being exchanged. For example, if a shareholder
paid a 2% initial sales charge in connection with a purchase of shares and
then exchanged those shares into A Shares of another fund with a 3% initial
sales charge, the shareholder would pay an additional 1% sales charge on the
exchange. A Shares acquired through the reinvestment of dividends or
distributions are deemed to have been acquired with a sales charge rate equal
to that applicable to the shares on which the dividends or distributions were
paid.

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redemption of the New Shares and, in the case of B Shares, the time remaining
before the New B Shares convert to A Shares of that Fund, the deferred sales
charge and the time remaining applicable to the Original Shares will apply to
the New Shares rather than the deferred sales charge and time remaining that
would otherwise apply. The deferred sales charge and time remaining applicable
to Shares first purchased by a shareholder will apply to New Shares resulting
from both an initial and any subsequent exchanges.

1. Exchanges By Mail. Exchanges may be made by sending a written request to
the Transfer Agent accompanied by any share certificates for the shares to be
exchanged. All written requests for exchanges must be signed by the
shareholder, and all certificates submitted for exchange must be endorsed by
the shareholder with signature guaranteed. See "How to Sell Shares - Other
Redemption Matters."

2. Exchanges By Telephone. A shareholder who has elected telephone exchange
privileges may make a telephone exchange request by calling the Transfer
Agent at 800-338-1348 or 612-667-8833 and providing the shareholder's account
number, the exact name in which the shareholder's shares are registered and
the shareholder's social security or taxpayer identification number. See "How
to Sell Shares - Other Redemption Matters."

Automatic Investment Plan

Under the Funds' Automatic Investment Plan, shareholders may authorize
monthly amounts of $50 or more to be withdrawn automatically from the
shareholder's designated bank account (other than passbook savings) and sent
to the Transfer Agent for investment in either A or B Shares of a Fund.
Shareholders wishing to use this plan must complete an application which may
be obtained by writing or calling the Transfer Agent. The Trust may modify or
terminate the automatic investment plan with respect to any shareholder in
the event that the Trust is unable to settle any transaction with the
shareholder's bank. If the Automatic Investment Plan is terminated before the
shareholder's account totals $1,000, the Trust reserves the right to close
the account in accordance with the procedures described under "How to Sell
Shares - Other Redemption Matters."

Individual Retirement Accounts

The Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). An IRA account application
form may be obtained by contacting the Trust at 800-338-1348 or 612-667-8833.
Individuals may make tax-deductible IRA contributions of up to a maximum of
$2,000 annually. However, the deduction will be reduced if the individual or,
in the case of a married individual filing jointly, either the individual or
the individual's spouse is an active participant in an employer-sponsored
retirement plan and has adjusted gross income above certain levels.

Automatic Withdrawal Plan

A shareholder whose Shares in a single account total $1,000 or more may
establish a withdrawal plan to provide for the preauthorized payment from the
shareholder's account of $250 or more on a monthly, quarterly, semi-annual or
annual basis. Under the withdrawal plan, sufficient shares in the
shareholder's account are redeemed to provide the amount of the periodic
payment and any taxable gain or loss is recognized by the shareholder upon
redemption of the shares. Shareholders wishing to utilize the withdrawal plan
may do so by completing an application which may be obtained by writing or
calling the Transfer Agent. The Trust may suspend a shareholder's withdrawal
plan without notice if the account contains insufficient funds to effect a
withdrawal or if the account balance is less than $1,000 at any time.

Reopening Accounts

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7. DIVIDENDS AND TAX MATTERS

Dividends

Dividends of the Funds' net investment income are declared and paid monthly.
Distributions of net capital gain, if any, realized by a Fund are distributed
annually. Dividends paid by a Fund with respect to each class of shares of
the Fund will be calculated in the same manner at the same time on the same
day. The per share dividends on a Fund's B Shares will be lower than the per
share dividends on A Shares as a result of the distribution services fees and
maintenance fees applicable to B Shares.

Shareholders may choose to have dividends and distributions of a Fund
reinvested in shares of that Fund (the "Reinvestment Option"), to receive
dividends and distributions in cash (the "Cash Option") or to direct
dividends and distributions to be reinvested in shares of another fund of the
Trust (the "Directed Dividend Option"). All dividends and distributions are
treated in the same manner for Federal income tax purposes whether received
in cash or reinvested in shares of a fund.

Under the Reinvestment Option, all dividends and distributions of a Fund are
automatically invested in additional shares of that Fund. All dividends and
distributions are reinvested at a Fund's net asset value as of the payment
date of the dividend or distribution. Shareholders are assigned this option
unless one of the other two options is selected. Under the Cash Option, all
dividends and distributions are paid to the shareholder in cash. Under the
Directed Dividend Option, shareholders of a Fund whose shares in a single
account of that Fund total $10,000 or more may elect to have all dividends
and distributions reinvested in shares of another fund of the Trust, provided
that those shares are eligible for sale in the shareholder's state of
residence. For further information concerning the Directed Dividend Option,
shareholders should contact the Transfer Agent.

Taxes

Each Fund intends to continue to qualify for each fiscal year to be taxed as
a "regulated investment company" under the Internal Revenue Code of 1986 (the
"Code"). As such, the Funds will not be liable for Federal income and excise
taxes on the net investment income and capital gain distributed to their
shareholders. Because each Fund intends to distribute all of its net
investment income and net capital gain each year, each Fund should thereby
avoid all Federal income and excise taxes.

Dividends paid by a Fund out of its net investment income (including realized
net short-term capital gain) are taxable to shareholders of the Fund as
ordinary income notwithstanding that the dividends are reinvested in
additional shares of the Fund.

Distributions of net long-term capital gain, if any, realized by a Fund are
taxable to shareholders of the Fund as long-term capital gain, regardless of
the length of time the shareholder may have held shares in the Fund at the
time of distribution. If a shareholder holds shares for six months or less
and during that period receives a distribution taxable to the shareholder as
long-term capital gain, any loss realized on the sale of the shares during
that six-month period would be a long-term capital loss to the extent of the
distribution. Any distribution of capital gain received by a shareholder on
shares of a Fund will have the effect of reducing the net asset value of the
shares by the amount of the distribution. Furthermore, a distribution made
shortly after the purchase of shares by a shareholder, although in affect a
return of capital to that particular shareholder, would be taxable to the
shareholder as described above.

Each Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemptions)
paid to a shareholder who fails to provide the Fund with a correct taxpayer
identification number or to make required certifications, or who is subject
to backup withholding.

Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by each Fund
will be mailed to shareholders shortly after the close of each year.

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accounts will be taxable to individual participants under applicable tax rules
without regard to the character of the income earned by the account.

8. OTHER INFORMATION

Banking Law Matters

Federal banking laws and regulations generally permit a bank or bank
affiliate to act as investment adviser, transfer agent, and custodian to an
investment company and to purchase shares of the investment company as agent
for and upon the order of a customer and, in connection therewith, to retain
a sales charge or similar payment. Counsel to the Trust believes that Norwest
and any other bank or bank affiliate that may serve as a Processing
Organization or perform sub-transfer agent or similar services or purchase
shares as agent for its customers may perform the services described in this
Prospectus for the Trust and its shareholders without violating applicable
Federal banking laws or regulations.

Federal or state statutes or regulations and judicial or administrative
decisions or interpretations relating to the activities of banks and their
affiliates, however, could prevent a bank or bank affiliate from continuing
to perform all or a part of the activities contemplated by this Prospectus.
If a bank or bank affiliate were prohibited from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by a bank or
bank affiliate may no longer be able to avail itself of those services. It is
not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

Determination of Net Asset Value

The Trust determines the net asset value per share of each Fund as of 4:00
P.M., Eastern time, on each Fund Business Day by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less
its liabilities) by the number of shares outstanding at the time the
determination is made. Securities owned by a Fund for which market quotations
are readily available are valued at current market value or, in their
absence, at fair value as determined by the Board. The Trust does not
determine net asset value on the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas.

Securities owned by a Fund for which market quotations are readily available
are valued at current market value. Securities for which market quotations
are not readily available are valued at fair value as determined by the Board
in accordance with procedures adopted by the Board.

The per share net asset values of each class of shares of a Fund are expected
to be substantially the same. Under certain circumstances, however, the per
share net asset value of each class may vary.

Performance Information

A Fund's performance may be quoted in advertising in terms of yield or total
return. All performance information is based on historical results and is not
intended to indicate future performance. A Fund's yield is a way of showing
the rate of income the Fund earns on its investments as a percentage of the
Fund's share price. To calculate standardized yield, a Fund takes the
interest income it earned from its investments for a 30-day period (net of
expenses), divides it by the average number of shares entitled to receive
dividends, and expresses the result as an annualized percentage rate based on
the Fund's share price at the end of the 30-day period. A Fund's total return
shows its overall change in value, including changes in share price and
assuming all the Fund's dividends and distributions are reinvested. A
cumulative total return reflects a Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total return
if the Fund's performance had been constant over the entire period. Because
average annual returns tend to smooth out variations in the Funds' returns,
shareholders should recognize that they are not the same as actual
year-by-year results. To illustrate the components of overall performance, a
Fund may separate its cumulative and average annual returns into income
results and capital gain or loss. Published yield quotations are, and total
return figures may be, based on amounts actually invested in a Fund net of
sales loads that may be paid by an investor. A computation of

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yield or total return that does not take into account the sales load paid by an
investor will be higher than a computation based on the public offering price of
shares purchased that take into account payment of the sales load.

The Funds' advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Inc., Lipper
Analytical Services, Inc. and IBC/Donoghue, Inc. In addition, the performance
of the Funds may be compared to recognized indices of market performance. The
comparative material found in the Funds' advertisements, sales literature or
reports to shareholders may contain performance ratings. This material is not
to be considered representative or indicative of future performance. All
performance information for a Fund is calculated on a class basis.

The Trust and Its Shares

The Trust was originally organized under the name "Prime Value Funds, Inc."
as a Maryland corporation on August 29, 1986, and on July 30, 1993, was
reorganized as a Delaware business trust under the name "Norwest Funds." The
Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares
into an unlimited number of separate portfolios or series (such as the Funds)
and may divide portfolios or series into classes of shares (such as A Shares
and B Shares), and the costs of doing so will be borne by the Trust.
Currently the authorized shares of the Trust are divided into thirty separate
series.

Other Classes of Shares. In addition to the Shares, each Fund may create and
issue shares of other classes of securities. Each Fund currently offers three
classes of shares: A Shares; B Shares; and I Shares. I Shares are offered to
fiduciary, agency and custodial clients of bank trust departments, trust
companies and their affiliates without any sales charges or distribution
service or maintenance fees. Each class of a Fund may have a different
expense ratio and different sales charges (including distribution fees) and
each class' performance will be affected by its expenses and sales charges.
For more information on any other class of shares of the Funds investors may
contact the Transfer Agent at 612-667-8833 or 800-338-1348. Investors may
also contact their Norwest sales representative or the Funds' distributor to
obtain information about the other classes. Sales personnel of broker-dealers
and other financial institutions selling the Fund's shares may receive
differing compensation for selling A, B and I Shares of the Funds.

Shareholder Voting and Other Rights. Each share of each fund of the Trust and
each class of shares has equal dividend, distribution, liquidation and voting
rights, and fractional shares have those rights proportionately, except that
expenses related to the distribution of the shares of each class (and certain
other expenses such as transfer agency and administration expenses) are borne
solely by those shares and each class votes separately with respect to the
provisions of any Rule 12b-1 plan which pertain to the class and other
matters for which separate class voting is appropriate under applicable law.
Generally, shares will be voted in the aggregate without reference to a
particular portfolio or class, except if the matter affects only one
portfolio or class or voting by portfolio or class is required by law, in
which case shares will be voted separately by portfolio or class, as
appropriate. Delaware law does not require the Trust to hold annual meetings
of shareholders, and it is anticipated that shareholder meetings will be held
only when specifically required by Federal or state law. Shareholders have
available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the
option of the shareholders, subject to any contingent deferred sales charge
that may apply. A shareholder in a portfolio is entitled to the shareholder's
pro rata share of all dividends and distributions arising from that
portfolio's assets and, upon redeeming shares, will receive the portion of
the portfolio's net assets represented by the redeemed shares.

From time to time, certain shareholders may own a large percentage of the
Shares of a Fund. Accordingly, these shareholders may be able to greatly
affect (if not determine) the outcome of a shareholder vote.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT
OF ADDITIONAL INFORMATION AND THE FUNDS' OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF THE FUNDS' SHARES, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE
MADE.

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NORWEST ADVANTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION

MARCH 1, 1996

COMPONENT EQUITY FUNDS

DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND

EQUITY FUNDS

LARGE COMPANY GROWTH FUND
SMALL COMPANY GROWTH FUND
INTERNATIONAL FUND
INTERNATIONAL PORTFOLIO
INCOME EQUITY FUND
INDEX FUND

BALANCED FUNDS

CONSERVATIVE BALANCED FUND
MODERATE BALANCED FUND
GROWTH BALANCED FUND

FIXED INCOME FUNDS

INTERMEDIATE U.S. GOVERNMENT FUND
MANAGED FIXED INCOME FUND
STABLE INCOME FUND

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NORWEST ADVANTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1996

This Statement of Additional Information ("SAI") supplements the Prospectus
offering I Shares (the "Shares") of Diversified Equity Fund, Growth Equity
Fund, Large Company Growth Fund, Small Company Growth Fund, International
Fund, Income Equity Fund, Index Fund, Conservative Balanced Fund, Moderate
Balanced Fund, Growth Balanced Fund, Intermediate U.S. Government Fund,
Managed Fixed Income Fund and Stable Income Fund (each a "Fund" and
collectively the "Funds"). Each Fund is a diversified series of Norwest
Advantage Funds, a registered open-end, management investment company (the
"Trust"). International Fund currently invests all of its investable assets
in the International Portfolio of Core Trust (Delaware) ("International
Portfolio"), a registered open-end, management investment company. This SAI
should be read only in conjunction with the Funds' Prospectus, copies of
which may be obtained without charge.

TABLE OF CONTENTS Page
----
1. Norwest Advantage Funds..................................
2. Investment Policies......................................
3. Investment Limitations...................................
4. Performance Data and Advertising.........................
5. Management...............................................
6. Other Information........................................

Appendix A - Description of Securities Ratings................ A-1

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.

THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED BY AN INVESTOR WITHOUT
CHARGE BY CONTACTING THE TRUST'S DISTRIBUTOR, FORUM FINANCIAL SERVICES, INC.,
TWO PORTLAND SQUARE, PORTLAND, MAINE 04101.

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1. NORWEST ADVANTAGE FUNDS

DEFINITIONS

The Trust was originally organized under the name Prime Value Funds, Inc. as
a Maryland corporation on August 29, 1986. On July 30, 1993, pursuant to a
shareholder vote, the Trust was reorganized as a Delaware business trust. On
October 1, 1995, the Trust's name was changed from "Norwest Funds." As used
in this SAI, the following terms shall have the meanings listed:

"Adviser" shall mean each Fund's investment adviser, Norwest Investment
Management, a part of Norwest. "Advisers" shall mean, collectively, the
Adviser and Schroder.

"Board" shall mean the Board of Trustees of the Trust.

"CFTC" shall mean the U.S. Commodities Futures Trading Commission.

"Core Trust" shall mean Core Trust (Delaware), an open-end, management
investment company registered under the 1940 Act.

"Forum" shall mean Forum Financial Services, Inc., the Trust's
administrator and distributor of the Trust's shares.

"FFC" shall mean Forum Financial Corp., the Trust's fund accountant.

"Fund" shall mean each of the thirteen separate portfolios of the Trust
to which this Statement of Additional Information relates as identified on
the cover page.

"Norwest" shall mean Norwest Bank Minnesota, N.A., a subsidiary of
Norwest Corporation.

"NRSRO" shall mean a nationally recognized statistical rating
organization.

"Portfolio" shall mean International Portfolio, International Portfolio
II, Small Company Portfolio and Index Portfolio, four separate portfolios of
Core Trust.

"Schroder" shall mean Schroder Capital Management Inc., the investment
subadviser to Diversified Equity Fund, Growth Equity Fund, International
Fund, Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced
Fund.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"Transfer Agent" shall mean Norwest acting in its capacity as transfer
and dividend disbursing agent of the Trust.

"Trust" shall mean Norwest Advantage Funds, an open-end management
investment company registered under the 1940 Act.

"U.S. Government Securities" shall mean obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities.

"1940 Act" shall mean the Investment Company Act of 1940, as amended.

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2. INVESTMENT POLICIES

The following discussion is intended to supplement the disclosure in the
Prospectus concerning the Funds' investments, investment techniques and
strategies and the risks associated therewith. No Fund may make any
investment or employ any investment technique or strategy not referenced in
the Prospectus as relates to that Fund. For example, while the SAI describes
"swap" transactions below, only those Funds whose investment policies, as
described in the Prospectus, allow the Fund to invest in swap transactions
may do so. Reference to the investment policies and investment limitations
of International Fund also pertain to the International Portfolio, in which
that Fund currently invests all of its assets.

RATINGS AS INVESTMENT CRITERIA

Moody's Investors Service, Inc., Standard & Poor's Corporation and other
NRSROs are private services that provide ratings of the credit quality of
debt obligations, including convertible securities. A description of the
range of ratings assigned to various types of bonds and other securities by
several NRSROs is included in Appendix A to this SAI. The Funds may use
these ratings to determine whether to purchase, sell or hold a security.
However, ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. If an issue of securities ceases to be rated
or if its rating is reduced after it is purchased by a Fund, the investment
adviser or investment subadviser of the Fund will determine whether the Fund
should continue to hold the obligation. Credit ratings attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks
of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings. An issuer's current financial condition
may be better or worse than a rating indicates.

CONVERTIBLE SECURITIES

A Fund may invest in convertible securities. A convertible security is a
bond, debenture, note, preferred stock or other security that may be
converted into or exchanged for a prescribed amount of common stock of the
same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive
interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, convertible securities have characteristics
similar to nonconvertible debt securities in that they ordinarily provide a
stable stream of income with generally higher yields than those of common
stocks of the same or similar issuers. Convertible securities rank senior to
common stock in a corporation's capital structure but are usually
subordinated to comparable nonconvertible securities. Although no securities
investment is without some risk, investment in convertible securities
generally entails less risk than in the issuer's common stock. However, the
extent to which such risk is reduced depends in large measure upon the degree
to which the convertible security sells above its value as a fixed income
security. Convertible securities have unique investment characteristics in
that they generally (1) have higher yields than common stocks, but lower
yields than comparable non-convertible securities, (2) are less subject to
fluctuation in value than the underlying stocks since they have fixed income
characteristics and (3) provide the potential for capital appreciation if the
market price of the underlying common stock increases.

The value of a convertible security is a function of its "investment value"
(determined by a comparison of its yield with the yields of other securities
of comparable maturity and quality that do not have a conversion privilege)
and its "conversion value" (the security's worth, at market value, if
converted into the underlying common stock). The investment value of a
convertible security is influenced by changes in interest rates, with
investment value declining as interest rates increase and increasing as
interest rates decline. The credit standing of the issuer and other factors
also may have an effect on the convertible security's investment value. The
conversion value of a convertible security is determined by the market price
of the underlying common stock. If the conversion value is low relative to
the investment value, the price of the convertible security is governed
principally by its investment value and generally the conversion value
decreases as the convertible security approaches maturity. To the extent the
market price of the underlying common stock approaches or exceeds the
conversion price, the price of the convertible security will be increasingly
influenced by its conversion value. In addition, a convertible security
generally will sell at a premium over its conversion value determined by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.

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A convertible security may be subject to redemption at the option of the
issuer at a price established in the convertible security's governing
instrument. If a convertible security held by the Fund is called for
redemption, the Fund will be required to permit the issuer to redeem the
security, convert it into the underlying common stock or sell it to a third
party.

EQUITY-LINKED SECURITIES

Equity-linked securities are securities that are convertible into or based
upon the value of, equity securities upon certain terms and conditions. The
following are three examples of equity-linked securities. A fund may invest
in the securities described below or other similar equity-linked securities.

Preferred Equity Redemption Cumulative Stock ("PERCS") technically are
preferred stock with some characteristics of common stock. PERCS are
mandatorily convertible into common stock after a period of time, usually
three years, during which the investors' capital gains are capped, usually at
30%. Commonly, PERCS may be redeemed by the issuer at any time or if the
issuer's common stock is trading at a specified price level or better. The
redemption price starts at the beginning of the PERCS' duration period at a
price that is above the cap by the amount of the extra dividends the PERCS
holder is entitled to receive relative to the common stock over the duration
of the PERCS and declines to the cap price shortly before maturity of the
PERCS. In exchange for having the cap on capital gains and giving the issuer
the option to redeem the PERCS at any time or at the specified common stock
price level, a Fund may be compensated with a substantially higher dividend
yield than that on the underlying common stock. Funds that seek current
income find PERCS attractive because a PERCS provides a higher dividend
income than that paid with respect to a company's common stock.

Equity-Linked Securities ("ELKS") differ from ordinary debt securities, in
that the principal amount received at maturity is not fixed but is based on
the price of the issuer's common stock. ELKS are debt securities commonly
issued in fully registered form for a term of three years under an indenture
trust. At maturity, the holder of ELKS will be entitled to receive a
principal amount equal to the lesser of a cap amount, commonly in the range
of 30% to 55% greater than the current price of the issuer's common stock, or
the average closing price per share of the issuer's common stock, subject to
adjustment as a result of certain dilution events, for the 10 trading days
immediately prior to maturity. Unlike PERCS, ELKS are commonly not subject
to redemption prior to maturity. ELKS usually bear interest during the
three-year term at a substantially higher rate than the dividend yield on the
underlying common stock. In exchange for having the cap on the return that
might have been received as capital gains on the underlying common stock, the
Investment Fund may be compensated with the higher yield, contingent on how
well the underlying common stock does. Funds that seek current income find
ELKS attractive because ELKS provide a higher dividend income than that paid
with respect to a company's common stock.

Liquid Yield Option Notes ("LYONs") differ from ordinary debt securities, in
that the amount received prior to maturity is not fixed but is based on the
price of the issuer's common stock. LYONs are zero-coupon notes that sell at
a large discount from face value. For an investment in LYONs, a Fund will
not receive any interest payments until the notes mature, typically in 15 or
20 years, when the notes are redeemed at face, or par, value. The yield on
LYONs, typically, is lower-than-market rate for debt securities of the same
maturity, due in part to the fact that the LYONs are convertible into common
stock of the issuer at any time at the option of the holder of the LYON.
Commonly, LYONs are redeemable by the issuer at any time after an initial
period or if the issuer's common stock is trading at a specified price level
or better, or, at the option of the holder, upon certain fixed dates. The
redemption price typically is the purchase price of the LYONs plus accrued
original issue discount to the date of redemption, which amounts to the
lower-than-market yield. A Fund will receive only the lower-than-market yield
unless the underlying common stock increases in value at a substantial rate.
LYONs are attractive to investors when it appears that they will increase in
value due to the rise in value of the underlying common stock.

WARRANTS

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price equals or exceeds the market value of such security, the warrants will
have little or no market value. If a warrant is not exercised within the
specified time period, it will become worthless and the Fund will lose the
purchase price paid for the warrant and the right to purchase the underlying
security. The Fund may not invest more than 2% of its net assets in warrants
not traded on the American or New York Stock Exchange.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

TYPES OF CREDIT ENHANCEMENT

To lessen the effect of failures by obligors on Mortgage Assets (as defined
in the Prospectus) to make payments, mortgage-backed securities may contain
elements of credit enhancement. Credit enhancement falls into two
categories: (1) liquidity protection; and (2) protection against losses
resulting after default by an obligor on the underlying assets and collection
of all amounts recoverable directly from the obligor and through liquidation
of the collateral. Liquidity protection refers to the provisions of
advances, generally by the entity administering the pool of assets (usually
the bank, savings association or mortgage banker that transferred the
underlying loans to the issuer of the security), to ensure that the receipt
of payments on the underlying pool occurs in a timely fashion. Protection
against losses resulting after default and liquidation ensures ultimate
payment of the obligations on at least a portion of the assets in the pool.
Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination
of such approaches. The Funds will not pay any additional fees for such
credit enhancement, although the existence of credit enhancement may increase
the price of security.

Examples of credit enhancement arising out of the structure of the
transaction include (i) "senior-subordinated securities" (multiple class
securities with one or more classes subordinate to other classes as to the
payment of principal thereof and interest thereon, with the result that
defaults on the underlying assets are borne first by the holders of the
subordinated class), (ii) creation of "spread accounts" or "reserve funds"
(where cash or investments, sometimes funded from a portion of the payments
on the underlying assets are held in reserve against future losses) and (iii)
"over-collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceeds that required to make payment of the
securities and pay any servicing or other fees). The degree of credit
enhancement provided for each issue generally is based on historical
information regarding the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that covered by credit enhancement
protection could adversely affect the return on an investment in such a
security.

OTHER GOVERNMENTAL RELATED MORTGAGE-BACKED SECURITIES

The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
Government in connection with the savings and loan crisis, holds assets of
failed savings associations as either a conservator or receiver for such
associations, or it acquires such assets in its corporate capacity. These
assets include, among other things, single family and multi-family mortgage
loans, as well as commercial mortgage loans. In order to dispose of such
assets in an orderly manner, RTC has established a vehicle registered with
the SEC through which it sells mortgage-backed securities. RTC
mortgage-backed securities represent pro rata interests in pools of mortgage
loans that RTC holds or has acquired, as described above, and are supported
by one or more of the types of private credit enhancements used by Private
Mortgage Lenders.

It is anticipated that in the future the Federal Deposit Insurance
Corporation (which also holds mortgage loans as a conservator or receiver of
insolvent banks or in its corporate capacity) or other governmental agencies
or instrumentalities may establish vehicles for the issuance of
mortgage-backed securities that are similar in structure and in types of
credit enhancements to RTC securities.

ASSET-BACKED SECURITIES

A Fund may invest in asset-backed securities, which have structural
characteristics similar to mortgage-backed securities but have underlying
assets that are not mortgage loans or interests in mortgage loans.
Asset-backed securities are securities that represent direct or indirect
participations in, or are secured by and payable from, assets such as motor
vehicle installment sales contracts, installment loan contracts, leases of
various types of real and

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personal property and receivables from revolving credit (credit card)
agreements. Such assets are securitized through the use of trusts and special
purpose corporations.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. Payments of principal and
interest may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution.

Asset-backed securities present certain risks that are not presented by
mortgage-backed debt securities or other securities in which a Fund may
invest. Primarily, these securities do not always have the benefit of a
security interest in comparable collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a
number of state and Federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards,
thereby reducing the balance due. Automobile receivables generally are
secured by automobiles. Most issuers of automobile receivables permit the
loan servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the holders
of the asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and the technical requirements under
state laws, the trustee for the holders of the automobile receivables may not
have a proper security interest in the underlying automobiles. Therefore,
there is the possibility that recoveries on repossessed collateral may not,
in some cases, be available to support payments on these securities. Because
asset-backed securities are relatively new, the market experience in these
securities is limited and the market's ability to sustain liquidity through
all phases of the market cycle has not been tested.

INTEREST-ONLY AND PRINCIPAL-ONLY SECURITIES

Some tranches of mortgage-backed securities, including CMOs, are structured
so that investors receive only principal payments generated by the underlying
collateral. Principal only ("POs") securities usually sell at a deep
discount from face value on the assumption that the purchaser will ultimately
receive the entire face value through scheduled payments and prepayments;
however, the market values of POs are extremely sensitive to prepayment
rates, which, in turn, vary with interest rate changes. If interest rates
are falling and prepayments accelerate, the value of the PO will increase.
On the other hand, if rates rise and prepayments slow, the value of the PO
will drop.

Interest only ("IOs") securities result from the creation of POs; thus, CMOs
with PO tranches also have IO tranches. IO securities sell at a deep
discount to their "notional" principal amount, namely the principal balance
used to calculate the amount of interest due. They have no face or par value
and, as the notional principal amortizes and prepays, the IO cash-flow
declines.

Unlike POs, IOs increase in value when interest rates rise and prepayment
rates slow; consequently they are often used to "hedge" portfolios against
interest rate risk. If prepayment rates are high, a Fund may receive less
cash back than it initially invested.

VARIABLE AND FLOATING RATE SECURITIES

The securities in which the Funds invest (including mortgage-backed
securities) may have variable or floating rates of interest. These
securities pay interest at rates that are adjusted periodically according to
a specified formula, usually with reference to some interest rate index or
market interest rate (the "underlying index"). The interest paid on these
securities is a function primarily of the underlying index upon which the
interest rate adjustments are based. Such adjustments minimize changes in
the market value of the obligation and, accordingly, enhance the ability of
the Fund to maintain a stable net asset value. Similar to fixed rate debt
instruments, variable and floating rate instruments are subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. The rate of interest on securities purchased by a Fund may
be tied to Treasury or other government securities or indices on those
securities as well as any other rate of interest or index. Certain variable
rate securities (including mortgage-backed securities) pay interest at a rate
that that varies inversely to prevailing short-term interest rates (sometimes
referred to as inverse floaters). For instance, upon reset the interest rate
payable on a security may go down when the underlying index has risen.
During times when short-term interest rates are relatively low as compared to
long-term interest rates a Fund may attempt to enhance its yield by
purchasing inverse floaters. Certain

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inverse floaters may have an interest rate mechanism that multiplies the
effects of changes in the underlying index. This form of leverage may have
the effect of increasing the volatility of the security's market value while
increasing the security's, and thus the Fund's, yield.

There may not be an active secondary market for any particular floating or
variable rate instrument (particularly inverse floaters) which could make it
difficult for a Fund to dispose of the instrument if the issuer defaulted on
its repayment obligation during periods that the Fund is not entitled to
exercise any demand rights it may have. A Fund could, for this or other
reasons, suffer a loss with respect to an instrument. The Adviser monitors
the liquidity of the Fund's investment in variable and floating rate
instruments, but there can be no guarantee that an active secondary market
will exist.

INTEREST RATE PROTECTION TRANSACTIONS

Certain Funds may enter into interest rate protection transactions, including
interest rate swaps, caps, collars and floors. Interest rate swap
transactions involve an agreement between two parties to exchange interest
payment streams that are based, for example, on variable and fixed rates that
are calculated on the basis of a specified amount of principal (the "notional
principal amount") for a specified period of time. Interest rate cap and
floor transactions involve an agreement between two parties in which the
first party agrees to make payments to the counterparty when a designated
market interest rate goes above (in the case of a cap) or below (in the case
of a floor) a designated level on predetermined dates or during a specified
time period. Interest rate collar transactions involve an agreement between
two parties in which the payments are made when a designated market interest
rate either goes above a designated ceiling or goes below a designated floor
on predetermined dates or during a specified time period.

A Fund expects to enter into interest rate protection transactions to
preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities it
anticipates purchasing at a later date. The Funds intend to use these
transactions as a hedge and not as a speculative investment.

A Fund may enter into interest rate protection transactions on an asset-based
basis, depending on whether it is hedging its assets or its liabilities, and
will usually enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted out, with the Fund receiving or paying, as the
case may be, only the net amount of the two payments. Inasmuch as these
interest rate protection transactions are entered into for good faith hedging
purposes, and inasmuch as segregated accounts will be established with
respect to such transactions, the Funds believe such obligations do not
constitute senior securities. The net amount of the excess, if any, of a
Fund's obligations over its entitlements with respect to each interest rate
swap will be accrued on a daily basis and an amount of cash, U.S. Government
Securities or other liquid high grade debt obligations having an aggregate
net asset value at least equal to the accrued excess will be maintained in a
segregated account by a custodian that satisfies the requirements of the 1940
Act. The Funds also will establish and maintain such segregated accounts
with respect to its total obligations under any interest rate swaps that are
not entered into on a net basis and with respect to any interest rate caps,
collars and floors that are written by the Fund.

A Fund will enter into interest rate protection transactions only with banks
and other institutions believed by the investment adviser to the Fund to
present minimal credit risks. If there is a default by the other party to
such a transaction, the Fund will have to rely on its contractual remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant to
the agreements related to the transaction.

The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps, collars and floors are more
recent innovations for which documentation is less standardized and,
accordingly, they are less liquid than swaps.

FOREIGN CURRENCY TRANSACTIONS

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connection with conversions between various currencies. A Fund may conduct
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or by entering
into foreign currency forward contracts ("forward contracts") to purchase or
sell foreign currencies. A forward contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days (usually less than one year) from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers and involve the risk that
the other party to the contract may fail to deliver currency when due, which
could result in losses to the Fund. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades. Foreign
exchange dealers realize a profit based on the difference between the price at
which they buy and sell various currencies.

A Fund may enter into forward contracts under two circumstances. First, with
respect to specific transactions, when the Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. By entering into
a forward contract for the purchase or sale, for a fixed amount of dollars,
of the amount of foreign currency involved in the underlying security
transactions, the Fund may be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar
and the subject foreign currency during the period between the date the
security is purchased or sold and the date on which payment is made or
received.

Second, a Fund may enter into forward currency contracts in connection with
existing portfolio positions. For example, when an investment adviser
believes that the currency of a particular foreign country may suffer a
substantial decline against the U.S. dollar, the Fund may enter into a
forward contract to sell, for a fixed amount of dollars, the amount of
foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of
short-term currency market movement is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
Forward contracts involve the risk of inaccurate predictions of currency
price movements, which may cause the Fund to incur losses on these contracts
and transaction costs. The investment advisers do not intend to enter into
forward contracts on a regular or continuous basis, and will not do so if, as
a result, a Fund will have more than 25 percent of the value of its total
assets committed to such contracts or the contracts would obligate the Fund
to deliver an amount of foreign currency in excess of the value of the Fund's
portfolio securities or other assets denominated in that currency.

At or before the settlement of a forward currency contract, a Fund may either
make delivery of the foreign currency or terminate its contractual obligation
to deliver the foreign currency by purchasing an offsetting contract. If the
Fund chooses to make delivery of the foreign currency, it may be required to
obtain the currency through the conversion of assets of the Fund into the
currency. The Fund may close out a forward contract obligating it to
purchase a foreign currency by selling an offsetting contract. If the Fund
engages in an offsetting transaction, the Fund will incur a gain or a loss to
the extent that there has been a change in forward contract prices.
Additionally, although forward contracts may tend to minimize the risk of
loss due to a decline in the value of the hedged currency, at the same time
they tend to limit any potential gain which might result should the value of
such currency increase.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market. The interbank market in foreign
currencies is a global, around-the-clock market.

When required by applicable regulatory guidelines, a Fund will set aside
cash, U.S. Government Securities or other liquid, high-grade debt securities
in a segregated account with its custodian in the prescribed amount.

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HEDGING AND OPTION INCOME STRATEGIES

Certain Funds may engage in certain options strategies in order to enhance
the Fund's income and may engage in certain options and futures strategies to
attempt to hedge the Fund's portfolio. The instruments in which the Funds
may invest include (i) options on fixed income securities, fixed income
securities indexes and foreign currencies, (ii) index, interest rate and
foreign currency futures contracts ("futures contracts"), and (iii) options
on futures contracts. Use of these instruments is subject to regulation by
the SEC, the several options and futures exchanges upon which options and
futures are traded, and the CFTC.

The various strategies referred to herein and in the Prospectus are intended
to illustrate the type of strategies that are available to, and may be used
by, an investment adviser in managing a Fund's portfolio. No assurance can be
given, however, that any strategies will succeed.

The Funds will not use leverage in their option income and hedging
strategies. In the case of transactions entered into as a hedge, a Fund will
hold securities, currencies or other options or futures positions whose
values are expected to offset ("cover") its obligations thereunder. A Fund
will not enter into a hedging strategy that exposes the Fund to an obligation
to another party unless it owns either (1) an offsetting ("covered") position
or (2) cash, U.S. Government Securities or other liquid, high-grade debt
securities with a value sufficient at all times to cover its potential
obligations. When required by applicable regulatory guidelines, the Fund
will set aside cash, U.S. Government Securities or other liquid, high-grade
debt securities in a segregated account with its custodian in the prescribed
amount. Any assets used for cover or held in a segregated account cannot be
sold or closed out while the hedging or option income strategy is
outstanding, unless they are replaced with similar assets. As a result,
there is a possibility that the use of cover or segregation involving a large
percentage of a Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.

OPTIONS STRATEGIES

A Fund may purchase put and call options written by others and write (sell)
put and call options covering specified securities, stock index-related
amounts or currencies. A put option (sometimes called a "standby
commitment") gives the buyer of the option, upon payment of a premium, the
right to deliver a specified amount of a security or currency to the writer
of the option on or before a fixed date at a predetermined price. A call
option (sometimes called a "reverse standby commitment") gives the purchaser
of the option, upon payment of a premium, the right to call upon the writer
to deliver a specified amount of a security or currency on or before a fixed
date, at a predetermined price. The predetermined prices may be higher or
lower than the market value of the underlying currency or security. A Fund
may buy or sell both exchange-traded and over-the-counter ("OTC") options. A
Fund will purchase or write an option only if that option is traded on a
recognized U.S. options exchange or if an investment adviser believes that a
liquid secondary market for the option exists. When a Fund purchases an OTC
option, it relies on the dealer from which it has purchased the OTC option to
make or take delivery of the securities or currency underlying the option.
Failure by the dealer to do so would result in the loss of the premium paid
by the Fund as well as the loss of the expected benefit of the transaction.
OTC options and the securities underlying these options currently are treated
as illiquid securities by the Funds.

Upon selling an option, a Fund receives a premium from the purchaser of the
option. Upon purchasing an option the Fund pays a premium to the seller of
the option. The amount of premium received or paid by the Fund is based upon
certain factors, including the market price of the underlying securities
index, the relationship of the exercise price to the market price, the
historical price volatility of the underlying securities index, the option
period, supply and demand and interest rates.

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a decline in market value of securities held in its portfolio.
The put enables the Fund to sell the underlying security at the predetermined
exercise price; thus the potential for loss to the Fund is limited to the
option premium paid. If the market price of the underlying security is lower
than the exercise price of the put, any profit the Fund realizes on the sale
of the security would be reduced by the premium paid for the put option less
any amount for which the put may be sold.

An investment adviser may write call options when it believes that the market
value of the underlying security will not rise to a value greater than the
exercise price plus the premium received. Call options may also be written
to provide limited protection against a decrease in the market price of a
security, in an amount equal to the call premium received less any
transaction costs.

A Fund may purchase and write put and call options on fixed income security
indexes in much the same manner as the options discussed above, except that
index options may serve as a hedge against overall fluctuations in the fixed
income securities markets (or market sectors) or as a means of participating
in an anticipated price increase in those markets. The effectiveness of
hedging techniques using index options will depend on the extent to which
price movements in the index selected correlate with price movements of the
securities which are being hedged. Index options are settled exclusively in
cash.

FOREIGN CURRENCY OPTIONS AND RELATED RISKS

A Fund may take positions in options on foreign currencies in order to hedge
against the risk of foreign exchange fluctuation on foreign securities the
Fund holds in its portfolio or which it intends to purchase. Options on
foreign currencies are affected by the factors discussed in "Options
Strategies" above and "Foreign Currency Forward Transactions" which influence
foreign exchange sales and investments generally.

The value of foreign currency options is dependent upon the value of the
foreign currency relative to the U.S. dollar and has no relationship to the
investment merits of a foreign security. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the use of foreign currency
options, the Fund may be disadvantaged by having to deal in an odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for
round lots.

To the extent that the U.S. options markets are closed while the market for
the underlying currencies remains open, significant price and rate movements
may take place in the underlying markets that cannot be reflected in the
options markets.

SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING

A Fund may effectively terminate its right or obligation under an option
contract by entering into a closing transaction. For instance, if the Fund
wished to terminate its potential obligation to sell securities or currencies
under a call option it had written, a call option of the same type would be
purchased by the Fund. Closing transactions essentially permit the Fund to
realize profits or limit losses on its options positions prior to the
exercise or expiration of the option. In addition:

(1) The successful use of options depends upon the investment adviser's
ability to forecast the direction of price fluctuations in the underlying
securities or currency markets, or in the case of an index option,
fluctuations in the market sector represented by the index.

(2) Options normally have expiration dates of up to nine months. Options
that expire unexercised have no value. Unless an option purchased by a
Fund is exercised or unless a closing transaction is effected with respect
to that position, a loss will be realized in the amount of the premium
paid.

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the exchanges is subject to the maintenance of a liquid secondary
market. Closing transactions may be effected with respect to options
traded in the over-the-counter markets (currently the primary markets
for options on foreign currencies) only by negotiating directly with
the other party to the option contract or in a secondary market for
the option if such market exists. There is no assurance that a liquid
secondary market will exist for any particular option at any specific
time. If it is not possible to effect a closing transaction, a Fund
would have to exercise the option which it purchased in order to
realize any profit. The inability to effect a closing transaction on
an option written by a Fund may result in material losses to the Fund.

(4) A Fund's activities in the options markets may result in a higher
portfolio turnover rate and additional brokerage costs.

FUTURES STRATEGIES. A futures contract is a bilateral agreement wherein one
party agrees to accept, and the other party agrees to make, delivery of cash,
an underlying debt security or the currency as called for in the contract at
a specified future date and at a specified price. For futures contracts with
respect to an index, delivery is of an amount of cash equal to a specified
dollar amount times the difference between the index value at the time of the
contract and the close of trading of the contract.

A Fund may sell interest rate futures contracts in order to continue to
receive the income from a fixed income security, while endeavoring to avoid
part of or all of a decline in the market value of that security which would
accompany an increase in interest rates.

A Fund may purchase index futures contracts for several reasons: to simulate
full investment in the underlying index while retaining a cash balance for
fund management purposes, to facilitate trading, to reduce transactions
costs, or to seek higher investment returns when a futures contract is priced
more attractively than securities in the index.

A Fund may purchase call options on a futures contract as a means of
obtaining temporary exposure to market appreciation at limited risk. This
strategy is analogous to the purchase of a call option on an individual
security, in that it can be used as a temporary substitute for a position in
the security itself.

A Fund may sell foreign currency futures contracts to hedge against possible
variations in the exchange rate of the foreign currency in relation to the
U.S. dollar. In addition, a Fund may sell foreign currency futures contracts
when the Adviser anticipates a general weakening of foreign currency exchange
rates that could adversely affect the market values of the Fund's foreign
securities holdings. A Fund may purchase a foreign currency futures contract
to hedge against an anticipated foreign exchange rate increase pending
completion of anticipated transactions. Such a purchase would serve as a
temporary measure to protect the Fund against such increase. A Fund may also
purchase call or put options on foreign currency futures contracts to obtain
a fixed foreign exchange rate at limited risk. A Fund may write call options
on foreign currency futures contracts as a partial hedge against the effects
of declining foreign exchange rates on the value of foreign securities.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING. No
price is paid upon entering into futures contracts, rather, a Fund is
required to deposit with its custodian in a segregated account in the name of
the futures broker an amount of cash or U.S. Government Securities generally
equal to 5% or less of the contract value. This amount is known as initial
margin. Subsequent payments, called variation margin, to and from the
broker, would be made on a daily basis as the value of the futures position
varies. When writing a call on a futures contract, variation margin must be
deposited in accordance with applicable exchange rules. The initial margin
in futures transactions is in the nature of a performance bond or good-faith
deposit on the contract that is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied.

Holders and writers of futures and options on futures contracts can enter
into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, a futures contract or
related option with the same terms as the position held or written.
Positions in futures contracts may be closed only on an exchange or board of
trade providing a secondary market for such futures contracts.

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has been reached in a particular contract, no trades may be made that day
at a price beyond that limit. Prices could move to the daily limit for
several consecutive trading days with little or no trading and thereby
prevent prompt liquidation of positions. In such event, it may not be
possible for a Fund to close a position, and in the event of adverse price
movements, the Fund would have to make daily cash payments of variation
margin. In addition:

(1) Successful use by a Fund of futures contracts and related options
will depend upon the Adviser's ability to predict movements in the
direction of the overall securities and currency markets, which
requires different skills and techniques than predicting changes in
the prices of individual securities. Moreover, futures contracts
relate not to the current level of the underlying instrument but to
the anticipated levels at some point in the future; thus, for example,
trading of stock index futures may not reflect the trading of the
securities which are used to formulate an index or even actual
fluctuations in the relevant index itself.

(2) The price of futures contracts may not correlate perfectly with
movement in the price of the hedged securities or currencies due to
price distortions in the futures market or otherwise. There may be
several reasons unrelated to the value of the underlying securities or
currencies which causes this situation to occur. As a result, a
correct forecast of general market trends may still not result in
successful hedging through the use of futures contracts over the short
term.

(3) There is no assurance that a liquid secondary market will exist for
any particular contract at any particular time. In such event, it
may not be possible to close a position, and in the event of
adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin.

(4) Like other options, options on futures contracts have a limited
life. A Fund will not trade options on futures contracts on any
exchange or board of trade unless and until, in the Adviser's
opinion, the market for such options has developed sufficiently
that the risks in connection with options on futures transactions
are not greater than the risks in connection with futures
transactions.

(5) Purchasers of options on futures contracts pay a premium in cash at
the time of purchase. This amount and the transaction costs is all
that is at risk. Sellers of options on futures contracts, however,
must post an initial margin and are subject to additional margin
calls which could be substantial in the event of adverse price
movements.

(6) A Fund's activities in the futures markets may result in a higher
portfolio turnover rate and additional transaction costs in the
form of added brokerage commissions.

(7) Buyers and sellers of foreign currency futures contracts are
subject to the same risks that apply to the buying and selling of
futures generally. In addition, there are risks associated with
foreign currency futures contracts and their use as a hedging
device similar to those associated with options on foreign
currencies described above. In addition, settlement of foreign
currency futures contracts must occur within the country issuing
that currency. Thus, a Fund must accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
restrictions or regulations regarding the maintenance of foreign
banking arrangements by U.S. residents, and the Fund may be
required to pay any fees, taxes or charges associated with such
delivery which are assessed in the issuing country.

COMMODITY FUTURES CONTRACTS AND COMMODITY OPTIONS

A Fund may invest in certain financial futures contracts and options
contracts in accordance with the policies described in the Prospectus and
above. A Fund will only invest in futures contracts, options on futures
contracts and other options contracts that are subject to the jurisdiction of
the CFTC after filing a notice of eligibility and otherwise complying with
the requirements of Section 4.5 of the rules of the CFTC. Under that section
the Fund would be permitted to purchase such futures or options contracts
only for bona fide hedging purposes within the meaning of the rules of the
CFTC; provided, however that in addition, with respect to positions in
commodity futures and option contracts not for bona fide hedging purposes the
Fund represents that the aggregate initial margin and premiums required to
establish these positions (subject to certain exclusions) will not exceed 5%
of the liquidation

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value of the Fund's assets after taking into account unrealized profits and
losses on any such contract the Fund has entered into.

GUARANTEED INVESTMENT CONTRACTS

A Fund may invest in guaranteed investment contracts ("GICs") issued by
insurance companies. Pursuant to such contracts, the Fund makes cash
contributions to a deposit fund of the insurance company's general account.
The insurance company then credits to the deposit fund on a monthly basis
guaranteed interest at a rate based on an index. The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. The
insurance company may assess periodic charges against a GIC for expense and
service costs allocable to it, and these charges will be deducted from the
value of the deposit fund. A Fund will purchase a GIC only when the Adviser
has determined that the GIC presents minimal credit risks to the Fund and is
of comparable quality to instruments that are rated high quality by an NRSRO
having the characteristics described above. Because a Fund may not receive
the principal amount of a GIC from the insurance company on seven days'
notice or less, a GIC may be considered an illiquid investment. The term of
a GIC will be one year or less. In determining the average weighted
portfolio maturity of a Fund, a GIC will be deemed to have a maturity equal
to the period of time remaining until the next readjustment of the guaranteed
interest rate.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the
buyer at an agreed upon price on an agreed upon future date. The resale
price in a reverse repurchase agreement reflects a market rate of interest
that is not related to the coupon rate or maturity of the sold security. For
certain demand agreements, there is no agreed upon repurchase date and
interest payments are calculated daily, often based upon the prevailing
overnight repurchase rate.

Generally, a reverse repurchase agreement enables a Fund to recover for the
term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than
the cost of obtaining the cash otherwise. In addition, interest costs on the
money received in a reverse repurchase agreement may exceed the return
received on the investments made by a Fund with those monies. The use of
reverse repurchase agreement proceeds to make investments may be considered
to be a speculative technique.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Funds may purchase securities on a when-issued or delayed delivery basis.
In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may
take place a month or more after the date of the transaction. At the time a
Fund makes the commitment to purchase securities on a when-issued or delayed
delivery basis, the Fund will record the transaction as a purchase and
thereafter reflect the value each day of such securities in determining its
net asset value.

A Fund will make commitments for such when-issued transactions only when it
has the intention of actually acquiring the securities. To facilitate such
acquisitions, the Fund will maintain with its custodian a separate account
with portfolio securities in an amount at least equal to such commitments.
On delivery dates for such transactions, the Fund will meet its obligations
from maturities, sales of the securities held in the separate account or from
other available sources of cash. If a Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a gain or loss due
to market fluctuation.

DOMESTIC AND FOREIGN BANK OBLIGATIONS

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yield. Although fixed-time deposits do not in all cases have a secondary
market, there are no contractual restrictions on the Fund's right to transfer
a beneficial interest in the deposits to third parties.

Investments that a Fund may make in securities of foreign branches of
domestic banks and domestic and foreign branches of foreign banks may involve
certain risks, including future political and economic developments, the
possible imposition of foreign withholding taxes on interest income payable
on such securities, the possible seizure or nationalization of foreign
deposits, differences from domestic banks in applicable accounting, auditing
and financial reporting standards, and the possible establishment of exchange
controls or other foreign governmental laws or restrictions applicable to the
payment of certificates of deposit or time deposits which might affect
adversely the payment of principal and interest on such securities held by
the Fund.

ILLIQUID SECURITIES

Each Fund may invest up to 15% of its net assets in illiquid securities. The
term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the securities and
includes, among other things, purchased over-the-counter (OTC) options and
repurchase agreements maturing in more than seven days.

The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to the investment adviser of
each Fund, pursuant to guidelines approved by the Board. The investment
adviser takes into account a number of factors in reaching liquidity
decisions, including but not limited to: (1) the frequency of trades and
quotations for the security; (2) the number of dealers willing to purchase or
sell the security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the security; and (4)
the nature of the marketplace trades, including the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the
transfer. The investment adviser monitors the liquidity of the securities in
each Fund's portfolio and reports periodically on such decisions to the Board.

TEMPORARY DEFENSIVE POSITION

When a Fund assumes a temporary defensive position, it may invest in (i)
short-term U.S. Government Securities, (ii) certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of commercial banks doing
business in the United States that have, at the time of investment, total
assets in excess of one billion dollars and that are insured by the Federal
Deposit Insurance Corporation, (iii) commercial paper of prime quality rated
Prime-2 or higher by Moody's or A-2 or higher by S&P or, if not rated,
determined by the Adviser to be of comparable quality, (iv) repurchase
agreements covering any of the securities in which the Fund may invest
directly and (v) money market mutual funds.

The Funds may invest in the securities of other investment companies within
the limits prescribed by the 1940 Act. Under normal circumstances, each Fund
intends to invest less than 5% of the value of its net assets in the
securities of other investment companies. In addition to the Fund's expenses
(including the various fees), as a shareholder in another investment company,
a Fund would bear its pro rata portion of the other investment company's
expenses (including fees).

3. INVESTMENT LIMITATIONS

Except as required by the 1940 Act, if any percentage restriction on
investment or utilization of assets is adhered to at the time an investment
is made, a later change in percentage resulting from a change in the market
values of a Fund's assets or purchases and redemptions of shares will not be
considered a violation of the limitation.

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FUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are
fundamental policies of the Fund and cannot be changed without the
affirmative vote of a majority of the Fund's outstanding voting securities
(as defined in the Prospectus).

(1) Diversification: With respect to 75 percent of its assets, the
Fund may not purchase a security other than a U.S. Government
Security if, as a result, more than five percent of the Fund's
total assets would be invested in the securities of a single issuer
or the Fund would own more than ten percent of the outstanding
voting securities of any single issuer; provided, however, that
each Fund may invest all or a portion of its assets in another
diversified, open-end management investment company with
substantially the same investment objective, policies and
restrictions as the Fund.

(2) Concentration: The Fund may not purchase securities if,
immediately after the purchase, more than 25 percent of the value
of the Fund's total assets would be invested in the securities of
issuers conducting their principal business activities in the same
industry; provided, however, that there is no limit on investments
in U.S. Government Securities, repurchase agreements covering U.S.
Government Securities, foreign government securities, mortgage
related or housing-related securities, municipal securities, and
issuers domiciled in a single country; that financial service
companies are classified according to the end users of their
services (for example, automobile finance, bank finance and
diversified finance); that utility companies are classified
according to their services (for example, gas, gas transmission,
electric and gas, electric and telephone); that will each invest
more than 25 percent of the value of the Fund's total assets in
obligations of domestic and foreign financial institutions and
their holding companies; and that each Fund may invest all of a
portion of its assets in another diversified, open-end management
investment company with substantially the same investment
objective, policies and restrictions as the Fund.

(3) Borrowing: Each Fund may borrow money for temporary or emergency
purposes, including the meeting of redemption requests; but not in
excess of 33 1/3 percent of the value of the Fund's total assets
(as computed immediately after the borrowing).

(4) Issuance of Senior Securities: The Fund may not issue
senior securities except to the extent permitted by the 1940 Act.

(5) Underwriting Activities: The Fund may not underwrite
securities of other issuers, except to the extent that the Fund may
be considered to be acting as an underwriter in connection with the
disposition of portfolio securities.

(6) Making Loans: The Fund may not make loans, except the
Funds may enter into repurchase agreements, purchase debt
securities that are otherwise permitted investments and lend
portfolio securities.

(7) Purchases and Sales of Real Estate: The Fund may not
purchase or sell real estate, any interest therein or real estate
limited partnership interests, except that the Fund may invest in
debt obligations secured by real estate or interests therein or
securities issued by companies that invest in real estate or
interests therein.

(8) Purchases and Sales of Commodities: The Fund may not
purchase or sell physical commodities or contracts, options or
options on contracts to purchase or sell physical commodities,
provided that currencies and currency-related contracts and
contracts on indices are not deemed to be physical commodities.

NONFUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are not
fundamental policies of the Fund and may be changed by the Board.

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(1) Borrowing: Borrowing for other than temporary or emergency
purposes or meeting redemption requests is limited to five percent
of the value of each Funds total assets except in the case of
Intermediate U.S. Government Fund, and Managed Fixed Income Fund.
Where a Fund establishes a segregated account to limit the amount
of leveraging of the Fund with respect to certain investment
techniques, the Fund does not treat those techniques as involving
borrowings fro purposes of this limitation.

(2) Illiquid Securities: No Fund may acquire securities or
invest in repurchase agreements with respect to any securities if,
as a result, more than (i) fifteen percent of the Fund's net assets
(taken at current value) would be invested in repurchase agreements
not entitling the holder to payment of principal within seven days
and in securities which are not readily marketable, including
securities that are not readily marketable by virtue of
restrictions on the sale of such securities to the public without
registration under the Securities Act of 1933 ("Restricted
Securities") or (ii) ten percent of the Fund's total assets would
be invested in Restricted Securities.

(3) Other Investment Companies: The Fund may not invest in
securities of another investment company, except to the extent
permitted by the 1940 Act.

(4) Margin and Short Sales: Except for Intermediate U.S.
Government Fund, a Fund may not purchase securities on margin or
make short sales of securities (except short sales against the box)
except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities. A Fund may make
margin deposits in connection with permitted transactions in
options and futures contracts. A Fund may not enter short sales if,
as a result, more that 25% of the value of the Fund's total assets
would be so invested, or such a position would represent more than
2% of the outstanding voting securities of any single issuer or
class of an issuer.

(5) Unseasoned Issuers: The Fund may not invest in securities (other
than fully-collateralized debt obligations) issued by companies that have
conducted continuous operations for less than three years, including the
operations of predecessors, unless guaranteed as to principal and interest by
an issuer in whose securities the Fund could invest, if, as a result, more
than five percent of the value of the Fund's total assets would be so
invested; provided, that the Fund may invest all of a portion of its assets
in another diversified, open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.

(6) Pledging: The Fund may not pledge, mortgage, hypothecate or
encumber any of its assets except to secure permitted borrowings.

(7) Investments by Officers and Trustees: The Fund may not invest in
or hold securities of any issuer if, to the Trust's knowledge, officers and
trustees of the Trust or an investment adviser to the Fund, individually
owning beneficially more than one-half of one percent of the securities of
the issuer, in the aggregate own more than five percent of the issuer's
securities.

(8) Oil, Gas and Mineral Investments: The Fund may not invest in
interests in oil and gas or interests in other mineral exploration or
development programs, including oil, gas and other mineral leases and the
Fund may not invest in real estate limited partnerships.

(9) Securities With Voting Rights: No Fixed Income Fund may purchase
securities having voting rights, except securities of other investment
companies.

(10) Warrants: Each Fund may not purchase warrants if, as a result,
more that 5% of the value of the Fund's total assets would be so invested.

(11) Options: Each Fund may not purchase an option if, as a result,
more that 5% of the value of the Fund's total assets would be so invested.

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4. PERFORMANCE DATA AND ADVERTISING

Quotations of performance may from time to time be used in advertisements, sales
literature, shareholder reports or other communications to shareholders or
prospective investors. All performance information supplied by the Funds is
historical and is not intended to indicate future returns. Each Fund's yield and
total return fluctuate in response to market conditions and other factors. The
value of a Fund's shares when redeemed may be more or less than their original
cost.

In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., or other companies which track the
investment performance of investment companies ("Fund Tracking Companies").
Each Fund may also compare any of its performance information with the
performance of recognized stock, bond and other indexes, including but not
limited to Standard & Poor's 500 Composite Stock Index, Russell 2000 Index,
Morgan Stanley - Europe, Australian and Far East Index, Lehman Brothers
Intermediate Government Index, Lehman Brothers Intermediate Government/Corporate
Index, Salomon Brothers Bond Index, Shearson Lehman Bond Index, the Dow Jones
Industrial Average, U.S. Treasury bonds, bills or notes and changes in the
Consumer Price Index as published by the U.S. Department of Commerce. The Funds
may refer to general market performances over past time periods such as those
published by Ibbotson Associates (for instance, its "Stocks, Bonds, Bills and
Inflation Yearbook"). In addition, the Funds may refer in such materials to
mutual fund performance rankings and other data published by Fund Tracking
Companies. Performance advertising may also refer to discussions of the Funds
and comparative mutual fund data and ratings reported in independent
periodicals, such as newspapers and financial magazines.

SEC YIELD CALCULATIONS

Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Norwest and others may charge the various retirement
plans or other shareholders that invest in a Fund fees in connection with an
investment in a Fund, which will have the effect of reducing the Fund's net
yield to those shareholders. The yields of a Fund are not fixed or guaranteed,
and an investment in a Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of a Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate to
compare a Fund's yield information directly to similar information regarding
investment alternatives which are insured or guaranteed.

FIXED INCOME AND EQUITY FUNDS. Standardized yields for the Funds used in
advertising are computed by dividing a Fund's interest income (in accordance
with specific standardized rules) for a given 30 days or one month period, net
of expenses, by the average number of shares entitled to receive distributions
during the period, dividing this figure by the Fund's net asset value per share
at the end of the period and annualizing the result (assuming compounding of
income in accordance with specific standardized rules) in order to arrive at an
annual percentage rate. In general, interest income is reduced with respect to
municipal securities purchased at a premium over their par value by subtracting
a portion of the premium from income on a daily basis. In general, interest
income is increased with respect to municipal securities purchased at original
issue at a discount by adding a portion of the discount to daily income.
Capital gains and losses generally are excluded from these calculations.

Income calculated for the purpose of determining each Fund's standardized yield
differs from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distribution the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.

For the 30-day period ended October 31, 1995 the annualized yield of I Shares of
each of the Fixed Income Funds was as follows.

Yield
-----
Intermediate U.S. Government Fund 6.80%
Managed Fixed Income Fund 5.62%

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Stable Income Fund 5.60%

TOTAL RETURN CALCULATIONS

Standardized total returns quoted in advertising and sales literature reflect
all aspects of a Fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the Fund's net asset value per
share over the period. Average annual returns are calculated by determining the
growth or decline in value of a hypothetical historical investment in a Fund
over a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis in ten
years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:

n
P(1+T) = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 payment made at the
beginning of the applicable period.

In addition to average annual returns, each Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Period total return
is calculated according to the following formula:

PT = (ERV/P-1)

Where:
PT = period total return.
The other definitions are the same as in average annual total return
above.

The average annual total return of each class of each Fund for the periods shown
ended October 31, 1995 was as follows. Where a Fund or class lacks sufficient
performance history for a period, return since inception has been substituted
for return for the period, as indicated by an asterisk. The actual dates of the
commencement of operations for each Fund and class thereof is listed in the
Fund's financial statements.

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One Year Five Years Ten Years
-------- ---------- ---------
Diversified Equity Fund
I Shares 22.55% 17.49% 15.14%*
Growth Equity Fund
I Shares 19.67% 19.97% 15.57%*
Large Company Growth Fund
I Shares 26.52% 19.68% 14.84%
Small Company Growth Fund
I Shares 35.35% 31.26% 20.79%
International Fund
A Shares 11.58%* - -
B Shares 8.24%* - -
I Shares 2.55% 8.28% 7.10%*
Income Equity Fund
I Shares 25.99% 16.23% 15.05%
Index Fund
I Shares 25.02% 16.68% 11.84%*
Conservative Balanced Fund
I Shares 12.04% 9.35% 8.90%*
Moderate Balanced Fund
I Shares 14.46% 11.03% 10.28%*
Growth Balanced Fund
I Shares 17.51% 13.48% 11.39%*
Intermediate U.S. Government Fund
I Shares 11.31% 7.21% 7.33%
Managed Fixed Income Fund
I Shares 10.59% 7.28% 8.00%
Stable Income Fund
I Shares 7.39% 7.39%* -

OTHER ADVERTISEMENT MATTERS

The Funds may advertise other forms of performance. For example, the Funds may
quote unaveraged or cumulative total returns reflecting the change in the value
of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period. Total returns may be quoted with or without
taking into consideration a Fund's front-end sales charge or contingent deferred
sales charge; excluding sales charges from a total return calculation produces a
higher return figure.

The Funds may also include various information in their advertisements.
Information included in a Fund's advertisements may include, but is not limited
to (i) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity, (ii) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents, (iv)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quartile or daily), (v) information
relating to inflation and its effects on the dollar; for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively, (vi) information regarding the effects of automatic investment
and systematic withdrawal plans, including the principle of dollar cost
averaging, (vii) descriptions of the Funds' portfolio managers and the portfolio
management staff of the Advisers or summaries of the views of the portfolio
managers with respect to the financial markets, (viii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (ix) the effects
of earning Federally and, if applicable, state tax-exempt income from a Fund or
investing in a tax-deferred account, such as an individual retirement account or
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Section 401(k) pension plan and (x) the net asset value, net assets or number of
shareholders of a Fund as of one or more dates.

As an example of compounding, $1,000 compounded annually at 9.00% will grow to
$1,090 at the end of the first year (an increase in $90) and $1,118 at the end
of the second year (an increase in $98). The extra $8 that was earned on the
$90 interest from the first year is the compound interest. One thousand dollars
compounded annually at 9.00% will grow to $2,367 at the end of ten years and
$5,604 at the end of 20 years. Other examples of compounding are as follows: at
7% and 12% annually, $1,000 will grow to $1,967 and $3,106, respectively, at the
end of ten years and $3,870 and $9,646, respectively, at the end of twenty
years. These examples are for illustrative purposes only and are not indicative
of any Fund's performance.

The Funds may advertise information regarding the effects of automatic
investment and systematic withdrawal plans, including the principle of dollar
cost averaging. In a dollar cost averaging program, an investor invests a fixed
dollar amount in a Fund at period intervals, thereby purchasing fewer shares
when prices are high and more shares when prices are low. While such a strategy
does not ensure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
had been purchased at those intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares through periods of
low price levels. For example, if an investor invests $100 a month for a period
of six months in a Fund the following will be the relationship between average
cost per share ($14.35 in the example given) and average price per share:

Systematic Share Shares
Period Investment Price Purchased
- ------ ---------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- -----
Total Invested $600 Average Price $15.17 Total Shares 41.81

In connection with its advertisements each Fund may provide "shareholders
letters" which serve to provide shareholders or investors an introduction into
the Fund's, the Trust's or any of the Trust's service provider's policies or
business practices. For instance, advertisements may provide for a message from
Norwest or its parent corporation that Norwest has more than 60 years been
committed to quality products and outstanding service in order to assist its
customers in meeting their financial goals and the reasons Norwest believes that
it has been successful as a national financial service firm.

5. MANAGEMENT

TRUSTEES AND OFFICERS

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.
John Y. Keffer and David R. Keffer are brothers.

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John Y. Keffer, Chairman and President.*

President and Director, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Financial Corp. (a registered transfer agent), Forum
Advisors, Inc. (a registered investment adviser). Mr. Keffer is a
Director, Trustee and officer of various registered investment companies
for which Forum Financial Services, Inc. serves as manager, administrator
and/or distributor. His address is 61 Broadway, New York, New York 10006.

Robert C. Brown, Trustee.*

Director, Federal Farm Credit Banks Funding Corporation and Farm Credit
System Financial Assistance Corp. Prior thereto, he was Manager of the
Capital Markets Group, Norwest Corporation (a multi-bank holding company
and parent of Norwest) until 1991. His address is 1431 Landings Place,
Sarasota, Florida 34231.

Donald H. Burkhardt, Trustee.

Principal, The Burkhardt Law Firm. His address is 777 South Steele Street,
Denver, Colorado 80209.

James C. Harris, Trustee.

President and sole Director of James C. Harris & Co., Inc. (a financial
consulting firm). Mr. Harris is also a liquidating Trustee and former
Director of First Midwest Corporation, a small business investment company.
His address is 6950 France Avenue South, Minneapolis, Minnesota 55435.

Richard M. Leach, Trustee.

Chief Executive Officer, Tee Box Company (a golf equipment manufacturer),
since January 1994 and President of Richard M. Leach Associates (a
financial consulting firm) since 1992. Prior thereto, Mr. Leach was Senior
Adviser of Taylor Investments (a registered investment adviser), a Director
of Mountainview Broadcasting (a radio station) and Managing Director,
Digital Techniques, Inc. (an interactive video design and manufacturing
company). His address is P.O. Box 1888, New London, New Hampshire 03257.

Timothy J. Penny, Trustee

Senior Counselor to the public relations firm Himle-Horner since 1994.
Prior thereto Mr. Penny was the Representative to the United States
Congress from Minnesota's First Congressional District. His address is 500
North State Street, Waseca, Minnesota 56095.

Donald C. Willeke, Trustee

Principal of the law firm of Willeke & Daniels. His address is 201
Ridgewood Avenue, Minneapolis, Minnesota 55403.

Michael D. Martins, Vice President and Treasurer

Fund Accounting Manager, Forum Financial Corp., with which he has been
associated since 1995. Prior thereto, Mr. Martins was at the audit firm of
Deloitte & Touche LLP. Mr. Martins is also an officer of various
registered investment companies for which Forum Financial Services, Inc.
serves as manager, administrator and/or distributor. His address is Two
Portland Square, Portland, Maine 04101.

David I. Goldstein, Vice President and Secretary.

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various registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor. His address is
Two Portland Square, Portland, Maine 04101.

David R. Keffer, Vice President, Assistant Secretary and Assistant Treasurer.

Chief Financial Officer, Forum Financial Services, Inc. Mr. Keffer is also
an officer of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is 61 Broadway, New York, New York 10006.

Sara M. Clark, Vice President and Assistant Treasurer.

Managing Director, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, from 1991 to 1994 Ms. Clark was
Controller of Wright Express Corporation (a national credit card company)
and for six years prior thereto was employed at Deloitte & Touche LLP as an
accountant. Ms. Clark is also an officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.

Thomas G. Sheehan, Vice President and Assistant Secretary.

Counsel, Forum Financial Services, Inc., with which he has been associated
since 1993. Prior thereto, Mr. Sheehan was Special Counsel to the Division
of Investment Management of the SEC. Mr. Sheehan is also an officer of
various registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor. His address is
Two Portland Square, Portland, Maine 04101.

Renee A. Walker, Assistant Secretary.

Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, Ms. Walker was an administrator at
Longwood Partners (the manager of a hedge fund partnership) for a year.
After graduating for college, from 1991 to 1993 Ms. Walker was a sales
representative assistant at PaineWebber Incorporated (a broker-dealer).
Her address is Two Portland Square, Portland, Maine 04101.

Christopher J. Kelley, Assistant Secretary.

Assistant Counsel, Forum Financial Services, Inc., with which he has been
associated since 1994. Prior thereto and subsequent to attending law
school, Mr. Kelley was employed at Putnam Investments in legal and
compliance capacities. His address is Two Portland Square, Portland, Maine
04101.

COMPENSATION OF TRUSTEES AND OFFICERS

Effective June 1, 1995 each Trustee of the Trust is paid a quarterly retained
fee for the Trustee's service to the Trust and to Norwest Select Funds, a
separate registered open-end management investment company for which each
Trustee serves as trustee, of $4,000. In addition, each Trustee is paid $3,000
for each Board meeting attended (whether in person or by electronic
communication) and is paid $1,000 for each Committee meeting attended on a date
when a Board meeting is not held. Trustees are also reimbursed for travel and
related expenses incurred in attending meetings of the Board. Mr. Keffer
received no compensation for his services as Trustee for the past year and no
officer of the Trust is compensated by the Trust. In addition, Mr. Keffer
currently is not compensated or reimbursed for his expenses in serving as
Trustee. Prior to June 1, 1995 Trustee of the Trust was paid $1,000 for each
Board meeting attended (whether in person or by electronic communication) plus
$100 per active portfolio of the Trust and was paid $1,000 for each Committee
meeting attended on a date when a Board meeting is not held.

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Penny was appointed a Trustee in January 1996 and, accordingly, was not paid any
compensation during the Trust's last fiscal year.

As of October 1, 1995, the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding shares of the Fund.

The following table provides the aggregate compensation paid to the Trustees of
the Trust by the Trust and Norwest Select Funds, combined. Information is
presented for the year ended October 31, 1995, the Funds' fiscal year end. Other
funds of the Trust have a May 31 fiscal year end.

Total Compensation From
Total Compensation the Trust and Norwest
from the Trust Select Funds
-------------- ------------
Mr. Brown $23,565 $26,177
Mr. Burkhart $29,909 $33,023
Mr. Harris $22,567 $25,177
Mr. Leach $22,566 $25,177
Mr. Willeke $14,000 $14,000

Neither the Trust or Norwest Select Funds has adopted any from of retirement
plan covering Trustees or officers.

TRUSTEES AND OFFICERS OF CORE TRUST

The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of Core Trust is indicated by an asterisk.
Mr. John Y. Keffer, Mr. David R. Keffer and Messrs. Goldstein, Martins and
Sheehan, officers of Core Trust, all currently serve as officers of the Trust.
Accordingly, for background information pertaining to these officers, see
"Trustees and Officers of the Trust" above.

John Y. Keffer*, Chairman and President.

Costas Azariadis, Trustee.

Professor of Economics, University of California, Los Angeles, since July
1992. Prior thereto, Dr. Azariadis was Professor of Economics at the
University of Pennsylvania. His address is Department of Economics,
University of California, Los Angeles, 405 Hilgard Avenue, Los Angeles,
California 90024.

James C. Cheng, Trustee.

Managing Director, Forum Financial Services, Inc. since September 1991.
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President and
Chief Executive Officer of Network Dynamics, Incorporated (a software
development company). His address is Two Portland Square, Portland, Maine
04101.

J. Michael Parish, Trustee.

Partner at the law firm of Winthrop Stimson Putnam & Roberts since 1989.
Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby & MacRae, a law
firm of which he was a member from 1974 to 1989. His address is 40 Wall
Street, New York, New York 10005.

Michael D. Martins, Treasurer

David R. Keffer, Vice President, Assistant Secretary and Assistant Treasurer.

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David I. Goldstein, Secretary.

Thomas G. Sheehan, Assistant Secretary.

Max Berueffy, Assistant Secretary.

Counsel, Forum Financial Services, Inc., with which he has been associated
since May 1994. For seven years prior to that, Mr. Berueffy held various
positions on the staff of the U.S. Securities and Exchange Commission. His last
position was Senior Special Counsel in the Division of Investment Management.
Mr. Berueffy is also an officer of various registered investment companies for
which Forum Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT

Norwest Investment Management, a part of Norwest Bank Minnesota, N.A., is
required to furnish at its expense all services, facilities and personnel
necessary in connection with managing each Fund's investments and effecting
portfolio transactions for each Fund. With respect to the Adviser's services
for International Fund, see "International Fund" below. Under its advisory
agreements, Norwest may delegate its responsibilities to any investment
subadviser approved by the Board with respect to all or a portion of the assets
of a Fund.

The Advisory Agreement between each Fund and Norwest will continue in effect
only if such continuance is specifically approved at least annually by the Board
or by vote of the shareholders of the Fund, and in either case by a majority of
the Trustees who are not parties to the Advisory Agreement or interested persons
of any such party, at a meeting called for the purpose of voting on the Advisory
Agreement.

The Advisory Agreement with respect to a Fund is terminable without penalty by
the Fund with respect to that Fund on 60 days written notice when authorized
either by vote of the Fund's shareholders or by a vote of a majority of the
Board, or by the Adviser on not more than 60 days nor less than 30 days written
notice, and will automatically terminate in the event of its assignment. The
Advisory Agreements also provide that, with respect to each Fund, neither the
Adviser nor its personnel shall be liable for any error of judgment or mistake
of law or for any act or omission in the performance of its or their duties to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of the Adviser's or their duties or by reason of reckless disregard
of its or their obligations and duties under the Advisory Agreement. The
Advisory Agreements provide that the Adviser may render service to others.

In addition to receiving its advisory fee from the Funds, Norwest may also act
and be compensated as investment manager for its clients with respect to assets
which are invested in a Fund. In some instances Norwest may elect to credit
against any investment management, custodial or other fee received from, or
rebate to, a client who is also a shareholder in the Fund an amount equal to all
or a portion of the fees received by Norwest or any affiliate of Norwest from a
Fund with respect to the client's assets invested in the Fund.

The advisory fees are accrued daily and paid monthly. Norwest, in its sole
discretion, may waive all or any portion of its advisory fee with respect to
each Fund. Norwest has agreed to reimburse the Trust for certain of each Fund's
operating expenses (exclusive of interest, taxes and brokerage fees,
organization expenses and, if applicable, distribution expenses, all to the
extent permitted by applicable state law or regulation) which in any year exceed
the limits prescribed by any state in which the Fund's shares are qualified for
sale. The Trust may elect not to qualify its shares for sale in every state.
For the purpose of this obligation to reimburse expenses, a Fund's annual
expenses are estimated and accrued daily, and any appropriate estimated payments
will be made by Norwest monthly. Subject to these obligations, the Trust pays
for all of its expenses.

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and expenses of the Trust's custodian, transfer agent and dividend disbursing
agent; (iv) fees of pricing, interest, dividend, credit and other reporting
services; (v) costs of membership in trade associations; (vi) telecommunications
expenses; (vii) auditing, legal and compliance expenses; (viii) costs of the
Trust's formation and maintaining its existence; (ix) costs of preparing and
printing the Trust's prospectuses, statements of additional information, account
application forms and shareholder reports and delivering them to existing and
prospective shareholders; (x) costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares of the Trust; (xi) costs of
reproduction, stationery and supplies; (xii) compensation of the Trust's
trustees, officers and employees who are not employees of the Adviser, Forum
Financial Services, Inc. or affiliated persons of the Adviser or Forum Financial
Services, Inc. and costs of other personnel performing services for the Trust;
(xiii) costs of corporate meetings; (xiv) registration fees and related expenses
for registration with the SEC and the securities regulatory authorities of other
countries in which the Trust's shares are sold; (xv) state securities law
registration fees and related expenses; (xvi) fees and out-of-pocket expenses
payable to Forum Financial Services, Inc. under any distribution, management or
similar agreement; (xvii) and all other fees and expenses paid by the Trust
pursuant to any distribution or shareholder service plan adopted pursuant to
Rule 12b-1 under the Act.

The following table shows the dollar amount of fees payable under the Investment
Advisory Agreements between Norwest and the Trust with respect to each Fund, the
amount of fee that was waived by Norwest, if any, and the actual fee received by
Norwest. The data is for the past fiscal year.

Fee Fee Fee
Payable Waived Retained
-------- ------ --------

Diversified Equity Fund 3,737,147 0 3,737,147
Growth Equity Fund 3,961,897 0 3,961,897
Large Company Growth Fund 362,480 0 362,480
Small Company Growth Fund 1,984,348 0 1,984,348
International Fund - - -
Income Equity Fund 187,584 0 187,584
Index Fund 212,875 0 212,875
Conservative Balanced Fund 547,353 0 547,353
Moderate Balanced Fund 1,722,174 0 1,722,174
Growth Balanced Fund 1,849,672 0 1,849,672
Intermediate U.S. Government Fund 160,764 0 160,764
Managed Fixed Income Fund 607,061 0 607,061
Stable Income Fund 114,429 0 114,429

SUBADVISORY ARRANGEMENTS

With respect to each of International Fund, Diversified Equity Fund, Growth
Equity Fund, Conservative Balanced Fund, Moderate Balanced Fund and Growth
Balanced Fund (the Funds that may invest in international securities), Norwest
and the Trust have entered into Subadvisory Agreements with Schroder.

Schroder makes investment decisions for each of the Funds listed above and
continuously reviews, supervises and administers each Fund's investment program
with respect to that portion, if any, of the respective Fund's portfolio that
Norwest has so delegated. Schroder is required to furnish at its own expense
all services, facilities and personnel necessary in connection with managing of
each Fund's investments and effecting portfolio transactions for each Fund (to
the extent of Norwest's delegation).

The Subadvisory Agreements among those Funds, Norwest and the Subadviser will
continue in effect only if such continuance is specifically approved at least
annually by the Board or by vote of the shareholders of the Fund, and in either
case by a majority of the Trustees who are not parties to the Subadvisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Subadvisory Agreement.

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The Subadvisory Agreement with respect to a Fund is terminable without penalty
by the Fund with respect to that Fund on 60 days written notice when authorized
either by vote of the Fund's shareholders or by a vote of a majority of the
Board, or by the Subadviser on not more than 60 days nor less than 30 days
written notice, and will automatically terminate in the event of its assignment.
The Subadvisory Agreements also provide that, with respect to each Fund, neither
the Subadviser nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the performance of its or their
duties to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of the Subadviser's or their duties or by reason
of reckless disregard of its or their obligations and duties under the
Subadvisory Agreement. The Subadvisory Agreements provide that the Subadviser
may render services to others.

The Subadvisory fees are accrued daily and paid monthly. Each Subadviser, in
its sole discretion, may waive all or any portion of its subadvisory fee with
respect to each Fund.

INTERNATIONAL FUND

The Advisory Agreement and Subadvisory Agreement with respect to International
Fund are identical to the Advisory Agreement and Subadvisory Agreement of each
other Fund for which Schroder acts as investment subadviser, except for the fees
payable thereunder and as follows. No payments will be made under International
Fund's Advisory Agreement or Subadvisory Agreement so long as all of the Fund's
investments consist solely of the International Portfolio or any other
registered investment company.

Schroder acts as investment adviser to the International Portfolio and is
required to furnish at its expense all services, facilities and personnel
necessary in connection with managing the International Portfolio's investments
and effecting portfolio transactions for the International Portfolio. The
Advisory Agreement between the International Portfolio and Schroder will
continue in effect only if such continuance is specifically approved at least
annually by the Board of Trustees of Core Trust or by vote of the holders of
beneficial interest of the International Portfolio, and in either case by a
majority of the Trustees of Core Trust who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.

The Advisory Agreement with respect to the International Portfolio is terminable
without penalty by the International Portfolio on 60 days written notice when
authorized either by vote of the International Portfolio's shareholders or by a
vote of a majority of the Board of Trustees of Core Trust, or by Schroder on not
more than 60 days nor less than 30 days written notice, and will automatically
terminate in the event of its assignment. The Advisory Agreement also provides
that, with respect to the International Portfolio, neither Schroder nor its
personnel shall be liable for any error of judgment or mistake of law or for any
act or omission in the performance of its or their duties to the International
Portfolio, except for willful misfeasance, bad faith or gross negligence in the
performance of Schroder's or their duties or by reason of reckless disregard of
its or their obligations and duties under the Advisory Agreement. The Advisory
Agreement provides that Schroder may render service to others.

The advisory fees are accrued daily and paid monthly. Schroder, in its sole
discretion, may waive all or any portion of its advisory fee with respect to
International Portfolio. For the Fund's fiscal period ended October 31, 1995,
the Adviser did not pay Schroder any investment advisory fee pursuant to its
Advisory Agreement with respect to the Fund.

ADMINISTRATION AND DISTRIBUTION

Forum supervises the overall management of the Trust (which includes, among
other responsibilities, negotiation of contracts and fees with, and monitoring
of performance and billing of, the Trust's transfer agent and custodian and
arranging for maintenance of books and records of the Trust) and provides the
Trust with general office facilities pursuant to a Management Agreement.

The Management Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board or by the shareholders and,
in either case, by a majority of the Trustees who are not parties to the
Management Agreement or interested persons of any such party.

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The Management Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to any Fund by vote of that Fund's
shareholders or by either party on not more than 60 days' nor less than 30 days'
written notice. The Management Agreement also provides that, with respect to
each Fund, neither Forum nor its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the performance of its
or their duties to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of Forum's or their duties or by reason of
reckless disregard of its or their obligations and duties under the Management
Agreement.

The following table shows the dollar amount of fees payable under the Management
Agreement between Forum and the Trust with respect to each Fund, the amount of
fee that was waived by Forum, if any, and the actual fee received by Forum. The
data is for the past fiscal year.

Fee Fee Fee
Payable Waived Retained
-------- ------ --------

Diversified Equity Fund 574,946 287,473 287,473
Growth Equity Fund 440,211 286,137 154,074
Large Company Growth Fund 55,766 55,766 0
Small Company Growth Fund 220,483 177,287 43,196
International Fund 205,150 41,566 163,584
Income Equity Fund 37,517 37,517 0
Index Fund 141,917 141,917 0
Conservative Balanced Fund 121,634 121,634 0
Moderate Balanced Fund 324,938 212,921 112,017
Growth Balanced Fund 318,909 209,411 109,498
Intermediate U.S. Government Fund 48,716 48,716 0
Managed Fixed Income Fund 173,446 147,461 25,985
Stable Income Fund 38,143 38,143 0

The Manager is also the Trust's Distributor and acts as the agent of the Trust
in connection with the offering of I Shares of each Fund on a "best efforts"
basis pursuant to a Distribution Agreement. Under a servicing agreement between
the Trust and Norwest with respect to International Fund, Norwest performs
ministerial, administrative and oversight functions for the Fund and undertakes
to reimburse certain excess expenses of the Fund. Among other things, Norwest
gathers performance and other data from the adviser of the International
Portfolio and from other sources, formats the data and prepares reports to the
Fund's shareholders and the Trustees. Norwest also ensures that the adviser to
the International Portfolio is aware of pending net purchases or redemptions of
Fund shares and other matters that may affect the adviser's performance of its
duties. Lastly, Norwest has agreed to reimburse the Fund for any amounts by
which its operating expenses (exclusive of interest, taxes and brokerage fees,
organization expenses and, if applicable, distribution expenses, all to the
extent permitted by applicable state law or regulation) exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale. No
fees will be paid to Norwest under the Servicing Agreement unless the Fund's
assets are invested solely in the International Portfolio or in a portfolio of
another registered investment company. This agreement will continue in effect
only if such continuance is specifically approved at least annually by the Board
or by the shareholders and, in either case, by a majority of the Trustees who
are not parties to the Management Agreement or interested persons of any such
party.

The agreement provides that neither Norwest nor its personnel shall be liable
for any error of judgment or mistake of law or for any act or omission in the
performance of its or their duties to the Fund, except for willful misfeasance,
bad faith or gross negligence in the performance of Forum's or their duties or
by reason of reckless disregard of its or their obligations and duties under the
agreement.

A SHARES AND B SHARES

Under the Distribution Services Agreement related to International Fund and
certain other Funds, Forum receives, and may reallow to certain financial
institutions, the initial sales charges assessed on purchases of A Shares of
that Fund. With respect to B Shares of International Fund and certain other
Funds, the Funds have adopted a distribution

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plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") which authorizes the
payment to Forum under the Distribution Services Agreement of a distribution
services fee, which may not exceed an annual rate of 0.75%, and a maintenance
fee in an amount equal to 0.25%, of the average daily net assets of the Fund
attributable to the B Shares.

The Plan provides that all written agreements relating to the Plan must be in a
form satisfactory to the Board. In addition, the Plan requires the Trust and
Forum to prepare, at least quarterly, written reports setting forth all amounts
expended for distribution purposes by the Funds and Forum pursuant to the Plan
and identifying the distribution activities for which those expenditures were
made.

The Plan provides that, with respect to each class of each Fund to which it
applies, it will remain in effect for one year from the date of its adoption and
thereafter may continue in effect for successive annual periods provided it is
approved by the shareholders of the respective class or by the Board, including
a majority of trustees who are not interested persons of the Trust and who have
no direct or indirect interest in the operation of the Plan, the Distribution
Services Agreement or any agreement related to the Plan. The Plan further
provides that it may not be amended to increase materially the costs which may
be borne by the Trust for distribution pursuant to the Plan without shareholder
approval and that other material amendments to the Plan must be approved by the
trustees in the manner described in the preceding sentence. The Plan may be
terminated at any time by a vote of the Board or by the shareholders of the
respective classes.

The following table shows the dollar amount of sales charges payable to Forum
with respect to sales of A Shares of International Fund and the amount of sales
charge retained by Forum and not reallowed to other persons. The data is for
the fiscal period ended October 31, 1995.

Sales Retained
Charges Amount
------- --------
A Shares Sales Charges 4,974 498

TRANSFER AGENT

Norwest acts as Transfer Agent of the Trust pursuant to a Transfer Agency
Agreement. The Transfer Agency Agreement will continue in effect only if such
continuance is specifically approved at least annually by the Board or by a vote
of the shareholders of the Trust and in either case by a majority of the
Trustees who are not parties to the Transfer Agency Agreement or interested
persons of any such party, at a meeting called for the purpose of voting on the
Transfer Agency Agreement.

Among the responsibilities of the Transfer Agent as agent for the Trust are:
(1) answering customer inquiries regarding account status and history, the
manner in which purchases and redemptions of shares of the Fund may be effected
and certain other matters pertaining to the Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, (4) assisting in processing purchase and redemption
transactions and receiving wired funds; (5) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (6) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (7) furnishing periodic statements and confirmations of
purchases and redemptions; (8) transmitting proxy statements, annual reports,
prospectuses and other communications from the Trust to its shareholders; (9)
receiving, tabulating and transmitting to the Trust proxies executed by
shareholders with respect to meetings of shareholders of the Trust; and (10)
providing such other related services as the Trust or a shareholder may request.

For its services, the Transfer Agent receives from the Trust, with respect to
each Fund a fee computed and paid monthly at the annual rate of 0.25% of the
Fund's average daily net assets (or, in those Funds with more than one class,
the Fund's average daily net assets attributable to the class).

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CUSTODIAN

Pursuant to a Custodian Agreement, Norwest acts as the custodian of the Trust's
assets. The custodian's responsibilities include safeguarding and controlling
the Trust's cash and securities, determining income and collecting interest on
Fund investments. For these services, the custodian receives no fee. The
custodian receives a separate fee for performing certain functions in connection
with loans of portfolio securities.

Pursuant to rules adopted under the 1940 Act, each Fund may maintain its foreign
securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board of Trustees following a consideration of a number of factors,
including (but not limited to) the reliability and financial stability of the
institution; the ability of the institution to perform capably custodial
services for the Fund; the reputation of the institution in its national market;
the political and economic stability of the country in which the institution is
located; and further risks of potential nationalization or expropriation of Fund
assets. The custodian employs qualified foreign subcustodians to provide
custody of the Funds' foreign assets in accordance with applicable regulations.
The Chase Manhattan Bank, N.A., through its Global Securities Services Division
located in London, England, acts as custodian of International Fund's assets,
but plays no role in making decisions as to the purchase or sale of portfolio
securities for the Fund.

A Fund will not pay custodian fees to the extent the Fund invests in shares of
another registered investment company. Where the Fund's investments consists
solely of such shares, such as International Fund's investment in shares of the
International Portfolio, the Fund will pay no custodian fees directly.

The Chase Manhattan Bank, N.A. serves as custodian to International Portfolio
and International Portfolio II of Core Trust and is compensated by Core Trust
with respect to those Portfolios. Norwest serves as custodian of Small Company
Portfolio and Index Portfolio of Core Trust and receives no compensation for its
services to those Portfolios.

PORTFOLIO ACCOUNTING

Forum Financial Corp., an affiliate of Forum, performs portfolio accounting
services for each Fund pursuant to a Fund Accounting Agreement with the Trust.
The Fund Accounting Agreement will continue in effect only if such continuance
is specifically approved at least annually by the Board or by a vote of the
shareholders of the Trust and in either case by a majority of the Trustees who
are not parties to the Fund Accounting Agreement or interested persons of any
such party, at a meeting called for the purpose of voting on the Fund Accounting
Agreement.

Under its agreement, FFC prepares maintains books and records of each Fund on
behalf of the Trust that are required to be maintained under the 1940 Act,
calculates the net asset value per share of each Fund (and class thereof) and
dividends and capital gain distributions and prepares periodic reports to
shareholders and the SEC. For its services, FFC receives from the Trust with
respect to each Fund a fee of $36,000 per year plus, for each class of the Fund
above one, $6,000 per year. In addition, FFC is paid an additional $12,000 per
year with respect to tax-free money market Funds, global and international Funds
and Funds with more than 25% of their total assets invested in asset backed
securities, that have more than 100 security positions or that have a monthly
portfolio turnover rate of 10% or greater.

FFC is required to use its best judgment and efforts in rendering fund
accounting services and is not be liable to the Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FFC is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and the Trust has agreed to
indemnify and hold harmless FFC, its employees, agents, officers and directors
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way related to FFC's actions
taken or failures to act with respect to a Fund or based, if applicable, upon
information, instructions or requests with respect to a Fund given or made to
FFC by an officer of the Trust duly authorized. This indemnification does not
apply to FFC's actions taken or failures to act in cases of FFC's own bad faith,
willful misconduct or gross negligence.

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The following table shows the dollar amount of fees payable to FFC for its
portfolio accounting services with respect to each Fund, the amount of fee that
was waived by FFC, if any, and the actual fee received by FFC. The data is for
the past fiscal year.

Fee Fee Fee
Payable Waived Retained
-------- ------ --------

Diversified Equity Fund 34,700 0 34,700
Growth Equity Fund 34,700 0 34,700
Large Company Growth Fund 34,700 0 34,700
Small Company Growth Fund 36,700 0 36,700
International Fund 51,766 0 51,766
Income Equity Fund 34,700 0 34,700
Index Fund 46,266 0 46,266
Conservative Balanced Fund 54,266 0 54,266
Moderate Balanced Fund 52,266 0 52,266
Growth Balanced Fund 50,833 0 50,833
Intermediate U.S. Government Fund 52,700 0 52,700
Managed Fixed Income Fund 46,700 0 46,700
Stable Income Fund 51,700 0 51,700

FFC performs similar services for each Portfolio and, in addition, acts as each
Portfolio's transfer agent.

6. OTHER INFORMATION

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

PURCHASES

Shares of each Fund are sold on a continuous basis.

Fund shares are normally issued for cash only. In the Adviser's discretion,
however, the Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
only accept securities that (i) are not restricted as to transfer either by law
or liquidity of market and (ii) have a value which is readily ascertainable (and
not established only by valuation procedures).

Set forth below is an example of the method of computing the offering price of
the Funds' A Shares. All other shares of the Trust are offered at their next
determined net asset value. The example assumes a purchase of A Shares of a
hypothetical fund ("Fund Q") in an amount such that the purchase would be
subject to the fund's maximum sales charge (in this case, 4.5%) at a price based
on a hypothetical net asset value per share of A Shares of the fund. Offering
price is determined as follows: Net asset value per share times the sum of one
(1) plus the sales charge expressed as a percentage (for example 4.5% would
equal 0.045).

Net Asset Offering
Value Per Share Price
--------------- --------

Fund Q 11.48 12.00

STATEMENT OF INTENTION

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a binding obligation upon the investor to purchase the full amount indicated. A
Shares purchased with the first 5% of such amount will be held subject to a
registered pledge (while remaining registered in the name of the investor) to
secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased, and such pledged shares
will be involuntarily redeemed to pay the additional sales charge, if necessary.
When the full amount indicated has been purchased, the shares will be released
from pledge.

EXCHANGES AND TELEPHONE TRANSACTIONS

By making an exchange, the investor authorizes the Trust's transfer agent to act
on telephonic instructions from any person representing himself or herself to be
the investor and believed by the Trust's transfer agent to be genuine. The
records of the Trust's transfer agent of such instructions are binding. The
exchange procedures may be modified or terminated at any time upon appropriate
notice to shareholders. For Federal income tax purposes, exchanges are treated
as sales on which a purchaser will realize a capital gain or loss depending on
whether the value of the shares redeemed is more or less than his basis in such
shares at the time of such transaction.

The exchange privilege permits I Shares shareholders to exchange their shares
for I Shares of any other Fund. For Federal income tax purposes, an exchange
transaction is treated as a sale and subsequent purchase on which a purchaser
may realize a capital gain or loss depending on whether the value of the shares
redeemed is more or less than his basis in such shares at the time of the
transaction.

Shareholders of A Shares may purchase, with the proceeds from a redemption of
all or part of their shares, A Shares of the other funds of the Trust that offer
A Shares or Investor class shares ("Investor Shares") of Ready Cash Investment
Fund or Municipal Money Market Fund, two money market portfolios of the Trust.
Shareholders of B Shares may purchase, with the proceeds from a redemption of
all or part of their shares, B Shares of the other funds of the Trust that offer
B Shares or Exchange class shares ("Exchange Shares") of Ready Cash Investment
Fund.

Shareholders of Investor Shares of Ready Cash Investment Fund and Municipal
Money Market Fund may purchase, with the proceeds from a redemption of all or
part of their shares, Investor Shares of the other Fund or A Shares of the funds
of the Trust that offer A Shares. Shareholders of Exchange Shares of Ready Cash
Investment Fund may purchase, with the proceeds from a redemption of all or part
of their shares, B Shares of the funds of the Trust that offer B Shares.

Shareholders of A Shares or Investor Shares making an exchange will be subject
to the applicable sales charge of any A Shares acquired in the exchange;
provided, that the sales charge charged with respect to the acquired shares will
be assessed at a rate that is equal to the excess (if any) of the rate of the
sales charge that would be applicable to the acquired shares in the absence of
an exchange over the rate of the sales charge previously paid on the exchanged
shares. For purposes of the preceding sentence, A Shares acquired through the
reinvestment of dividends or distributions are deemed to have been acquired with
a sales charge rate equal to that paid on the shares on which the dividend or
distribution was paid.

In addition, A Shares and Investor Shares acquired by a previous exchange
transaction involving shares on which a sales charge has directly or indirectly
been paid (e.g., shares purchased with a sales charge or issued in connection
with an exchange transaction involving shares that had been purchased with a
sales charge), as well as additional shares acquired through reinvestment of
dividends or distributions on such shares will be treated as if they had been
acquired subject to that sales charge.

B Shares may be exchanged without the payment of any contingent deferred sales
charge; however, B Shares or Exchange Shares acquired as a result of such
exchange and subsequently redeemed will nonetheless be subject to the contingent
deferred sales charge applicable to the original B Shares as if those shares
were being redeemed at that time. Exchange Shares may be exchanged without the
payment of any contingent deferred sales charge; however, B Shares acquired as a
result of such exchange and subsequently redeemed will nonetheless be subject to
the contingent deferred sales charge applicable to the Exchange Shares as if
those shares were being redeemed at that time.

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REDEMPTIONS

In addition to the situations described in the Prospectus with respect to the
redemptions of shares, the Trust may redeem shares involuntarily to reimburse a
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder or to collect any charge
relating to transactions effected for the benefit of a shareholder which is
applicable to a Fund's shares as provided in the Prospectus from time to time.

Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partially in portfolio securities,
brokerage costs may be incurred by the shareholder in converting securities to
cash. The Trust and Core Trust have each filed a formal election with the SEC
pursuant to which the Funds and the International Portfolio will only effect a
redemption in portfolio securities if the particular shareholder is redeeming
more than $250,000 or one percent of a Fund's or the International Portfolio's
total net assets, whichever is less, during any 90-day period.

CONTINGENT DEFERRED SALES CHARGE (A SHARES)

Certain A Shares of the Funds on which no initial sales charge was assessed,
that are redeemed within specified periods after the purchase date will be
subject to a contingent deferred sales charge upon redemption.

RIGHT OF ACCUMULATION. Contingent deferred sales charges may be charged on
redemptions of A Shares purchased pursuant to the Cumulative Quantity Discount
(Right of Accumulation). The contingent deferred sales charge will apply to A
Shares purchased if the value of those shares on the date of purchase plus the
net asset value of any Investor Shares held by the shareholder (as of the close
of business on the previous Fund Business Day) of all A Shares held by the
shareholder exceed $1,000,000. For example, if a shareholder has made prior
purchases of A Shares which now have a value of $900,000, the purchase of
$150,000 of A Shares will not be subject to an initial sales charge but will be
subject to the contingent deferred sales charge. The $900,000 of A Shares is
not subject to the contingent deferred sales charge.

STATEMENT OF INTENTION. Contingent deferred sales charges may be charged on
redemptions of A Shares purchased pursuant to a Statement of Intention ("SOI").
The contingent deferred sales charge will not apply to SOIs of under $1,000,000
and will not be applied to SOIs for a greater amount if the shareholder never
purchases $1,000,000 or more of A Shares under the SOI. If a shareholder
purchases $1,000,000 or more under an SOI, the contingent deferred sales charge
will apply with respect to the entire amount purchased. The holding period for
each A Share, however, shall be determined from the date the share was
purchased. If the shareholder redeems A Shares during the period that the SOI
is in effect, a contingent deferred sales charge will be charged at the time the
shareholder has purchased $1,000,000 or more worth of A Shares pursuant to the
SOI and will be assessed at the rate applicable in the case of a single purchase
of the minimum amount specified in the SOI. If the shareholder purchases less
than the amount specified under the SOI, an additional contingent deferred sales
charge may be assessed in respect of A Shares previously redeemed based on the
amount actually purchased pursuant to the SOI.

A Shares purchased by a shareholder within 60 days following the redemption by
the shareholder of A Shares in the same Fund with a value at least equal to the
A Shares being purchased will not be subject to a contingent deferred sales
charge; provided, however, that this exemption is not applicable to more than
two purchases within a 12-month period.

CONTINGENT DEFERRED SALES CHARGE (A SHARES AND B SHARES)

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For these purposes, the term disability shall have the meaning ascribed thereto
in Section 72(m)(7) of the Code. Under that provision, a person is considered
disabled if the person is unable to engage in any substantial activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite duration.
Appropriate documentation satisfactory to the Fund is required to substantiate
any shareholder death or disability.

CONVERSION OF B SHARES

The conversion of Exchange Shares to Investor Shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the distribution services fee with respect to the Exchange Shares
does not result in the Fund's dividends or distributions constituting
"preferential dividends" under the Code, and (ii) the conversion of Exchange
Shares to Investor Shares does not constitute a taxable event under Federal
income tax law. The conversion of Exchange Shares to Investor Shares may be
suspended if such an opinion is no longer available at the time the conversion
is to occur. In that event, no further conversions of Exchange Shares would
occur, and shares might continue to be subject to a distribution services fee
for an indefinite period, which may extend beyond the specified number of years
for conversion of the original B Shares.

DETERMINATION OF NET ASSET VALUE

Securities owned by a Fund for which market quotations are readily available are
valued at current market value. The Funds value their securities as follows. A
security listed or traded on an exchange is valued at its last sale price (prior
to the time as of which assets are valued) on the exchange where it is
principally traded. Lacking any such sales on the day of valuation, the
security is valued at the mean of the last bid and asked prices. All other
securities for which over-the-counter market quotations are readily available
generally are valued at the mean of the current bid and asked prices. When
market quotations are not readily available, securities are valued at fair value
as determined in good faith by the Board. Debt securities may be valued on the
basis of valuations furnished by pricing services which utilize electronic data
processing techniques to determine valuations for normal institutional-size
trading units of debt securities, without regard to sale or bid prices, when
such valuations are believed to more accurately reflect the fair market value of
such securities. All assets and liabilities of a Fund denominated in foreign
currencies are converted into United States dollars at the mean of the bid and
asked prices of such currencies against the United States dollar last quoted by
a major bank.

Under procedures adopted by the Board, a net asset value for a Fund later
determined to have been inaccurate for any reason will be recalculated.
Purchases and redemptions made at a net asset value determined to have been
inaccurate will be adjusted, although in certain circumstances, such as where
the difference between the original net asset value and the recalculated net
asset value divided by the recalculated net asset value is 0.005 (1/2 of 1%) or
less or shareholder transactions are otherwise insubstantially affected, further
action is not required.

PORTFOLIO TRANSACTIONS

The following discussion concerning portfolio transactions relates to the Funds
and, with respect to International Fund, the International Portfolio.

Investment decisions for the Funds will be made independently from those for any
other client account or investment company that is or may in the future become
managed by the Adviser or its affiliates. Investment decisions are the product
of many factors including basic suitability for the particular client involved.
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more clients are selling the security. In some instances, one client may
sell a particular security to another client. It also sometimes happens that
two or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as is possible,
averaged as to price and allocated between such clients in a manner which, in
the respective Adviser's opinion, is equitable to each and in accordance with
the amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients. In addition, when purchases or sales of the
same security for the Fund and other

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client accounts managed by the Advisers occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large denomination purchases or sales.

Purchases and sales of fixed income portfolio securities are generally effected
as principal transactions. These securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and ask prices. In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup. In underwritten offerings, the price includes a disclosed
fixed commission or discount.

Purchases and sales of equity securities on exchanges are generally effected
through brokers who charge commissions. Allocations of transactions to brokers
and dealers and the frequency of transactions are determined by the Advisers in
their best judgment and in a manner deemed to be in the best interest of
shareholders of the Funds (holders of beneficial interest in the case of the
International Portfolio) rather than by any formula. The primary consideration
is prompt execution of orders in an effective manner and at the most favorable
price available to the Fund. In transactions on stock exchanges in the United
States, these commissions are negotiated, whereas on foreign stock exchanges
these commissions are generally fixed. Where transactions are executed in the
over-the-counter market, the Fund will seek to deal with the primary market
makers; but when necessary in order to obtain best execution, it will utilize
the services of others. In all cases the Fund will attempt to negotiate best
execution. No Fixed Income Fund paid any brokerage commissions during the
fiscal period ended October 31, 1995.

The following table shows the aggregate brokerage commissions with respect to
each Equity Fund and Balanced Fund with respect to each Fund's investment in
equity securities. The data is for the past fiscal year.

Aggregate
Commissions Paid
----------------
Diversified Equity Fund 180,093
Growth Equity Fund 115,993
Large Company Growth Fund 60,264
Small Company Growth Fund 600,341
International Fund -
Income Equity Fund 25,321
Index Fund 107,332
Conservative Balanced Fund 9,298
Moderate Balanced Fund 57,931
Growth Balanced Fund 66,361
Managed Fixed Income Fund 1,750

A Fund may not always pay the lowest commission or spread available. Rather, in
determining the amount of commission, including certain dealer spreads, paid in
connection with securities transactions, the Advisers take into account such
factors as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the services described below) and any
risk assumed by the executing broker. The Advisers may also take into account
payments made by brokers effecting transactions for a Fund (i) to the Fund or
(ii) to other persons on behalf of the Fund for services provided to it for
which it would be obligated to pay.

In addition, the Advisers may give consideration to research services furnished
by brokers to the Advisers for their use and may cause the Fund to pay these
brokers a higher amount of commission than may be charged by other brokers.
Such research and analysis may be used by the Advisers in connection with
services to clients other than the Funds, and the Advisers' fees are not reduced
by reason of the Advisers' receipt of the research services.

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determine, an Adviser may consider sales of shares of the Funds as a factor in
the selection of broker-dealers to execute portfolio transactions for the Funds.

Subject to the general policies regarding allocation of portfolio brokerage as
set forth above, the Board has authorized the Advisers to employ their
respective affiliates to effect securities transactions of the Funds, provided
certain other conditions are satisfied. Payment of brokerage commissions to an
affiliate of an Adviser for effecting such transactions is subject to Section
17(e) of the 1940 Act, which requires, among other things, that commissions for
transactions on securities exchanges paid by a registered investment company to
a broker which is an affiliated person of such investment company, or an
affiliated person of another person so affiliated, not exceed the usual and
customary brokers' commissions for such transactions. It is the Funds' policy
that commissions paid to Schroder Securities Limited, Norwest Investment
Management, Inc. and other affiliates of an Adviser will, in the judgment of the
Adviser responsible for making portfolio decisions and selecting brokers, be (i)
at least as favorable as commissions contemporaneously charged by the affiliate
on comparable transactions for its most favored unaffiliated customers and (ii)
at least as favorable as those which would be charged on comparable transactions
by other qualified brokers having comparable execution capability. The Board,
including a majority of the non-interested Trustees, has adopted procedures to
ensure that commissions paid to affiliates of an Adviser by the Funds satisfy
the foregoing standards.

The Fund has no understanding or arrangement to direct any specific portion of
its brokerage to Schroder Securities, and will not direct brokerage to Schroder
Securities in recognition of research services.

From time to time, the Funds may purchase securities of a broker or dealer
through which its regularly engages in securities transactions. The following
table shows these purchases, and their respective values, at October 31, 1995.

Market Value at
October 31, 1995

Diversified Equity Fund
Charles Schwab Corporation 8,884,652
Donaldson, Lufkin & Jenrette, Inc. 1,529,150

Growth Equity Fund
Charles Schwab Corporation 9,797,364
Donaldson, Lufkin & Jenrette, Inc. 1,695,750

Large Company Growth Fund
Charles Schwab Corporation 3,097,275
Donaldson, Lufkin & Jenrette, Inc. 544,425

Index Fund
Merrill Lynch & Co., Inc. 377,400
Morgan Stanley Group, Inc. 269,700
Salomon Brothers, Inc. 133,663

Conservative Balanced Fund
Charles Schwab Corporation 436,912
Donaldson, Lufkin & Jenrette, Inc. 77,350
Lehman Brothers, Inc. 913,003
Paine Webber Group, Inc. 1,004,850
Salomon Brothers, Inc. 1,497,017
Merrill Lynch & Co., Inc. 501,983
Bear Stearns Company 500,627
Salomon Brothers, Inc. 492,067

Moderate Balanced Fund

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Charles Schwab Corporation 1,882,613
Donaldson, Lufkin & Jenrette, Inc. 324,275
Lehman Brothers, Inc. 2,383,953
Paine Webber Group, Inc. 2,009,700
Salomon Brothers, Inc. 2,795,395

Growth Balanced Fund
Charles Schwab Corporation 3,211,651
Donaldson, Lufkin & Jenrette, Inc. 556,325
Paine Webber Group, Inc. 1,607,760
Salomon Brothers, Inc. 1,999,477

Managed Fixed Income Fund
Dean Witter 2,600,000
Lehman Brothers, Inc. 2,788,578
Paine Webber Group, Inc. 2,713,095
Salomon Brothers, Inc. 2,612,844

Stable Income Fund
Lehman Brothers, Inc. 2,028,896

TAXATION

Each Fund intends for each taxable year to qualify for tax treatment as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. Such qualification does not, of course, involve governmental
supervision of management or investment practices or policies. Investors should
consult their own counsel for a complete understanding of the requirements each
Fund must meet to qualify for such treatment, and of the application of state
and local tax laws to his or her particular situation.

Certain listed options and regulated futures contracts are considered "section
1256 contracts" for Federal income tax purposes. Section 1256 contracts held by
a Fund at the end of each taxable year will be "marked to market" and treated
for Federal income tax purposes as though sold for fair market value on the last
business day of such taxable year. Gain or loss realized by a Fund on section
1256 contracts generally will be considered a 60 percent long-term and 40
percent short-term capital gain or loss. Each Fund can elect to exempt its
section 1256 contracts which are part of a "mixed straddle" (as described below)
from the application of section 1256.

With respect to over-the-counter put and call options, gain or loss realized by
a Fund upon the lapse or sale of such options held by such Fund will be either
long-term or short-term capital gain or loss depending upon the Fund's holding
period with respect to such option. However, gain or loss realized upon the
lapse or closing out of such options that are written by a Fund will be treated
as short-term capital gain or loss. In general, if a Fund exercises an option,
or an option that a Fund has written is exercised, gain or loss on the option
will not be separately recognized but the premium received or paid will be
included in the calculation of gain or loss upon disposition of the property
underlying the option.

Any option, futures contract, or other position entered into or held by a Fund
in conjunction with any other position held by such Fund may constitute a
"straddle" for Federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may constitute a "mixed
straddle". In general, straddles are subject to certain rules that may affect
the character and timing of a Fund's gains and losses with respect to straddle
positions by requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to the extent that a
Fund has unrealized gains with respect to the other position in such straddle;
(ii) a Fund's holding period in straddle positions be suspended while the
straddle exists (possibly resulting in any gain being treated as short-term
capital gain rather than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed straddle and
which are non-section 1256 positions be treated as 60 percent long-term and 40
percent short-term capital loss; (iv) losses recognized with respect to certain
straddle positions which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v)

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the deduction of interest and carrying charges attributable to certain straddle
positions may be deferred. Various elections are available to a Fund which may
mitigate the effects of the straddle rules, particularly with respect to mixed
straddles. In general, the straddle rules described above do not apply to any
straddles held by a Fund if all of the offsetting positions consist of section
1256 contracts.

Each International Fund shareholder should include in the shareholder's report
of gross income in his Federal income tax return both cash dividends received by
the shareholder from the Fund and also the amount which the Fund advises the
shareholder is the shareholder's pro rata portion of foreign income taxes paid
with respect to, or withheld from, dividends and interest paid to the
International Portfolio from its foreign investments. Each shareholder then
would be entitled, subject to certain limitations, to take a foreign tax credit
against the shareholders' Federal income tax liability for the amount of such
foreign taxes or else to deduct such foreign taxes as an itemized deduction from
gross income.

COUNSEL AND AUDITORS

Legal matters in connection with the issuance of shares of beneficial interest
of the Trust are passed upon by the law firm of Seward & Kissel, One Battery
Park Plaza, New York, New York 10004.

KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, independent
auditors, acts as auditors for the Trust.

OWNERSHIP OF FUND SHARES

Prior to the public issuance of shares of the Funds, due to its initial
investment, Forum owned all outstanding shares of each Fund and, accordingly,
may be deemed to be a controlling person of each Fund. Upon the investment in
each Fund by public shareholders, Forum ceased to be a controlling person of any
Fund. As of February ___, 1995, the Trustees and officers of the Trust in the
aggregate owned less than one percent of the outstanding shares of each Fund.

The following persons owned of record 5% or more of the outstanding shares of a
Fund or any class thereof, as of February ___, 1995:

[5% Shareholder Table]

ADDITIONAL INFORMATION ABOUT THE TRUST

Currently, the Trust is divided into thirty-one separate series representing
shares of each of the thirteen Funds and shares of Cash Investment Fund, Ready
Cash Investment Fund, U.S. Government Fund, Treasury Fund, Municipal Money
Market Fund, Adjustable U.S. Government Reserve Fund, Government Income Fund,
Income Fund, Total Return Bond Fund, Tax-Free Income Fund, Arizona Tax-Free
Fund, Colorado Tax-Free Fund, Minnesota Tax-Free Fund, Income Stock Fund,
ValuGrowth Stock Fund, Small Company Stock Fund, Contrarian Stock Fund and Short
Maturity Investment Fund. The Trust has received an order from the SEC
permitting the issuance and sale of separate classes of shares representing
interests in each of the Trust's portfolios. It is anticipated, however, that
the Trust will operate the classes of each Fund in accordance with rules of the
SEC adopted after the Trust obtained its exemptive order.

The Board determined that currently no conflict of interest exists between or
among each Fund's I Shares and its other classes, if any. On an ongoing basis,
the Board, pursuant to its fiduciary duties under the 1940 Act and state law,
will seek to ensure that no such conflict arises.

The Trust's shareholders are not personally liable for the obligations of the
Trust under Delaware law. The Delaware Business Trust Act (the "Delaware Act")
provides that a shareholder of a Delaware business trust shall be entitled to
the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust shareholder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or a shareholder is
subject to the jurisdiction of courts in those states,

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<PAGE>

the courts may not apply Delaware law, and may thereby subject the Trust
shareholders to liability. To guard against this risk, the Trust Instrument of
the Trust disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation and instrument entered into by the Trust or its Trustees, and
provides for indemnification out of Trust property of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss beyond his investment because of
shareholder liability is limited to circumstances in which (1) a court refuses
to apply Delaware law, (2) no contractual limitation of liability is in effect,
and (3) the Trust itself is unable to meet its obligations. In light of
Delaware law, the nature of the Trust's business, and the nature of its assets,
the Board believes that the risk of personal liability to a Trust shareholder is
extremely remote.

FINANCIAL STATEMENTS

The financial statements of each Fund for the year ended October 31, 1995 (which
include statements of assets and liabilities, statements of operations,
statements of changes in net assets, notes to financial statements, financial
highlights, schedules of investments and the independent auditors' report
thereon) are included in the Annual Report to Shareholders of the Trust
delivered along with this SAI and are incorporated herein by reference.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the information included in the
Funds' registration statement filed with the SEC under the Securities Act of
1933 with respect to the securities offered hereby, certain portions of which
have been omitted pursuant to the rules and regulations of the SEC. The
registration statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any
contract of other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.

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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

Moody's rates corporate bond issues, including convertible debt issues, as
follows:

Bonds which are rated Aaa are judged by Moody's to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payment and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1, and B1.

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STANDARD AND POOR'S CORPORATION ("S&P")

S&P rates corporate bond issues, including convertible debt issues, as follows:

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.

Bonds rated BBB are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

Bonds rated BB, B, CCC, CC and C are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal payments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

Bonds rated CCC have currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

Bonds rated C typically are subordinated to senior debt which as assigned an
actual or implied CCC debt rating. This rating may also be used to indicate
imminent default.

The C rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued. The rating Cl is reserved
for income bonds on which no interest is being paid.

Bonds are rated D when the issue is in payment default, or the obligor has filed
for bankruptcy. Bonds rated D are in payment default or the obligor has filed
for bankruptcy. The D rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will made during
such grace period.

Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the rating category.

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FITCH INVESTORS SERVICE, INC. ("FITCH")

Fitch rates corporate bond issues, including convertible debt issues, as
follows:

AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.

A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB Bonds are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

BB Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, DD, and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA, DDD, DD, or D categories.

PREFERRED STOCK

MOODY'S INVESTORS SERVICE, INC.

Moody's rates preferred stock as follows:

An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
among preferred stock issues.

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An issue rated aa is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.

An issue rated a is considered to be an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.

An issue rated baa is considered to be a medium-grade, neither highly protected
nor poorly secured. Earnings and asset protection appear adequate at present
but may be questionable over any great length of time.

An issue rated ba is considered to have speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.

An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of
the issue over any long period of time may be small.

An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.

An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.

An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from aa through b in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issuer ranks in the lower end of its generic rating
category.

STANDARD & POOR'S CORPORATION

S&P rates preferred stock as follows:

AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.

A preferred stock issue rated AA also qualifies as a high-quality fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.

An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

An issue rated BBB is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the A category.

Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations. BB indicates the lowest degree of speculation and CCC the highest
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

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The rating CC is reserved for a preferred stock issue in arrears on dividends or
sinking fund payments but that is currently paying.

A preferred stock rated C is a non-paying issue.

A preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.

To provide more detailed indications of preferred stock quality, the ratings
from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign
to show relative standing within the major rating categories.

COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE, INC.

Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics: Leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S CORPORATION

S&P's two highest commercial paper ratings are A-1 and A-2. Issues assigned an
A rating are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to indicate
the relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety is
not as high as for issues designated A-1. A-3 issues have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations. Issues rated A-2 are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.

FITCH INVESTORS SERVICE, INC.

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 rating.

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F-3. Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, however, near-term adverse
changes could cause these securities to be rated below investment grade.

F-S. Issues assigned this rating have characteristics suggesting a minimal
degree of assurance for timely payment and are vulnerable to near-term adverse
changes in financial and economic conditions.

D. Issues assigned this rating are in actual or imminent payment default.

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NORWEST ADVANTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION

MARCH 1, 1996

EQUITY FUNDS

DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
INCOME EQUITY FUND

FIXED INCOME FUNDS

INTERMEDIATE U.S. GOVERNMENT FUND
STABLE INCOME FUND

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NORWEST ADVANTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION

MARCH 1, 1996

This Statement of Additional Information ("SAI") supplements the Prospectus
offering A Shares and B Shares (collectively the "Shares") of Diversified Equity
Fund, Growth Equity Fund, Income Equity Fund, Intermediate U.S. Government Fund
and Stable Income Fund (each a "Fund" and collectively the "Funds"). Each Fund
is a diversified series of Norwest Advantage Funds, a registered open-end,
management investment company (the "Trust"). This SAI should be read only in
conjunction with the Funds' Prospectus, copies of which may be obtained without
charge.

TABLE OF CONTENTS
PAGE
----
1. Norwest Advantage Funds. . . . . . . .
2. Investment Policies. . . . . . . . . .
3. Investment Limitations . . . . . . . .
4. Performance Data and Advertising . . .
5. Management . . . . . . . . . . . . . .
6. Other Information. . . . . . . . . . .

Appendix A - Description of Securities Ratings A-1

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.

THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ ONLY IN CONJUNCTION WITH
THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED BY AN INVESTOR WITHOUT CHARGE BY
CONTACTING THE TRUST'S DISTRIBUTOR, FORUM FINANCIAL SERVICES, INC., TWO PORTLAND
SQUARE, PORTLAND, MAINE 04101.

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1. NORWEST ADVANTAGE FUNDS

DEFINITIONS

The Trust was originally organized under the name Prime Value Funds, Inc. as a
Maryland corporation on August 29, 1986. On July 30, 1993, pursuant to a
shareholder vote, the Trust was reorganized as a Delaware business trust. On
October 1, 1995, the Trust's name was changed from "Norwest Funds." As used in
this SAI, the following terms shall have the meanings listed:

"Adviser" shall mean each Fund's investment adviser, Norwest
Investment Management, a part of Norwest. "Advisers" shall mean, collectively,
the Adviser and Schroder.

"Board" shall mean the Board of Trustees of the Trust.

"CFTC" shall mean the U.S. Commodities Futures Trading
Commission.

"Core Trust" shall mean Core Trust (Delaware), an open-end,
management investment company registered under the 1940 Act.

"Forum" shall mean Forum Financial Services, Inc., the Trust's
administrator and distributor of the Trust's shares.

"FFC" shall mean Forum Financial Corp., the Trust's fund
accountant.

"Fund" shall mean each of the thirteen separate portfolios of the
Trust to which this Statement of Additional Information relates as identified on
the cover page.

"Norwest" shall mean Norwest Bank Minnesota, N.A., a subsidiary
of Norwest Corporation.

"NRSRO" shall mean a nationally recognized statistical rating
organization.

"Portfolio" shall mean International Portfolio II, Small Company
Portfolio and Index Portfolio, three separate portfolios of Core Trust.

"Schroder" shall mean Schroder Capital Management Inc., the
investment subadviser to Diversified Equity Fund and Growth Equity Fund.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"Transfer Agent" shall mean Norwest acting in its capacity as
transfer and dividend disbursing agent of the Trust.

"Trust" shall mean Norwest Advantage Funds, an open-end
management investment company registered under the 1940 Act.

"U.S. Government Securities" shall mean obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities.

"1940 Act" shall mean the Investment Company Act of 1940, as
amended.

2. INVESTMENT POLICIES

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investment or employ any investment technique or strategy not referenced in the
Prospectus as relates to that Fund. For example, while the SAI describes "swap"
transactions below, only those Funds whose investment policies, as described in
the Prospectus, allow the Fund to invest in swap transactions may do so.

RATINGS AS INVESTMENT CRITERIA

Moody's Investors Service, Inc., Standard & Poor's Corporation and other NRSROs
are private services that provide ratings of the credit quality of debt
obligations, including convertible securities. A description of the range of
ratings assigned to various types of bonds and other securities by several
NRSROs is included in Appendix A to this SAI. The Funds may use these ratings
to determine whether to purchase, sell or hold a security. However, ratings are
general and are not absolute standards of quality. Consequently, securities
with the same maturity, interest rate and rating may have different market
prices. If an issue of securities ceases to be rated or if its rating is
reduced after it is purchased by a Fund, the investment adviser or investment
subadviser of the Fund will determine whether the Fund should continue to hold
the obligation. Credit ratings attempt to evaluate the safety of principal and
interest payments and do not evaluate the risks of fluctuations in market value.
Also, rating agencies may fail to make timely changes in credit ratings. An
issuer's current financial condition may be better or worse than a rating
indicates.

CONVERTIBLE SECURITIES

A Fund may invest in convertible securities. A convertible security is a bond,
debenture, note, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. Although no
securities investment is without some risk, investment in convertible securities
generally entails less risk than in the issuer's common stock. However, the
extent to which such risk is reduced depends in large measure upon the degree to
which the convertible security sells above its value as a fixed income security.
Convertible securities have unique investment characteristics in that they
generally (1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stocks since they have fixed income characteristics
and (3) provide the potential for capital appreciation if the market price of
the underlying common stock increases.

The value of a convertible security is a function of its "investment value"
(determined by a comparison of its yield with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value and
generally the conversion value decreases as the convertible security approaches
maturity. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. In addition,
a convertible security generally will sell at a premium over its conversion
value determined by the extent to which investors place value on the right to
acquire the underlying common stock while holding a fixed income security.

A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Fund is called for redemption, the Fund will be
required to permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.

EQUITY-LINKED SECURITIES

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Equity-linked securities are securities that are convertible into or based upon
the value of, equity securities upon certain terms and conditions. The following
are three examples of equity-linked securities. A fund may invest in the
securities described below or other similar equity-linked securities.

Preferred Equity Redemption Cumulative Stock ("PERCS") technically are preferred
stock with some characteristics of common stock. PERCS are mandatorily
convertible into common stock after a period of time, usually three years,
during which the investors' capital gains are capped, usually at 30%. Commonly,
PERCS may be redeemed by the issuer at any time or if the issuer's common stock
is trading at a specified price level or better. The redemption price starts at
the beginning of the PERCS' duration period at a price that is above the cap by
the amount of the extra dividends the PERCS holder is entitled to receive
relative to the common stock over the duration of the PERCS and declines to the
cap price shortly before maturity of the PERCS. In exchange for having the cap
on capital gains and giving the issuer the option to redeem the PERCS at any
time or at the specified common stock price level, a Fund may be compensated
with a substantially higher dividend yield than that on the underlying common
stock. Funds that seek current income find PERCS attractive because a PERCS
provides a higher dividend income than that paid with respect to a company's
common stock.

Equity-Linked Securities ("ELKS") differ from ordinary debt securities, in that
the principal amount received at maturity is not fixed but is based on the price
of the issuer's common stock. ELKS are debt securities commonly issued in fully
registered form for a term of three years under an indenture trust. At
maturity, the holder of ELKS will be entitled to receive a principal amount
equal to the lesser of a cap amount, commonly in the range of 30% to 55% greater
than the current price of the issuer's common stock, or the average closing
price per share of the issuer's common stock, subject to adjustment as a result
of certain dilution events, for the 10 trading days immediately prior to
maturity. Unlike PERCS, ELKS are commonly not subject to redemption prior to
maturity. ELKS usually bear interest during the three-year term at a
substantially higher rate than the dividend yield on the underlying common
stock. In exchange for having the cap on the return that might have been
received as capital gains on the underlying common stock, the Investment Fund
may be compensated with the higher yield, contingent on how well the underlying
common stock does. Funds that seek current income find ELKS attractive because
ELKS provide a higher dividend income than that paid with respect to a company's
common stock.

Liquid Yield Option Notes ("LYONs") differ from ordinary debt securities, in
that the amount received prior to maturity is not fixed but is based on the
price of the issuer's common stock. LYONs are zero-coupon notes that sell at a
large discount from face value. For an investment in LYONs, a Fund will not
receive any interest payments until the notes mature, typically in 15 or 20
years, when the notes are redeemed at face, or par, value. The yield on LYONs,
typically, is lower-than-market rate for debt securities of the same maturity,
due in part to the fact that the LYONs are convertible into common stock of the
issuer at any time at the option of the holder of the LYON. Commonly, LYONs are
redeemable by the issuer at any time after an initial period or if the issuer's
common stock is trading at a specified price level or better, or, at the option
of the holder, upon certain fixed dates. The redemption price typically is the
purchase price of the LYONs plus accrued original issue discount to the date of
redemption, which amounts to the lower-than-market yield. A Fund will receive
only the lower-than-market yield unless the underlying common stock increases in
value at a substantial rate. LYONs are attractive to investors when it appears
that they will increase in value due to the rise in value of the underlying
common stock.

WARRANTS

Warrants are options to purchase an equity security at a specified price
(usually representing a premium over the applicable market value of the
underlying equity security at the time of the warrant's issuance) and usually
during a specified period of time. To the extent that the market value of the
security that may be purchased upon exercise of the warrant rises above the
exercise price, the value of the warrant will tend to rise. To the extent that
the exercise price equals or exceeds the market value of such security, the
warrants will have little or no market value. If a warrant is not exercised
within the specified time period, it will become worthless and the Fund will
lose the purchase price paid for the warrant and the right to purchase the
underlying security. The Fund may not invest more than 2% of its net assets in
warrants not traded on the American or New York Stock Exchange.

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MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

TYPES OF CREDIT ENHANCEMENT

To lessen the effect of failures by obligors on Mortgage Assets (as defined in
the Prospectus) to make payments, mortgage-backed securities may contain
elements of credit enhancement. Credit enhancement falls into two categories:
(1) liquidity protection; and (2) protection against losses resulting after
default by an obligor on the underlying assets and collection of all amounts
recoverable directly from the obligor and through liquidation of the collateral.
Liquidity protection refers to the provisions of advances, generally by the
entity administering the pool of assets (usually the bank, savings association
or mortgage banker that transferred the underlying loans to the issuer of the
security), to ensure that the receipt of payments on the underlying pool occurs
in a timely fashion. Protection against losses resulting after default and
liquidation ensures ultimate payment of the obligations on at least a portion of
the assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The Funds will not pay any additional fees for
such credit enhancement, although the existence of credit enhancement may
increase the price of security.

Examples of credit enhancement arising out of the structure of the transaction
include (i) "senior-subordinated securities" (multiple class securities with one
or more classes subordinate to other classes as to the payment of principal
thereof and interest thereon, with the result that defaults on the underlying
assets are borne first by the holders of the subordinated class), (ii) creation
of "spread accounts" or "reserve funds" (where cash or investments, sometimes
funded from a portion of the payments on the underlying assets are held in
reserve against future losses) and (iii) "over-collateralization" (where the
scheduled payments on, or the principal amount of, the underlying assets exceeds
that required to make payment of the securities and pay any servicing or other
fees). The degree of credit enhancement provided for each issue generally is
based on historical information regarding the level of credit risk associated
with the underlying assets. Delinquency or loss in excess of that covered by
credit enhancement protection could adversely affect the return on an investment
in such a security.

OTHER GOVERNMENTAL RELATED MORTGAGE-BACKED SECURITIES

The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
Government in connection with the savings and loan crisis, holds assets of
failed savings associations as either a conservator or receiver for such
associations, or it acquires such assets in its corporate capacity. These
assets include, among other things, single family and multi-family mortgage
loans, as well as commercial mortgage loans. In order to dispose of such assets
in an orderly manner, RTC has established a vehicle registered with the SEC
through which it sells mortgage-backed securities. RTC mortgage-backed
securities represent pro rata interests in pools of mortgage loans that RTC
holds or has acquired, as described above, and are supported by one or more of
the types of private credit enhancements used by Private Mortgage Lenders.

It is anticipated that in the future the Federal Deposit Insurance Corporation
(which also holds mortgage loans as a conservator or receiver of insolvent banks
or in its corporate capacity) or other governmental agencies or
instrumentalities may establish vehicles for the issuance of mortgage-backed
securities that are similar in structure and in types of credit enhancements to
RTC securities.

ASSET-BACKED SECURITIES

A Fund may invest in asset-backed securities, which have structural
characteristics similar to mortgage-backed securities but have underlying assets
that are not mortgage loans or interests in mortgage loans. Asset-backed
securities are securities that represent direct or indirect participations in,
or are secured by and payable from, assets such as motor vehicle installment
sales contracts, installment loan contracts, leases of various types of real and
personal property and receivables from revolving credit (credit card)
agreements. Such assets are securitized through the use of trusts and special
purpose corporations.

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Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. Payments of principal and
interest may be guaranteed up to certain amounts and for a certain time period
by a letter of credit issued by a financial institution.

Asset-backed securities present certain risks that are not presented by
mortgage-backed debt securities or other securities in which a Fund may invest.
Primarily, these securities do not always have the benefit of a security
interest in comparable collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a number of state
and Federal consumer credit laws, many of which give such debtors the right to
set off certain amounts owed on the credit cards, thereby reducing the balance
due. Automobile receivables generally are secured by automobiles. Most issuers
of automobile receivables permit the loan servicers to retain possession of the
underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the asset-backed securities. In addition,
because of the large number of vehicles involved in a typical issuance and the
technical requirements under state laws, the trustee for the holders of the
automobile receivables may not have a proper security interest in the underlying
automobiles. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.

INTEREST-ONLY AND PRINCIPAL-ONLY SECURITIES

Some tranches of mortgage-backed securities, including CMOs, are structured so
that investors receive only principal payments generated by the underlying
collateral. Principal only ("POs") securities usually sell at a deep discount
from face value on the assumption that the purchaser will ultimately receive the
entire face value through scheduled payments and prepayments; however, the
market values of POs are extremely sensitive to prepayment rates, which, in
turn, vary with interest rate changes. If interest rates are falling and
prepayments accelerate, the value of the PO will increase. On the other hand,
if rates rise and prepayments slow, the value of the PO will drop.

Interest only ("IOs") securities result from the creation of POs; thus, CMOs
with PO tranches also have IO tranches. IO securities sell at a deep discount
to their "notional" principal amount, namely the principal balance used to
calculate the amount of interest due. They have no face or par value and, as
the notional principal amortizes and prepays, the IO cash-flow declines.

Unlike POs, IOs increase in value when interest rates rise and prepayment rates
slow; consequently they are often used to "hedge" portfolios against interest
rate risk. If prepayment rates are high, a Fund may receive less cash back than
it initially invested.

VARIABLE AND FLOATING RATE SECURITIES

The securities in which the Funds invest (including mortgage-backed securities)
may have variable or floating rates of interest. These securities pay interest
at rates that are adjusted periodically according to a specified formula,
usually with reference to some interest rate index or market interest rate (the
"underlying index"). The interest paid on these securities is a function
primarily of the underlying index upon which the interest rate adjustments are
based. Such adjustments minimize changes in the market value of the obligation
and, accordingly, enhance the ability of the Fund to maintain a stable net asset
value. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's creditworthiness. The rate of interest on
securities purchased by a Fund may be tied to Treasury or other government
securities or indices on those securities as well as any other rate of interest
or index. Certain variable rate securities (including mortgage-backed
securities) pay interest at a rate that that varies inversely to prevailing
short-term interest rates (sometimes referred to as inverse floaters). For
instance, upon reset the interest rate payable on a security may go down when
the underlying index has risen. During times when short-term interest rates are
relatively low as compared to long-term interest rates a Fund may attempt to
enhance its yield by purchasing inverse floaters. Certain inverse floaters may
have an interest rate mechanism that multiplies the effects of changes in the
underlying index. This form of leverage may have the effect of increasing the
volatility of the security's market value while increasing the security's, and
thus the Fund's, yield.

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There may not be an active secondary market for any particular floating or
variable rate instrument (particularly inverse floaters) which could make it
difficult for a Fund to dispose of the instrument if the issuer defaulted on its
repayment obligation during periods that the Fund is not entitled to exercise
any demand rights it may have. A Fund could, for this or other reasons, suffer
a loss with respect to an instrument. The Adviser monitors the liquidity of the
Fund's investment in variable and floating rate instruments, but there can be no
guarantee that an active secondary market will exist.

INTEREST RATE PROTECTION TRANSACTIONS

Certain Funds may enter into interest rate protection transactions, including
interest rate swaps, caps, collars and floors. Interest rate swap transactions
involve an agreement between two parties to exchange interest payment streams
that are based, for example, on variable and fixed rates that are calculated on
the basis of a specified amount of principal (the "notional principal amount")
for a specified period of time. Interest rate cap and floor transactions
involve an agreement between two parties in which the first party agrees to make
payments to the counterparty when a designated market interest rate goes above
(in the case of a cap) or below (in the case of a floor) a designated level on
predetermined dates or during a specified time period. Interest rate collar
transactions involve an agreement between two parties in which the payments are
made when a designated market interest rate either goes above a designated
ceiling or goes below a designated floor on predetermined dates or during a
specified time period.

A Fund expects to enter into interest rate protection transactions to preserve a
return or spread on a particular investment or portion of its portfolio or to
protect against any increase in the price of securities it anticipates
purchasing at a later date. The Funds intend to use these transactions as a
hedge and not as a speculative investment.

A Fund may enter into interest rate protection transactions on an asset-based
basis, depending on whether it is hedging its assets or its liabilities, and
will usually enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted out, with the Fund receiving or paying, as the case
may be, only the net amount of the two payments. Inasmuch as these interest
rate protection transactions are entered into for good faith hedging purposes,
and inasmuch as segregated accounts will be established with respect to such
transactions, the Funds believe such obligations do not constitute senior
securities. The net amount of the excess, if any, of a Fund's obligations over
its entitlements with respect to each interest rate swap will be accrued on a
daily basis and an amount of cash, U.S. Government Securities or other liquid
high grade debt obligations having an aggregate net asset value at least equal
to the accrued excess will be maintained in a segregated account by a custodian
that satisfies the requirements of the 1940 Act. The Funds also will establish
and maintain such segregated accounts with respect to its total obligations
under any interest rate swaps that are not entered into on a net basis and with
respect to any interest rate caps, collars and floors that are written by the
Fund.

A Fund will enter into interest rate protection transactions only with banks and
other institutions believed by the investment adviser to the Fund to present
minimal credit risks. If there is a default by the other party to such a
transaction, the Fund will have to rely on its contractual remedies (which may
be limited by bankruptcy, insolvency or similar laws) pursuant to the agreements
related to the transaction.

The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps, collars and floors are more
recent innovations for which documentation is less standardized and,
accordingly, they are less liquid than swaps.

FOREIGN CURRENCY TRANSACTIONS

Investments in foreign companies will usually involve the currencies of
foreign countries. In addition, a Fund may temporarily hold funds in bank
deposits in foreign currencies during the completion of certain investment
programs. Accordingly, the value of the assets of a Fund, as measured in
United States dollars, may be affected by changes in foreign currency
exchange rates and exchange control regulations. In addition, the Fund may
incur costs in connection with conversions between various currencies. A
Fund may conduct foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or by entering into foreign currency forward contracts
("forward contracts") to purchase or sell foreign currencies. A

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forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days (usually
less than one year) from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers and involve the risk that the
other party to the contract may fail to deliver currency when due, which
could result in losses to the Fund. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
Foreign exchange dealers realize a profit based on the difference between the
price at which they buy and sell various currencies.

A Fund may enter into forward contracts under two circumstances. First, with
respect to specific transactions, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to "lock in" the U.S. dollar price of the security. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying security transactions, the Fund
may be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.

Second, a Fund may enter into forward currency contracts in connection with
existing portfolio positions. For example, when an investment adviser believes
that the currency of a particular foreign country may suffer a substantial
decline against the U.S. dollar, the Fund may enter into a forward contract to
sell, for a fixed amount of dollars, the amount of foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term currency
market movement is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward contracts involve the risk
of inaccurate predictions of currency price movements, which may cause the Fund
to incur losses on these contracts and transaction costs. The investment
advisers do not intend to enter into forward contracts on a regular or
continuous basis, and will not do so if, as a result, a Fund will have more than
25 percent of the value of its total assets committed to such contracts or the
contracts would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's portfolio securities or other assets
denominated in that currency.

At or before the settlement of a forward currency contract, a Fund may either
make delivery of the foreign currency or terminate its contractual obligation to
deliver the foreign currency by purchasing an offsetting contract. If the Fund
chooses to make delivery of the foreign currency, it may be required to obtain
the currency through the conversion of assets of the Fund into the currency.
The Fund may close out a forward contract obligating it to purchase a foreign
currency by selling an offsetting contract. If the Fund engages in an
offsetting transaction, the Fund will incur a gain or a loss to the extent that
there has been a change in forward contract prices. Additionally, although
forward contracts may tend to minimize the risk of loss due to a decline in the
value of the hedged currency, at the same time they tend to limit any potential
gain which might result should the value of such currency increase.

There is no systematic reporting of last sale information for foreign currencies
and there is no regulatory requirement that quotations available through dealers
or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market. The interbank market in foreign currencies is a global,
around-the-clock market.

When required by applicable regulatory guidelines, a Fund will set aside cash,
U.S. Government Securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.

HEDGING AND OPTION INCOME STRATEGIES

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index, interest rate and foreign currency futures contracts ("futures
contracts"), and (iii) options on futures contracts. Use of these instruments
is subject to regulation by the SEC, the several options and futures exchanges
upon which options and futures are traded, and the CFTC.

The various strategies referred to herein and in the Prospectus are intended to
illustrate the type of strategies that are available to, and may be used by, an
investment adviser in managing a Fund's portfolio. No assurance can be given,
however, that any strategies will succeed.

The Funds will not use leverage in their option income and hedging strategies.
In the case of transactions entered into as a hedge, a Fund will hold
securities, currencies or other options or futures positions whose values are
expected to offset ("cover") its obligations thereunder. A Fund will not enter
into a hedging strategy that exposes the Fund to an obligation to another party
unless it owns either (1) an offsetting ("covered") position or (2) cash, U.S.
Government Securities or other liquid, high-grade debt securities with a value
sufficient at all times to cover its potential obligations. When required by
applicable regulatory guidelines, the Fund will set aside cash, U.S. Government
Securities or other liquid, high-grade debt securities in a segregated account
with its custodian in the prescribed amount. Any assets used for cover or held
in a segregated account cannot be sold or closed out while the hedging or option
income strategy is outstanding, unless they are replaced with similar assets.
As a result, there is a possibility that the use of cover or segregation
involving a large percentage of a Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.

OPTIONS STRATEGIES

A Fund may purchase put and call options written by others and write (sell) put
and call options covering specified securities, stock index-related amounts or
currencies. A put option (sometimes called a "standby commitment") gives the
buyer of the option, upon payment of a premium, the right to deliver a specified
amount of a security or currency to the writer of the option on or before a
fixed date at a predetermined price. A call option (sometimes called a "reverse
standby commitment") gives the purchaser of the option, upon payment of a
premium, the right to call upon the writer to deliver a specified amount of a
security or currency on or before a fixed date, at a predetermined price. The
predetermined prices may be higher or lower than the market value of the
underlying currency or security. A Fund may buy or sell both exchange-traded
and over-the-counter ("OTC") options. A Fund will purchase or write an option
only if that option is traded on a recognized U.S. options exchange or if an
investment adviser believes that a liquid secondary market for the option
exists. When a Fund purchases an OTC option, it relies on the dealer from which
it has purchased the OTC option to make or take delivery of the securities or
currency underlying the option. Failure by the dealer to do so would result in
the loss of the premium paid by the Fund as well as the loss of the expected
benefit of the transaction. OTC options and the securities underlying these
options currently are treated as illiquid securities by the Funds.

Upon selling an option, a Fund receives a premium from the purchaser of the
option. Upon purchasing an option the Fund pays a premium to the seller of the
option. The amount of premium received or paid by the Fund is based upon
certain factors, including the market price of the underlying securities index,
the relationship of the exercise price to the market price, the historical price
volatility of the underlying securities index, the option period, supply and
demand and interest rates.

A Fund may purchase call options on debt securities that an investment adviser
intends to include in the Fund's portfolio in order to fix the cost of a future
purchase. Call options may also be purchased as a means of participating in an
anticipated price increase of a security on a more limited risk basis than would
be possible if the security itself were purchased. In the event of a decline in
the price of the underlying security, use of this strategy would serve to limit
the potential loss to the Fund to the option premium paid; conversely, if the
market price of the underlying security increases above the exercise price and
the Fund either sells or exercises the option, any profit eventually realized
will be reduced by the premium paid. A Fund may similarly purchase put options
in order to hedge against a decline in market value of securities held in its
portfolio. The put enables the Fund to sell the underlying security at the
predetermined exercise price; thus the potential for loss to the Fund is limited
to the option premium paid. If the market price of the underlying security is
lower than the exercise price of the put, any profit the Fund realizes on the
sale of the security would be reduced by the premium paid for the put option
less any amount for which the put may be sold.

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An investment adviser may write call options when it believes that the market
value of the underlying security will not rise to a value greater than the
exercise price plus the premium received. Call options may also be written to
provide limited protection against a decrease in the market price of a security,
in an amount equal to the call premium received less any transaction costs.

A Fund may purchase and write put and call options on fixed income security
indexes in much the same manner as the options discussed above, except that
index options may serve as a hedge against overall fluctuations in the fixed
income securities markets (or market sectors) or as a means of participating in
an anticipated price increase in those markets. The effectiveness of hedging
techniques using index options will depend on the extent to which price
movements in the index selected correlate with price movements of the securities
which are being hedged. Index options are settled exclusively in cash.

FOREIGN CURRENCY OPTIONS AND RELATED RISKS

A Fund may take positions in options on foreign currencies in order to hedge
against the risk of foreign exchange fluctuation on foreign securities the Fund
holds in its portfolio or which it intends to purchase. Options on foreign
currencies are affected by the factors discussed in "Options Strategies" above
and "Foreign Currency Forward Transactions" which influence foreign exchange
sales and investments generally.

The value of foreign currency options is dependent upon the value of the foreign
currency relative to the U.S. dollar and has no relationship to the investment
merits of a foreign security. Because foreign currency transactions occurring
in the interbank market involve substantially larger amounts than those that may
be involved in the use of foreign currency options, the Fund may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.

To the extent that the U.S. options markets are closed while the market for the
underlying currencies remains open, significant price and rate movements may
take place in the underlying markets that cannot be reflected in the options
markets.

SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING

A Fund may effectively terminate its right or obligation under an option
contract by entering into a closing transaction. For instance, if the Fund
wished to terminate its potential obligation to sell securities or currencies
under a call option it had written, a call option of the same type would be
purchased by the Fund. Closing transactions essentially permit the Fund to
realize profits or limit losses on its options positions prior to the exercise
or expiration of the option. In addition:

(1) The successful use of options depends upon the
investment adviser's ability to forecast the direction of price
fluctuations in the underlying securities or currency markets, or
in the case of an index option, fluctuations in the market sector
represented by the index.

(2) Options normally have expiration dates of up to nine
months. Options that expire unexercised have no value. Unless
an option purchased by a Fund is exercised or unless a closing
transaction is effected with respect to that position, a loss
will be realized in the amount of the premium paid.

(3) A position in an exchange-listed option may be closed
out only on an exchange which provides a market for identical
options. Most exchange-listed options relate to equity
securities. Exchange markets for options on foreign currencies
are relatively new and the ability to establish and close out
positions on the exchanges is subject to the maintenance of a
liquid secondary market. Closing transactions may be effected
with respect to options traded in the over-the-counter markets
(currently the primary markets for options on foreign currencies)
only by negotiating directly with the other party to the option
contract or in a secondary market for the option if such market
exists. There is no assurance that a liquid secondary market
will exist for any particular option at any specific time. If it
is not possible to effect a closing transaction, a

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Fund would have to exercise the option which it purchased in
order to realize any profit. The inability to effect a closing
transaction on an option written by a Fund may result in material
losses to the Fund.

(4) A Fund's activities in the options markets may result in
a higher portfolio turnover rate and additional brokerage costs.

FUTURES STRATEGIES. A futures contract is a bilateral agreement wherein one
party agrees to accept, and the other party agrees to make, delivery of cash, an
underlying debt security or the currency as called for in the contract at a
specified future date and at a specified price. For futures contracts with
respect to an index, delivery is of an amount of cash equal to a specified
dollar amount times the difference between the index value at the time of the
contract and the close of trading of the contract.

A Fund may sell interest rate futures contracts in order to continue to receive
the income from a fixed income security, while endeavoring to avoid part of or
all of a decline in the market value of that security which would accompany an
increase in interest rates.

A Fund may purchase index futures contracts for several reasons: to simulate
full investment in the underlying index while retaining a cash balance for fund
management purposes, to facilitate trading, to reduce transactions costs, or to
seek higher investment returns when a futures contract is priced more
attractively than securities in the index.

A Fund may purchase call options on a futures contract as a means of obtaining
temporary exposure to market appreciation at limited risk. This strategy is
analogous to the purchase of a call option on an individual security, in that it
can be used as a temporary substitute for a position in the security itself.

A Fund may sell foreign currency futures contracts to hedge against possible
variations in the exchange rate of the foreign currency in relation to the U.S.
dollar. In addition, a Fund may sell foreign currency futures contracts when
the Adviser anticipates a general weakening of foreign currency exchange rates
that could adversely affect the market values of the Fund's foreign securities
holdings. A Fund may purchase a foreign currency futures contract to hedge
against an anticipated foreign exchange rate increase pending completion of
anticipated transactions. Such a purchase would serve as a temporary measure to
protect the Fund against such increase. A Fund may also purchase call or put
options on foreign currency futures contracts to obtain a fixed foreign exchange
rate at limited risk. A Fund may write call options on foreign currency futures
contracts as a partial hedge against the effects of declining foreign exchange
rates on the value of foreign securities.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING. No
price is paid upon entering into futures contracts, rather, a Fund is required
to deposit with its custodian in a segregated account in the name of the futures
broker an amount of cash or U.S. Government Securities generally equal to 5% or
less of the contract value. This amount is known as initial margin. Subsequent
payments, called variation margin, to and from the broker, would be made on a
daily basis as the value of the futures position varies. When writing a call on
a futures contract, variation margin must be deposited in accordance with
applicable exchange rules. The initial margin in futures transactions is in the
nature of a performance bond or good-faith deposit on the contract that is
returned to the Fund upon termination of the contract, assuming all contractual
obligations have been satisfied.

Holders and writers of futures and options on futures contracts can enter into
offsetting closing transactions, similar to closing transactions on options, by
selling or purchasing, respectively, a futures contract or related option with
the same terms as the position held or written. Positions in futures contracts
may be closed only on an exchange or board of trade providing a secondary market
for such futures contracts.

Under certain circumstances, futures exchanges may establish daily limits in the
amount that the price of a futures contract or related option may vary either up
or down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. Prices could move to the daily limit for several consecutive
trading days with little or no trading and thereby prevent prompt liquidation of
positions. In such event, it may not be possible for a Fund to close a
position, and in the event of adverse price movements, the Fund would have to
make daily cash payments of variation margin. In addition:

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(1) Successful use by a Fund of futures contracts and
related options will depend upon the Adviser's ability to predict
movements in the direction of the overall securities and currency
markets, which requires different skills and techniques than
predicting changes in the prices of individual securities.
Moreover, futures contracts relate not to the current level of
the underlying instrument but to the anticipated levels at some
point in the future; thus, for example, trading of stock index
futures may not reflect the trading of the securities which are
used to formulate an index or even actual fluctuations in the
relevant index itself.

(2) The price of futures contracts may not correlate
perfectly with movement in the price of the hedged securities or
currencies due to price distortions in the futures market or
otherwise. There may be several reasons unrelated to the value
of the underlying securities or currencies which causes this
situation to occur. As a result, a correct forecast of general
market trends may still not result in successful hedging through
the use of futures contracts over the short term.

(3) There is no assurance that a liquid secondary market
will exist for any particular contract at any particular time.
In such event, it may not be possible to close a position, and in
the event of adverse price movements, the Fund would continue to
be required to make daily cash payments of variation margin.

(4) Like other options, options on futures contracts have a
limited life. A Fund will not trade options on futures contracts
on any exchange or board of trade unless and until, in the
Adviser's opinion, the market for such options has developed
sufficiently that the risks in connection with options on futures
transactions are not greater than the risks in connection with
futures transactions.

(5) Purchasers of options on futures contracts pay a premium
in cash at the time of purchase. This amount and the transaction
costs is all that is at risk. Sellers of options on futures
contracts, however, must post an initial margin and are subject
to additional margin calls which could be substantial in the
event of adverse price movements.

(6) A Fund's activities in the futures markets may result in
a higher portfolio turnover rate and additional transaction costs
in the form of added brokerage commissions.

(7) Buyers and sellers of foreign currency futures contracts
are subject to the same risks that apply to the buying and
selling of futures generally. In addition, there are risks
associated with foreign currency futures contracts and their use
as a hedging device similar to those associated with options on
foreign currencies described above. In addition, settlement of
foreign currency futures contracts must occur within the country
issuing that currency. Thus, a Fund must accept or make delivery
of the underlying foreign currency in accordance with any U.S. or
foreign restrictions or regulations regarding the maintenance of
foreign banking arrangements by U.S. residents, and the Fund may
be required to pay any fees, taxes or charges associated with
such delivery which are assessed in the issuing country.

COMMODITY FUTURES CONTRACTS AND COMMODITY OPTIONS

A Fund may invest in certain financial futures contracts and options contracts
in accordance with the policies described in the Prospectus and above. A Fund
will only invest in futures contracts, options on futures contracts and other
options contracts that are subject to the jurisdiction of the CFTC after filing
a notice of eligibility and otherwise complying with the requirements of Section
4.5 of the rules of the CFTC. Under that section the Fund would be permitted to
purchase such futures or options contracts only for bona fide hedging purposes
within the meaning of the rules of the CFTC; provided, however that in addition,
with respect to positions in commodity futures and option contracts not for bona
fide hedging purposes the Fund represents that the aggregate initial margin and
premiums required to establish these positions (subject to certain exclusions)
will not exceed 5% of the liquidation value of the Fund's assets after taking
into account unrealized profits and losses on any such contract the Fund has
entered into.

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REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are transactions in which a Fund sells a security
and simultaneously commits to repurchase that security from the buyer at an
agreed upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.

Generally, a reverse repurchase agreement enables a Fund to recover for the term
of the reverse repurchase agreement all or most of the cash invested in the
portfolio securities sold and to keep the interest income associated with those
portfolio securities. Such transactions are only advantageous if the interest
cost to the Fund of the reverse repurchase transaction is less than the cost of
obtaining the cash otherwise. In addition, interest costs on the money received
in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies. The use of reverse repurchase
agreement proceeds to make investments may be considered to be a speculative
technique.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Funds may purchase securities on a when-issued or delayed delivery basis.
In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Fund
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Fund will record the transaction as a purchase and thereafter reflect
the value each day of such securities in determining its net asset value.

A Fund will make commitments for such when-issued transactions only when it has
the intention of actually acquiring the securities. To facilitate such
acquisitions, the Fund will maintain with its custodian a separate account with
portfolio securities in an amount at least equal to such commitments. On
delivery dates for such transactions, the Fund will meet its obligations from
maturities, sales of the securities held in the separate account or from other
available sources of cash. If a Fund chooses to dispose of the right to acquire
a when-issued security prior to its acquisition, it could, as with the
disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation.

DOMESTIC AND FOREIGN BANK OBLIGATIONS

A Fund may invest in fixed-time deposits, which are payable at their stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Fund but may be subject to early withdrawal penalties which vary
depending upon market conditions and the remaining maturity of the obligation
and could reduce the Fund's yield. Although fixed-time deposits do not in all
cases have a secondary market, there are no contractual restrictions on the
Fund's right to transfer a beneficial interest in the deposits to third parties.

Investments that a Fund may make in securities of foreign branches of domestic
banks and domestic and foreign branches of foreign banks may involve certain
risks, including future political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on such
securities, the possible seizure or nationalization of foreign deposits,
differences from domestic banks in applicable accounting, auditing and financial
reporting standards, and the possible establishment of exchange controls or
other foreign governmental laws or restrictions applicable to the payment of
certificates of deposit or time deposits which might affect adversely the
payment of principal and interest on such securities held by the Fund.

ILLIQUID SECURITIES

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The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to the investment adviser of each
Fund, pursuant to guidelines approved by the Board. The investment adviser
takes into account a number of factors in reaching liquidity decisions,
including but not limited to: (1) the frequency of trades and quotations for the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the security, the
method of soliciting offers and the mechanics of the transfer. The investment
adviser monitors the liquidity of the securities in each Fund's portfolio and
reports periodically on such decisions to the Board.

TEMPORARY DEFENSIVE POSITION

When a Fund assumes a temporary defensive position, it may invest in (i) short-
term U.S. Government Securities, (ii) certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of commercial banks doing
business in the United States that have, at the time of investment, total assets
in excess of one billion dollars and that are insured by the Federal Deposit
Insurance Corporation, (iii) commercial paper of prime quality rated Prime-2 or
higher by Moody's or A-2 or higher by S&P or, if not rated, determined by the
Adviser to be of comparable quality, (iv) repurchase agreements covering any of
the securities in which the Fund may invest directly and (v) money market mutual
funds.

The Funds may invest in the securities of other investment companies within the
limits prescribed by the 1940 Act. Under normal circumstances, each Fund
intends to invest less than 5% of the value of its net assets in the securities
of other investment companies. In addition to the Fund's expenses (including
the various fees), as a shareholder in another investment company, a Fund would
bear its pro rata portion of the other investment company's expenses (including
fees).

3. INVESTMENT LIMITATIONS

Except as required by the 1940 Act, if any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of a
Fund's assets or purchases and redemptions of shares will not be considered a
violation of the limitation.

FUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are fundamental
policies of the Fund and cannot be changed without the affirmative vote of a
majority of the Fund's outstanding voting securities (as defined in the
Prospectus).

(1) Diversification: With respect to 75 percent of its
assets, the Fund may not purchase a security other than a U.S.
Government Security if, as a result, more than five percent of
the Fund's total assets would be invested in the securities of a
single issuer or the Fund would own more than ten percent of the
outstanding voting securities of any single issuer; provided,
however, that each Fund may invest all or a portion of its assets
in another diversified, open-end management investment company
with substantially the same investment objective, policies and
restrictions as the Fund.

(2) Concentration: The Fund may not purchase securities if,
immediately after the purchase, more than 25 percent of the value
of the Fund's total assets would be invested in the securities of
issuers conducting their principal business activities in the
same industry; provided, however, that there is no limit on
investments in U.S. Government Securities, repurchase agreements
covering U.S. Government Securities, foreign government
securities, mortgage related or housing-related securities,
municipal securities, and issuers domiciled in a single country;
that financial service companies are classified according to the
end users of their services (for example, automobile finance,
bank finance and diversified finance); that utility companies are
classified according to their services (for example, gas, gas
transmission, electric and gas, electric and telephone); that
will each invest more than 25 percent of the value of the

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<PAGE>

Fund's total assets in obligations of domestic and foreign
financial institutions and their holding companies; and that each
Fund may invest all of a portion of its assets in another
diversified, open-end management investment company with
substantially the same investment objective, policies and
restrictions as the Fund.

(3) Borrowing: Each Fund may borrow money for temporary or
emergency purposes, including the meeting of redemption requests;
but not in excess of 33 1/3 percent of the value of the Fund's
total assets (as computed immediately after the borrowing).

(4) Issuance of Senior Securities: The Fund may not issue
senior securities except to the extent permitted by the 1940 Act.

(5) Underwriting Activities: The Fund may not underwrite
securities of other issuers, except to the extent that the Fund
may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.

(6) Making Loans: The Fund may not make loans, except the
Funds may enter into repurchase agreements, purchase debt
securities that are otherwise permitted investments and lend
portfolio securities.

NONFUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are not
fundamental policies of the Fund and may be changed by the Board.

(1) Borrowing: Borrowing for other than temporary or
emergency purposes or meeting redemption requests is limited to
five percent of the value of each Funds total assets except in
the case of Intermediate U.S. Government Fund, and Managed Fixed
Income Fund. Where a Fund establishes a segregated account to
limit the amount of leveraging of the Fund with respect to
certain investment techniques, the Fund does not treat those
techniques as involving borrowings fro purposes of this
limitation.

(2) Illiquid Securities: No Fund may acquire securities or
invest in repurchase agreements with respect to any securities
if, as a result, more than (i) fifteen percent of the Fund's net
assets (taken at current value) would be invested in repurchase
agreements not entitling the holder to payment of principal
within seven days and in securities which are not readily
marketable, including securities that are not readily marketable
by virtue of restrictions on the sale of such securities to the
public without registration under the Securities Act of 1933
("Restricted Securities") or (ii) ten percent of the Fund's total
assets would be invested in Restricted Securities.

(3) Other Investment Companies: The Fund may not invest in
securities of another investment company, except to the extent
permitted by the 1940 Act.

(4) Margin and Short Sales: Except for Intermediate U.S.
Government Fund, a Fund may not purchase securities on margin or
make short sales of securities (except short sales against the
box) except for the use of short-term credit necessary for the
clearance of purchases and sales of portfolio securities. A Fund
may make margin deposits in connection with permitted
transactions in options and futures contracts. A Fund may not
enter short sales if, as a result, more that 25% of the value of
the Fund's total assets would

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be so invested, or such a position would represent more than 2%
of the outstanding voting securities of any single issuer or
class of an issuer.

(5) Unseasoned Issuers: The Fund may not invest in
securities (other than fully-collateralized debt obligations)
issued by companies that have conducted continuous operations for
less than three years, including the operations of predecessors,
unless guaranteed as to principal and interest by an issuer in
whose securities the Fund could invest, if, as a result, more
than five percent of the value of the Fund's total assets would
be so invested; provided, that the Fund may invest all of a
portion of its assets in another diversified, open-end management
investment company with substantially the same investment
objective, policies and restrictions as the Fund.

(6) Pledging: The Fund may not pledge, mortgage,
hypothecate or encumber any of its assets except to secure
permitted borrowings.

(7) Investments by Officers and Trustees: The Fund may not
invest in or hold securities of any issuer if, to the Trust's
knowledge, officers and trustees of the Trust or an investment
adviser to the Fund, individually owning beneficially more than
one-half of one percent of the securities of the issuer, in the
aggregate own more than five percent of the issuer's securities.

(8) Oil, Gas and Mineral Investments: The Fund may not
invest in interests in oil and gas or interests in other mineral
exploration or development programs, including oil, gas and other
mineral leases and the Fund may not invest in real estate limited
partnerships.

(9) Securities With Voting Rights: No Fixed Income Fund may
purchase securities having voting rights, except securities of
other investment companies.

(10) Warrants: Each Fund may not purchase warrants if, as a
result, more that 5% of the value of the Fund's total assets
would be so invested.

(11) Options: Each Fund may not purchase an option if, as a
result, more that 5% of the value of the Fund's total assets
would be so invested.

4. PERFORMANCE DATA AND ADVERTISING

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SEC YIELD CALCULATIONS

Standardized yields for the Funds used in advertising are computed by dividing a
Fund's interest income (in accordance with specific standardized rules) for a
given 30 days or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income in accordance with specific
standardized rules) in order to arrive at an annual percentage rate. In
general, interest income is reduced with respect to municipal securities
purchased at a premium over their par value by subtracting a portion of the
premium from income on a daily basis. In general, interest income is increased
with respect to municipal securities purchased at original issue at a discount
by adding a portion of the discount to daily income. Capital gains and losses
generally are excluded from these calculations.

TOTAL RETURN CALCULATIONS

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:

n
P(1+T) = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the
end of the applicable period, of a hypothetical $1,000
payment made at the beginning of the applicable period.

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<PAGE>

components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration. Period total return is calculated according to the following
formula:

PT = (ERV/P-1)

Where:
PT = period total return.
The other definitions are the same as in average annual
total return above.

OTHER ADVERTISEMENT MATTERS

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Systematic Share Shares
Period Investment Price Purchased
------ ----------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- ----
Total Invested $600 Average Price $15.17 Total Shares 41.81

5. MANAGEMENT

TRUSTEES AND OFFICERS

TRUSTEES AND OFFICERS OF THE TRUST

John Y. Keffer, Chairman and President.*

President and Director, Forum Financial Services, Inc. (a
registered broker-dealer), Forum Financial Corp. (a registered transfer
agent), Forum Advisors, Inc. (a registered investment adviser). Mr. Keffer
is a Director, Trustee and officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. His address is 61 Broadway, New York,
New York 10006.

Robert C. Brown, Trustee.*

Director, Federal Farm Credit Banks Funding Corporation and Farm
Credit System Financial Assistance Corp. Prior thereto, he was Manager
of the Capital Markets Group, Norwest Corporation (a multi-bank holding
company and parent of Norwest) until 1991. His address is 1431 Landings
Place, Sarasota, Florida 34231.

Donald H. Burkhardt, Trustee.

Principal, The Burkhardt Law Firm. His address is 777 South
Steele Street, Denver, Colorado 80209.

James C. Harris, Trustee.

President and sole Director of James C. Harris & Co., Inc. (a
financial consulting firm). Mr. Harris is also a liquidating Trustee and
former Director of First Midwest Corporation, a small business investment
company. His address is 6950 France Avenue South, Minneapolis, Minnesota
55435.

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<PAGE>

Richard M. Leach, Trustee.

Chief Executive Officer, Tee Box Company (a golf equipment
manufacturer), since January 1994 and President of Richard M. Leach
Associates (a financial consulting firm) since 1992. Prior thereto, Mr.
Leach was Senior Adviser of Taylor Investments (a registered investment
adviser), a Director of Mountainview Broadcasting (a radio station) and
Managing Director, Digital Techniques, Inc. (an interactive video design
and manufacturing company). His address is P.O. Box 1888, New London, New
Hampshire 03257.

Timothy J. Penny, Trustee

Senior Counselor to the public relations firm Himle-Horner since
1994. Prior thereto Mr. Penny was the Representative to the United States
Congress from Minnesota's First Congressional District. His address is 500
North State Street, Waseca, Minnesota 56095.

Donald C. Willeke, Trustee

Principal of the law firm of Willeke & Daniels. His address is 201
Ridgewood Avenue, Minneapolis, Minnesota 55403.

Michael D. Martins, Vice President and Treasurer

David I. Goldstein, Vice President and Secretary.

Counsel, Forum Financial Services, Inc., with which he has been associated
since 1991. Prior thereto, Mr. Goldstein was associated with the law firm
of Kirkpatrick & Lockhart. Mr. Goldstein is also an officer of various
registered investment companies for which Forum Financial Services, Inc.
serves as manager, administrator and/or distributor. His address is Two
Portland Square, Portland, Maine 04101.

David R. Keffer, Vice President, Assistant Secretary and Assistant Treasurer.

Sara M. Clark, Vice President and Assistant Treasurer.

Thomas G. Sheehan, Vice President and Assistant Secretary.

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Renee A. Walker, Assistant Secretary.

Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, Ms. Walker was an administrator at
Longwood Partners (the manager of a hedge fund partnership) for a year. After
graduating for college, from 1991 to 1993 Ms. Walker was a sales representative
assistant at PaineWebber Incorporated (a broker-dealer). Her address is Two
Portland Square, Portland, Maine 04101.

Christopher J. Kelley, Assistant Secretary.

Assistant Counsel, Forum Financial Services, Inc., with which he has been
associated since 1994. Prior thereto and subsequent to attending law school,
Mr. Kelley was employed by Putnam Investments in legal and compliance
capacities. His address is Two Portland Square, Portland, Maine 04101.

COMPENSATION OF TRUSTEES AND OFFICERS

Effective June 1, 1995 each Trustee of the Trust is paid a quarterly retained
fee for the Trustee's service to the Trust and to Norwest Select Funds, a
separate registered open-end management investment company for which each
Trustee serves as trustee. of $4,000. In addition, each Trustee is paid $3,000
for each Board meeting attended (whether in person or by electronic
communication) and is paid $1,000 for each Committee meeting attended on a date
when a Board meeting is not held. Trustees are also reimbursed for travel and
related expenses incurred in attending meetings of the Board. Mr. Keffer
received no compensation for his services as Trustee for the past year and no
officer of the Trust is compensated by the Trust. In addition, Mr. Keffer
currently is not compensated or reimbursed for his expenses in serving as
Trustee. Prior to June 1, 1995 Trustee of the Trust was paid $1,000 for each
Board meeting attended (whether in person or by electronic communication) plus
$100 per active portfolio of the Trust and was paid $1,000 for each Committee
meeting attended on a date when a Board meeting is not held.

Mr. Burkhart, Chairman of the Trust's and Norwest Select Funds' audit
committees, receives additional compensation of $5,000 from the Trust and $1,000
form Norwest Select Funds for his services as Chairman. Mr. Penny was appointed
a Trustee in January 1996 and, accordingly, was not paid any compensation during
the Trust's last fiscal year.

As of October 1, 1995, the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding shares of the Fund.

The following table provides the aggregate compensation paid to the Trustees of
the Trust by the Trust and Norwest Select Funds, combined. Information is
presented for the year ended October 31,

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1995, the Funds' fiscal year end. Other funds of the Trust have a May 31 fiscal
year end.

TOTAL COMPENSATION TOTAL COMPENSATION FROM
THE TRUST THE TRUST AND NORWEST
FROM THE TRUST SELECT FUNDS
----------------- ----------------------
Mr. Brown $23,565 $26,177
Mr. Burkhart $29,909 $33,023
Mr. Harris $22,567 $25,177
Mr. Leach $22,566 $25,177
Mr. Willeke $14,000 $14,000

Neither the Trust or Norwest Select Funds has adopted any from of retirement
plan covering Trustees or officers.

TRUSTEES AND OFFICERS OF CORE TRUST

John Y. Keffer*, Chairman and President.

Costas Azariadis, Trustee.

Professor of Economics, University of California, Los Angeles, since July
1992. Prior thereto, Dr. Azariadis was Professor of Economics at the University
of Pennsylvania. His address is Department of Economics, University of
California, Los Angeles, 405 Hilgard Avenue, Los Angeles, California 90024.

James C. Cheng, Trustee.

Managing Director, Forum Financial Services, Inc. since September 1991.
President of Technology Marketing Associates (a marketing consulting company)
since September 1991. Prior thereto, Mr. Cheng was President and Chief
Executive Officer of Network Dynamics, Incorporated (a software development
company). His address is Two Portland Square, Portland, Maine 04101.

J. Michael Parish, Trustee.

Partner at the law firm of Winthrop Stimson Putnam & Roberts since 1989.
Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby & MacRae, a law firm of
which he was a member from 1974 to 1989. His address is 40 Wall Street, New
York, New York 10005.

Michael D. Martins, Treasurer

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David R. Keffer, Vice President, Assistant Secretary and Assistant Treasurer.

David I. Goldstein, Secretary.

Thomas G. Sheehan, Assistant Secretary.

Max Berueffy, Assistant Secretary.

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT

Norwest Investment Management, a part of Norwest Bank Minnesota, N.A., is
required to furnish at its expense all services, facilities and personnel
necessary in connection with managing each Fund's investments and effecting
portfolio transactions for each Fund. Under its advisory agreements, Norwest
may delegate its responsibilities to any investment subadviser approved by the
Board with respect to all or a portion of the assets of a Fund.

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to others.

Subject to the obligations of Norwest to reimburse the Trust for its excess
expenses as described above, the Trust has, under the Investment Advisory
Agreements, confirmed its obligation to pay all its other expenses, including:
(i) interest charges, taxes, brokerage fees and commissions; (ii) certain
insurance premiums; (iii) fees, interest charges and expenses of the Trust's
custodian, transfer agent and dividend disbursing agent; (iv) fees of pricing,
interest, dividend, credit and other reporting services; (v) costs of membership
in trade associations; (vi) telecommunications expenses; (vii) auditing, legal
and compliance expenses; (viii) costs of the Trust's formation and maintaining
its existence; (ix) costs of preparing and printing the Trust's prospectuses,
statements of additional information, account application forms and shareholder
reports and delivering them to existing and prospective shareholders; (x) costs
of maintaining books of original entry for portfolio and fund accounting and
other required books and accounts and of calculating the net asset value of
shares of the Trust; (xi) costs of reproduction, stationery and supplies; (xii)
compensation of the Trust's trustees, officers and employees who are not
employees of the Adviser, Forum Financial Services, Inc. or affiliated persons
of the Adviser or Forum Financial Services, Inc. and costs of other personnel
performing services for the Trust; (xiii) costs of corporate meetings; (xiv)
registration fees and related expenses for registration with the SEC and the
securities regulatory authorities of other countries in which the Trust's shares
are sold; (xv) state securities law registration fees and

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related expenses; (xvi) fees and out-of-pocket expenses payable to Forum
Financial Services, Inc. under any distribution, management or similar
agreement; (xvii) and all other fees and expenses paid by the Trust pursuant to
any distribution or shareholder service plan adopted pursuant to Rule 12b-1
under the Act.

FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
Diversified Equity Fund 3,737,147 0 3,737,147
Growth Equity Fund 3,961,897 0 3,961,897
Income Equity Fund 187,584 0 187,584
Intermediate U.S. Government Fund 160,764 0 160,764
Stable Income Fund 114,429 0 114,429

SUBADVISORY ARRANGEMENTS

With respect to each of, Diversified Equity Fund and Growth Equity Fund (the
Funds that may invest in international securities), Norwest and the Trust have
entered into Subadvisory Agreements with Schroder.

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shall be liable for any error of judgment or mistake of law or for any act or
omission in the performance of its or their duties to the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of the
Subadviser's or their duties or by reason of reckless disregard of its or their
obligations and duties under the Subadvisory Agreement. The Subadvisory
Agreements provide that the Subadviser may render services to others.

The Subadvisory fees are accrued daily and paid monthly. Each Subadviser, in
its sole discretion, may waive all or any portion of its subadvisory fee with
respect to each Fund.

ADMINISTRATION

FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
Diversified Equity Fund 574,946 287,473 287,473
Growth Equity Fund 440,211 286,137 154,074
Income Equity Fund 37,517 37,517 0
Intermediate U.S. Government Fund 48,716 48,716 0
Stable Income Fund 38,143 38,143 0

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DISTRIBUTION

Forum also acts as distributor of the shares of the Fund. Forum acts as
distributor of the Funds pursuant to a Distribution Services Agreement with the
Trust. Forum distributes shares of each Fund on a "best efforts" basis under
which it is required to take and pay for only such shares as may be sold.

Under the Distribution Services Agreement, the Trust has agreed to indemnify,
defend and hold Forum, and any person who controls Forum within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which Forum or any such controlling person may incur,
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in the Trust's
Registration Statement or a Fund's Prospectus or Statement of Additional
Information in effect from time to time under the 1933 Act or arising out of or
based upon any alleged omission to state a material fact required to be stated
in any one thereof or necessary to make the statements in any one thereof not
misleading. Forum is not, however, protected against any liability to the Trust
or its shareholders to which Forum would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Forum's reckless disregard of its obligations and duties
under the Distribution Services Agreement.

With respect to each Fund, the Distribution Services Agreement will continue in
effect only if such continuance is specifically approved at least annually by
the Board or by the shareholders and, in either case, by a majority of the
Trustees who are not parties to the Distribution Services Agreement or
interested persons of any such party and, with respect to each class of a Fund
for which there is an effective plan of distribution adopted pursuant to Rule
12b-1, who do not have any direct or indirect financial interest in any
distribution plan of the Fund or in any agreement related to the distribution
plan cast in person at a meeting called for the purpose of voting on such
approval.

The Distribution Services Agreement terminates automatically if assigned. With
respect to each Fund, the Distribution Services Agreement may be terminated at
any time without the payment of any penalty (i) by the Board or by a vote of the
Fund's shareholders or, with respect to each class of a Fund for which there is
an effective plan of distribution adopted pursuant to Rule 12b-1, a majority of
Trustees who do not have any direct or indirect financial interest in any such
plan or in any agreements related to the plan, on 60 days' written notice to
Forum or (ii) by Forum on 60 days' written notice to the Trust.

Under the Distribution Services Agreement, Forum receives, and may

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reallow to certain financial institutions, the initial sales charges assessed on
purchases of A Shares of the Funds. With respect to B Shares of each Fund, the
Funds have adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act
(the "Plan") which authorizes the payment to Forum under the Distribution
Services Agreement of a distribution services fee, which may not exceed an
annual rate of 0.75%, and a maintenance fee in an amount equal to 0.25%, of the
average daily net assets of the Fund attributable to the B Shares.

As of the date hereof, the Trust had not yet commenced operations with respect
to A Shares and B Shares of the Funds. Thus, Forum had not yet received any fee
for its distribution services with respect to each Fund's B Shares nor any sales
charges with respect to sales of each Fund's A Shares.

TRANSFER AGENT

Among the responsibilities of the Transfer Agent as agent for the Trust are:
(1) answering customer inquiries regarding account

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status and history, the manner in which purchases and redemptions of shares of
the Fund may be effected and certain other matters pertaining to the Fund; (2)
assisting shareholders in initiating and changing account designations and
addresses; (3) providing necessary personnel and facilities to establish and
maintain shareholder accounts and records, (4) assisting in processing purchase
and redemption transactions and receiving wired funds; (5) transmitting and
receiving funds in connection with customer orders to purchase or redeem shares;
(6) verifying shareholder signatures in connection with changes in the
registration of shareholder accounts; (7) furnishing periodic statements and
confirmations of purchases and redemptions; (8) transmitting proxy statements,
annual reports, prospectuses and other communications from the Trust to its
shareholders; (9) receiving, tabulating and transmitting to the Trust proxies
executed by shareholders with respect to meetings of shareholders of the Trust;
and (10) providing such other related services as the Trust or a shareholder may
request.

CUSTODIAN

A Fund will not pay custodian fees to the extent the Fund invests in shares of
another registered investment company. Where the Fund's investments consists
solely of such shares, the Fund will

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pay no custodian fees directly

The Chase Manhattan Bank, N.A. serves as custodian to International Portfolio II
of Core Trust and is compensated by Core Trust with respect to that Portfolio.
Norwest serves as custodian of Small Company Portfolio and Index Portfolio of
Core Trust and receives no compensation for its services to those Portfolios.

PORTFOLIO ACCOUNTING

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FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
Diversified Equity Fund 34,700 0 34,700
Growth Equity Fund 34,700 0 34,700
Income Equity Fund 34,700 0 34,700
Intermediate U.S. Government Fund 52,700 0 52,700
Stable Income Fund 51,700 0 51,700

FFC performs similar services for each Portfolio and, in addition, acts as each
Portfolio's transfer agent.

EXPENSES

The Trust may elect not to qualify its shares for sale in every state. The
Adviser has agreed to reimburse the Trust for certain of the operating expenses
of the Funds (exclusive of interest, taxes, brokerage, fees and organization
expenses, all to the extent permitted by applicable state law or regulation)
which in any year exceed the limits prescribed by any state in which the Fund's
shares are qualified for sale. Forum believes that currently the most
restrictive expense ratio limitation imposed by any state is 2-1/2% of the first
$30 million of each Fund's average net assets, 2% of the next $70 million of its
average net assets and 1-1/2% of its average net assets in excess of $100
million. For the purpose of this obligation to reimburse expenses, a Fund's
annual expenses are estimated and accrued daily, and any appropriate estimated
payments will be made by the Adviser or the manager and distributor monthly.

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Trust who are not officers of the Adviser, Forum Financial Services, Inc. or
affiliated persons of the Adviser or Forum Financial Services, Inc.; (xi) costs
of corporate meetings; (xii) registration fees and related expenses for
registration with the SEC and the securities regulatory authorities of other
countries in which the Trust's shares are sold; (xiii) state securities law
registration fees and related expenses; (xiv) fees and out-of-pocket expenses
payable to Forum Financial Services, Inc. under any distribution, management or
similar agreement; (xv) and all other fees and expenses paid by the Trust
pursuant to any distribution or shareholder service plan adopted pursuant to
Rule 12b-1 under the Act.

6. OTHER INFORMATION

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of all Funds are sold on a continuous basis by the distributor.

NET ASSET OFFERING
VALUE PER SHARE PRICE
-------- --------- -----
Fund Q 11.48 12.00

STATEMENT OF INTENTION

As more fully described in the Prospectus, investors may obtain reduced sales
charges with respect to the purchase of A Shares of the Funds by means of a
written Statement of Intention, which expresses the investor's intention to
invest not less than $100,000 within a period of 13 months in A Shares of a
Fund. The Statement of Intention is not a binding obligation upon the investor
to purchase the full amount indicated. A Shares purchased with the first 5% of
such amount will be held subject to a registered pledge (while remaining
registered in the name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full amount indicated
is not purchased, and such pledged shares will be involuntarily redeemed to pay
the additional sales charge, if necessary. When the full amount indicated has
been purchased, the shares will be released from

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pledge.

EXCHANGES

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dividends or distributions on such shares will be treated as if they had been
acquired subject to that sales charge.

REDEMPTIONS

Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partially in portfolio securities,
brokerage costs may be incurred by the shareholder in converting the securities
to cash. The Trust has filed a formal election with the SEC pursuant to which a
Fund will only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.

CONTINGENT DEFERRED SALES CHARGE (A SHARES)

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a shareholder has made prior purchases of A Shares which now have a value of
$900,000, the purchase of $150,000 of A Shares will not be subject to an initial
sales charge but will be subject to the contingent deferred sales charge. The
$900,000 of A Shares is not subject to the contingent deferred sales charge.

CONTINGENT DEFERRED SALES CHARGE (A SHARES AND B SHARES)

With respect to A Shares and B Shares of the Funds, certain redemptions are not
subject to any contingent deferred sales charge. No contingent deferred sales
charge is imposed on (i) redemptions of shares acquired through the reinvestment
of dividends and distributions, (ii) involuntary redemptions by a Fund of
shareholder accounts with low account balances, (iii) redemptions of shares
following the death or disability of a shareholder if the Fund is notified
within one year of the shareholder's death or disability, (iv) redemptions to
effect a distribution (other than a lump sum distribution) from an IRA, Keogh
plan or Section 403(b) custodial account or from a qualified retirement plan.
For these purposes, the term disability shall have the meaning ascribed thereto
in Section 72(m)(7) of the Code. Under that provision, a person is considered
disabled if the person is unable to engage in any substantial activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and

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indefinite duration. Appropriate documentation satisfactory to the Fund is
required to substantiate any shareholder death or disability.

CONVERSION OF B SHARES

DETERMINATION OF NET ASSET VALUE

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affected, further action is not required.

PORTFOLIO TRANSACTIONS

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the-counter market, the Fund will seek to deal with the primary market makers;
but when necessary in order to obtain best execution, it will utilize the
services of others. In all cases the Fund will attempt to negotiate best
execution. No Fixed Income Fund paid any brokerage commissions during the
fiscal period ended October 31, 1995.

The following table shows the aggregate brokerage commissions with respect to
each Equity Fund with respect to each Fund's investment in equity securities.
The data is for the past fiscal year.

AGGREGATE
COMMISSIONS PAID
----------------
Diversified Equity Fund 180,093
Growth Equity Fund 115,993
Income Equity Fund 25,321

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to the obligation to seek the most
favorable price and execution available and such other policies as the Board may
determine, an Adviser may consider sales of shares of the Funds as a factor in
the selection of broker-dealers to execute portfolio transactions for the Funds.

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registered investment company to a broker which is an affiliated person of such
investment company, or an affiliated person of another person so affiliated, not
exceed the usual and customary brokers' commissions for such transactions. It
is the Funds' policy that commissions paid to Schroder Securities Limited,
Norwest Investment Management, Inc. and other affiliates of an Adviser will, in
the judgment of the Adviser responsible for making portfolio decisions and
selecting brokers, be (i) at least as favorable as commissions contemporaneously
charged by the affiliate on comparable transactions for its most favored
unaffiliated customers and (ii) at least as favorable as those which would be
charged on comparable transactions by other qualified brokers having comparable
execution capability. The Board, including a majority of the non-interested
Trustees, has adopted procedures to ensure that commissions paid to affiliates
of an Adviser by the Funds satisfy the foregoing standards.

Market Value at
October 31, 1995

Diversified Equity Fund
Charles Schwab Corporation 8,884,652
Donaldson, Lufkin & Jenrette, Inc. 1,529,150

Growth Equity Fund
Charles Schwab Corporation 9,797,364
Donaldson, Lufkin & Jenrette, Inc. 1,695,750

Stable Income Fund
Lehman Brothers, Inc. 2,028,896

TAXATION

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COUNSEL AND AUDITORS

Legal matters in connection with the issuance of shares of beneficial interest
of the Trust are passed upon by the law firm of Seward & Kissel, One Battery
Park Plaza, New York, New York 10004.

KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, independent
auditors, acts as auditors for the Trust.

OWNERSHIP OF FUND SHARES

The following persons owned of record 5% or more of the outstanding shares of a
Fund, or any class thereof, as of February ___, 1995:

[5% Shareholder Table]

ADDITIONAL INFORMATION ABOUT THE TRUST

Currently, the Trust is divided into thirty-one separate series representing
shares of each of the five Funds and shares of Cash Investment Fund, Ready Cash
Investment Fund, U.S. Government Fund, Treasury Fund, Municipal Money Market
Fund, Adjustable U.S. Government Reserve Fund, Government Income Fund, Income
Fund, Total Return Bond Fund, Tax-Free Income Fund, Arizona Tax-Free Fund,
Colorado Tax-Free Fund, Minnesota Tax-Free Fund, Income Stock Fund, ValuGrowth
Stock Fund, Small Company Stock Fund, Contrarian Stock Fund, Large Company
Growth Fund, Small Company Growth Fund, International Fund, Index Fund,
Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Managed Fixed Income Fund and Short Maturity Investment Fund. The Trust has
received an order from the SEC permitting the issuance and sale of separate
classes of shares representing interests in each of the Trust's portfolios. It
is anticipated, however, that the Trust will operate the classes of each Fund in
accordance with rules of the SEC adopted after the Trust obtained its exemptive
order.

The Board determined that currently no conflict of interest exists between or
among each Fund's A Shares, B Shares, and other classes, if any. On an ongoing
basis, the Board, pursuant to its fiduciary duties under the 1940 Act and state
law, will seek to ensure that no such conflict arises.

The Trust's shareholders are not personally liable for the obligations of the
Trust under Delaware law. The Delaware Business Trust

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Act (the "Delaware Act") provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private corporations for profit. However, no similar statutory
or other authority limiting business trust shareholder liability exists in many
other states, including Texas. As a result, to the extent that the Trust or a
shareholder is subject to the jurisdiction of courts in those states, the courts
may not apply Delaware law, and may thereby subject the Trust shareholders to
liability. To guard against this risk, the Trust Instrument of the Trust
disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
and instrument entered into by the Trust or its Trustees, and provides for
indemnification out of Trust property of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss beyond his investment because of shareholder liability is limited
to circumstances in which (1) a court refuses to apply Delaware law, (2) no
contractual limitation of liability is in effect, and (3) the Trust itself is
unable to meet its obligations. In light of Delaware law, the nature of the
Trust's business, and the nature of its assets, the Board believes that the risk
of personal liability to a Trust shareholder is extremely remote.

FINANCIAL STATEMENTS

REGISTRATION STATEMENT

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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

Moody's rates corporate bond issues, including convertible debt issues, as
follows:

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Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1, and B1.

STANDARD AND POOR'S CORPORATION ("S&P")

S&P rates corporate bond issues, including convertible debt issues, as follows:

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

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Bonds rated C typically are subordinated to senior debt which as assigned an
actual or implied CCC debt rating. This rating may also be used to indicate
imminent default.

Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the rating category.

FITCH INVESTORS SERVICE, INC. ("FITCH")

Fitch rates corporate bond issues, including convertible debt issues, as
follows:

A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse

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changes in economic conditions and circumstances than bonds with higher ratings.

CCC Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

PREFERRED STOCK

MOODY'S INVESTORS SERVICE, INC.

Moody's rates preferred stock as follows:

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An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
among preferred stock issues.

An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.

An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.

An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.

STANDARD & POOR'S CORPORATION

S&P rates preferred stock as follows:

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AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.

The rating CC is reserved for a preferred stock issue in arrears on dividends or
sinking fund payments but that is currently paying.

A preferred stock rated C is a non-paying issue.

A preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.

COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE, INC.

Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will

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often be evidenced by many of the following characteristics: Leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-established access to
a range of financial markets and assured sources of alternate liquidity.

STANDARD AND POOR'S CORPORATION

FITCH INVESTORS SERVICE, INC.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 rating.

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F-S. Issues assigned this rating have characteristics suggesting a minimal
degree of assurance for timely payment and are vulnerable to near-term adverse
changes in financial and economic conditions.

D. Issues assigned this rating are in actual or imminent payment default.

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PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS.

Included in the Prospectus:

For all Funds (A Shares, B Shares and I Shares) for which a Prospectus is
contained in this amendment to the Registration Statement:

Financial Highlights.

Included in the Statement of Additional Information:

For all Funds (A Shares, B Shares and I Shares) for which a Prospectus is
contained in this amendment to the Registration Statement:

Audited financial statements for the fiscal year ended October 31, 1995
including: statements of assets and liabilities, statements of operations,
statements of changes in net assets, notes to financial statements, financial
highlights, schedules of investments and independent auditors' report thereon
(for each Fund, filed with the Securities and Exchange Commission on January 31,
1996 for such Fund pursuant to Rule 30b2-1 under the Investment Company Act of
1940, as amended, and incorporated herein by reference).

(B) EXHIBITS.

NOTE: * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY REFERENCE. ALL
REFERENCES TO A POST-EFFECTIVE AMENDMENT ("PEA") OR PRE-EFFECTIVE AMENDMENT
("PREEA") ARE TO PEAS AND PREEAS TO REGISTRANT'S REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 33-9645.

(1) Trust Instrument of Registrant as now in effect (filed herewith).

(2) By-Laws of Registrant as now in effect (filed herewith).

(3) Not Applicable.

(4) Specimen Certificate for shares of beneficial interest of each class of
each portfolio of Registrant. Except for the names of the classes of shares and
CUSIP numbers. the certificate of each class of each portfolio of Registrant is
substantially the same as the specimen certificate, and therefore, is omitted
pursuant to Rule 483(d)(2) under the 1933 Act (filed herewith).

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(5) (a) Investment Advisory Agreement between Registrant and Norwest Bank
Minnesota, N.A. relating to the Diversified Equity Fund, Growth Equity Fund,
Large Company Growth Fund, Small Company Growth Fund, International Fund, Income
Equity Fund, Index Fund, Conservative Balanced Fund, Moderate Balanced Fund,
Growth Balanced Fund, Intermediate U.S. Government Fund, Managed Fixed Income
Fund and Stable Income Fund. Except for the names of each series of the
Registrant, the Investment Advisory Agreement of each series of Registrant is
substantially the same as the Investment Advisory Agreement, and therefore, is
omitted pursuant to Rule 483(d)(2) under the 1933 Act (filed herewith).

(b) Investment Sub-Advisory Agreement between Registrant and Crestone
Capital Management, Inc. relating to Small Company Stock Fund (filed herewith).

(c) Investment Sub-Advisory Agreement between Registrant and Schroder
Capital Management International, Inc. relating to the Diversified Equity Fund,
Growth Equity Fund, International Fund, Conservative Balanced Fund, Moderate
Balanced Fund and Growth Balanced Fund (filed herewith)

(d) Advisory Agreement between Registrant and Norwest Bank Minnesota,
N.A., relating to Cash Investment Fund, Treasury Fund, U.S. Government Fund,
Ready Cash Investment Fund, Municipal Money Market Fund, Minnesota Tax-Free
Fund, Colorado Tax-Free Fund, Government Income Fund, Income Fund, Tax-Free
Income Fund, Adjustable U.S. Government Reserve Fund, ValuGrowth Stock Fund, and
Income Stock Fund (filed herewith).

(6) Distribution Agreement between Registrant and Forum Financial
Services, Inc. relating to each portfolio of Registrant (filed herewith).

(7) Not Applicable.

(8) (a) Custodian Agreement between Registrant and Norwest Bank Minnesota,
N.A. dated August 1, 1993 as amended November 11, 1994 (filed herewith).

(b) Transfer Agency Agreement to be between Registrant and Norwest Bank
Minnesota, N.A. (filed herewith).

(9) (a) Management Agreement between Registrant and Forum Financial Services,
Inc. relating to each portfolio of Registrant (filed herewith).

(b) Fund Accounting Agreement between Registrant and Forum Financial Corp.
(filed herewith).

(c) Administration Services Agreement between Registrant and Norwest Bank
Minnesota, N.A. relating to International Fund (filed herewith).

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(10) (a)* Opinion of Seward & Kissel (filed on December 31, 1986 as Exhibit
10(a) of PreEA 2).

(b) Opinion of Seward & Kissel (previously filed on August 3, 1994 as
Exhibit 10(c) of PEA 25) and also filed herewith.

(11) Consent of KPMG Peat Marwick LLP, independent accountants (filed herewith).

(12) Not Applicable.

(13)* Investment representation letter of John Y. Keffer as initial
purchaser of shares of stock of Registrant (filed on December 31, 1986 as
Exhibit 13 of PreEA 2).

(14)* Individual Retirement Account materials (filed on April 22, 1994 as
Exhibit 14 to PEA 24).

(15) Rule 12b-1 Plan adopted by Registrant with respect to the Income Fund, Tax-
Free Income Fund, Minnesota Tax-Free Fund, ValuGrowth Stock Fund, Adjustable
U.S. Government Reserve Fund, Colorado Tax-Free Fund, Income Stock Fund, Arizona
Tax-Free Fund, Contrarian Stock Fund, Small Company Stock Fund, Government
Income Fund, Total Return Bond Fund, Stable Income Fund, Income Equity Fund,
Diversified Equity Fund, Intermediate U.S. Government Fund, Growth Equity Fund
and Exchange Shares of Ready Cash Investment Fund (filed herewith).

(16)* Schedule for Computation of each Performance Quotation provided in the
Registration Statement in response to Item 22 for the Colorado Tax-Free Fund and
Income Stock Fund (filed on February 18, 1994 as Exhibit 16 to PEA 23).

(17) Not Applicable.

(18) Multiclass (Rule 18f-3) Plan adopted by Registrant (filed herewith).

Other Exhibits

(A) Power of Attorney of James C. Harris, Trustee of Registrant (filed
herewith).

(B) Power of Attorney of Richard M. Leach, Trustee of Registrant (filed
herewith).

(D) Power of Attorney of Donald H. Burkhardt, Trustee of Registrant (filed
herewith).

(E) Power of Attorney of John Y. Keffer, Trustee of Registrant

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(filed herewith).

(F) Power of Attorney of Donald C. Willeke, Trustee of Registrant (filed
herewith).

(G) Power of Attorney of Timothy J. Penny, Trustee of Registrant (filed
herewith).

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF JANUARY 31, 1996.

NUMBER OF
TITLE OF CLASS OF UNIT OF BENEFICIAL INTEREST RECORD HOLDERS
- --------------------------------------------- --------------
Cash Investment Fund 3,203
U.S. Government Fund 550
Treasury Fund 406
Municipal Money Market Fund
Investor Shares 644
Institutional Shares 280
Ready Cash Investment Fund
Investor Shares 12,456
Institutional Shares 14
Exchange Class 8
Adjustable U.S. Government Reserve Fund
A Shares 86
B Shares 22
I Shares 35
Government Income Fund
A Shares 683
B Shares 580
I Shares 75
Income Fund
A Shares 297
B Shares 226
I Shares 61
Total Return Bond Fund
A Shares 71
B Shares 186
I Shares 59
Colorado Tax-Free Fund
A Shares 462
B Shares 166
I Shares 8
Minnesota Tax-Free Fund

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A Shares 481
B Shares 287
I Shares 17

Tax-Free Income Fund
A Shares 674
B Shares 194
I Shares 60
Income Stock Fund
A Shares 1,157
B Shares 1,114
I Shares 124
ValuGrowth Stock Fund
A Shares 1,255
B Shares 576
I Shares 96
Contrarian Stock Fund
A Shares 67
B Shares 101
I Shares 26
Small Company Stock Fund
A Shares 429
B Shares 444
I Shares 91
Diversified Equity Fund
A Shares 0
B Shares 0
I Shares 1,512
Growth Equity Fund
I Shares 1,285
Large Company Growth Fund
I Shares 144
Small Company Growth Fund
I Shares 224
International Fund
A Shares 97
B Shares 98
I Shares 259
Income Equity Fund
A Shares 0
B Shares 0
I Shares 400
Index Fund
I Shares 224
Conservative Balanced Fund
I Shares 384
Moderate Balanced Fund
I Shares 961
Growth Balanced Fund
A Shares 0
B Shares 0
I Shares 638
Intermediate U.S. Government Fund

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A Shares 0
B Shares 0
I Shares 472
Managed Fixed Income Fund
I Shares 729
Stable Income Fund
A Shares 0
B Shares 0
I Shares 362

ITEM 27. INDEMNIFICATION.

The general effect of Section 10.02 of Registrant's Trust Instrument is to
indemnify existing or former trustees and officers of the Trust to the fullest
extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Section 10.02 of Registrant's Trust Instrument contained in this Registration
Statement as Exhibit 1 and incorporated herein by reference.

Registrant's Investment Advisory Agreements, Investment Subadvisory Agreements,
Management and Distribution Agreements and Distribution Services Agreements
provide that Registrant's investment advisers and principal underwriter are
protected against liability to the extent permitted by Section 17(i) of the
Investment Company Act of 1940. Similar provisions are contained in the
Management Agreement and Transfer Agency and Fund Accounting Agreement.
Registrant's principal underwriter is also provided with indemnification against
various liabilities and expenses under the Management and Distribution
Agreements and Distribution Services Agreements between Registrant and the
principal underwriter; provided, however, that in no event shall the
indemnification provision be construed as to protect the principal underwriter
against any liability to Registrant or its security holders to which the
principal underwriter would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations and duties under those
agreements. Registrant's transfer agent and fund accountant and certain related
individuals are also provided with indemnification against various liabilities
and expenses under the Transfer Agency and Fund Accounting Agreements between
Registrant and the transfer agent and fund accountant; provided, however, that
in no event shall the transfer agent, fund accountant or such persons be
indemnified against any liability or expense that is the direct result of
willful misfeasance, bad faith or gross negligence by the transfer agent or such
persons.

The preceding paragraph is modified in its entirety by the

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provisions of the Investment Advisory Agreements, Investment SubAdvisory
Agreements, Management and Distribution Agreements, Distribution Services
Agreements, Management Agreements, Transfer Agency Agreement and Fund Accounting
Agreement of Registrant filed as Exhibits 5, 6, and 9 to Registrant's
Registration Statement and incorporated herein by reference.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

NORWEST BANK MINNESOTA, N.A.

The description of Norwest Bank Minnesota, N.A., under the caption
"Management-Adviser" or "Management of the Funds -Norwest Investment Management"
in each Prospectus and under the caption "Management-Adviser" or "Management-
Investment Advisory Services-Norwest Investment Management" in each Statement of
Additional Information constituting Parts A and B, respectively, of this
Registration Statement are incorporated by reference herein.

The following are the directors and principal executive officers of Norwest Bank
Minnesota, N.A., including their business connections which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A., is Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, MN 55479. Unless otherwise indicated below, the principal business
address of any company with which the directors and principal executive officers
are connected is also Sixth Street and Marquette Avenue, Minneapolis, MN 55479.

A. Rodney Boren, Jr., Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates
during the last two years. Mr. Boren is also a Director of Norwest Trust
Company, New York, New York and Norwest Foundation.

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James R. Campbell, Director, President and Chief Executive Officer, has
held this position for the last two years. Mr. Campbell is also Executive Vice
President of Norwest Corporation, Director and Chairman of Norwest Investment
Advisors, Inc., and a Director of Flore Properties, Inc., Centennial Investment
Corporation and Peregrine Capital Management, Inc., which is located at LaSalle
Plaza, 800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402-2056. Mr.
Campbell is also a Director of a number of non-profit organizations located in
Minneapolis, Minnesota. Within the last two years Mr. Campbell was a Director
of Norwest Insurance, Inc. and Norwest Equipment Finance, Inc.

Michael A. Graf, Controller and Cashier, also serves as Senior Vice
President and Controller of Norwest Corporation.

P. Jay Kiedrowski, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates
since August 1987. Mr. Kiedrowski is also a Director and Chairman of the Board
of Norwest Investment Management, Inc. and President of Norwest Investment
Management, a part of Norwest.

Scott A. Kisting, Director and Executive Vice President, is also a Director
of Norwest Insurance, Inc., IntraWest Insurance Company and Fidelity National
Life Insurance Company.

Edgar M. Morsman, Jr., Executive Vice President and Chief Lending Officer,
has served in various capacities as an employee of Norwest Bank Minnesota, N.A.
and/or its affiliates during the last two years. Mr. Morsman is also a Director
of Centennial Investment Corporation, First Interstate Equipment Finance, Inc.,
Flore Properties, Inc., Norwest Credit, Inc., Norwest Business Credit, Inc.,
R.D. Leasing, Inc. and Norwest Equipment Finance, Inc., which is located at 733
Marquette Avenue, Suite 300, Minneapolis, MN 55479-2048.

Dharani P. Narayana, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates
during the last two years. Mr. Narayana is also a Director and Chairman of
Norwest Bank International, Director and Secretary of Norwest Investments
Limited, a Director of Norwest Bank International, Colorado, a Director and Vice
President of Norwest Bank International, Iowa, and a Director of Norwest Bank
International, Wisconsin. Mr. Narayana is also a Director and Secretary of
Minnetonka Overseas Investments Limited, and a Director of Minnetonka
Representaocoes Commerciais Ltda. and Nortico Investments Ltd. all of which are
located at Grand Cayman, Cayman Islands, British West Indies.

William H. Queenan, Director, is also Executive Vice President of Norwest
Corporation.

John T. Thornton, Director, is also Executive Vice President

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and Chief Financial Officer of Norwest Corporation. Mr. Thornton is also a
Director of Northern Prairie Indemnity, Limited, Grand Cayman, Cayman Islands,
British West Indies, a Director of Norwest Capital Markets, Inc. Mr. Thornton
is also a Director of Norwest Growth Fund, Inc., Norwest Venture Capital
Management, Inc. and Norwest Equity Capital, Inc., and Director, President and
Treasurer of Norwest Investors, Inc., and Director, President and CEO of Norwest
Limited, Inc., all located at 2800 Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, MN 54402. Mr. Thornton is also Director and President of Superior
Guaranty Insurance Company and Norwest Holding Company, and a Director of
Bettendorf Asset Management, Inc. Mr. Thornton is also a Director of Eau Claire
Asset Management, Inc., Green Bay Asset Management, Inc., Iowa Asset Management,
Inc., LaCrosse Asset Management, Inc., South Bend Asset Management, Inc., South
Dakota Asset Management, Inc., Waupun Asset Management, Inc., all located at 100
West Commons Blvd., Suite 303, New Castle, DE 19720.

Richard C. Westergaard, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates
during the last two years. Mr. Westergaard is also a Director of Norwest
Business Credit, Inc., Norwest Credit, Inc., First Interstate Equipment Finance,
Inc. and R.D. Leasing, Inc. and a Director of Norwest Equipment Finance, Inc.
and Commonwealth Leasing Corporation, located at Investors Building, 733
Marquette, Suite 300, Minneapolis, MN 55479-2048.

Charles D. White, Senior Vice President, has served in various capacities
as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates during the
last two years. Mr. White is also Treasurer and Chief Financial Officer of
Norwest Limited, Inc. Mr. White is also a Director of Bettendorf Asset
Management, Inc., Eau Claire Asset Management, Inc., Green Bay Asset Management,
Inc., IntraWest Asset Management, Inc., Iowa Asset Management, Inc., LaCrosse
Asset Management, Inc., South Bend Asset Management, Inc., South Dakota Asset
Management, Inc., and Waupun Asset Management, Inc., located at 100 West Commons
Boulevard, Suite 303, New Castle, DE 19720.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL, INC.

The description of Schroder Capital Management International, Inc. ("Schroder")
under the caption "Management of the Funds-Investment Advisory Services-Schroder
Capital Management International, Inc." in the Prospectus and "Management-
Investment Advisory Services" in the Statement of Additional Information
relating to International Fund, Diversified Equity Fund, Growth Equity Fund,
Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund,
constituting certain of Parts A and B, respectively, of the Registration
Statement, are incorporated by reference herein.

The following are the directors and principal officers of Schroder,

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including their business connections which are of a substantial nature. The
address of each company listed, unless otherwise noted, is 33 Gutter Lane,
London EC2V 8AS, United Kingdom. Schroder Capital Management International
Limited ("Schroder Ltd.") is a United Kingdom affiliate of Schroder which
provides investment management services international clients located
principally in the United States.

I. Peter Sedgwick, Chairman. Mr. Sedgwick is also Group Managing Director
- - Investment Management of Schroders PLC, 120 Cheapside, London EC2V 6DS, United
Kingdom, the holding company of the various Schroder companies, Chairman and
Director of Schroder Ltd., Director and Chief Executive Officer of Schroder
Investment Management Limited, an investment management company, Director of
Schroder Investment Management (UK) Limited, Schroder Personal Financial
Management Limited, Schroder Investment Management (Europe) Limited, Schroder
Investment Trust Management Limited and Church, Charity & Local Authorities Fund
Managers Limited, 2 Fore Street, London EC2Y 5AQ, United Kingdom, each an
investment management company, and Director, The Equitable Life Assurance
Company, Walton Street, Aylesbury, Bucks, United Kingdom, a life assurance
company. Mr. Sedgwick is also a director of various nominee companies and of
various unit trust companies, investment trusts and closed end investment
companies for which Schroder and/or its affiliates provide investment services.

David M. Salisbury, Chief Executive Officer. Mr. Salisbury is also the
Chief Executive Officer of Schroder Ltd. and Director of Dimensional Fund
Advisors Inc., 1299 Ocean Avenue, Santa Monica, California, an investment
advisory company and DFA Securities Inc., a broker dealer subsidiary of
Dimensional Fund Advisors Inc. located at the same address. Until October 1992
Mr. Salisbury was Chairman of Schroder Capital Distributors Inc. ("Schroder
Distributors"), 787 Seventh Avenue, New York, New York, a broker dealer. Mr.
Salisbury is a director or former director of various investment trust companies
and closed end investment companies for which Schroder and/or its affiliates
provide investment services.

John S. Ager, Director. Mr. Ager is also a Director of Schroder Ltd.

Richard R. Foulkes, Deputy Chairman and Director. Mr. Foulkes is also a
Director of Schroder Ltd. and Schroder Distributors.

Laura E. Luckyn-Malone, Managing Director. Ms. Luckyn-Malone is also a
Director of Schroder Wertheim Investment Services, Inc. and Schroder Ltd. and
President and Director of a closed-end investment company for which Schroder
and/or its affiliates provide investment services. Director and President of
Schroder Advisors.

David J. Mumford, Director. Mr. Mumford is also a Director of Schroder
Ltd. and Schroder Investment Management Limited and is Chairman of Schroders
Guernsey Limited, St. Julian's Avenue, St.

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Peter Port, Guernsey C.J., a Guernsey based bank, and Director of J. Henry
Schroder Wagg & Company Limited, 120 Cheapside London EC2V 6DS, United Kingdom,
a United Kingdom based bank.

Gavin D.L. Ralston, Director. Mr. Ralston is also a Director of Schroder
Ltd.

Mark J. Smith, Director. Mr. Smith is also Director, Schroder Ltd. and
Schroder Investment Management (Guernsey) Limited, an investment management
company, and Director and Vice President of Schroder Distributors and Director
and Vice President of Schroder Advisors. Mr. Smith is also a director of various
investment trusts and open end investment companies for which Schroder and/or
its affiliates provide investment services.

Ton F. Tija, Director. Mr. Tija is also a Director of Schroder Ltd.

John A. Trioano, Managing Director. Mr. Trioano is also a Director of
Schroder Ltd. and Schroder Advisors, Chairman of Schroder Distributors and
President and Director open end investment companies for which Schroder and/or
its affiliates provide investment services.

Jane P. Lucas, Director. Ms. Lucas is also a Director of Schroder Wertheim
Investment Services, Inc. and Assistant Director of Schroder Investment
Management, Ltd.

Kathleen Adams, Vice President. Ms. Adams is also Vice President of
Schroder Distributors.

Mark J. Astley, Vice President.

Andrew R. Barker, First Vice President. Mr. Barker is also First Vice
President of Schroder Ltd.

David A.W. Butler, First Vice President. Mr. Butler is also First Vice
President and Treasurer of Schroder Ltd. and an officer of open end investment
companies for which Schroder and/or its affiliates provide investment services.

Richard J. Conyers, Vice President. Mr. Conyers is also Vice President of
Schroder Ltd. and Manger of Schroder Investment Management Limited.

Heather F. Crighton, Fund Manger. Ms. Crighton is also Fund Manager of
Schroder Ltd.

Louise Crouset, First Vice President. Mr. Crouset is also First Vice
President of Schroder Ltd. and, until October 1993, was Vice President of
Wellington Management, an investment adviser.

Robert C. Davy, Director. Mr. Davy is also a Director of

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Schroder Ltd. and an officer of open end investment companies for which Schroder
and/or its affiliates provide investment services.

Margaret H. Douglas-Hamilton, Secretary. Ms. Douglas-Hamilton is also
First Vice President and General Counsel of Schroders Incorporated ("Schroders
Inc."), 787 Seventh Avenue, New York, New York, the holding company for various
United States based Schroder affiliates. Ms. Douglas-Hamilton is also Secretary
to various Schroder affiliates, including Schroder Distributors.

Lyn M. Fox, Vice President.

Stephen M. Futrell, Comptroller. Mr. Futrell is Treasurer of Schroders
Inc., President, Treasurer and Director of Schroder Distributors and an officer
of various open end investment companies for which Schroder and/or its
affiliates provide investment services.

David Gibson, First Vice President. Mr. Gibson is also First Vice
President of Schroder Ltd. and Assistant Director of Schroder Investment
Management Limited.

Simon C. Hallett, Fund Manager. Mr. Hallett is also Fund Manager of
Schroder Ltd.

Nicholas J. A. Melhuish, Fund Manager. Mr. Melhuish is also Fund Manager of
Schroder Ltd.

Laurette J. Oat, First Vice President. Within the last two years, Ms. Oat
was a Senior Vice President of NatWest Investment Bank, 65 East 55th Street, New
York, New York 10002.

John Stainsby, First Vice President. Mr. Stainsby is also First Vice
President of Schroder Ltd.

Fariba Talebi, First Vice President. Mr. Talebi is also an officer of
various open end investment companies for which Schroder and/or its affiliates
provide investment services.

Jan Kees van Heusde, First Vice President. Mr. van Heusde is also First
Vice President of Schroder Ltd.

Patrick Vermeulen, Vice First President. Mr. Vermeulen is also Vice First
President of Schroder Ltd.

Susan M. Belson, Vice President.

Alan Gilston, Vice President.

Abdallah Nauphal, First Vice President.

Ellen B. Sullivan, First Vice President.

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Ira L. Unschuld, Vice President.

Catherine A. Mazza, Vice President. Ms. Mazza is also Senior Vice President
of Schroder Advisors.

Robert Jackowitz, Vice President. Mr. Jackowitz is also Vice President and
Treasurer of Schroder Wertheim Investment Services, Inc., Treasurer of Schroder
Advisors and Assistant Treasurer of Schroders Incorporated.

CRESTONE CAPITAL MANAGEMENT, INC.

The description of Crestone Capital Management, Inc. ("Crestone") under the
caption "Management-SubAdviser" in the Prospectus and "Management- Adviser-
SubAdviser-Small Company Stock Fund" in the Statement of Additional Information
relating to the Small Company Stock Fund, constituting certain of Parts A and B,
respectively, of the Registration Statement, are incorporated by reference
herein.

The following are the directors and principal officers of Crestone, including
their business connections which are of a substantial nature.

Kirk McCown, President and Director. His address is 7720 East Belleview
Avenue, Suite 220, Englewood, Colorado 80111.

Mark Steven Sunderhuse, Senior Vice President and Director. His address is
7720 East Belleview Avenue, Suite 220, Englewood, Colorado 80111.

P. Jay Kiedrowski, Director. Mr. Kiedrowski is an Executive Vice President
of Norwest and is also a Director and Chairman of the Board of Norwest
Investment Management, Inc. His address is Sixth and Marquette Avenue,
Minneapolis, Minnesota 55479.

Steven P. Gianoli, Director. Mr. Gianoli is a Vice President of Norwest.
His address is Sixth and Marquette Avenue, Minneapolis, Minnesota 55479.

Susan Koonsman, Director. Ms. Koonsman is President of Norwest Investments
& Trust. Her address is 1740 Broadway, Denver, Colorado 80274.

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter to Avalon Capital, Inc., Core Trust (Delaware), The CRM Funds, The
Cutler Trust, Forum Funds, Inc., Monarch Funds, Norwest Advantage Funds, Norwest
Select Funds, Sound Shore Fund, Inc., Stone Bridge Funds, Inc. and Trans Adviser
Funds, Inc.

(b) John Y. Keffer, President and Secretary of Forum Financial

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Services, Inc., is the Chairman and President of Registrant. David R. Keffer,
Vice President and Treasurer of Forum Financial Services, Inc., is the Vice
President, Assistant Treasurer and Assistant Secretary of Registrant. Their
business address is Two Portland Square, Portland, Maine

ITEM 30. LOCATION OF BOOKS AND RECORDS.

The majority of accounts, books and other documents required to be maintained by
31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of Forum Financial Services, Inc. at Two Portland
Square, Portland, Maine 04101 and at Forum Financial Corp., Two Portland Square,
Portland, Maine 04101. The records required to be maintained under Rule 31a-
1(b)(1) with respect to journals of receipts and deliveries of securities and
receipts and disbursements of cash are maintained at the offices of Registrant's
custodian. The records required to be maintained under Rule 31a-1(b)(5), (6)
and (9) are maintained at the offices of Registrant's investment advisers as
indicated in the various prospectuses constituting Part A of this Registration
Statement.

Additional records are maintained at the offices of Norwest Bank Minnesota,
N.A., 733 Marquette Avenue, Minneapolis, MN 55479-0040, Registrant's investment
adviser, custodian and transfer agent.

ITEM 31. MANAGEMENT SERVICES.

Not Applicable.

ITEM 32. UNDERTAKINGS.

(a) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders
relating to the portfolio or class thereof to which the prospectus relates upon
request and without charge.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Portland, and State of Maine on the 28th
day of February, 1996.

NORWEST ADVANTAGE FUNDS

By: /s/ John Y. Keffer
------------------
John Y. Keffer
President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 28th
day of February, 1996.

SIGNATURES TITLE
---------- -----

(a) Principal Executive Officer

/s/ John Y. Keffer Chairman and President
------------------
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Michael D. Martins Treasurer, Principal Financial
---------------------- and Accounting Officer
Michael D. Martins

/s/ John Y. Keffer Chairman
------------------
John Y. Keffer

Robert C. Brown Trustee
Donald H. Burkhardt Trustee
James C. Harris Trustee
Richard M. Leach Trustee
Donald C. Willeke Trustee
Timothy J. Penny Trustee

By: /s/ John Y. Keffer
------------------
John Y. Keffer
Attorney in Fact

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SIGNATURES

On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Norwest Advantage Funds to be
signed in the City of Portland, State of Maine on the 28th day of February,
1996.

CORE TRUST (DELAWARE)

By: /s/ John Y. Keffer
------------------
John Y. Keffer
President

This amendment to the Registration Statement of Norwest Advantage Funds has been
signed below by the following persons in the capacities indicated on the 28th
day of February, 1996.

SIGNATURES TITLE

(a) Principal Executive Officer

/s/ John Y. Keffer Chairman and President
------------------
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Michael D. Martins Treasurer, Principal Financial
---------------------- and Accounting Officer
Michael D. Martins

/s/ John Y. Keffer Chairman
------------------
John Y. Keffer

J. Michael Parish Trustee
James C. Cheng Trustee
Costas Azariadis Trustee

By: /s/ John Y. Keffer
------------------
John Y. Keffer
Attorney in Fact

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INDEX TO EXHIBITS

Sequential
Exhibit Page Number
- ------- -----------

1 Trust Instrument

2 By-Laws

4 Form of Certificate for shares of beneficial interest of
each class of each portfolio of Registrant

5 (a) Investment Advisory Agreement between Registrant and
Norwest Bank Minnesota, N.A., relating to Cash Investment
Fund, Municipal Money Market Fund, Minnesota Tax-Free
Fund, Colorado Tax-Free Fund, Government Income Fund,
Income Fund, Tax-Free Income Fund, Adjustable U.S.
Government Reserve Fund, ValuGrowth Stock Fund
and Income Stock Fund

(b) Investment Advisory Agreement between Registrant
and Norwest Bank Minnesota, N.A., relating to
Diversified Equity Fund, Growth Equity Fund, Large
Company Growth Fund, Small Company Growth
Fund, International Fund, Income Equity Fund,
Index Fund, Conservative Balanced Fund, Moderate
Balanced Fund, Growth Balanced Fund, Intermediate
U.S. Government Fund, Managed Fixed Income Fund
and Stable Income Fund

(d) Investment Sub-Advisory Agreement between Registrant
and Schroder Capital Management International Inc.

6 Distribution Services Agreement between Registrant
and Forum Financial Services, Inc., relating to each
portfolio of Registrant

8 (a) Custodian Agreement

(b) Transfer Agency Agreement

<PAGE>

INDEX TO EXHIBITS

Sequential
Exhibit Page Number
- ------- -----------

9 (a) Management Agreement

(b) Fund Accounting Agreement

10(b) Opinion of Steward & Kissel dated July 28, 1994

11 Consent of KPMG Peat Marwick LLP

15 Rule 12b-1 Plan

18 Multiclass (Rule 18f-3) Plan

Other Exhibits

(A) Power of Attorney of James C. Harris, Trustee of Registrant

(B) Power of Attorney of Richard M. Leach, Trustee of Registrant

(D) Power of Attorney of Donald H. Burkhardt, Trustee of Registrant

(E) Power of Attorney of John Y. Keffer, Trustee of Registrant

(F) Power of Attorney of Donald C. Willeke, Trustee of Registrant

(G) Power of Attorney of Timothy J. Penny, Trustee of Registrant

<PAGE>

EXHIBIT 1

<PAGE>

NORWEST ADVANTAGE FUNDS

TRUST INSTRUMENT

AMENDED AND RESTATED
OCTOBER 1, 1995

<PAGE>

TABLE OF CONTENTS

PAGE
ARTICLE I NAME AND DEFINITIONS

Section 1.01 Name 1
Section 1.02 Definitions 1

ARTICLE II BENEFICIAL INTEREST

Section 2.01 Shares of Beneficial Interest 2
Section 2.02 Issuance of Shares 2
Section 2.03 Register of Shares and Share Certificates 2
Section 2.04 Transfer of Shares 2
Section 2.05 Treasury Shares 3
Section 2.06 Establishment of Series 3
Section 2.07 Investment in the Trust 3
Section 2.08 Assets and Liabilities of Series 3
Section 2.09 No Preemptive Rights 4
Section 2.10 No Personal Liability of Shareholders 4
Section 2.11 Assent to Trust Instrument 4

ARTICLE III THE TRUSTEES

Section 3.01 Management of the Trust 4
Section 3.02 Initial Trustees 5
Section 3.03 Term of Office 5
Section 3.04 Vacancies and Appointments 5
Section 3.05 Temporary Absence 5
Section 3.06 Number of Trustees 5
Section 3.07 Effect of Ending of a Trustee's Service 5
Section 3.08 Ownership of Assets of the Trust 5

ARTICLE IV POWERS OF THE TRUSTEES

Section 4.01 Powers 6
Section 4.02 Issuance and Repurchase of Shares 8
Section 4.03 Trustees and Officers as Shareholders 8
Section 4.04 Action by the Trustees 8
Section 4.05 Chairman of the Trustees 8
Section 4.06 Principal Transactions 9

ARTICLE V EXPENSES OF THE TRUST 9

ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

Section 6.01 Investment Adviser 9
Section 6.02 Principal Underwriter 10
Section 6.03 Administrator 10
Section 6.04 Transfer Agent 10
Section 6.05 Parties to Contract 10
Section 6.06 Provisions and Amendments 10

<PAGE>

ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 7.01 Voting Powers 11
Section 7.02 Meetings 11
Section 7.03 Quorum and Required Vote 11

ARTICLE VI CUSTODIAN

Section 8.01 Appointment and Duties 12
Section 8.02 Central Certificate System 12

ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS

Section 9.01 Distributions 12
Section 9.02 Redemptions 13
Section 9.03 Determination of Net Asset Value
and Valuation of Portfolio Assets 13
Section 9.04 Suspension of the Right of Redemption 13
Section 9.05 Redemption of Shares in Order to
Qualify as Regulated Investment Company 13

ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 10.01 Limitation of Liability 14
Section 10.02 Indemnification 14
Section 10.03 Shareholders 15

ARTICLE MISCELLANEOUS

Section 11.01 Trust Not a Partnership 15
Section 11.02 Trustee's Good Faith Action,
Expert Advice, No Bond or Surety 15
Section 11.03 Establishment of Record Dates 15
Section 11.04 Termination of Trust 16
Section 11.05 Reorganization 16
Section 11.06 Filing of Copies, References, Headings 16
Section 11.07 Applicable Law 17
Section 11.08 Amendments 17
Section 11.09 Fiscal Year 17
Section 11.10 Provisions in Conflict with Law 17

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<PAGE>

NORWEST ADVANTAGE FUNDS

This TRUST INSTRUMENT of NORWEST ADVANTAGE FUNDS is restated and amended
this 1st day of October 1, 1995 by the parties signatory hereto, as Trustees.

WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;

NOW THEREFORE, the Trustees declare that all money and property contributed
to the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.

ARTICLE I
NAME AND DEFINITIONS

SECTION 1.01 NAME. The name of the trust created hereby is "Norwest
Advantage Funds."

SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:

(a) "Bylaws" means the Bylaws of the trust as adopted by the Trustees, as
amended from time to time;

(b) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person", "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.

(c) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.

(d) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;

(e) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;

(f) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.

(g) "Shareholder" means a record owner of Outstanding Shares of the Trust;

(h) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;

(i) The "Trust" means Norwest Advantage Funds and reference to the Trust,
when applicable to one or more Series of the Trust, shall refer to any such
Series;

(j) The "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to

<PAGE>

time be duly qualified and serving as Trustees in accordance with the provisions
of Article III hereof and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their capacity as Trustees hereunder;

(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.

(l) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.

ARTICLE II
BENEFICIAL INTEREST

SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more
separate and distinct Series or classes of a Series as the Trustees shall from
time to time create and establish. The number of Shares of each Series, and
class thereof, authorized hereunder is unlimited. Each Share shall have no par
value. All Shares issued hereunder, including without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.

SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into
a greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.

SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be entitled
to receive dividends or other distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or other distribution, nor to have notice given to him as herein
or in the Bylaws provided, until he has given his address to the transfer agent
or such officer or other agent of the Trustees as shall keep the said register
for entry thereon. No share certificates shall be issued by the Trust.

SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.

SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.

SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such

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<PAGE>

Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding of any
particular Series previously established and designated, the Trustees may by a
majority vote abolish that Series and the establishment and designation thereof.

All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require.
All provisions herein relating to the Trust shall apply equally to each Series
of the Trust, and each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of the Trust.

SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.03 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.

SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever from the same may be,
shall be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.08, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, changes or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally. Notice of this

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<PAGE>

contractual limitation on inter-Series liabilities may, in the Trustee's sole
discretion, be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the Delaware Act, and
upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on inter-
Series liabilities (and the statutory effect under Section 3804 of setting forth
such notice in the certificate of trust) shall become applicable to the Trust
and each Series. Any person extending credit to, contracting with or having any
claim against any Series may look only to the assets of that Series to satisfy
or enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.

SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other Series.

SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).

SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.

ARTICLE III
THE TRUSTEES

SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct
the business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the State of Delaware, in
any and all states of the United States of America, in the District of Columbia,
in any and all commonwealths, territories, dependencies, colonies, or
possessions of the United States of America, and in any foreign jurisdiction and
to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination
as to what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.

The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.

SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall elect at
least three (3) but not more than twelve (12) Trustees, as specified by the
Trustees pursuant to Section 3.06 of this Article III.

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<PAGE>

SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of disease or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least two-
thirds of the Outstanding Shares.

SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy
in the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the limitations
under the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the Trustees,
duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.

An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.

SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.

SECTION 3.06 NUMBER OF TRUSTEES. The number of Trustees shall be at least
three (3), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).

SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination to
serve, death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.

SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart for any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and
the right to conduct any business shall at all times be considered as vested in
the Trustees on behalf of the Trust, except that the Trustees may cause legal
title to any Trust Property to be held by, or in the name of the Trust, or in
the name of any person as nominee. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or of any Series or any
right of partition or possession thereof, but each Shareholder shall have,
except as otherwise provided for herein, a proportionate undivided beneficial
interest in the Trust or Series. The Shares shall be personal property giving
only the rights specifically set forth in this Trust Instrument.

ARTICLE IV
POWERS OF THE TRUSTEES

SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make

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<PAGE>

and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:

(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust:

(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;

(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;

(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;

(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;

(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;

(h) To retain one or more transfer agents and shareholder servicing
agents, or both;

(i) To set record dates in the manner provided herein or in the Bylaws;

(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, custodian, underwriter or
other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;

(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee

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<PAGE>

or nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;

(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;

(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;

(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;

(s) To make distributions of income and of capital gains to Shareholders
in the manner provided herein;

(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;

(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;

(v) To interpret the investment policies, practices or limitations of any
Series;

(w) To establish a registered office and have a registered agent in the
state of Delaware; and

(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.

The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.

The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.

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No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments make or property transferred to the Trustees or upon their order.

SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.

SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.

SECTION 4.04 ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called or by unanimous written consent without a meeting
or by telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date
and place of all meetings of the Trustees shall be given by the party calling
the meeting to each Trustee by telephone, facsimile or other electronic
mechanism sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two hours in advance of the meeting. Notice need not
be given to any Trustee who attends the meeting without objecting to the lack of
notice or who executes a written waiver of notice with respect to the meeting.
Any meeting conducted by telephone shall be deemed to take place at the
principal office of the Trust, as determined by the Bylaws or by the Trustees.
Subject to the requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one or more of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. Written
consents or waivers of the Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the Trust may
be accomplished by facsimile or other similar electronic mechanism.

SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.

SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.

ARTICLE V
EXPENSES OF THE TRUST

Subject to the provisions of Article II, Section 2.08 hereof, the Trustees
shall be reimbursed from the Trust estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant;

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fees of pricing, interest, dividend, credit and other reporting services; costs
of membership in trade associations; telecommunications expenses; funds
transmission expenses; auditing, legal and compliance expenses; costs of forming
the Trust and maintaining corporate existence; costs of preparing and printing
the Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to existing shareholders; expenses of meetings of
shareholders and proxy solicitations therefore; costs of maintaining books and
accounts; costs of reproduction, stationery and supplies; fees and expenses of
the Trust's trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust; costs of Trustee
meetings; Securities and Exchange Commission registration fees and related
expenses; state or foreign securities laws registration fees and related
expenses and for such non-recurring items as may arise, including litigation to
which the Trust (or a Trustee acting as such) is a party, and for all losses and
liabilities by them incurred in administering the Trust, and for the payment of
such expenses, disbursements, losses and liabilities the Trustees shall have a
lien on the assets belonging to the appropriate Series, or in the case of an
expense allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto. This section
shall not preclude the Trust from directly paying any of the aforementioned fees
and expenses.

ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

SECTION 6.01 INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not to be inconsistent with the provisions of this
Trust Instrument or of the Bylaws). Notwithstanding any other provision of this
Trust Instrument, the Trustees may authorize any investment adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by all of the
Trustees.

The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
between the investment adviser and sub-adviser (such terms and conditions not to
be inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Any reference in this Trust Instrument to the investment adviser shall be deemed
to include such sub-advisers, unless the context otherwise requires.

SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.

SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).

SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish

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the Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).

SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.

SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into
pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of said Section
15, as modified by any applicable rule, regulation or order of the Commission.

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ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 hereof, (b) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (c) with respect to any investment advisory contract as
provided in Article VI, Sections 6.01 and 6.06 hereof, and (d) with respect to
such additional matters relating to the Trust as may be required by law, by this
Trust Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.

On any matter submitted to a vote of the Shareholders, all Shares shall be
voted separately by individual Series, except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects the interests of more
than one Series, then the Shareholders of all such Series shall be entitled to
vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or of the Trust, or in the
event of any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be voted only
in person or by written proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required or
permitted by law, this Trust Instrument or any of the Bylaws of the Trust to be
taken by Shareholders.

SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III hereof at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings may be held within or without the State of Delaware.
Special meetings of the Shareholders of any Series may be called by the Trustees
and shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the Outstanding Shares entitled to vote. Whenever
ten or more Shareholders meeting the qualifications set forth in Section 16(c)
of the 1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view to
obtaining signatures on such a request for a meeting, the Trustees shall comply
with the provisions of said Section 16(c) with respect to providing such
Shareholders access to the list of the Shareholders of record of the Trust or
the mailing of such materials to such Shareholders of record, subject to any
rights provided to the Trust or any Trustees provided by said Section 16(c).
Notice shall be sent, by First Class Mail or such other means determined by the
Trustees, at least 15 days prior to any such meeting.

SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of that Series
(or class).

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ARTICLE VIII
CUSTODIAN

SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and is a member of the Depository Trust
Company as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Bylaws of the Trust: (a) to hold the securities owned by the Trust and
deliver the same upon written order or oral order confirmed in writing; (b) to
receive and receipt for any moneys due to the Trust and deposit the same in its
own banking department or elsewhere as the Trustees may direct; and (c) to
disburse such funds upon orders or vouchers.

The Trustees may also authorize the custodian to employ one or more sub-
custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and is a
member of the Depository Trust Company or such other person as may be permitted
by the Commission or otherwise in accordance with the 1940 Act.

SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.

ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS

SECTION 9.01 DISTRIBUTIONS.

(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.

(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.

(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend pro rata among
the Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in Subsection 9.01(b) hereof.

SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize,

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requesting that the Series purchase the Shares in accordance with this Section
9.02; and the Shareholder so requesting shall be entitled to require the Series
to purchase, and the Series or the principal underwriter of the Series shall
purchase his said Shares, but only at the Net Asset Value thereof (as described
in Section 9.03 of this Article IX). The Series shall make payment for any such
Shares to be redeemed, as aforesaid, in cash or property from the assets of that
Series and payment for such Shares shall be made by the Series or the principal
underwriter of the Series to the Shareholder of record within seven (7) days
after the date upon which the request is effective. Upon redemption, shares
shall become Treasury shares and may be re-issued from time to time.

SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO
ASSETS. The term "Net Asset Value" of any Series shall mean that amount by
which the assets of that Series exceed its liabilities, all as determined by or
under the direction of the Trustees. Such value shall be determined separately
for each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees; provided, however,
that the Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any Order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 9.03
with respect to valuation of assets and liabilities. The resulting amount,
which shall represent the total Net Asset Value of the particular Series, shall
be divided by the total number of shares of that Series outstanding at the time
and the quotient so obtained shall be the Net Asset Value per Share of that
Series. At any time the Trustees may cause the Net Asset Value per Share last
determined to be determined again in similar manner and may fix the time when
such redetermined value shall become effective. If, for any reason, the net
income of any Series, determined at any time, is a negative amount, the Trustees
shall have the power with respect to that Series (a) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, (b) to reduce the number of Outstanding Shares of
such Series by reducing the number of Shares in the account of each Shareholder
by a pro rata portion of that number of full and fractional Shares which
represents the amount of such excess negative net income, (c) to cause to be
recorded on the books of such Series an asset account in the amount of such
negative net income (provided that the same shall thereupon become the property
of such Series with respect to such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount, of dividends declared
thereafter upon the Outstanding Shares of such Series on the day such negative
net income is experienced, until such asset account is reduced to zero; (d) to
combine the methods described in clauses (a) and (b) and (c) of this sentence;
or (e) to take any other action they deem appropriate, in order to cause (or in
order to assist in causing) the Net Asset Value per Share of such Series to
remain at a constant amount per Outstanding Share immediately after each such
determination and declaration. The Trustees shall also have the power not to
declare a dividend out of net income for the purpose of causing the Net Asset
Value per Share to be increased. The Trustees shall not be required to adopt,
but may at any time adopt, discontinue or amend the practice of maintaining the
Net Asset Value per Share of the Series at a constant Amount.

SECTION 9.04 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.

SECTION 9.05 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into

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conformity with the requirements for such qualification and (b) to refuse to
transfer or issue Shares to any person whose acquisition of Shares in question
would result in such disqualification. The redemption shall be effected at the
redemption price and in the manner provided in this Article IX.

The holders of Shares shall upon demand disclose to the Trustees in writing
such information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority.

ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION

SECTION 10.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the
Trust or to Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.

SECTION 10.02 INDEMNIFICATION.

(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):

(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(b) No indemnification shall be provided hereunder to a Covered person:

(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry);

provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.

(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights

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to indemnification to which Trust personnel, other than Covered Persons, and
other persons may be entitled by contract or otherwise under law.

(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 10.02.

SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by the Shareholder,
assume the defense of any claim made against the Shareholder for any act or
obligation of the Series and satisfy any judgment thereon from the assets of the
Series.

ARTICLE XI
MISCELLANEOUS

SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust officers or any
Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Series or (if the Trustees shall have yet to have established
Series) of the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Trust Instrument shall protect a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee hereunder.

SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.

SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in

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<PAGE>

respect of any such change, conversion or exchange of Shares, and in such case
such Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or other distribution, or to
receive such allotment or rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed as aforesaid.

SECTION 11.04 TERMINATION OF TRUST.

(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).

(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees, sell and
convey all or substantially all of the assets of the Trust or any affected
Series to another trust, partnership, association or corporation, or to a
separate series of shares thereof, organized under the laws of any state which
trust, partnership, association or corporation is an open-end management
investment company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the Trust or
any affected Series, and which may include shares of beneficial interest, stock
or other ownership interests of such trust, partnership, association or
corporation or of a series thereof.

(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.05(b), the Trust or any affected
Series shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder and the right, title and
interest of all parties with respect to the Trust or Series shall be canceled
and discharged.

Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.

SECTION 11.05 REORGANIZATION. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.

Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.

SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof' and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument.
All expressions like "his", "he" and "him", shall be deemed to include the
feminine and neuter, as well as masculine,

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<PAGE>

genders. Headings are placed herein for convenience of reference only and in
case of any conflict, the text of this Trust Instrument, rather than the
headings, shall control. This Trust Instrument may be executed in any number of
counterparts each of which shall be deemed an original.

SECTION 11.07 APPLICABLE LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.

SECTION 11.08 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to
vote (a) on any amendment which would affect their right to vote granted in
Section 7.01 of Article VII hereof, (b) on any amendment to this Section 11.08,
(c) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (d) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Notwithstanding anything else herein, any amendment to Article X
hereof shall not limit the rights to indemnification or insurance provided
therein with respect to action or omission of Covered Persons prior to such
amendment.

SECTION 11.09 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.

SECTION 11.10 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument as of date first written above.

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<PAGE>

/s/ Robert C. Brown
Robert C. Brown, as
Trustee
and not individually

/s/ Donald H. Burkhardt
Donald H. Burkhardt, as
Trustee
and not individually

/S/ JAMES C. HARRIS
-------------------
James C. Harris, as
Trustee
and not individually

/s/ John Y. Keffer
John Y. Keffer, as
Trustee
and not individually

/s/ Richard M. Leach
Richard M. Leach, as
Trustee
and not individually

/s/ Donald C. Willeke
Donald C. Willeke, as
Trustee
and not individually

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<PAGE>

EXHIBIT 2

<PAGE>

NORWEST FUNDS

BYLAWS

DATED JULY 1, 1993

<PAGE>

NORWEST FUNDS
BYLAWS

These Bylaws of NORWEST Funds (the "Trust"), a Delaware business trust, are
subject to the Trust Instrument of the Trust dated July 1, 1993, as from time to
time amended, supplemented or restated (the "Trust Instrument"). Capitalized
terms used herein which are defined in the Trust Instrument are used as therein
defined.

ARTICLE I
PRINCIPAL OFFICE

The principal office of the Trust shall be located in New York City, New
York, or such other location as the Trustees may, from time to time, determine.
The Trust may establish and maintain such other offices and places of business
as the Trustees may, from time to time, determine.

ARTICLE II
OFFICERS AND THEIR ELECTION

SECTION 2.01 OFFICERS. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from time to
time elect. The Trustees may delegate to any officer or committee the power to
appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.

SECTION 2.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 3.13 hereof, the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.

SECTION 2.03 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.

<PAGE>

ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES

SECTION 3.01 MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by, or under the direction of, the Trustees, and they
shall have all powers necessary and desirable to carry out their
responsibilities, so far as such powers are not inconsistent with the laws of
the State of Delaware, the Trust Instrument or with these Bylaws.

SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect from
their own number an executive committee, which shall have any or all the powers
of the Trustees while the Trustees are not in session. The Trustees may also
elect from their own number other committees from time to time. The number
composing such committees and the powers conferred upon the same are to be
determined by vote of a majority of the Trustees. All members of such
committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.

SECTION 3.03 COMPENSATION. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.

SECTION 3.04 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders
and the Trustees, and he may, subject to the approval of the Trustees, appoint a
Trustee to preside at such meetings in his absence. He shall perform such other
duties as the Trustees may from time to time designate.

SECTION 3.05 PRESIDENT. The President shall be the chief executive
officer of the Trust and, subject to the direction of the Trustees, shall have
general administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute or sign such powers of attorney, proxies, agreements or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants and other advisors and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.

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SECTION 3.06 TREASURER. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and securities
of the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall
perform such additional duties as the Trustees may from time to time designate.

SECTION 3.07 SECRETARY. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the custody of the seal of the Trust. The
Secretary shall perform such additional duties as the Trustees may from time to
time designate.

SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior of
the Vice Presidents present and able to act) may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.

SECTION 3.09 ASSISTANT TREASURER. Any Assistant treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer.

SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary.

SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority and perform
such duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties.

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<PAGE>

SECTION 3.12 SURETY BONDS. The Trustees may require any officer or agent
of the Trust to execute a bond (including without limitation, any bond required
by the 1940 Act and the rules and regulations of the Commission) to the Trust in
such sum and with such surety or sureties as the Trustees may determine,
conditioned upon the faithful performance of his duties to the Trust including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his hands.

SECTION 3.13 REMOVAL. Any officer may be removed from office whenever in
the judgment of the Trustees the best interest of the Trust will be served
thereby, by the vote of a majority of the Trustees given at any regular meeting
or any special meeting of the Trustees. In addition, any officer or agent
appointed in accordance with the provisions of Section 3.10 hereof may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Trustees.

SECTION 3.14 REMUNERATION. The salaries or other compensation, if any, of
the officers of the Trust shall be fixed from time to time by resolution of the
Trustees.

ARTICLE IV
SHAREHOLDER'S MEETINGS

SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or (b)
requested in writing by the holder or holders of at least 10% of the Outstanding
Shares entitled to vote. If the Secretary, when so ordered or requested,
refuses or neglects for more than 30 days to call such special meeting, the
Trustees or the Shareholders so requesting, may, in the name of the Secretary,
call the meeting by giving notice thereof in the manner required when notice is
given by the Secretary. If the meeting is a meeting of the Shareholders of one
or more Series or classes of Shares, but not a meeting of all Shareholders of
the Trust, then only special meetings of the Shareholders of such one or more
Series or classes shall be called and only the shareholders of such one or more
Series or classes shall be entitled to notice of and to vote at such meeting.

SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of any
meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least fifteen (15) days
before the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the record of such meeting, or to any Shareholder who
shall attend such

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<PAGE>

meeting in person or by proxy. Notice of adjournment of a Shareholder's meeting
to another time or place need not be given, if such time and place are announced
at the meeting or reasonable notice is given to persons present at the meeting
and the adjourned meeting is held within a reasonable time after the date set
for the original meeting.

SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by proxy,
provided that either (a) an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven (11) months before
the meeting, unless the instrument specifically provides for a longer period or
(b) the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act which authorization is received not more than eleven (11) months before the
meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contract from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden or proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, as these Bylaws or such Trust Instrument may
be amended or supplemented from time to time, all maters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Shareholders
were shareholder of a Delaware corporation.

SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such other
place in the United States as the Trustees may designate.

SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the

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Shareholders held at the principal place of business of the Trust.

ARTICLE V
TRUSTEES' MEETINGS

SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any two
other Trustees.

SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall
be given notice of the determination by the Chairman or any two other Trustees,
as provided for in Section 4.04 of the Trust Instrument.

SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a quorum
for the transaction of business and an action of a majority of the quorum shall
constitute action of the Trustees.

SECTION 5.04 NOTICE. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the meeting to each
Trustee, as provided for the Section 4.04 of the Trust Instrument. A written
notice may be mailed, postage prepaid, addressed to him at his address as
registered on the books of the Trust or, if not so registered, at his last known
address.

SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees shall
be held at the principal place of business of the Trust or such other place as
the Trustees may designate. Any meeting may adjourn to any place.

SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to the holding of
the meeting without notice, or shall sign a written assent thereto filed with
the record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.

SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting. Such consent shall be treated,
for all purposes, as a vote at a meeting of the Trustees held at the principal
place of business of the Trustees.

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<PAGE>

SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Trustees
may participate in a meeting of Trustees by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting. Any meeting conducted by telephone shall be deemed to
take place at and from the principal office of the Trust.

ARTICLE VI
SHARES OF BENEFICIAL INTEREST

SECTION 6.01 BENEFICIAL INTEREST. The beneficial interest in the Trust
shall at all times divided into such transferable Shares of one or more separate
and distinct Series, or classes thereof, as the Trustees shall from time to time
create and establish. The number of Shares is unlimited, and each Share of each
Series or class thereof shall be without par value and shall represent an equal
proportionate interest with each other Share in the Series, none having priority
or preference over another, except to the extent that such priorities or
preference are established with respect to one or more classes of shares
consistent with applicable law and any rule or order of the Commission.

SECTION 6.02 TRANSFER OF SHARES. The Shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer recorded
on the books of the Trust, in person or by attorney.

SECTION 6.03 EQUITABLE INTEREST NOT RECOGNIZED. The Trust shall be
entitled to treat the holder of record of any Share or Shares of beneficial
interest as equitable or other claim or interest in such Share or Shares on the
part of any other person except as may be otherwise expressly provided by law.

SECTION 6.04 SHARE CERTIFICATE. No certificates certifying the ownership
of Shares shall be issued except as the Trustees may otherwise authorize. The
Trustees may issue certificates to a Shareholder of any Series or class thereof
for any purpose and the issuance of a certificate to one or more Shareholders
shall not require the issuance of certificates generally. In the event that the
Trustees authorize the issuance of Share certificates, such certificate shall
be in the form proscribed from time to time by the Trustees and shall be signed
by the President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary. Such signatures may be facsimiles if the
certificate is signed by a transfer or shareholder services agent or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on
certificate shall have ceased to be such officer before such

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<PAGE>

certificate is issued, it may be issued by the Trust with the same effect as if
he or she were such officer at the time of its issue.

In lieu of issuing certificates for Shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trusts for the record holders of such Shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such Shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.

SECTION 6.05 LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.

SECTION 6.06 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may
at any time discontinue the issuance of Share certificates and may, by written
notice to each Shareholder, require the surrender of Share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of Shares in the Trust.

ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST

The Trustees, acting for and on behalf of the Trust, shall be deemed to
hold legal and beneficial ownership of any income earned on securities held by
the Trust issued by any business entity formed, organized or existing under the
laws of any jurisdiction other than a state, commonwealth, possession or colony
of the United States or the laws of the United States.

ARTICLE VIII
INSPECTION OF BOOKS

The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust or any of them shall be open to the inspection
of the Shareholder; and no Shareholder shall have any right to inspect any
account or book or document of the Trust except as conferred by law or otherwise
by the Trustees or by resolution of the Shareholders.

ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES

-8-

<PAGE>

The Trust may purchase and maintain insurance on behalf of any Covered
Person or employee of the Trust, including any Covered Person or employee of the
Trust who is or was serving at the request of the Trust as a Trustee, officer or
employee of a corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Trustees would
have the power to indemnify him against such liability.

The Trust may not acquire or obtain a contract for insurance that protects
or purports to protect any Trustee or officer of the Trust against any liability
to the Trust of its Shareholders to which he would otherwise be subject by
reason or willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.

ARTICLE X
SEAL

The seal of the Trust shall be circular in form bearing the inscription:

"NORWEST FUNDS -- 1993
THE STATE OF DELAWARE"

-9-

<PAGE>

EXHIBIT 4

<PAGE>

SHARES OF BENEFICIAL INTEREST
NO PAR VALUE

NORWEST FUNDS

__________ FUND - __________ CLASS

[CERTIFICATE SPECIMEN]

-1-

<PAGE>

- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

UNIF GIFT MIN ACT - _______ Custodial ______
TEN COM - as tenants in common (Cust) (Minor)
TEN ENT - as tenants by entireties under Uniform Gifts to
Minors

JT TEN - as joint tenants with right of survivorship Act ___________________
and not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
- --------------------------------------------------------------------------------

FOR VALUE RECEIVED, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------------

- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)

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

, SHARES
- ------------------------------------------------------
OF BENEFICIAL INTEREST REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT

ATTORNEY
- ------------------------------------------------------
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN-NAMED TRUST WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.

DATED 19
------ --

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

-2-

<PAGE>

EXHIBIT 5 (a)

<PAGE>

NORWEST FUNDS
INVESTMENT ADVISORY AGREEMENT

August 1, 1993

AGREEMENT made this 1st day of August, 1993, between Norwest Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at 61 Broadway, New York, New York 10006
and Norwest Bank Minnesota, N.A. (the "Adviser"), a corporation organized under
the laws of State of Delaware with its principal place of business at 733
Marquette Avenue, Minneapolis, Minnesota 55479.

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue its shares of beneficial interest, no par value, in separate
series and classes; and

WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust as listed in Appendix A hereto (each a
"Fund" and collectively the "Funds") and the Adviser is willing to provide those
services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, the Trust and the Adviser agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument, By-Laws and Registration Statement filed with
the Securities and Exchange Commission (the "Commission") under the Act and the
Securities Act of 1933 (the "Securities Act"), including any representations
made in the prospectuses and statements of additional information relating to
the Funds contained therein and as may be supplemented from time to time, all in
such manner and to such extent as may from time to time be authorized by the
Trust's Board of Trustees (the "Board"). The Trust is currently authorized to
issue fourteen series of shares and the Board is authorized to issue any
unissued shares in any number of additional classes or series. The Trust has
delivered copies of the documents listed in this Section 1 and will from time to
time furnish Adviser with any amendments thereof.

SECTION 2. APPOINTMENT

The Trust hereby employs Adviser, subject to the direction and control of
the Board, to manage the investment and reinvestment of the assets in each Fund
and, without limiting the generality of the foregoing, to provide other services
specified in Section 3 hereof.

-2-

<PAGE>

SECTION 3. DUTIES OF THE ADVISER

(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.

(b) The Adviser will report to the Board at each meeting thereof all
changes in each Fund since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in
the Funds' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the Funds'
maintain investments. The Adviser will also furnish the Board with such
statistical and analytical information with respect to securities in the Funds
as the Adviser may believe appropriate or as the Board reasonably may request.
In making purchases and sales of securities for the Funds, the Adviser will bear
in mind the policies set from time to time by the Board as well as the
limitations imposed by the Trust's Trust Instrument, By-Laws, Registration
Statement under the Act and the Securities Act, the limitations in the Act and
in the Internal Revenue Code of 1986, as amended in respect of regulated
investment companies and the investment objectives, policies and restrictions of
the Funds.

(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on
the Trust's behalf in any such respect.

-3-

<PAGE>

documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Trust pursuant
to the rules and regulations of any national, state, or local government entity
with jurisdiction over the Trust, including the Securities and Exchange
Commission and the Internal Revenue Service. The books and records pertaining
to the Trust which are in possession of the Adviser shall be the property of the
Trust. The Trust, or the Trust's authorized representatives, shall have access
to such books and records at all times during the Adviser's normal business
hours. Upon the reasonable request of the Trust, copies of any such books and
records shall be provided promptly by the Adviser to the Trust or the Trust's
authorized representatives.

SECTION 4. EXPENSES

The Adviser shall be responsible for that portion of the net expenses of
each Fund (except interest, taxes, brokerage, fees and other expenses paid by
the Fund in accordance with an effective plan pursuant to Rule 12b-1 under the
Act and organization expenses, all to the extent such exceptions are permitted
by applicable state law and regulation) incurred by the Fund during each of the
Fund's fiscal years or portion thereof that this Agreement is in effect which,
as to the Fund, in any such year exceeds the limits applicable to the Fund under
the laws or regulations of any state in which shares of the Fund are qualified
for sale (reduced pro rata for any portion of less than a year) and which is not
assumed by Forum Financial Services, Inc., the Trust's manager and distributor
or any other person.

The Trust hereby confirms that, subject to the foregoing, the Trust shall
be responsible and shall assume the obligation for payment of all the Trust's
other expenses, including: interest charges, taxes, brokerage fees and
commissions; certain insurance premiums; fees, interest charges and expenses of
the Trust's custodian, transfer agent and dividend disbursing agent;
telecommunications expenses; auditing, legal and compliance expenses; costs of
the Trust's formation and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information, account
application forms and shareholder reports and delivering them to existing and
prospective shareholders; costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares of the Trust; costs of reproduction,
stationery and supplies; compensation of the Trust's trustees, officers,
employees and other personnel performing services for the Trust who are not the
Adviser's employees or employees of Forum Financial Services, Inc. or affiliated
persons of either; costs of corporate meetings; registration fees and related
expenses for registration with the Commission and the securities regulatory
authorities of other countries in which the Trust's shares are sold; state
securities law registration fees and related

-4-

<PAGE>

expenses; fees and out-of-pocket expenses payable to Forum Financial Services,
Inc. under any distribution, management or similar agreement; and all other fees
and expenses paid by the Trust pursuant to any distribution or shareholder
service plan adopted pursuant to Rule 12b-1 under the Act.

SECTION 5. STANDARD OF CARE

The Trust shall expect of the Adviser, and the Adviser will give the Trust
the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an inducement to the Adviser's undertaking these
services the Adviser shall not be liable hereunder for any mistake of judgment
or in any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, the Adviser against
any liability to the Trust or to the Trust's security holders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of the Adviser's duties hereunder, or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder.

SECTION 6. COMPENSATION

In consideration of the foregoing, the Trust shall pay the Adviser, with
respect to each of the Funds, a fee at an annual rate as listed in Appendix A
hereto. Such fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. The Adviser's
reimbursement, if any, of a Fund's expenses as provided in Section 4 hereof,
shall be estimated and paid to the Trust monthly in arrears, at the same time as
the Trust's payment to the Adviser for such month. Payment of the advisory fee
will be reduced or postponed, if necessary, with any adjustments made after the
end of the year.

SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.

(b) This Agreement shall remain in effect with respect to a Fund for a
period of one year from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting securities of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the

-5-

<PAGE>

continuation of this Agreement is not approved as to a Fund, the Adviser may
continue to render to that Fund the services described herein in the manner and
to the extent permitted by the Act and the rules and regulations thereunder.

(c) This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting securities of the Fund on 60 days' written notice to
the Adviser or (ii) by the Adviser on 60 days' written notice to the Trust.
This agreement shall terminate upon assignment.

SECTION 8. ACTIVITIES OF THE ADVISER

Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust 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
corporation, trust, firm, individual or association.

SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the shareholders of the
Funds.

SECTION 10. "NORWEST" NAME

If the Adviser ceases to act as investment adviser to the Trust or any Fund
whose name includes the words "Norwest," or if the Adviser requests in writing,
the Trust shall take prompt action to change the name of the Trust any such Fund
to a name that does not include the words "Norwest." The Adviser may from time
to time make available without charge to the Trust for the Trust's use any marks
or symbols owned by the Adviser, including marks or symbols containing the words
"Norwest" or any variation thereof, as the Adviser deems appropriate. Upon the
Adviser's request in writing, the Trust shall cease to use any such mark or
symbol at any time. The Trust acknowledges that any rights in or to the words
"Norwest" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties,

-6-

<PAGE>

including other investment companies, to use the words "Norwest" in their names
without the consent of the Trust. The Trust shall not use the words "Norwest"
in conducting any business other than that of an investment company registered
under the Act without the permission of the Adviser.

SECTION 11. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected. No amendment to
this Agreement or the termination of this Agreement with respect to a Fund shall
effect this Agreement as it pertains to any other Fund, nor shall any such
amendment require the vote of any of the Fund's shareholders.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
---
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/s/ Jay Kiedrowski
Jay Kiedrowski
Executive Vice President

-7-

<PAGE>

NORWEST FUNDS
INVESTMENT ADVISORY AGREEMENT
AUGUST 1, 1993
AS AMENDED DECEMBER 8, 1993

APPENDIX A

Fee as a % of
the Annual Average Daily
Funds of the Trust Net Assets of the Fund
- ----------------------- -------------------------------

Cash Investment Fund,
Treasury Fund and
U.S. Government Fund 0.20% of the first $300
million of assets;
0.16% for next $400
million, and 0.12% of
remaining net assets

Ready Cash Investment Fund 0.40% of the first $300
million of assets;
0.36% for next $400
million, and 0.32% of
remaining net assets

Municipal Money Market Fund 0.35% of the first $500
million of assets;
0.325% for next $500
million, and 0.30% of
remaining net assets

Minnesota Tax-Free Fund,
Colorado Tax-Free Fund, 0.50% of the first $300
million of assets;
0.46% for next $400
million, and 0.42% of
remaining net assets

Government Income Fund 0.40%

Income Fund
Tax-Free Income Fund,
Adjustable U.S. Government
Reserve Fund 0.50%

ValuGrowth Stock Fund, 0.80% of the first $300
Income Stock Fund million of assets;
0.76% for next $400
million, and
0.72% of remaining net assets

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Appendix A to the
Investment Advisory Agreement to be duly amended with respect to Arizona
Tax-Free Fund and Total Return Bond Fund, all as of December 8, 1993.

NORWEST FUNDS NORWEST BANK MINNESOTA, N.A.

/s/ John Y. Keffer /s/Jay Kiedrowski
John Y. Keffer Jay Kiedrowski
President Executive Vice President

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<PAGE>

EXHIBIT 5 (b)

<PAGE>

NORWEST FUNDS (ADVANTAGE)
INVESTMENT ADVISORY AGREEMENT

November 11, 1994

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument), in
separate series;

WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust as listed in Appendix A hereto (each a
"Fund" and collectively the "Funds"), and the Adviser is willing to provide
those services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, the Trust and the Adviser agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument, By-Laws and Registration Statement filed with
the Securities and Exchange Commission (the "Commission") under the Act and the
Securities Act of 1933 (the "Securities Act"), including any representations
made in the prospectus and statement of additional information relating to the
Funds contained therein and as may be supplemented from time to time, all in
such manner and to such extent as may from time to time be authorized by the
Trust's Board of Trustees (the "Board"). The Trust is currently authorized to
issue thirty-one series of shares and the Board is authorized to issue any
unissued shares in any number of additional classes or series. The Trust has
delivered copies of the documents listed in this Section 1 and will from time to
time furnish Adviser with any amendments thereof.

SECTION 2. INVESTMENT ADVISER; APPOINTMENT

-1-

<PAGE>

SECTION 3. DUTIES OF THE ADVISER

(b) The Adviser will report to the Board at each meeting thereof all
changes in each Fund since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Funds' holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Funds maintain
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request. In making
purchases and sales of securities for the Funds, the Adviser will bear in mind
the policies set from time to time by the Board as well as the limitations
imposed by the Trust's Trust Instrument, By-Laws and Registration Statement
under the Act and the Securities Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended in respect of regulated investment
companies and the investment objectives, policies and restrictions of the Funds.

(d) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents and records
relating to the services provided by the Adviser pursuant to this Agreement
required to be prepared and maintained by the Trust pursuant to the rules and
regulations of any national, state, or local government entity with jurisdiction
over the Trust, including the Securities and Exchange Commission and the
Internal Revenue Service. The books and records pertaining to the Trust which
are in possession of the Adviser shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during the Adviser's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided promptly by the Adviser to the Trust or the Trust's authorized
representatives.

-2-

<PAGE>

(e) The Adviser shall have no duties or obligations pursuant to this
Agreement, including any obligation to reimburse Fund expenses pursuant to
Section 4 hereof, during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Act.

SECTION 4. EXPENSES

The Adviser shall be responsible for that portion of the net expenses of
each Fund (except interest, taxes, brokerage, fees and other expenses paid by
the fund in accordance with an effective plan pursuant to Rule 12b-1 under the
Act and organization expenses, all to the extent such exceptions are permitted
by applicable state law and regulation) incurred by the Fund during each of the
Fund's fiscal years or portion thereof that this Agreement is in effect which,
as to the Fund, in any such year exceeds the limits applicable to the Fund under
the laws or regulations of any state in which shares of the Fund are qualified
for sale (reduced pro rata for any portion of less than a year) and which is not
assumed by Forum Financial Services, Inc., the Trust's manager and distributor,
or any other person.

The Trust hereby confirms that, subject to the foregoing, the Trust shall
be responsible and shall assume the obligation for payment of all the Trust's
other expenses, including: interest charges, taxes, brokerage fees and
commissions; certain insurance premiums; fees, interest charges and expenses of
the Trust's custodian, transfer agent and dividend disbursing agent;
telecommunications expenses; auditing, legal and compliance expenses; costs of
the Trust's formation and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information, account
application forms and shareholder reports and delivering them to existing and
prospective shareholders; costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares in the Trust; costs of reproduction,
stationery and supplies; compensation of the Trust's trustees, officers,
employees and other personnel performing services for the Trust who are not the
Adviser's employees or employees of Forum Financial Services, Inc. or affiliated
persons of either; costs of corporate meetings; registration fees and related
expenses for registration with the Commission and the securities regulatory
authorities of other countries in which the Trust's shares are sold; state
securities law registration fees and related expenses; fees and out-of-pocket
expenses payable to Forum Financial Services, Inc. under any distribution,
management or similar agreement; and all other fees and expenses paid by the
Trust pursuant to any distribution or shareholder service plan adopted pursuant
to Rule 12b-1 under the Act.

SECTION 5. STANDARD OF CARE

-3-

<PAGE>

that nothing herein shall be deemed to protect, or purport to protect, the
Adviser against any liability to the Trust or to the Trust's security holders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties
hereunder, or by reason of the Adviser's reckless disregard of its obligations
and duties hereunder.

SECTION 6. COMPENSATION

(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Funds, a fee at an annual rate as listed in Appendix
A hereto. Such fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. The Adviser's
reimbursement, if any, of a Fund's expenses as provided in Section 4 hereof,
shall be estimated and paid to the Trust monthly in arrears, at the same time as
the Trust's payment to the Adviser for such month. Payment of the advisory fee
will be reduced or postponed, if necessary, with any adjustments made after the
end of the year.

(b) For purposes of calculating a Fund's daily net assets in determining
the fees payable hereunder there shall be excluded all holdings (and liabilities
related to the purchase of holdings) in any registered open-end management
investment company for which the Adviser acts as investment adviser. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Act.

SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.

-4-

<PAGE>

SECTION 8. ACTIVITIES OF THE ADVISER

SECTION 9. SUBADVISERS

At its own expense, the Adviser may carry out any of its obligations under
this agreement by employing, subject to your supervision, one or more persons
who are registered as investment advisers pursuant to the Investment Advisers
Act of 1940, as amended, or who are exempt from registration thereunder
("Subadvisers"). Each Subadviser's employment will be evidenced by a separate
written agreement approved by the Board and, if required, by the shareholders of
the applicable Fund. The Adviser shall not be liable hereunder for any act or
omission of any Subadviser, except to exercise good faith in the employment of
the Subadviser and except with respect to matters as to which the Adviser
assumes responsibility in writing.

SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the interest holders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the interest holders of the
Funds.

SECTION 11. "NORWEST" NAME

If the Adviser ceases to act as investment adviser to the Trust or any Fund
whose name includes the word "Norwest," or if the Adviser requests in writing,
the Trust shall take prompt action to change the name of the Trust any such Fund
to a name that does not include the word "Norwest." The Adviser may from time
to time make available without charge to the Trust for the Trust's use any marks
or symbols owned by the adviser, including marks or symbols containing the word
"Norwest" or any variation thereof, as the Adviser deems appropriate. Upon the
Adviser's request in writing, the Trust shall cease to use any such mark or
symbol at any time. The Trust acknowledges that any rights in or to the word
"Norwest" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties, including other investment companies, to use the word "Norwest" in
their names without the consent of the Trust. The Trust shall not use the word
"Norwest" in conducting any

-5-

<PAGE>

business other than that of an investment company registered under the Act
without the permission of the Adviser.

SECTION 12. MISCELLANEOUS

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/s/ P. Jay Kiedrowski
P. Jay Kiedrowski
Executive Vice President

-6-

<PAGE>

NORWEST FUNDS (ADVANTAGE)
INVESTMENT ADVISORY AGREEMENT

Appendix A

Fee as a % of
the Annual Average Daily
Funds of the Trust Net Assets of the Fund
- -------------------- ------------------------

Diversified Equity Fund 0.65%
Growth Equity Fund 0.90%

Large Company Growth Fund 0.65%
Small Company Growth Fund 0.90%
International Fund 0.85%
Income Equity Fund 0.50%
Index Fund 0.15%

Conservative Balanced Fund 0.45%
Moderate Balanced Fund 0.53%
Growth Balanced Fund 0.58%

Intermediate U.S. Government Fund 0.33%
Managed Fixed Income Fund 0.35%
Stable Income Fund 0.30%

<PAGE>

EXHIBIT 5 (c)

<PAGE>

NORWEST FUNDS
INVESTMENT SUBADVISORY AGREEMENT

AGREEMENT made this 26th day of July, 1994, among Norwest Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at 61 Broadway, New York, New York 10006,
Norwest Bank Minnesota, N.A. (the "Adviser"), a corporation organized under the
laws of State of Delaware with its principal place of business at Sixth Street
and Marquette, Minneapolis, Minnesota 55479 and Crestone Capital Management,
Inc. (the "Subadviser"), a corporation organized under the laws of the State of
Colorado with its principal place of business at 7720 East BelleView Avenue,
Englewood, Colorado 80111.

WHEREAS, the Trust and the Adviser desire that the Subadviser perform
investment advisory services for the Small Company Stock Fund (the "Fund") and
the Subadviser is willing to provide those services on the terms and conditions
set forth in this Agreement;

NOW THEREFORE, the Trust, the Adviser and the Subadviser agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument, By-Laws and Registration Statement filed with
the Securities and Exchange Commission (the "Commission") under the Act and the
Securities Act of 1933 (the "Securities Act"), including any representations
made in the prospectus and statement of additional information relating to the
Fund contained therein and as may be supplemented from time to time, all in such
manner and to such extent as may from time to time be authorized by the Trust's
Board of Trustees (the "Board"). The Trust is currently authorized to issue
thirty-one series of shares and the Board is authorized to issue any unissued
shares in any number of additional classes or series. The Trust has delivered
copies of the documents listed in this Section 1 and will from time to time
furnish Subadviser with any amendments thereof.

SECTION 2. INVESTMENT ADVISER; APPOINTMENT

Subject to the direction and control of the Board, the Adviser manages the
investment and reinvestment of the assets of the Fund and provides for certain
management and services as specified in the Investment Advisory Agreement
between the Trust and the Adviser with respect to the Fund.

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Subject to the direction and control of the Board, the Subadviser shall
manage the investment and reinvestment of the assets of the Fund and, without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.

SECTION 3. DUTIES OF THE SUBADVISER

(a) The Subadviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Fund. To carry out such
decisions, the Subadviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Fund. In all purchases, sales and other transactions in securities for the
Fund, the Subadviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.

(b) The Subadviser will report to the Board at each meeting thereof all
changes in the Fund since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Fund and the
Subadviser, and on its own initiative, will furnish the Board from time to time
with such information as the Subadviser may believe appropriate for this
purpose, whether concerning the individual companies whose securities are
included in the Fund's holdings, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in which the
Fund maintains investments. The Subadviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Fund as the Subadviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities for the Fund, the
Subadviser will bear in mind the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Trust Instrument, By-Laws,
Registration Statement under the Act and the Securities Act, the limitations
in the Act and in the Internal Revenue Code of 1986, as amended in respect of
regulated investment companies and the investment objectives, policies and
restrictions of the Fund.

(c) The Subadviser may from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's behalf in any such respect.

(d) The Subadviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Subadviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Subadviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining

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<PAGE>

to the Trust which are in possession of the Subadviser shall be the property of
the Trust. The Trust, or the Trust's authorized representatives, shall have
access to such books and records at all times during the Subadviser's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by the Subadviser to the Trust
or the Trust's authorized representatives.

SECTION 4. EXPENSES

Subject to any expenses reimbursement arrangements between the Adviser or
others and the Trust, the Trust shall be responsible and shall assume the
obligation for payment of all of the Trust's expenses.

SECTION 5. STANDARD OF CARE

The Trust shall expect of the Subadviser, and the Subadviser will give the
Trust the benefit of, the Subadviser's best judgment and efforts in rendering
its services to the Trust, and as an inducement to the Subadviser's undertaking
these services the Subadviser shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Subadviser against any liability to the Trust or to the Trust's security holders
to which the Subadviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the
Subadviser's duties hereunder, or by reason of the Subadviser's reckless
disregard of its obligations and duties hereunder.

SECTION 6. COMPENSATION

In consideration of the foregoing, the Adviser and not the Trust shall pay
the Subadviser a fee as shall be determined from time to time in writing
between the Adviser and the Subadviser; provided, that no fee shall be paid to
the Subadviser by the Adviser from the date hereof until the date on which
shareholders of the Fund approve this Agreement.

SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective on the date first above written.

(b) This Agreement shall remain in effect for a period of one year from
the date of its effectiveness and shall continue in effect for successive
twelve-month periods (computed from each anniversary date of the approval);
provided that such continuance is specifically approved at least annually (i) by
the Board or by the vote of a majority of the outstanding voting securities of
the Fund, and, in either case, (ii) by a majority of the Trust's trustees who
are not parties to this Agreement or interested persons of any such party (other
than as trustees of the Trust); provided further, however, that if this
Agreement or the continuation of this Agreement is not approved, the Subadviser
may continue to render the services described herein in the manner and to the
extent permitted by the Act and the rules and regulations thereunder.

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<PAGE>

(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund on 60 days' written notice to the Subadviser or
(ii) by the Subadviser on 60 days' written notice to the Trust. This agreement
shall terminate upon assignment unless prior approval of the Board is obtained.

SECTION 8. ACTIVITIES OF THE SUBADVISER

Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's officers, directors or employees who may
also be a trustee, officer or employee of the Trust, or persons otherwise
affiliated persons of the Trust 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 corporation, trust, firm, individual or association.

SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of the Fund shall not be
liable for any obligations of the Trust or of the Fund under this Agreement, and
the Subadviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Subadviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Fund.

SECTION 10. MISCELLANEOUS

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

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<PAGE>

(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/S/ JOHN Y. KEFFER
--------------------------
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/S/ JAY KIEDROWSKI
--------------------------
Jay Kiedrowski
Executive Vice President

CRESTONE CAPITAL MANAGEMENT, INC.

/S/ KIRK MCCOWN
-------------------------------
Kirk McCown
President

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<PAGE>

NORWEST FUNDS
INVESTMENT SUBADVISORY AGREEMENT
FEE AGREEMENT

This fee agreement is made as of the 26th day of July, 1994 by and between
Crestone Capital Management, Inc. ("Crestone") and Norwest Bank Minnesota, N.A.
("Norwest").

WHEREAS, the parties have entered into a Norwest Funds Investment
Subadvisory Agreement ("Subadvisory Agreement") whereby Crestone provides
investment management advice to Norwest;

WHEREAS, the Subadvisory provide that the fees to be paid Crestone are to
be as agreed upon in writing by the parties.

NOW THEREFORE, the parties agree that the fees to be paid Crestone under
the Subadvisory Agreement shall be calculated as follows on a monthly basis by
applying the following annual percentage rates to the assets managed by Crestone
pursuant to said Subadvisory Agreement:

a. 0.0040 on the first $30,000,000.00;
b. 0.0030 on the next $30,000,000.00;
c. 0.0020 on the next $40,000,000.00; and
d. 0.0015 on all sums in excess of $100,000,000.00;

provided, however, that no fee shall be paid to Crestone by Norwest for
Crestone's services on behalf of Small Company Stock Fund (the "Fund"), a
separate portfolio of Norwest Funds (the "Trust"), from the date hereof until
the date on which shareholders of the Fund approve the "Norwest Funds Investment
Subadvisory Agreement" among the Trust, Norwest and Crestone.

The net assets under management against which the foregoing fees are to be
applied is the month-end average of net assets, determined at the end of each
month by dividing the sum of the average net assets managed by Crestone at the
end of each week during the month by the number of weeks ended during the
calendar month. The assets for each weekly period are determined by averaging
the net assets under management at the close of each business day for each
business day in the week that this agreement is in effect. If this agreement
becomes effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for that part of the month this
Agreement is in effect shall be subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month. During any period when the determination of net asset
value is suspended, the average net asset value for the last day prior to such
suspension shall for this purpose be deemed to be the average net asset value at
the close of each succeeding week until it is again determined.

The foregoing fee schedule shall remain in effect until changed in writing
by the parties.

NORWEST BANK MINNESOTA, N.A.

/s/ Jay Kiedrowski
Jay Kiedrowski
Executive Vice President

<PAGE>

CRESTONE CAPITAL MANAGEMENT, INC.

/s/ Kirk Mc Cown
Kirk McCown
President

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EXHIBIT 5 (d)

<PAGE>

NORWEST FUNDS (ADVANTAGE)
INVESTMENT SUBADVISORY AGREEMENT

November 11, 1994

AGREEMENT made this 11th day of November, 1994, between Norwest Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at 61 Broadway, New York, New York 10006,
Norwest Bank Minnesota, N.A. (the "Adviser"), a banking association organized
under the laws of the United States of America with its principal place of
business at Sixth Street and Marquette, Minneapolis, Minnesota 55479, and
Schroder Capital Management International Inc. (the "Subadviser,") a corporation
organized under the laws of the State of New York with its principal place of
business at One State Street, New York, New York.

WHEREAS, the Subadviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
is registered with the United Kingdom Investment Management Regulatory
Organization ("IMRO");

WHEREAS, the Trust and the Adviser desire that the Subadviser perform
investment advisory services for International Fund, Diversified Equity Fund,
Growth Equity Fund, Conservative Balanced Fund, Moderate Balanced Fund, and
Growth Balanced Fund (each a "Fund", and collectively the "Funds"), and the
Subadviser is willing to provide those services on the terms and conditions set
forth in this Agreement; and

WHEREAS, the Subadviser is willing to render such investment advisory
services to the Funds; and

NOW THEREFORE, in consideration for the promises and covenants contained
herein, the Trust, the Adviser and the Subadviser hereby agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

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currently authorized to issue thirty-one series of shares and the Board is
authorized to issue any unissued shares in any number of additional classes or
series. The Trust has delivered to the Adviser copies of the documents listed
in this Section 1 and will from time to time furnish Subadviser with any
amendments thereof.

SECTION 2. INVESTMENT SUBADVISER; APPOINTMENT

Subject to the direction and control of the Board, the Adviser manages the
investment and reinvestment of the assets of the Funds and provides for certain
management and services as specified in the Investment Advisory Agreements
between the Trust and the Adviser with respect to the Funds.

Subject to the direction and control of the Board and the Adviser,
Subadviser shall manage the investment and reinvestment of the assets of the
Funds and, without limiting the generality of the foregoing, shall provide the
management and other services specified below, all in such manner and to such
extent as may be directed from time to time by the Adviser.

SECTION 3. DUTIES OF THE SUBADVISER

(a) The Subadviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Funds. To carry out such
decisions, the Subadviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Subadviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.

(b) The Subadviser will report to the Board at each meeting thereof all
changes in the Funds since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Subadviser, and on its own initiative, will furnish the Board from time to time
with such information as the Subadviser may believe appropriate for this
purpose, whether concerning the individual companies whose securities are
included in a Fund's holdings, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in which the
Fund maintains investments. The Subadviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Funds as the Subadviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities for a Fund, the Subadviser
will bear in mind the policies set from time to time by the Board as well as the
limitations imposed by the Trust's Trust Instrument, By-Laws and Registration
Statement under the Act and the Securities Act, the limitations in the Act and
in the Internal Revenue Code of 1986, as amended in respect of regulated
investment companies and the investment objectives, policies and restrictions of
the Funds.

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(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's behalf in any such respect.

(d) The Subadviser shall maintain records for each Fund relating to
portfolio transactions and the placing and allocation of brokerage orders as are
required to be maintained by the Trust under the Act. The Subadviser shall
prepare and maintain, or cause to be prepared and maintained, in such form, for
such periods and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Subadviser
pursuant to this Agreement required to be prepared and maintained by the Trust
pursuant to the rules and regulations of any national, state, or local
government entity with jurisdiction over the Trust, including the Securities and
Exchange Commission and the Internal Revenue Service. The books and records
pertaining to the Trust which are in possession of the Subadviser shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided promptly by the Subadviser to the Trust
or the Trust's authorized representatives.

SECTION 4. EXPENSES

Subject to any expense reimbursement arrangements between the Adviser or
others and the Trust, the Trust shall be responsible and shall assume the
obligation for payment of all of the Trust's expenses. The Subadviser shall pay
for maintaining its staff and personnel necessary to perform its obligations
under this Agreement and shall, at its own expense maintain the office space,
facilities, equipment and personnel that are reasonably necessary to carry out
its obligations hereunder.

SECTION 5. STANDARD OF CARE

The Trust shall expect of the Subadviser, and the Subadviser will give the
Trust the benefit of, the Subadviser's best judgment and efforts in rendering
its services to the Trust, and as an inducement to the Subadviser's undertaking
these services the Subadviser shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Subadviser against any liability to the Trust or to the Trust's interest holders
to which the Subadviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the
Subadviser's duties hereunder, or by reason of the Subadviser's reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Subadviser" shall include any affiliates of the Subadviser performing
services for the Funds contemplated hereby and directors, officers and employees
of the Subadviser as well as the Subadviser itself.

The Subadviser shall not be liable for any losses caused by disturbances of
its operations by virtue of force majeure, war, riot, or damage caused by nature
or due to other events for which

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the Subadviser is not responsible (e.g., strike, lock-out or losses caused by
the imposition of foreign exchange controls, expropriation of assets or other
acts of domestic or foreign authorities).

The presence of exculpatory language in this Agreement shall not be deemed
by the Trust, the Funds, the Adviser, the Subadviser, or any other party
appointed pursuant to this Agreement, including without limitation any
custodian, as in any way limiting causes of action and remedies which may,
notwithstanding such language, be available to the Funds either under common law
or statutory law principles applicable to fiduciary relationships or under the
Federal securities laws.

SECTION 6. COMPENSATION

In consideration of the foregoing, the Adviser and not the Trust shall pay
the Subadviser a fee with respect to each fund as shall be determined from time
to time in writing between the Adviser and the Subadviser.

SECTION 7. EFFECTIVENESS, DURATION, AND TERMINATION

(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.

(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting interests of a Portfolio on 60 days' written notice to the Subadviser or
(ii) by the Subadviser on 60 days' written notice to the Trust. This agreement
shall terminate upon assignment.

SECTION 8. ACTIVITIES OF THE SUBADVISER

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dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association. It is specifically understood that
officers, directors and employees of the Subadviser and its affiliates may
continue to engage in providing portfolio management services and advice to
other investment companies, whether or not registered, and to other investment
advisory clients. When other clients of the Subadviser desire to purchase or
sell a security at the same time such security is purchased or sold for the
Funds, such purchases and sales will, to the extent feasible, be allocated among
the Funds and such clients in a manner believed by the Subadviser to be
equitable to the Funds and such clients.

SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of the Funds shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and the Subadviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Funds to which the Subadviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.

SECTION 10. NOTICE

Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:

61 Broadway
New York, New York 10006;
Attention: Norwest Funds Secretary

if to the Adviser, at:

Sixth Street and Marquette.
Minneapolis, MN 55479
Attention: James P. Ross

and if to the Subadviser, at:

Schroder Capital Management International Inc.,
787 Seventh Avenue, 29th Floor
New York, New York 10019
Attention: Mark J. Smith

SECTION 11. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if

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required by the Act, by a vote of a majority of the outstanding voting
securities of the Funds thereby affected.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

(e) The Subadviser confirms that each Fund is a "business customer" as
defined by IMRO.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
-----------------------------
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/S/ P. Jay Kiedrowski
-----------------------------
P. Jay Kiedrowski
Executive Vice President

SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL, INC.

/s/ Mark J. Smith
-----------------------------
Mark J. Smith
Director

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EXHIBIT 6

<PAGE>

NORWEST ADVANTAGE FUNDS
DISTRIBUTION SERVICES AGREEMENT

October 1, 1995, as amended January 29, 1996

AGREEMENT made the 1st day of October, 1995 as amended this 29th day of
January, 1996 between Norwest Advantage Funds (the "Trust"), a business trust
organized under the laws of the State of Delaware with its principal place of
business at Two Portland Square, Portland, Maine 04101 and Forum Financial
Services, Inc. ("Forum"), a corporation organized under the laws of State of
Delaware with its principal place of business at Two Portland Square, Portland,
Maine 04101.

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and offers
for sale continuously shares of beneficial interest, no par value, in separate
series and classes;

WHEREAS, Forum is a registered broker-dealer engaged in the business of
selling shares of registered investment companies either directly to purchasers
or through other securities dealers;

WHEREAS, the Trust desires that Forum, as principal underwriter, offer the
shares of each series of the Trust (each a Fund) and of each class thereof as
listed in Appendix A hereto (referred to as the "Shares") and Forum is willing
to so act as principal underwriter on the terms and conditions set forth in this
Agreement in order to promote the growth of the Funds and facilitate the
distribution of their Shares;

NOW, THEREFORE, the parties agree as follows:

SECTION 1. DELIVERY OF DOCUMENTS AND APPOINTMENT

(a) The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in the Trust's Trust Instrument, By-Laws and registration statement
filed with the Securities and Exchange Commission (the "SEC"), under the Act and
the Securities Act of 1933, as amended (the "Securities Act"), including any
representations made in a prospectus ("Prospectus") or statement of additional
information ("SAI") relating to a Fund contained therein and as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue the Shares and the Board is
authorized to issue any unissued shares in any number of additional series or
classes. The Trust has delivered to Forum copies of the documents listed in
this Section and will from time to time furnish Forum with any amendments
thereof.

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<PAGE>

(b) The Trust hereby appoints Forum as the principal underwriter and
distributor of the Funds to sell the Shares of the Funds to the public and
hereby agrees during the term of this Agreement to sell Shares of the Funds to
Forum upon the terms and conditions herein set forth.

SECTION 2. EXCLUSIVE NATURE OF DUTIES

Forum shall be the exclusive representative of the Trust to act as
principal underwriter and distributor of the Funds except that the rights given
under this Agreement to Forum shall not apply to Shares issued in connection
with the merger or consolidation of any other investment company with a Fund; a
Fund's acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company; or the reinvestment in Shares
by a Fund's shareholders of dividends or other distributions or any other
offering by the Trust of securities to its stockholders.

SECTION 3. PURCHASE OF SHARES FROM THE TRUST;
OFFERING OF SHARES

(a) Forum shall have the right to buy from the Trust the Shares needed to
fill unconditional orders for unsold Shares of the Funds as shall then be
effectively registered under the Securities Act placed with Forum by investors
or securities dealers or depository institutions or other financial
intermediaries acting as agent for their customers. Alternatively, Forum may
act as the Trust's agent, to offer, and to solicit offers to subscribe to,
unsold Shares of the Funds as shall then be effectively registered under the
Securities Act. Forum will promptly forward all orders and subscriptions to the
Trust. The price which Forum shall pay for Shares purchased from the Trust and
the price that Forum shall offer Shares shall be the net asset value, determined
as set forth in Section 3(c) hereof, used in determining the public offering
price on which such orders are based. Shares purchased by Forum are to be
resold by Forum to investors at the public offering price, as set forth in
Section 3(b) hereof, or to securities dealers, depository institutions or other
financial intermediaries acting as agent for their customers that have entered
into agreements with Forum pursuant to Section 9 hereof. The Trust reserves the
right to sell Shares of the Funds directly to investors through subscriptions
received by the Trust, but no such direct sales shall affect the sales charges
due to Forum hereunder.

(b) The public offering price of the Shares of a Fund, i.e., the price per
Share at which Forum or selected dealers or selected agents (each as defined in
Section 9 hereof) may sell Shares to the public (or, in the case of Exchange
Shares of Ready Cash Investment Fund (RCIF), to shareholders of B Shares or such
other classes of Shares of a Fund as may from time to time be permissible),
shall be the public offering price determined in accordance with the then
currently effective Prospectus and SAI of the Fund or class thereof under the
Securities Act, relating to such Shares, but not to exceed the net asset value
at which Forum, when acting as principal, is to purchase such Shares, plus, in
the case of Shares for which an initial sales charge is assessed, an initial
charge

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<PAGE>

equal to a specified percentage or percentages of the public offering price of
the Shares as set forth in the current Prospectus relating to the Shares. In
the case of Shares for which an initial sales charge may be assessed, Shares may
be sold to certain classes of persons at reduced sales charges or without any
sales charge as from time to time set forth in the current Prospectus and SAI
relating to the Shares. The Trust will advise Forum of the net asset value per
Share on any date requested by Forum and at such other times as it shall have
been determined by the Trust.

(c) The net asset value of Shares of the Funds shall be determined by the
Trust, or any agent of the Trust, as of the close of the New York Stock Exchange
on each Fund business day in accordance with the method set forth in the
Prospectus and SAI and guidelines established by the Board.

(d) The Trust reserves the right to suspend the offering of Shares of a
Fund or of any class thereof at any time in the absolute discretion of the
Board, and upon notice of such suspension Forum shall cease to offer Shares of
the Funds specified in the notice.

(e) The Trust, or any agent of the Trust designated in writing to Forum by
the Trust, shall be promptly advised by Forum of all purchase orders for Shares
received by Forum and all subscriptions for Shares obtained by Forum as agent
shall be directed to the Trust for acceptance and shall not be binding until
accepted by the Trust. Any order or subscription may be rejected by the Trust;
provided, however, that the Trust will not arbitrarily or without reasonable
cause refuse to accept or confirm orders or subscriptions for the purchase of
Shares. The Trust (or its agent) will confirm orders and subscriptions upon
their receipt, will make appropriate book entries and, upon receipt by the Trust
(or its agent) of payment thereof, will issue such Shares in certificated or
uncertificated form pursuant to the instructions of Forum. Forum agrees to
cause such payment and such instructions to be delivered promptly to the Trust
(or its agent).

SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST

(a) Any of the outstanding Shares of a Fund or class thereof may be
tendered for redemption at any time, and the Trust agrees to redeem or
repurchase the Shares so tendered in accordance with its obligations as set
forth in the Trust's Trust Instrument and in accordance with the applicable
provisions set forth in the Prospectus and SAI relating to the Shares of the
Fund. The price to be paid to redeem or repurchase the Shares of a Fund shall
be equal to the net asset value calculated in accordance with the provisions of
Section 3(b) hereof less, in the case of Shares for which a deferred sales
charge is assessed, a deferred sales charge equal to a specified percentage or
percentages of the net asset value of those Shares as from time to time set
forth in the Prospectus relating to those Shares (or, in the case of Exchange
Shares of RCIF, relating to Exchange Shares and the original B Shares) or their
cost (or, in the case of Exchange Shares of RCIF, the cost of the B Shares of a
Fund that were first purchased by the shareholder and then exchanged, either
directly or indirectly through a series of exchanges, for the Exchange Shares
(the "Original B Shares")), whichever is less. Shares of a Fund or class
thereof for

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<PAGE>

which a deferred sales charge may be assessed and that have been outstanding for
a specified period of time may be redeemed without payment of a deferred sales
charge as from time to time set forth in the Prospectus relating to those Shares
(or, in the case of Exchange Shares of RCIF, relating to the Original B Shares).
All payments by the Trust hereunder shall be made in the manner set forth below.

(b) The Trust (or its agent) shall pay the total amount of the redemption
price consisting of the redemption price less any applicable deferred sales
charge to the redeeming shareholder or its agent, and, except as may be
otherwise required by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD") and any interpretations thereof, the
deferred sales charges, if any, as defined in the above paragraph pursuant to
the instructions of Forum, in each case in New York Clearing House funds on or
before the seventh business day subsequent to the Trust or its agent having
received the notice of redemption in proper form. Notwithstanding the
termination of this Agreement, Forum shall be entitled to receive its Allocable
Portion (as defined in Appendix B hereto) of all contingent deferred sales
charges ("CDSCs") paid or payable with respect to the Shares in accordance with
Section 4(b) hereof.

(c) Redemption of Shares or payment may be suspended at times when the New
York Stock Exchange is closed for any reason other than its customary weekend or
holiday closings, when trading thereon is restricted, when an emergency exists
as a result of which disposal by the Trust of securities owned by a Fund is not
reasonably practicable or it is not reasonably practicable for the Trust fairly
to determine the value of a Fund's net assets, or during any other period when
the SEC, by order, so permits.

SECTION 5. COMPENSATION

(a) The Trust will pay Forum in consideration of its services in
connection with the distribution of Shares of each Fund its allocable portion
("Allocable Portion") (as determined in accordance with Appendix B to this
Agreement) of the distribution servicing fees allowable under the NASD Rules of
Fair Practice as in effect from time to time (the "NASD Rules") in respect of
such Shares of such Fund, which fee (the "Distribution Fee") shall accrue daily
and be paid monthly as promptly as possible after the last day of each calendar
month but in any event prior to the tenth (10th) day of the following calendar
month, at an annual rate set forth in the distribution plan dated August 1, 1995
as amended January 29, 1996 (the "Plan"), together with a separate interest fee
thereon, as determined in accordance with Section 3(c) of the Plan.

Forum will be deemed to have fully earned its Allocable Portion of the
Distribution Fee payable in respect of Shares of each Fund upon the sale of the
"Commission Shares" (as defined in Appendix B to this Agreement) of such Fund
taken into account in determining Forum's Allocable Portion of such Distribution
Fee.

(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds,
all CDSCs properly

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<PAGE>

payable by such holders in accordance with the terms of the Prospectus relating
to such Shares and shall cause the Transfer Agent to pay such amounts over as
promptly as possible after the settlement date for each redemption of such
Shares. Forum's Allocable Portion of CDSC shall be payable to Forum (or to
persons to whom Forum directs the Trust to make payments).

(c) Forum may direct the Trust to pay any part or all of the Distribution
Fee or CDSCs payable to Forum in respect of any Shares of any Fund directly to
persons providing funds to Forum to cover or otherwise enable the incurring of
expenses associated with distribution services, and the Trust agrees to accept
and to comply with such direction. Forum shall, at its own expense and not the
expense of the Trust or any Fund, provide the Trust with any necessary
calculations of Forum's Allocable Portion of any Distribution Fee or CDSCs, and
the Trust shall be entitled to rely conclusively on such calculations, without
prejudice to any claim it may have concerning the accuracy of such calculations.

(d) Notwithstanding anything to the contrary contained in this Agreement
or in any relevant Plan, (a) the amount of asset-based sales charges and CDSCs
paid to Forum by any class of Shares of any Fund shall not exceed the amount
permitted by the NASD Rules, as in effect from time to time, and (b) the
aggregate amount of asset-based sales charges and CDSCs paid to Forum by any
class of Shares of any Fund shall not exceed [six and one-quarter percent (6
1/4%)] of the total issue price of such Shares plus interest thereon from the
date of issuance through the date of payment at the prime rate (determined in
accordance with the NASD Rules in effect from time to time) plus one percent
(1%) per annum.

(e) The Trust will pay to Forum each month a maintenance fee with respect
to each Fund or class thereof in the amounts, for the periods, and at the annual
rates set forth in the Prospectus relating to the Shares of the Fund.

(f) Except as provided in clauses (a), (b) and (e) of Section 5 hereof,
Forum shall be entitled to no compensation for its services hereunder.

SECTION 6. ASSIGNMENT

(a) Forum may, from time to time, assign, transfer or pledge ("Transfer")
to one or more designees (each an "Assignee"), its rights to all or a designated
portion of (i) the Forum's Allocable Portion of the Distribution Fees (but not
Forum's duties and obligations pursuant hereto or pursuant to the Plan), and
(ii) Forum's Allocable Portion of CDSCs, free and clear of any offsets or claims
the Trust may have against Forum. Each such Assignee's interest in a designated
portion of a Forum's Allocable Portion of the Distribution Fees and a Forum's
Allocable Portion of CDSCs is hereinafter referred to as an "Assignee's 12b-1
Portion" and an "Assignee's CDSC Portion," respectively. A Transfer pursuant to
this Section 6(a) shall not reduce or extinguish any claim of the Trust against
Forum.

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<PAGE>

(b) Forum shall promptly notify the Trust in writing of each Transfer
pursuant to Section 6(a) hereof by providing the Trust with the name and
address of each such Assignee.

(c) In connection with a Transfer Forum may direct the Trust to pay all of
such Distributor's Allocable Portion of the Distribution Fees and the
Distributor's Allocable Portion of CDSCs from time to time to a depository or
collection agent designated by any Assignee, which depository or collection
agent may be delegated the duty of dividing the Distributor's Allocable Portion
of the Distribution Fees and the Distributor's Allocable Portion of CDSC between
the Assignee's 12b-1 Portion and Assignee's CDSC Portion and the balance of
Distributor's Allocable Portion (such balance, when distributed to Forum by the
depository or collection agent, "Distributor's 12b-1 Share") and of the
Distributor's Allocable Portion of CDSCs (such balance, when distributed to
Forum by the depository or collection agent, the "Distributor's Earned CDSC
Portion"), in which case only Distributor's 12b-1 Share and the Distributor's
Forum's Earned CDSC Portion may be subject to offsets or claims the Trust may
have against Forum.

(d) The Trust shall not amend the Plan to reduce the amount payable to
Forum or any Assignee under Section 5(a) hereof with respect to the B Shares for
any B Shares which have been issued prior to the date of such amendment.

SECTION 7. DUTIES AND REPRESENTATIONS OF THE TRUST

(a) The Trust shall furnish to Forum copies of all information, financial
statements and other papers which Forum may reasonably request for use in
connection with the distribution of Shares of the Funds, including, upon request
by Forum, one certified copy of all financial statements prepared for the Funds
by independent public accountants. The Trust shall make available to Forum such
number of copies of the Funds' Prospectuses and SAIs as Forum shall reasonably
request.

(b) The Trust shall take, from time to time, subject to the approval of
its Trustees and any required approval of its shareholders, all action necessary
to fix the number of authorized shares of the Funds (if such number is not
limited) and to register the Shares under the Securities Act, to the end that
there will be available for sale such number of Shares as Forum reasonably may
be expected to sell.

(c) The Trust and Forum will cooperate with each other in taking such
action as may be necessary to qualify Shares for sale under the securities laws
of such states and other jurisdictions as the Trust may designate; provided that
Forum shall not be required to register as a broker-dealer or file a consent to
service of process in such states. Any such qualification may be withheld,
terminated or withdrawn by the Trust at any time in its discretion. Forum shall
furnish such information and other material relating to its affairs and
activities as may be required by the Trust in connection with such

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<PAGE>

qualification. The Trust will pay all fees and expenses of registering Shares
under the Securities Act and of qualification and the maintenance of
qualification of Shares and its qualification under applicable state securities
laws. Forum shall pay all expenses relating to Forum's broker-dealer
qualification.

(d) The Trust will furnish, in reasonable quantities upon request by
Forum, copies of annual and interim reports of the Funds.

(e) The Trust represents that its Registration Statement under the
Securities Act and the Trust's Prospectuses included therein (as in effect from
time to time) have been or will be, as the case may be, carefully prepared in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC thereunder. The Trust represents and warrants that its
Registration Statement and Prospectuses contain or will contain all statements
required to be stated therein in accordance with the Securities Act and the
rules and regulations of the SEC, and that all statements of fact contained or
to be contained therein are or will be true and correct at the time indicated or
on the effective date as the case may be; that neither its Registration
Statement nor its Prospectuses, when they shall become effective or be
authorized for use, will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares. The Trust will from
time to time file such amendment or amendments to its Registration Statement and
Prospectuses as, in the light of future developments, shall, in the opinion of
its counsel, be necessary in order to have its Registration Statement and
Prospectuses at all times contain all material facts required to be stated
therein or necessary to make any statements therein not misleading to a
purchaser of Shares, but, if the Trust shall not file such amendment or
amendments within fifteen days following receipt of a written request from Forum
to do so, Forum may, at its option, terminate this agreement immediately. The
Trust shall not file any amendment to its Registration Statement or Prospectuses
without giving Forum reasonable notice thereof in advance; provided, however,
that nothing contained in this agreement shall in any way limit the Trust's
right to file at any time such amendments to its Registration Statement or
Prospectuses, of whatever character, as the Trust may deem advisable, such right
being in all respects absolute and unconditional. The Trust represents and
warrants that any amendment to its Registration Statement or Prospectuses
hereafter filed will, when they becomes effective, contain all statements
required to be stated therein in accordance with the Act and the rules and
regulations of the SEC, that all statements of fact contained therein will, when
the same shall become effective, be true and correct and that no such amendment,
when it becomes effective, will include an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of the Shares.

SECTION 8. DUTIES OF FORUM

(a) Forum shall use its best efforts to sell Shares of the Funds upon the
terms and conditions contained herein and in the then current Prospectus. Forum
shall devote

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<PAGE>

reasonable time and effort to effect sales of Shares of the Funds, but shall not
be obligated to sell any specific number of Shares. The services of Forum to
the Trust hereunder are not to be deemed exclusive and nothing herein contained
shall prevent Forum from entering into like arrangements with other investment
companies so long as the performance of its obligations hereunder is not
impaired thereby.

(b) In selling Shares of the Funds, Forum shall use its best efforts in
all material respects duly to conform with the requirements of all federal and
state laws relating to the sale of such securities. None of Forum, any selected
dealer, any selected agent, or any other person is authorized by the Trust to
give any information or to make any representations other than as is contained
in a Fund's Prospectus and SAI, as from time to time in effect, or any sales
literature specifically approved in writing by the Trust.

(c) Forum shall adopt and follow procedures, as approved by the officers
of the Trust, for the confirmation of sales to investors and selected dealers or
selected agents, the collection of amounts payable by investors and selected
dealers or selected agents on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD as
may from time to time exist.

SECTION 9. SELECTED DEALER AND SELECTED AGENT AGREEMENTS

Forum shall have the right to enter into selected dealer agreements with
securities dealers of its choice ("selected dealers") and selected agent
agreements with depository institutions and other financial intermediaries of
its choice ("selected agents") for the sale of Shares of the Funds and to fix
therein the portion of the sales charge that may be allocated to the selected
dealers or selected agents; provided, that the Trust shall approve the forms of
agreements with selected dealers or selected agents and the compensation set
forth therein. Shares of each Fund shall be resold by selected dealers or
selected agents only at the public offering price(s) set forth in the Prospectus
and SAI relating to the Shares of the Fund. Within the United States, Forum
shall offer and sell Shares of the Funds only to such selected dealers as are
members in good standing of the NASD.

SECTION 10. PAYMENT OF EXPENSES

(a) The Trust shall bear all costs and expenses of the Funds, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of its Registration Statement and Prospectuses and SAIs
and all amendments and supplements thereto and the preparing and mailing of
annual and interim reports and proxy materials to shareholders (including but
not limited to the expense of setting in type any registration statements,
prospectuses, annual or interim reports or proxy materials).

(b) The Trust shall bear the cost and expenses of the qualification of
Shares of the Funds for sale, and, if necessary or advisable in connection
therewith, of qualifying the Trust (but not Forum) as an issuer or as a broker
or dealer, in such states of the United States or other jurisdictions as shall
be selected by the Trust and Forum pursuant to

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<PAGE>

Section 7(c) hereof and the costs and expenses payable to each state or
jurisdiction for continuing qualification therein until the Trust decides to
discontinue qualification pursuant to Section 7(c) hereof.

SECTION 11. INDEMNIFICATION OF FORUM

The Trust agrees to indemnify, defend and hold Forum, and any person who
controls Forum within the meaning of Section 15 of the Securities Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which Forum
or any such controlling person may incur, under the Securities Act, or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Trust's Registration Statement or
the Prospectuses or SAIs in effect from time to time under the Securities Act or
arising out of or based upon any alleged omission to state a material fact
required to be stated in any one thereof or necessary to make the statements in
any one thereof not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect Forum against any
liability to the Trust or its security holders to which Forum would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of Forum's reckless disregard of its
obligations and duties under this Agreement. The Trust's agreement to indemnify
Forum and any such controlling person as aforesaid is expressly conditioned upon
the Trust's being notified of the commencement of any action brought against
Forum or any such controlling person, such notification to be given by letter or
by telegram addressed to the Trust at its principal office in New York, New
York, and sent to the Trust by the person against whom such action is brought
within ten days after the summons or other first legal process shall have been
served. The Trust will be entitled to assume the defense of any suit brought to
enforce any such claim and to retain counsel of good standing chosen by the
Trust and approved by Forum. In the event the Trust elects to assume the
defense of any such suit and retain counsel of good standing approved by Forum,
the defendants in the suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Trust does not elect to assume
the defense of the suit or in case Forum does not approve of counsel chosen by
the Trust, the Trust will reimburse Forum or the controlling person or persons
named defendant or defendants in the suit for the fees and expenses of any
counsel retained by Forum or such persons. The indemnification agreement
contained in this Section shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of Forum or any
controlling person and shall survive the sale of any of a Fund's Shares made
pursuant to subscriptions obtained by Forum. This agreement of indemnity will
inure exclusively to the benefit of Forum, to the benefit of its successors and
assigns, and to the benefit of any controlling persons and their successors and
assigns. The Trust agrees promptly to notify Forum of the commencement of any
litigation or proceeding against the Trust in connection with the issue and sale
of any of the Shares of the Funds. The failure to notify the Trust of the
commencement of any such action shall not relieve the Trust from any liability
which it may have to the person against whom the action is

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<PAGE>

brought by reason of any alleged untrue statement or omission otherwise than on
account of the indemnity agreement contained in this Section.

SECTION 12. INDEMNIFICATION OF THE TRUST

Forum agrees to indemnify, defend and hold the Trust, its several officers
and trustees, and any person who controls the Trust within the meaning of
Section 15 of the Securities Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Trust, its officers or trustees, or any such
controlling person may incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by the
Trust, its officers and trustees or controlling person resulting from such
claims or demands shall arise out of or be based upon (i) any alleged untrue
statement of a material fact contained in information furnished in writing by
Forum to the Trust for use in its Registration Statement insofar as it relates
to a Fund or the Prospectuses or SAIs relating to a Fund in effect from time to
time under the Securities Act, (ii) any alleged omission to state a material
fact in connection with such information required to be stated in the
Registration Statement, a Prospectus or a SAI or necessary to make the
information not misleading or (iii) willful misfeasance, bad faith or gross
negligence in the performance by Forum of its duties, or by reason of Forum's
reckless disregard of its obligations and duties under this Agreement. Forum's
agreement to indemnify the Trust, its officers and trustees and any controlling
person as aforesaid is expressly conditioned upon Forum being notified of the
commencement of any action brought against the Trust, its officers or trustees
or any controlling person, such notification to be given by letter or telegram
addressed to Forum at its principal office in New York, New York, and sent to
Forum by the person against whom the action is brought, within ten days after
the summons or other first legal process shall have been served. Forum will be
entitled to assume the defense of the action, with counsel in good standing of
its own choosing approved by the Trust, if the action is based solely upon
alleged misstatement, omission or action described in clauses (i), (ii) or
(iii), above and in any other event Forum and the Trust, and their officers and
trustees or controlling persons, shall each have the right to participate in the
defense or preparation of the defense of any such action. In the event Forum
elects to assume the defense of any such suit and retain counsel of good
standing approved by the Trust, the defendants in the suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case
Forum does not elect to assume the defense of the suit or in case the Trust does
not approve of counsel chosen by Forum, Forum will reimburse the Trust or the
controlling person or persons named defendant or defendants in the suit for the
fees and expenses of any counsel retained by the Trust or such persons. The
indemnification agreement contained in this Section shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Trust or any controlling person and shall survive the sale of any of the
Shares made pursuant to orders or subscriptions obtained by Forum. This
agreement of indemnity will inure exclusively to the benefit of the Trust, to
the benefit of its successors and assigns, and to the benefit of any controlling
persons and

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<PAGE>

their successors and assigns. Forum agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against Forum in connection with
the issue and sale of any of the Shares. The failure to notify Forum of the
commencement of any action shall not relieve Forum from any liability which it
may have to the Trust, to its officers and trustees, or to controlling persons
by reason of any untrue statement or omission on the part of or action by Forum
otherwise than on account of the indemnity agreement contained in this Section.

SECTION 13. NOTIFICATION BY THE TRUST

The Trust agrees to advise Forum immediately:

(a) of any request by the SEC for amendments to the Trust's Registration
Statement insofar as it relates to the Funds, a Fund's Prospectus or SAI or for
additional information,

(b) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the Trust's Registration Statement insofar as it relates to
the Funds, a Fund's Prospectus or SAI or the initiation of any proceeding for
that purpose,

(c) of the happening of any material event which makes untrue any
statement made in the Trust's Registration Statement insofar as it relates to
the Funds or any Fund's Prospectus or SAI or which requires the making of a
change in either thereof in order to make the statements therein not misleading,
and

(d) of all actions of the SEC with respect to any amendments to the
Trust's Registration Statement insofar as it relates to the Funds, a Fund's
Prospectus or SAI which may from time to time be filed with the SEC under the
Securities Act.

SECTION 14. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective with respect to each Fund on the
date hereof. Upon effectiveness of this Agreement, it shall supersede all
previous agreements between the parties hereto covering the subject matter
hereof insofar as such Agreement may have been deemed to relate to the Funds.

(b) This Agreement shall continue in effect with respect to a Fund for a
period of one year from the date of its effectiveness and shall continue in
effect for successive one-year periods with respect to the Fund; provided,
however, that continuance is specifically approved at least annually (i) by the
Board or by a vote of a majority of the outstanding voting securities of the
Fund and (ii) by a vote of a majority of Trustees of the Trust (I) who are not
parties to this Agreement or interested persons of any such party (other than as
Trustees of the Trust) and (II) with respect to each class of a Fund for which
there is an effective plan of distribution adopted pursuant to Rule 12b-1 under
the Act, who do not have any direct or indirect financial interest in any such
plan applicable

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to the class or in any agreements related to the plan, cast in person at a
meeting called for the purpose of voting on such approval; provided further,
however, that if the continuation of this Agreement is not approved as to a
Fund, Forum may continue to render to the Fund the services described herein in
the manner and to the extent permitted by the Act and the rules and regulations
thereunder.

(c) This Agreement may be terminated at any time with respect to a Fund,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting securities of the Fund or, with respect to each class
of a Fund for which there is an effective plan of distribution adopted pursuant
to Rule 12b-1 under the Act, a majority of Trustees of the Trust who do not have
any direct or indirect financial interest in any such plan or in any agreements
related to the plan, on 60 days' written notice to Forum or (ii) by Forum on 60
days' written notice to the Trust.

(d) This Agreement shall also automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the Act; PROVIDED, that the Transfer of Forum's rights to the
Distributor's 12b-1 Portion or the Distributor's Earned CDSC shall not cause a
termination of this Agreement or be deemed to be an assignment for purposes of
this Section 14(d).

(e) Subject to the provisions of the following sentence, if this Agreement
is terminated for any reason other than a Complete Termination (as defined in
Section 10 of the Plan), the obligations of the Trust and Forum pursuant to
Sections 5(a)-(d) and 6(a)-(d) of this Agreement will continue and survive any
such termination. A termination of the Plan (including a Complete Termination
as defined in Section 10 of the Plan) with respect to any or all Shares of any
or all Funds shall not affect the obligations of the Trust with respect to
payments of the Distributor's Allocable Portion of CDSC or Assignee's Allocable
Portion of CDSC or of the obligations of Forum in respect of CDSC's pursuant to
Sections 5 and 6 of this Agreement.

SECTION 15. NOTICES

Any notice required or permitted to be given hereunder by either party to
the other shall be deemed sufficiently given if personally delivered or sent by
telegram or registered, certified or overnight mail, postage prepaid, addressed
by the party giving such notice to the other party at the last address furnished
by the other party to the party giving such notice, and unless and until changed
pursuant to the foregoing provisions hereof each such notice shall be addressed
to the Trust or Forum, as the case may be.

SECTION 16. ACTIVITIES OF FORUM

Except to the extent necessary to perform Forum's obligations hereunder,
nothing herein shall be deemed to limit or restrict Forum's right, or the right
of any of Forum's officers, directors or employees who may also be a trustee,
officer or employee of the Trust, or persons otherwise affiliated with the Trust
to engage in any other business or to

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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 corporation, trust, firm, individual or association.

SECTION 17. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the Trustees of the Trust or the shareholders of the Funds.

SECTION 18. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(c) The provisions of this Agreement shall be, to the extent applicable,
construed and interpreted in accordance with the laws of the State of New York.

(d) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

NORWEST ADVANTAGE FUNDS FORUM FINANCIAL SERVICES, INC.

/s/David I. Goldstein /s/John Y. Keffer
David I. Goldstein John Y. Keffer
Vice President President

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NORWEST ADVANTAGE FUNDS
DISTRIBUTION SERVICES AGREEMENT

October 1, 1995

APPENDIX A

Funds of the Trust Classes of Shares
- ------------------ -----------------

Cash Investment Fund Sole Existing Class

U.S. Government Fund Sole Existing Class

Treasury Fund Sole Existing Class

Municipal Money Market Fund Institutional Class
Investor Class

Ready Cash Investment Fund Institutional Class
Investor Class
Exchange Class

Income Stock Fund A Shares
B Shares
I Shares

ValuGrowth Stock Fund A Shares
B Shares
I Shares

Contrarian Stock Fund A Shares
B Shares
I Shares

Small Trust Stock Fund A Shares
B Shares
I Shares

Adjustable U.S. Government
Reserve Fund A Shares
B Shares
I Shares

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Funds of the Trust Classes of Shares
- ------------------ -----------------

Government Income Fund A Shares
B Shares
I Shares

Income Fund A Shares
B Shares
I Shares

Total Return Bond Fund A Shares
B Shares
I Shares

Tax-Free Income Fund A Shares
B Shares
I Shares

Arizona Tax-Free Fund A Shares
B Shares
I Shares

Colorado Tax-Free Fund A Shares
B Shares
I Shares

Minnesota Tax-Free Fund A Shares
B Shares
I Shares

Diversified Equity Fund I Shares
A Shares
B Shares

Growth Equity Fund I Shares
A Shares
B Shares

Large Trust Growth Fund I Shares

Small Trust Growth Fund I Shares

International Fund I Shares
A Shares
B Shares

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Funds of the Trust Classes of Shares
- ------------------ -----------------

Income Equity Fund I Shares
A Shares
B Shares

Index Fund I Shares

Conservative Balanced Fund I Shares

Moderate Balanced Fund I Shares

Growth Balanced Fund I Shares

Intermediate U.S. Government Fund I Shares
A Shares
B Shares

Managed Fixed Income Fund I Shares

Stable Income Fund I Shares
A Shares
B Shares

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<PAGE>

NORWEST ADVANTAGE FUNDS
DISTRIBUTION SERVICES AGREEMENT
October 1, 1995 (as amended January 29, 1996)

APPENDIX B

Forum's "Allocable Portion" of the CDSCs and Distribution Fees in respect
of a Fund shall be 100 percent until such time as Forum shall cease to serve as
exclusive distributor of such Shares and thereafter shall be recomputed first on
the date of any termination of Forum's services as exclusive distributor of
Shares of any Fund and thereafter periodically (but not less than monthly), in
accordance with Parts B & C below based upon the number of representing the
Shares of such Fund outstanding on each such computation date allocated to Forum
in accordance with Part A below:

For Purposes of this Appendix B defined terms used herein shall have the
meaning assigned to such terms in the Distribution Agreement and the following
terms shall have the following meanings:

"COMMISSION SHARE" shall mean, in respect of any Fund, each Share of such
Fund which is issued under circumstances which would normally give rise to an
obligation of the holder of such Share to pay a CDSC upon redemption of such
Share, including, without limitation, any Share of such Fund issued in
connection with a Permitted Free Exchange, and any such Share shall not cease to
be a Commission Share prior to the redemption (including a redemption in
connection with a Permitted Free Exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for waivers thereof
shall exist.

"DATE OF ORIGINAL ISSUANCE" means in respect of any Commission Share of any
Eligible Fund, the date with reference to which the amount of the CDSC payable
on redemption thereof is computed.

"FREE SHARE" shall mean, in respect of any Fund, each Share of such Fund
other than a Commission Share, including, without limitation, each Share issued
in connection with the reinvestment of dividends.

"OTHER DISTRIBUTOR" shall mean in respect of the Shares of any Fund, each
entity appointed from time to time as the exclusive distributor for such Shares
of the Fund after Forum ceases to serve in that capacity.

"PERMITTED FREE EXCHANGE" with respect to any Shares of any Fund, shall
mean an exchange of such Share for a Share of another Fund which pursuant to the
terms of the related Prospectus for such Shares, relieves or defers the CDSCs in
respect of such Share.

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"TRANSFER AGENT" shall mean, in respect of any Fund, the entity serving as
the transfer agent and who maintains accounts for each record holder of Shares
of such Fund including record holders which are record owners of Omnibus
Accounts.

PART A: ATTRIBUTION OF SHARES

Each class of Shares of each Fund, which are outstanding from time to time,
shall be attributed to either Forum or an Other Distributor in accordance with
the following rules:

(1) COMMISSION SHARES: (a) Commission Shares of each class of Shares of
each Fund outstanding from time to time attributed to Forum or such Other
Distributor shall be those Commission Shares of such class of such Fund which
were sold while Forum or such Other Distributor was the exclusive Distributor
for such Shares, determined in accordance with the transfer records for such
Fund.

(b) The Commission Shares of each class of Shares of each Fund outstanding
from time to time attributed to Forum or such Other Distributor shall be the
Date of Original Issuance of which occurs during the period in which Forum or
such Other Distributor was the exclusive distributor for such Fund in respect of
such class of Shares of such Fund.

(c) A Commission Share of a Fund (the "First Fund") issued in
consideration of the investment of proceeds of the redemption of a Commission
Share of another Fund (the "Second Fund") in connection with a Permitted Free
Exchange, is deemed to have a Date of Original Issuance identical to the Date of
Original Issuance of the Commission Share of the Second Fund which was so
redeemed and any such Commission Share will be attributed to Forum or such Other
Distributor based upon such Date of Original Issuance in accordance with rules
(a) and (b) above.

(d) A Commission Share of a Fund which is redeemed other than in
connection with a Permitted Free Exchange or is converted to a class A share at
the end of the autoconversion period is deemed to come out of the Commission
Shares attributed to Forum or such Other Distributor based upon the Date of
Original Issuance of such Commission Share in accordance with rule (a) above.

(2) FREE SHARES.

(a) Free Shares outstanding on the date of termination of Forum's services
will be attributed to Forum or such Other Distributor in the same proportion
that Commission Shares were attributed to each on such date.

(b) Thereafter Free Shares which are issued during any period in
connection with the reinvestment of dividends or other distributions or in
connection with the reinvestment of proceeds of redemption of Free Shares of
another Fund which will be

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attributed to Forum and such Other Distributor based upon the percentage of
total Free Shares of such Fund which were outstanding at the commencement of
such period which was attributed to each at the commencement of such period
under these rules.

(c) Free Shares which are redeemed (whether in connection with the
reinvestment of the proceeds of such redemption in Shares of another Fund or
otherwise) or converted into class A shares of such Fund during any period after
the date of termination of Forum's services will be deemed to come out of the
Free Shares of such Fund attributed to Forum and such Other Distributor based
upon the percentage of total Free Shares of such Eligible Fund which were
outstanding at the commencement of such period which was attributed to each at
the commencement of such period under these rules.

PART B: ALLOCATION OF DISTRIBUTION FEES.

The portion of the Distribution Fees accruing in respect of Shares of a
Fund during a particular calendar month are allocated to Forum and Other
Distributor determined by multiplying the total of such Distribution Fees
accruing during a particular calendar month by the following fraction:

((BTS x BNAV) + (ETS x ENAV))/2
-------------------------------
((BS x BNAV) + (ES x ENAV))/2

where:

BTS = Total Number of Shares of such Fund attributed to Forum or such Other
Distributor and outstanding at the beginning of such calendar month

BNAV = Per Share Net Asset Value of Shares of such Fund at the beginning of
such calendar month

ETS = Total Number of Shares of such Fund attributed to Forum or such Other
Distributor and outstanding at the end of such calendar month

ENAV = Per Share Net Asset Value of Shares of such Fund at the end of such
calendar month

BPS = Total Number of Shares of such Fund outstanding at the beginning of
such calendar month

EPS = Total Number of Shares of such Eligible Fund outstanding at the end of
such calendar month

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PART C: ALLOCATION OF CDSCs

CDSCs will be allocated to either Forum or a Other Distributor based upon
whether the Commission Share giving rise to such CDSC was attributed to Forum or
such Other Distributor in accordance with Part A above.

PART D: ALLOCATION PROCEDURES FOR SHARES HELD THROUGH AN
ACCOUNT MAINTAINED IN THE NAME OF AN INTERMEDIARY

In the case of Shares of a Fund held through an account maintained in the
name of a broker-dealer or other intermediary, the allocation procedures
contained in this Appendix B shall be amplified as Forum and the Trust shall
agree to ensure the appropriate attribution of, and allocation of distribution
services fees attributable to those shares.

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EXHIBIT 8 (a)

<PAGE>

NORWEST FUNDS
CUSTODIAN AGREEMENT

August 1, 1993,
as amended November 11, 1994

AGREEMENT, dated as of August 1, 1993 and amended and restated as of
November 11, 1994, between Norwest Funds (the "Trust"), a business trust
organized under the laws of the State of Delaware with its principal place of
business at 61 Broadway, New York, New York 10006 and Norwest Bank Minnesota,
N.A. (the "Custodian"), a banking association organized under the laws of the
United States of America with its principal place of business at Sixth Street
and Marquette, Minneapolis, Minnesota 55479.

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and is
authorized to issue its shares of beneficial interest, no par value, in separate
series and classes;

WHEREAS, the Trust desires to appoint Norwest Bank Minnesota, N.A.,
custodian of its securities and cash and Norwest Bank Minnesota, N.A. is willing
to act in such capacity upon the terms and conditions set forth below; and

WHEREAS, pursuant to a separate agreement between the Trust and Norwest
Bank Minnesota, N.A. (the "Transfer Agency Agreement"), Norwest Bank Minnesota,
N.A. will perform the duties of transfer agent of the Trust

NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:

SECTION 1. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow.

(a) Act: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.

(b) Board: The term Board shall mean the Board of Trustees of the Trust.

(c) Book-Entry Account: The term Book-Entry Account shall mean an account
maintained by a Federal Reserve Bank in which Book-Entry Securities are held.

(d) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system
maintained by a Federal Reserve Bank.

(e) Custodian: The term Custodian shall mean Norwest Bank, Minnesota,
N.A., in its capacity as custodian under this Agreement.

(f) Foreign Securities: The term Foreign Securities shall mean "Foreign
Securities" as that term is defined in Rule 17f-5 under the Act.

(g) Foreign Sub-Custodian: The term Foreign Sub-Custodian shall mean
"Eligible Foreign Sub-Custodian" as that term is defined in Rule 17f-5 under the
Act.

(h) Fund Business Day: The term Fund Business Day shall mean a day that
is a business day for a Series as defined in the Series' prospectus.

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(i) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good faith
by the Custodian to be a person or persons authorized by a resolution of the
Board to give Oral Instructions on behalf of the Trust. Each Oral Instruction
shall specify whether it is applicable to the entire Trust or a specific Series
of the Trust.

(j) Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Trust.

(k) Securities Depository: The term Securities Depository shall mean a
system, domestic or foreign, for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the securities and shall include any system
for the issuance of Book-Entry Securities.

(l) Series: The term Series shall mean the Series listed in Appendix A or
any series that the Trust shall subsequently establish provided, that the
Custodian may decline to act as custodian for any series subsequently
established

(m) Share Certificates: The term Share Certificates shall mean the
certificates for the Shares.

(n) Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry records of
the Trust.

(o) Shares: The term Shares shall mean the issued and outstanding shares
of beneficial interest, no par value, of the Trust, including any fractions
thereof.

(p) Sub-Custodian: The term Sub-Custodian shall mean any person selected
by the Custodian under Section 20 hereof and in accordance with the requirements
of the Act to custody any or all of the Securities and cash of the Trust, and
shall include Foreign Sub-Custodians.

(q) Trust: The term Trust shall mean Norwest Funds.

(r) Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures, or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board to
give Written Instructions on behalf of the Trust. Each Written Instruction
shall specify whether it is applicable to the entire Trust or a specific Series
of the Trust.

(s) 1934 Act: The term 1934 Act shall mean the Securities Exchange Act of
1934, as amended from time to time.

SECTION 2. APPOINTMENT. The Trust hereby appoints the Custodian as
custodian of the Securities and cash of each Series from time to time on deposit
hereunder. The Securities and cash of the Trust shall be and remain the sole
property of the Trust and the Custodian shall have only custody thereof. The
Custodian shall hold, earmark and physically segregate for the appropriate
Series account of the Trust all non-cash property, including all Securities that
are not maintained pursuant to Section 6 in a Securities Depository or Book-
Entry Account. The Custodian will collect from time to time the dividends and
interest of the Securities held by the Custodian.

The Custodian shall open and maintain a separate bank or trust account or
accounts in the name of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Notwithstanding the foregoing, a separate
bank account may be established by the Trust to be used as a petty

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cash account in accordance with Rule 17f-3 under the Act and the Custodian shall
have not duty or liability with regard to such account.

Upon receipt of Written Instructions, funds held by the Custodian for the
Trust may be deposited by the Custodian to its credit in the banking department
of the Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.

SECTION 3. DELIVERY OF BOARD RESOLUTIONS. The Trust shall, as necessary,
file with the Custodian a certified copy of the operative resolution of the
Board authorizing execution of Written Instructions and the number of
signatories required and setting forth authentic signatures of all signatories
authorized to sign on behalf of the Trust or any Series thereof. Such
resolution shall constitute conclusive evidence of the authority of all
signatories designated therein to act and shall be considered in full force and
effect, with the Custodian fully protected in acting in reliance thereon, until
the Custodian receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give written Instructions.

The Trust shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Trust or any Series. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.

SECTION 4. INSTRUCTIONS. For all purposes under this Agreement, the
Custodian is authorized to act upon receipt of the first of any Written or Oral
Instruction it receives. If the first Instruction is an Oral Instruction, the
Trust shall deliver or have delivered to the Custodian a confirmatory Written
Instruction; and if the Custodian receives an Instruction, whether Written or
Oral, with respect to a Securities transaction, the Trust shall cause the broker
or dealer to send a written confirmation of the transaction to the Custodian.
The Custodian shall be entitled to rely on the first Instruction received and,
for any act or omission undertaken in compliance therewith, shall be free of
liability and fully indemnified and held harmless by the Trust. The sole
obligation of the Custodian with respect to any confirmatory Written Instruction
or broker or dealer written confirmation shall be to make reasonable efforts to
detect any discrepancy between the original Instruction and such confirmation
and to report such discrepancy to the Trust. The Trust shall be responsible, at
the Trust's expense, for taking any action, including any reprocessing,
necessary to correct any discrepancy or error, and to the extent such action
requires the Custodian to act, the Trust shall give the Custodian specific
Written Instructions as to the action required.

SECTION 5. DEPOSIT OF TRUST ASSETS. The Trust will initially transfer and
deposit or cause to be transferred and deposited with the Custodian all of the
Securities, other property and cash owned by the Trust at the time this
Agreement becomes effective, provided that the Custodian shall have the right,
in its sole discretion, to refuse to accept any securities or other property
that are not in proper form for deposit or any reason. Such transfer and
deposit shall be evidenced by appropriate schedules duly executed by the Trust.
The Trust may deposit with the Custodian additional Securities of the Trust and
dividends or interest collected on such Securities as the same are acquired from
time to time.

The Trust will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
Shares sold, whether representing initial issue or any other securities and
(iii) cash as may be acquired. Deposits with respect to sales of Shares shall
be accompanied by Written or Oral Instructions stating the amount to be
deposited with the Custodian and registration instructions.

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SECTION 6. DEPOSIT OF TRUST ASSETS WITH THIRD PARTIES. The Trust hereby
authorizes the Custodian to deposit assets of the Trust as follows:

(a) With the Custodian or any other bank licensed and regularly examined
by the United States or any state thereof assets held in the Option Account
created pursuant to Section 13(b).

(b) In the Custodian's or Sub-Custodian's account(s) with any Securities
Depository as the Trust shall permit by Written or Oral Instruction.

So long as any deposit referred to in (b) or (c) above is maintained for
the Trust, the Custodian shall: (i) deposit the Securities in an account that
includes only assets held by the Custodian for customers; (ii) send the Trust a
confirmation (i.e., an advice of notice of transaction) of any transfers of the
Trust to or from the account; (iii) with respect to Securities of the Trust
transferred to the account, identify as belonging to the Trust a quantity of
securities in a fungible bulk of securities that are registered in the name of
the Custodian or its nominee, or credited to the Custodian's account on the
books of a Securities Depository or the Custodian's agent; (iv) promptly send to
the Trust all reports it receives from the appropriate Federal Reserve Bank or
Securities Depository on its respective system of internal accounting control;
and (v) send to the Trust such reports of the systems of internal accounting
control of the Custodian and its agents through which Securities are deposited
as are available and as the Trust may reasonably request from time to time.

The Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting from the negligence (including failure to act), fault or willful
misconduct of the Custodian, its agents or employees in selecting a Securities
Depository or Book-Entry Account. The Custodian shall not waive any rights it
may have against a Securities Depository or Federal Reserve Bank. The Trust may
elect to be subrogated to the rights of the Custodian against the Securities
Depository or Federal Reserve Bank or any other person with respect to any claim
that the Custodian may have as a consequence of any such loss or damage, if and
to the extent that the Trust has not been made whole for any such loss or
damage.

SECTION 7. REGISTRATION OF SECURITIES. The Securities held by the
Custodian, unless payable to bearer or maintained in a Securities Depository or
Book-Entry Account pursuant to Section 6, shall be registered in the name of the
Custodian or in the name of its nominee, or if directed by Written Instructions,
in the name of the Trust or its nominee. In the event that any Securities are
registered in the name of the Trust or its nominee, the Trust will endorse, or
cause to be endorsed, to the Custodian dividend and interest checks, or will
issue appropriate orders to the issuers of the Securities to pay dividends and
interest to the Custodian. Securities, excepting bearer securities, delivered
from time to time to the Custodian shall, in all cases, be in due form for
transfer, or registered as above provided.

SECTION 8. DISBURSEMENTS OF CASH. The Custodian is hereby authorized and
directed to disburse cash to or from the Trust from time to time as follows:

(a) For the purchase of Securities by the Trust, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank.

(b) For transferring funds, including mark-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii)
written agreement to repurchase the Securities from the Trust.

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(c) For transferring funds to a duly-designated redemption paying agent to
redeem or repurchase Shares, upon receipt of (i) either Share Certificates in
due form for transfer, or proper processing of Shares for which no Share
Certificates are outstanding and (ii) Written or Oral Instructions stating the
applicable redemption price.

(d) For exercising warrants and rights received upon the Securities, upon
timely receipt of Written or Oral Instructions authorizing the exercise of such
warrants and rights and stating the consideration to be paid.

(e) For repaying, in whole or in part, any loan of the Trust, or returning
cash collateral for Securities loaned by the Trust, upon receipt of Written or
Oral Instructions directing payment and stating the Securities, if any, to be
received against payment.

(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Trust deems
appropriate to include in dividends or distributions declared on the Shares.

(g) For paying or reimbursing the Trust for other corporate expenditures,
upon receipt of Written or Oral Instructions stating that such expenditures are
or were authorized by resolution of the Board and specifying the amount of
payment, the purposes for which such payment is to be made, and the person or
persons to whom payment is to be made.

(h) For transferring funds to any Sub-Custodian, upon receipt of Written
or Oral Instructions and upon agreement by the Custodian.

(i) To advance or pay out accrued interest on bonds purchased, dividends
on stocks sold and similar items.

(j) To pay proper compensation and expenses of the Custodian.

(k) To pay, or provide the Trust with money to pay, taxes, upon receipt of
appropriate Written or Oral Instructions.

(l) To transfer funds to a separate checking account maintained by the
Trust.

(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.

Before making any payments or disbursements, however, the Custodian shall
receive, and may conclusively rely upon, Written or Oral Instructions requesting
such payment or disbursement and stating that it is for one or more or the
purposes enumerated above. Notwithstanding the foregoing, the Custodian may
disburse cash for other corporate purposes; provided, however, that such
disbursement maybe made only upon receipt of Written or Oral Instructions
stating that such disbursement was authorized by resolution of the Board.

SECTION 9. DELIVERY OF SECURITIES. The Custodian is hereby authorized and
directed to deliver Securities of the Trust from time to time as follows:

(a) For completing sales of Securities sold by the Trust, upon receipt of
(i) Written or Oral Instructions specifying the Securities sold, the amount to
be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.

(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the

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exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.

(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment or otherwise, upon timely receipt of (i) Written
or Oral Instructions authorizing such exchange or conversion and stating the
manner in which such exchange or conversion is to be made and (ii) the
Securities, certificates of deposit, interim receipts, and/or cash to be
received as specified in the Written or Oral Instructions.

(d) For presenting for payment Securities that have matured or have been
called for redemption;

(e) For delivering Securities upon redemption of Shares in kind, upon
receipt of (i) Share Certificates in due form for transfer, or proper processing
of Shares for which no Share Certificates are outstanding and (ii) appropriate
Written or Oral Instructions.

(f) For depositing with the lender Securities to be held as collateral for
a loan to the Trust or depositing with a borrower Securities to be loaned by the
Trust, (i) upon receipt of Written or Oral Instructions directing delivery to
the lender or borrower and suitable collateral, if Securities are loaned or (ii)
pursuant to the terms of a separate securities lending agreement.

(g) For complying with a repurchase agreement, upon receipt of Written or
Oral Instructions stating (i) the securities to be delivered and the payment to
be received and (ii) payment.

(h) For depositing with a depository agent in connection with a tender or
other similar offer to purchase Securities of the Trust, upon receipt of Written
or Oral Instructions.

(i) For depositing Securities with the issuer thereof, or its agents, for
the purpose of transferring such Securities into the name of the Trust, the
Custodian or any nominee of either in accordance with Section 7.

(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.

(k) Notwithstanding the foregoing, the Custodian may, without Written or
Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.

SECTION 10. BORROWINGS. The Trust will cause any person (including the
Custodian) from which it borrows money using Securities as collateral to deliver
to the Custodian a notice of undertaking in the form currently employed by the
lender setting forth the amount that the lender will loan to the Trust against
delivery of a stated amount of collateral. The Trust shall promptly deliver to
the Custodian Written or Oral Instructions for each loan, stating (i) the name
of the lender, (ii) the amount and terms of the loan, which terms may be
specified by incorporating by reference an attached promissory note or loan
agreement duly endorsed by the Trust, (iii) the time and date, if known, on
which the loan will be consummated (the "borrowing date"), (iv) the date on
which the loan becomes due and payable, (v) the total amount payable to the
Trust on the borrowing date, (vi) the market value of Securities to be delivered
as collateral for such loan and (vii) the name of the issuer, the title and the
number of shares or principal amount of the Securities to be delivered as
collateral. The Custodian shall deliver on the borrowing date such specified
collateral and the executed promissory note, if any, and receive from the lender
the total amount of the loan proceeds; provided, however, that no delivery of
Securities shall occur if the amount of loan proceeds does not conform to the
amount set forth in the Written or Oral Instructions, or if such Instruction do
not contain the requirements of (vii) above. The Custodian may, at the option
of the lender, keep such collateral in its

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possession; provided such collateral is subject to all rights given the lender
by any promissory note or loan agreement executed by the Trust.

The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian.

SECTION 11. INDEBTEDNESS TO CUSTODIAN. If, in its sole discretion, the
Custodian advances funds to the Trust to pay for the purchase of Securities, to
cover an overdraft of the Trust's account with the Custodian, or to pay any
other indebtedness to the Custodian, the Trust's indebtedness shall be deemed to
be a loan by the Custodian to the Trust, payable on demand and bearing interest
at the rate then charged by the Custodian for such loans; provided, however,
that the Custodian shall give the Trust notice of any such advance that exceeds
five percent of the value of the Securities and cash held by the Custodian at
the time of the advance. The Trust hereby agrees that the Custodian shall have
a continuing lien and security interest, to the extent of any such overdraft or
indebtedness, in any property then held by the Custodian or its agents for the
benefit of the Trust, or in which the Trust may have an interest. The Trust
authorizes the Custodian, in its sole discretion at any time, to charge any such
overdraft or indebtedness, together with interest due thereon, against any
balance then credited to the Trust on the Custodian's books.

SECTION 12. SECURITIES LOANS. The Custodian may from time to time lend
securities of the Trust in accordance with and pursuant to a separate securities
lending agreement.

SECTION 13. OPTIONS, FUTURES CONTRACTS AND SEGREGATED ACCOUNTS. The
Custodian's responsibilities regarding option contracts will be governed by the
following sub-paragraphs:

(a) OPTIONS.

(i) Upon receipt of Written or Oral Instructions relating to the purchase
of an option or sale of a covered call option, the Custodian shall: (A)
receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of the option; (B) if the transaction involves the sale of
a covered call option, deposit and maintain in a segregated account the
Securities (either physically or by book-entry in a Securities Depository)
subject to the covered call option written on behalf of the Series; and (C)
pay, release and/or transfer such securities, cash or other assets in accordance
with any notices or other communications evidencing the expiration, termination
or exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the Securities or Options Exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.

(ii) Upon receipt of instructions relating to the sale of a naked option
(including stock index and commodity options), the Custodian, the Trust and the
broker-dealer shall enter into an agreement to comply with the rules of the OCC
or of any registered national securities exchange or similar organizations(s).
Pursuant to that agreement and any Written or Oral Instructions, the Custodian
shall: (A) receive and retain confirmations or other documents, if any,
evidencing the writing of the option; (B) deposit and maintain in a segregated
account Securities (either physically or by book-entry in a Securities
Depository cash and/or other assets; and (C) pay, release and/or transfer such
Securities, cash or other assets in accordance with any such agreement and with
any notices or other communications evidencing the expiration, termination or
exercise of such option which are furnished to the Custodian by the OCC, the
Securities or Options Exchanges on which such options were traded, or such other
organization as may be responsible for handling such option transactions. The
Custodian shall not be responsible for determining the quality and quantity of
assets held in any segregated account established in compliance with applicable
margin maintenance requirements and the performance of other terms of any option
contract.

(b) FUTURES CONTRACTS. Upon receipt of Written or Oral Instructions, the
custodian shall enter into a futures margin procedural agreement among the Fund,
the Custodian and the designated futures commission merchant (a "Procedural
Agreement"). Under the Procedural Agreement the Custodian shall: (A) receive
and retain confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Series; (B) deposit and
maintain in a segregated account cash, Securities and/or other assets designated
as initial, maintenance or variation "margin" deposits intended to secure the
Series' performance of its obligations under any

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<PAGE>

futures contracts purchased or sold, or any options on futures contracts written
by the Series, in accordance with the provisions of any Procedural Agreement
designed to comply with the provisions of the Commodity Futures Trading
Commission and/or any commodity exchange or contract market (such as the Chicago
Board of Trade), or any similar organization(s), regarding such margin deposits;
and (C) release assets from and/or transfer assets into such margin accounts
only in accordance with any such Procedural Agreements. The Custodian shall not
be responsible for determining the type and amount of assets held in the
segregated account or paid to the broker-dealer in compliance with applicable
margin maintenance requirements and the performance of any futures contract or
option on a futures contract in accordance with its terms.

(c) SEGREGATED ACCOUNTS. Upon receipt of Written or Oral Instructions,
the Custodian shall establish and maintain on its books a segregated account or
accounts for and on behalf of the Series, into which account or accounts may be
transferred assets of each Series, including Securities maintained by the
Custodian in a Securities Depository, said account or accounts to be maintained
(i) for the purpose of compliance by the Series with the procedures required by
SEC Investment Company Act Release Number 10666 or any subsequent release or
releases relating to the maintenance of segregated accounts by registered
investment companies or (ii) for such other purposes as may be set forth, from
time to time in Written or Oral Instructions. The Custodian shall not be
responsible for the determination of the type or amount of assets to be held in
any segregated account referred to in this paragraph.

SECTION 14. EXERCISE OF POWERS WITH RESPECT TO SECURITIES. The Custodian
assumes no duty, obligation or responsibility whatsoever to exercise any voting
or consent powers with respect to the Securities held by it from time to time
hereunder. The Trust or such persons as it may designate shall have the right
to vote, consent or otherwise act with respect to Securities. The Custodian
will exercise its best efforts (as defined in Section 16) to furnish to the
Trust in a timely manner all proxies or other appropriate authorizations with
respect to Securities registered in the name of the Custodian or its nominee, so
that the Trust or its designee may vote, consent or otherwise act.

SECTION 15. COMPENSATION.

(a) The Trust agrees to pay to the Custodian compensation for its services
as set forth in Appendix B hereto, or as shall be set forth in written
amendments to Appendix B approved by the Trust and the Custodian from time to
time.

(b) The Trust shall pay all fees and expenses of any Sub-Custodian
approved by the Trust.

SECTION 16. CORPORATE ACTIVITY. The Custodian will exercise its best
efforts to forward to the Trust in a timely manner all notices of shareholder
meetings, proxy statements, annual reports, conversion notices, call notices, or
other notices or written materials of any kind (excluding share certificates and
dividend, principal and interest payments) sent to the Custodian as registered
owner of Securities. Best efforts as used in this Agreement shall mean the
efforts reasonably believed in good faith by the Custodian to be adequate in the
circumstances.

Upon receipt of warrants or rights issued in connection with the assets of
the Trust, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Trust of such receipt. However,
the Custodian shall have no obligation to take any other action with respect to
such warrants or rights, except as directed in Written or Oral Instructions.

Custodian shall take all reasonable actions, as agreed to by the Trust and
the Custodian, to assist the Trust in obtaining from year to year favorable
opinions from the Trust's independent auditors with respect to the Custodian's
activities hereunder.

SECTION 17. RECORDS. The Custodian acknowledges and agrees that all books
and records maintained for the Trust in any capacity under this Agreement are
the property of the Trust and may be inspected by the Trust or any authorized
regulatory agency at any reasonable time. Upon request all such books and
records will be surrendered promptly to the Trust. The Custodian agrees to make
available upon request and to preserve for the periods prescribed in Rule 31a-2
of the Act any records related to services provided under this Agreement and
required to be maintained by Rule 31a-1 under the Act.

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SECTION 18. LIABILITY. The Custodian assumes only the usual duties and
obligations normally performed by custodians of open-end investment companies.
The Custodian specifically assumes no responsibility for the management,
investment or reinvestment of the Securities from time to time owned by the
Trust, whether or not on deposit hereunder. The Custodian assumes no duty,
obligation or responsibility whatsoever with respect to Securities not deposited
with the Custodian.

The Custodian may rely upon the advice of counsel, who may be counsel for
the Trust or for the Custodian, and upon statements of accountants, brokers or
other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for
any action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Trust or its
officers, or information furnished by the Trust or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.

No liability of any kind, other than to the Trust, shall attach to the
Custodian by reason of its custody of the Securities and cash held by the
Custodian hereunder or otherwise as a result of its custodianship. In the event
that any claim shall be made against the Custodian, it shall have the right to
pay the claim and reimburse itself from the assets of the Trust; provided,
however, that no such reimbursement shall occur unless the Trust is notified of
the claim and is afforded an opportunity to contest or defend the claim, if it
so elects. The Trust agrees to indemnify and hold the Custodian harmless for
any loss, claim, damage or expense arising out of the custodian relationship
under this Agreement; provided such loss, claim, damage or expense is not the
direct result of the Custodian's negligence or willful misconduct.

SECTION 19. TAXES. The Custodian shall not be liable for any taxes,
assessments or governmental charges that may be levied or assessed upon the
Securities held by it hereunder, or upon the income therefrom. Upon Written or
Oral Instruction, the Custodian may pay any such tax, assessment or charge and
reimburse itself out of the monies of the Trust or the Securities held
hereunder.

SECTION 20. SUB-CUSTODIANS.

(a) The Custodian may from time to time request appointment of one or more
Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing the
use of a Sub-Custodian, the Custodian shall appoint one or more Sub-Custodians
or Foreign Sub-Custodians of Securities and cash owned by the Trust from time to
time.

(b) Custodian shall cause Foreign Securities and amounts of cash
reasonably required to effect Trust's Foreign Securities transactions in the
Custodian Account to be held in such countries or other jurisdictions as Trust
shall direct in Written or Oral Instructions.

Custodian may hold Foreign Securities and cash in sub-custody accounts,
which shall be deemed part of the Custodian Account and which have been
established by Custodian or by a Sub-Custodian with those Foreign Sub-Custodians
as Trust shall approve in Written or Oral Instructions.

Each Foreign Sub-Custodian is authorized to hold Foreign Securities in an
account with any foreign Securities Depository as Trust shall approve in Written
or Oral Instructions.

The contractual agreement between the Custodian and any Foreign Sub-
Custodian must provide at a minimum that the Foreign Sub-Custodian shall
provide, obtain or use its best efforts to assist the Trust in obtaining
information responsive to the "notes" to Rule 17f-5 under the Act with respect
to (i) each country or jurisdiction where the Trust's assets are proposed to be
maintained, are maintained or in the future may be maintained and (ii) each
Foreign Sub-Custodian which is proposed to hold, holds or in the future may hold
Foreign Securities or cash of the Trust. Notwithstanding any other provisions
of this Agreement, each Foreign Sub-Custodian's undertaking to assist Trust in
obtaining such information shall neither increase the Foreign Sub-Custodian's
duty of care nor reduce Trust's responsibility to determine for itself the
prudence of entrusting its assets to any particular Foreign Sub-Custodian or
foreign Securities Depository.

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<PAGE>

The Custodian shall deposit Foreign Securities and cash of the Trust with a
Foreign Sub-Custodian only in an account of the Foreign Sub-Custodian which
holds only assets held by Custodian as custodian for its customers. In the
event that a Foreign Sub-Custodian is authorized to hold any of the Foreign
Securities placed in its care in a foreign Securities Depository, Custodian will
direct the Foreign Sub-Custodian to identify the Foreign Securities on the books
of the foreign Securities Depository as being held for the account of Custodian
as custodian for its customers.

(c) The Custodian shall have no liability to the Trust by reason of any
act or omission of any Sub-Custodian approved by the Trust, and the Trust shall
indemnify the Custodian and hold it harmless from and against any and all
actions, suits, claims, losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising directly or indirectly out of or in connection
with the performance of any Sub-Custodian approved by the Trust. The Custodian
assigns to the Trust any and all claims for any losses, costs, expenses, or
damages that may be incurred by the Trust by reason of the negligence, gross
negligence or misconduct of any Sub-Custodian approved by the Trust, or by
reason of the failure of a Sub-Custodian approved by the Trust to perform in
accordance with any applicable agreement, including instructions of the
Custodian. The Custodian shall be under no obligation to prosecute or to defend
any action, suit or claim arising out of, or in connection with, the performance
of any Sub-Custodian approved by the Trust, if, in the opinion of the
Custodian's counsel, such action will involve expense or liability to the
Custodian. The Trust shall, upon request, furnish the Custodian with
satisfactory indemnity against such expense or liability, and upon request of
the Custodian, the Trust shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity.

With respect to each Sub-Custodian not approved by the Trust, which may not
be a Foreign Sub-Custodian, the Custodian shall be liable to the Trust for any
loss which shall occur as a result of the failure of the Sub-Custodian to
exercise reasonable care with respect to the safekeeping of assets to the same
extent that the Custodian would be liable to the Trust if the Custodian were
holding such assets in its own premises. The Custodian shall be liable to the
Trust under this paragraph only to the extent of the Trust's direct damages, to
be determined based on the market value of the assets which are subject to loss
and without reference to any special conditions or circumstances.

SECTION 21. EFFECTIVENESS, DURATION AND TERMINATION.

(a) This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original, and shall become effective on the date
hereof. This Agreement shall remain in effect for a period of one year from the
date of its effectiveness and shall continue in effect for successive twelve-
month periods; provided that such continuance is specifically approved at least
annually by the Board and by a majority of the Trustees who are not parties to
this Agreement or interested persons of any such party.

(b) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Trust shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Trust as its own custodian. Each successor custodian
shall be a person qualified to serve under the Act. Promptly following receipt
of written notice from the Trust of the appointment of a successor custodian and
receipt of Written or Oral Instructions, the Custodian shall deliver all
Securities and cash it then holds directly to the successor custodian and shall,
upon request of the Trust and the successor custodian and upon payment of the
Custodian's reasonable charges and disbursements, (i) execute and deliver to the
successor custodian an instrument approved by the successor custodian's counsel
transferring to the successor custodian all the rights, duties and obligations
of the Custodian, (ii) transfer to the successor custodian the originals or
copies of all books and records maintained by the Custodian hereunder and (iii)
cooperate with, and provide reasonable assistance to, the successor custodian in
the establishment of the books and records necessary to carry out the successor
custodian's responsibilities hereunder. Upon delivery of the Securities and
other assets of the Trust and compliance with the other requirements of this
Section 21, the Custodian shall have no further duty or liability hereunder.
Every successor custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, duties and obligations of the predecessor custodian.

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SECTION 22. REQUIRED PERFORMANCE ON FUND BUSINESS DAYS. Nothing contained
in this Agreement is intended to or shall require the Custodian, in any capacity
hereunder, to perform any functions or duties on any day other than a Fund
Business Day. Functions or duties normally scheduled to be performed on any day
which is not a Fund Business Day shall be performed on, and as of, the next Fund
Business Day unless otherwise required by law.

SECTION 23. MISCELLANEOUS.

(a) This Agreement shall extend to and bind the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Trust without the written consent of the Custodian, or
by the Custodian without the written consent of the Trust. Notwithstanding the
foregoing, either party may assign this Agreement without the consent of the
other party so long as the assignee is an affiliate, parent or subsidiary of the
assigning party and the assignee of the Custodian is qualified to serve as
custodian under the Act.

(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.

(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/s/ P. Jay Kiedrowski
P. Jay Kiedrowski
Executive Vice President

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NORWEST FUNDS
CUSTODIAN AGREEMENT
(August 1, 1993, as amended November 11, 1994)

APPENDIX A

SERIES OF THE TRUST

Group A:
--------
Cash Investment Fund
U.S. Government Fund
Treasury Fund
Ready Cash Investment Fund
Municipal Money Market Fund
ValuGrowth Stock Fund
Income Stock Fund
Small Company Stock Fund
Contrarian Stock Fund
Government Income Fund
Income Fund
Adjustable U.S. Government Reserve Fund
Total Return Bond Fund
Tax-Free Income Fund
Minnesota Tax-Free Fund
Colorado Tax-Free Fund
Arizona Tax-Free Fund

Group B:
--------
Diversified Equity Fund
Growth Equity Fund
Large Company Growth Fund
Small Company Growth Fund
International Fund
Income Equity Fund
Index Fund
Conservative Balanced Fund
Moderate Balanced Fund
Growth Balanced Fund
Intermediate U.S. Government Fund
Managed Fixed Income Fund
Stable Income Fund

<PAGE>

NORWEST FUNDS
CUSTODIAN AGREEMENT
(August 1, 1993, as amended November 11, 1994)

APPENDIX B

COMPENSATION

WITH RESPECT TO THOSE SERIES LISTED IN GROUP A ON APPENDIX A:

(a) ACCOUNT ADMINISTRATIVE FEE. $0.20/1000 up to $100 million; $0.15/1000
on next $100 million; and $0.10/1000 on over $200 million. Based on the fair
market value of custody assets. Market value charges will be based on the
average size of the account during the year using quarterly valuations.

(b) HOLDING FEE PER ISSUE. $20.00/Book entry item and $25.00/Physical
item per annum. Charges are based on the average number of assets held during
the year using quarterly valuations.

(c) TRANSACTION FEE. $15.00/Book entry transaction and $20.00/Physical
transaction for any asset movement defined as a purchase or sale. No
transaction charge will be made for the initial receipt of securities related to
the opening of any account.

(d) LIMITATION. The Custodian's total fees for the services rendered by
it pursuant to this Agreement shall not exceed, with respect to Cash Investment
Fund, U.S. Government Fund and Treasury Fund, 0.03% of the average daily net
assets of such Series, and with respect to all other Series, 0.05% of the
average daily net assets of such Series, computed and paid monthly.

WITH RESPECT TO THOSE SERIES LISTED IN GROUP B ON APPENDIX A:

No compensation pursuant to this Agreement.

<PAGE>

EXHIBIT 8 (b)

<PAGE>

NORWEST FUNDS
TRANSFER AGENCY AGREEMENT

AGREEMENT, dated as of August 1, 1993 and amended and restated as of
December 8, 1993, between Norwest Funds (the "Trust"), a business trust
organized under the laws of the State of Delaware with its principal place of
business at 61 Broadway, New York, New York 10006 and Norwest Bank Minnesota,
N.A. ("Norwest"), a banking association organized under the laws of the United
States of America with its principal place of business at 733 Marquette Avenue,
Minneapolis, Minnesota 55479.

WHEREAS, the Trust desires that Norwest perform certain transfer agency and
related services for each class of each series of the Trust and Norwest is
willing to provide those services on the terms and conditions set forth in this
Agreement; and

WHEREAS, pursuant to a separate agreement between the Trust and Norwest,
Norwest will perform the duties of custodian of the securities and cash of the
Trust;

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:

SECTION 1. APPOINTMENT. The Trust hereby appoints Norwest as its Transfer
Agent and Norwest agrees to act in such capacity upon the terms set forth in
this Agreement.

SECTION 2. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow:

(a) Act: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.

(b) Board: The term Board shall mean the Board of Trustees of the Trust.

(c) Class: The term Class shall mean the classes of each Series listed in
Appendix C or any class that the Trust shall subsequently establish; provided,
that Norwest may decline to accept any class subsequently established.

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(d) Custodian; Custodian Agreement: The term Custodian shall mean Norwest
Bank, Minnesota, N.A. or any successor or other custodian acting as such for any
Series of the Trust. The term Custodian Agreement shall mean the agreement or
agreements between the Trust and the Custodian or Custodians providing for
custodial services to the Trust.

(e) Manager: The term Manager shall mean Forum Financial Services, Inc.
or any successor thereto who acts as the manager of the Trust.

(f) Oral Instruction: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Norwest in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed in good faith by
Norwest to be a person or persons authorized by a resolution of the Board of
Trustees of the Trust to give Oral Instructions on behalf of the Trust. Each
Oral Instruction shall specify whether it is applicable to all of the Trust or
to a specific Series or Class.

(g) Processing Organization: The term Processing Organization shall mean
a financial institution that has entered into an agreement with Norwest in
substantially the form of the agreement appended hereto as Appendix B.

(h) Prospectus: The term Prospectus shall mean the then-current
prospectus forming a part of an effective Registration Statement of the Trust
under the Securities Act of 1933, as amended, and the Act covering the Shares of
a Series or Class as the case may be, as the same may be amended or supplemented
from time to time.

(i) Series: The term Series shall mean each series listed in Appendix C
or any series that the Trust shall subsequently establish; provided, that
Norwest may decline to accept any series subsequently established.

(j) Share Certificates: The term Share Certificates shall mean the
certificates for the Shares.

(k) Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry records of
the Trust.

(l) Shares: The term Shares shall mean the issued and outstanding shares
of beneficial interest, no par value, of the Trust, including any fractions
thereof.

(m) Trust: The term Trust shall mean Norwest Funds.

(n) Valuation Time: The term Valuation Time shall mean, with respect to
each Series, the time at which the Series' net

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asset value is calculated, as disclosed in the Series' Prospectus.

(o) Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Norwest in original writing containing original signatures,
or a copy of such document transmitted by facsimile, including transmission of
such signature, or other mechanical or documentary means at the request of a
person or persons reasonably believed in good faith by Norwest to be a person or
persons authorized by a resolution of the Board to give Written Instructions on
behalf of the Trust. Each Written Instruction shall specify whether it is
applicable to all of the Trust or a specific Series or Class.

SECTION 3. SHARE CERTIFICATES. The Trust shall furnish to Norwest a
supply of blank Share Certificates of each Class of each Series and, from time
to time, will renew such supply upon Norwest's request. Blank Share
Certificates shall be signed manually or by facsimile signatures of officers of
the Trust authorized to sign by the by-laws of the Trust and, if required by
Norwest, shall bear the Trust's seal or a facsimile thereof.

SECTION 4. ISSUANCE OF SHARES. Norwest shall make original issues of
Shares of each Class of each Series in accordance with Section 11 below and the
Trust's then current Prospectus, upon receipt of (i) Written Instructions
requesting the issuance, (ii) a certified copy of a resolution of the Board
authorizing the issuance, (iii) necessary funds for the payment of any original
issue tax applicable to such Shares, and (iv) an opinion of the Trust's counsel
as to the legality and validity of the issuance, which opinion may provide that
it is contingent upon the filing by the Trust of an appropriate notice with the
Securities and Exchange Commission, as required by Rule 24f-2 under the Act. If
the opinion described in (iv) above is contingent upon a filing under Rule 24f-
2, the Trust shall fully indemnify Norwest for any liability arising from the
failure of the Trust to comply with that rule.

SECTION 5. TRANSFER OF SHARES. Transfers of Shares of each Class of each
Series shall be registered on the Shareholder records maintained by Norwest. In
registering transfers of Shares, Norwest may rely upon the Uniform Commercial
Code as in effect in the State of Delaware or any other statutes that, in the
opinion of Norwest's counsel, protect Norwest and the Trust from liability
arising from (i) not requiring complete documentation, (ii) registering a
transfer without an adverse claim inquiry, (iii) delaying registration for
purposes of such inquiry or (iv) refusing registration whenever an adverse claim
requires such refusal. As Transfer Agent, Norwest will be responsible for
delivery to the transferor and transferee of such documentation as is required
by the Uniform Commercial Code.

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SECTION 6. ISSUANCE AND TRANSFER OF SHARE CERTIFICATES. Subject to the
provisions of Section 8, new Share Certificates shall be issued by Norwest upon
surrender of outstanding Share Certificates in the form deemed by Norwest to be
properly endorsed for transfer and satisfactory evidence of compliance with all
applicable laws relating to the payment or collection of taxes. Norwest shall
forward Share Certificates in "non-negotiable" form by first-class or registered
mail, or by whatever means Norwest deems equally reliable and expeditious.
While in transit to the addressee, all deliveries of Share Certificates shall be
insured by Norwest as it deems appropriate. Norwest shall not mail Share
Certificates in "negotiable" form unless requested in writing by the Trust and
fully indemnified by the Trust to Norwest's satisfaction. Norwest may issue new
Share Certificates in place of those lost, destroyed or stolen, upon receiving
indemnity satisfactory to Norwest, and may issue new Share Certificates in
exchange for, and upon surrender of, mutilated Share Certificates as Norwest
deems appropriate. Unless otherwise directed by the Trust, Norwest may issue or
register Share Certificates reflecting the signature, or facsimile thereof, of
an officer who has died, resigned or been removed by the Trust. The Trust shall
file promptly with Norwest approval, adoption or ratification of such action as
may be required by law or Norwest. All share certificates submitted for
transfer or replacement shall be marked "canceled" or destroyed by Norwest
following the issuance in lieu of the Share Certificate of a new or replacement
Share Certificate or shares not evidenced by a Share Certificate.

SECTION 7. MAINTENANCE OF STOCK RECORDS. Norwest shall maintain customary
stock registry records for each Class of each Series, noting the issuance,
transfer or redemption of Shares and the issuance and transfer of Share
Certificates. Norwest will also maintain for each Class of each Series an
account entitled "Unissued Certificate Account" (or similar name) in which it
will record the Shares issued and outstanding from time to time for which
issuance of Share Certificates has not been requested. Norwest is authorized to
keep records for each Class of each Series, containing the names and addresses
of record of Shareholders, and the number of Shares from time to time owned by
them for which no Share Certificates are outstanding. Each Shareholder account
will be assigned a single account number for each Class of each Series, even
though Shares for which Certificates have been issued will be accounted for
separately.

SECTION 8. RECORDS REFLECTING ISSUANCES AND REDEMPTIONS. Norwest shall
issue Share Certificates for Shares only upon receipt of a written request from
a Shareholder. If Shares are purchased without such request, Norwest shall
merely note on its stock registry records the issuance of the Shares and credit
the Unissued Certificate Account and the respective Shareholders' accounts with
the Shares. Whenever Shares owned by Shareholders are surrendered for
redemption, Norwest shall make appropriate

-5-

<PAGE>

entries in the stock transfer records and debit the Unissued Certificate
Account, if appropriate, and the record of issued Shares outstanding; and shall
cancel any Share Certificate surrendered for redemption.

SECTION 9. RELIANCE BY NORWEST. In performing its duties hereunder,
Norwest may rely conclusively and act without further investigation upon any
list, instruction, certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned or executed or authorized by a
duly-authorized person or persons, or by the Trust, or upon the advice of
counsel for the Trust or for Norwest. Norwest may record any transfer of Share
Certificates which it reasonably believes in good faith to have been duly-
authorized, or may refuse to record any transfer of Share Certificates if, in
good faith, it deems such refusal necessary in order to avoid any liability on
the part of either the Trust or Norwest. The Trust agrees to indemnify and hold
harmless Norwest from and against any and all losses, claims, damages,
liabilities or expenses that it may suffer or incur by reason of such good faith
reliance, action or failure to act.

SECTION 10. INSPECTION OF RECORDS. Norwest shall notify the Trust of any
request or demand for the inspection of the Trust's share records. Norwest
shall abide by the Trust's instructions for granting or denying the inspection;
provided, however, Norwest may grant the inspection without such instructions if
it is advised by counsel to Norwest that failure to do so will result in
liability to Norwest.

SECTION 11. SHARE PURCHASES; COMPUTATION OF NET ASSET VALUE.

(a) An instruction from a Processing Organization, directing investment of
a specific dollar amount in a Class of a Series shall be deemed to be a
completed purchase order at the time the instruction is received by Norwest,
provided that Federal Funds in respect of the instruction in that amount are
received by Norwest prior to 4:00 p.m., Eastern time, that day, or such other
cut-off time prescribed by the Trust in Oral or Written Instructions, and
provided further that if the cut-off time is on a day other than the day the
instruction is received, the purchase order shall be deemed to be completed at
the time the instruction is received by Norwest, subject to cancellation.

(b) An instruction from a shareholder other than a Processing Organization
directing investment in a Class of a Series shall be deemed to be a completed
purchase order upon receipt by Norwest of Federal Funds in respect of the
instruction in that amount, provided that in the case of a purchase order
accompanied by a check drawn on any member bank of the Federal Reserve System,
Federal Funds shall be deemed to have been

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<PAGE>

received upon the lesser of two business days after receipt of the check or upon
the actual time of receipt by Norwest of Federal Funds in respect of the check.

On each Fund Business Day, as soon as possible after each Valuation Time
for a Series, Norwest shall obtain from the Manager a quotation (on which it may
conclusively rely) of the net asset value for each Class of the Series as of
that Valuation Time. Norwest shall use the net asset values determined as of
the Valuation Time to compute the number of Shares of each Class of a Series to
be purchased and the aggregate purchase proceeds to be deposited with the
Custodian based on the completed purchase orders received by Norwest on that day
prior to the Valuation Time for the Series, and Norwest shall thereupon pay the
Custodian the aggregate net asset value of shares of each Class of the Series
purchased for which payment has been received by Norwest. As necessary but no
more frequently than once daily (unless a more frequent basis is agreed to by
Norwest), Norwest shall issue the proper number of Shares to be purchased
pursuant to the preceding sentence and promptly thereafter shall send written
confirmation of such purchase to the Custodian and the Trust or Manager.
Norwest shall also credit each Shareholder's separate account with the number of
Shares purchased by such Shareholder. Norwest shall promptly thereafter mail
written confirmation of the purchase to each Shareholder and to the Trust if
requested. Each confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Share Certificates are outstanding (if any),
the amount invested and the price paid for the newly-purchased Shares.

SECTION 12. SHARE REDEMPTIONS. Prior to each Valuation Time for a Series
on each Fund Business Day, as specified in accordance with Section 11 above,
Norwest shall process all requests to redeem Shares of each Class of the Series
in accordance with Section 8. Upon confirmation of the net asset value by the
Manager, Norwest shall notify the Trust and the Custodian of the redemption
amount, apply the redemption proceeds in accordance with Section 13 and the
Prospectus, record the redemption in the stock registry books, and debit the
redeemed Shares from the Unissued Certificates Account, if appropriate, and the
account of the Shareholder and mark "canceled" or destroy any Share Certificates
evidencing the redeemed shares.

In lieu of carrying out the redemption procedures described in the
preceding paragraph, Norwest may, at the request of the Trust, sell Shares of
each class of each Series to the Trust as repurchases from Shareholders,
provided that the sale price is not less than the applicable redemption price.
The redemption procedures shall then be appropriately modified. The Trust may
authorize Norwest by Written Instruction to effect any redemptions upon
provision of an indemnity satisfactory in form to Norwest.

-7-

<PAGE>

SECTION 13. REDEMPTION PROCEEDS. The proceeds of redemption shall be
remitted by Norwest in accordance with the Prospectus as follows:

(a) By check mailed to the Shareholder at the Shareholder's address of
record. The redemption request and Share Certificates, if any, for Shares being
redeemed must reflect a guarantee of the owner's signature as described in
Section 22; or

(b) By other procedures commonly followed by mutual funds, as set forth
in the Prospectus and in a Written Instruction from the Trust and mutually
agreed upon by the Trust and Norwest. For purposes of redemption of shares of
any Class of any Series that have been purchased by check within fifteen (15)
days prior to receipt of the redemption request, the Trust shall provide
Norwest with Written Instructions concerning the time within which such
requests may be honored. The authority of Norwest to perform its
responsibilities under Sections 12 and 13 shall be suspended if Norwest
receives notice of the suspension of the determination of the Trust's net
asset value.

SECTION 14. DIVIDENDS. Upon the declaration with respect to a Class of
each dividend and capital gain distribution by the Board, the Trust shall notify
Norwest of the date of such declaration, the amount payable per Share, the
record date for determining the Shareholders entitled to payment, and the
payment and reinvestment date. On or before each payment date the Trust will
transfer, or cause the Custodian to transfer, to Norwest the total amount of the
dividend or distribution currently payable. Norwest will, on the designated
payment date, reinvest all dividends and distributions in additional Shares of
the same Class and promptly mail to each Shareholder at his address of record, a
statement showing the number of Shares (rounded to three decimal places) of that
Class then owned by the Shareholder and the net asset value of such Shares, or
transmit such information in accordance with any arrangement between the
Shareholder and Norwest; provided, however, that if a Shareholder elects to
receive dividends and distributions in cash, Norwest shall prepare a check in
the appropriate amount and mail it to the Shareholder at the Shareholder's
address of record within five (5) Fund Business Days after the designated
payment date or transmit the appropriate amount in Federal funds in accordance
with any arrangement between the Shareholder and Norwest.

SECTION 15. RECORDS.

(a) The Trust shall deliver or cause to be delivered over to Norwest (i) an
accurate list of Shareholders of the Trust, showing each Shareholder's address
of record, number of Shares owned and whether such Shares are represented by
outstanding Share Certificates or by non-certificated Share accounts and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by

-8-

<PAGE>

Norwest under this Agreement (collectively referred to as the "Materials"). The
Trust shall indemnify and hold harmless Norwest from and against any and all
losses, claims, damages, liabilities or expenses arising out of or in connection
with any error, omission, inaccuracy or other deficiency of the Materials, or
out of the failure of the Trust to provide any portion of the Materials or to
provide any information in the Trust's possession needed by Norwest to
knowledgeably perform its functions.

(b) Norwest shall prepare and maintain or cause to be prepared and
maintained records in such form for such periods and in such locations as may be
required by applicable regulations, all documents and records relating to the
services provided to the Trust pursuant to this Agreement required to be
maintained pursuant to the Act, rules and regulations of the Securities and
Exchange Commission, the Internal Revenue Service and any other national, state
or local government entity with jurisdiction over the Trust.

SECTION 16. COOPERATION WITH INDEPENDENT ACCOUNTANTS. Norwest shall
cooperate with the Trust's independent public accountants and shall take
reasonable action to make all necessary information available to such
accountants for the performance of their duties.

SECTION 17. OTHER SERVICES. In addition to the services described above,
Norwest will perform other services for the Trust as mutually agreed upon in
writing from time to time, including but not limited to preparing and filing
federal tax forms with the Internal Revenue Service, mailing federal tax
information to Shareholders, mailing Shareholder reports, preparing the annual
list of Shareholders, mailing notices of Shareholders' meetings, proxies and
proxy statements and tabulating proxies. Norwest shall answer certain
Shareholder inquiries related to their share accounts and other correspondence
requiring an answer from the Trust. Norwest shall maintain dated copies of
written communications from Shareholders, and replies thereto.

SECTION 18. REQUIRED PERFORMANCE ON FUND BUSINESS DAY. Nothing contained
in this Agreement is intended to or shall require Norwest, in any capacity
hereunder, to perform any functions or duties on any day other than a Fund
Business Day. Functions or duties normally scheduled to be performed on any day
which is not a Fund Business Day shall be performed on, and as of, the next Fund
Business Day, unless otherwise required by law.

SECTION 19. COMPENSATION. The Trust agrees to pay to Norwest compensation
for its services as set forth in Appendix A attached hereto, or as shall be set
forth in written amendments to Appendix A approved by the Trust and Norwest from
time to time. Such amounts will be computed and paid monthly in arrears by the
Trust. Except as permitted by this Agreement with regard

-9-

<PAGE>

to indemnity, the foregoing fee shall be full and complete compensation and
reimbursement for all Norwest's expenses incurred in connection with the
services contemplated by this Agreement, and Norwest shall be entitled to no
additional expense reimbursement or other payments of any nature.

SECTION 20. TAXES. Norwest shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Trust or any Shareholder, excluding taxes assessed
against Norwest for compensation received by it hereunder.

SECTION 21. STANDARD OF CARE; LIABILITY. Norwest shall, at all times, act
in good faith and shall use whatever methods it deems appropriate to ensure the
accuracy of all services performed under this Agreement. Norwest shall not be
liable for any non-negligent action taken in good faith and reasonably believed
by Norwest to be within the powers conferred upon it by this Agreement. The
Trust shall indemnify Norwest and hold it harmless from and against any and all
losses, claims, damages, liabilities or expenses (including reasonable expenses
for legal counsel) arising directly or indirectly out of or in connection with
this Agreement; provided such loss, claim, damage, liability or expense is not
the direct result of Norwest's negligence or willful misconduct, and provided
further that Norwest shall give the Trust notice and reasonable opportunity to
defend against any such loss, claim, damage, liability or expense in the name of
the Trust or Norwest, or both. The Trust will be entitled to assume the defense
of any suit brought to enforce any such claim or demand, and to retain counsel
of good standing chosen by the Trust and approved by Norwest, such approval not
to be unreasonably withheld. In the event the Trust does elect to assume the
defense of any such suit and retain counsel of good standing approved by
Norwest, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case Norwest
does not approve of counsel chosen by the Trust or Norwest has been advised that
it may have available defenses or claims which are not available or conflict
with those available to the Trust, the Trust will reimburse Norwest, its
officers or directors or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
Norwest or them. Norwest may, at any time, waive its right to indemnification
hereunder and assume its own defense. Without limiting the foregoing:

(a) Norwest may rely upon the advice of the Trust or counsel to the Trust
or Norwest, and upon statements of accountants, brokers and other persons
believed by Norwest in good faith to be expert in the matters upon which are
consulted. Norwest shall not be liable for any action taken in good faith
reliance upon such advice or statements;

-10-

<PAGE>

(b) Norwest shall not be liable for any action reasonably taken in good
faith reliance upon any Written Instructions or certified copy of any resolution
of the Board; provided, however, that upon receipt of a Written Instruction
countermanding a prior Instruction that has not been fully executed by Norwest,
Norwest shall verify the content of the second Instruction and honor it, to the
extent possible. Norwest may rely upon the genuineness of any such document, or
copy thereof, reasonably believed by Norwest in good faith to have been validly
executed;

(c) Norwest may rely, and shall be protected by the Trust in acting, upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper or document reasonably believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties; and

(d) Norwest may, with the consent of the Trust, subcontract the
performance of all, or any portion of, the services to be provided hereunder
with respect to any Shareholder or group of Shareholders to any Processing
Organization or agent of Norwest and may reimburse any such Processing
Organization or agent for the services it performs; provided that no such
reimbursement will increase the amount payable by the Trust pursuant to this
Agreement.

SECTION 22. SIGNATURE GUARANTEES. UPON RECEIPT OF WRITTEN INSTRUCTIONS,
NORWEST IS AUTHORIZED TO MAKE PAYMENT UPON REDEMPTION OF SHARES OR OTHERWISE
EFFECT ANY TRANSACTION OR CLASS OF TRANSACTION WITHOUT A SIGNATURE GUARANTEE,
AND THE TRUST HEREBY AGREES TO INDEMNIFY AND HOLD NORWEST HARMLESS FROM ANY AND
ALL EXPENSES, DAMAGES, CLAIMS, SUITS, LIABILITIES, ACTIONS, DEMANDS OR LOSSES
WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH SUCH PAYMENT OR TRANSACTIONS IF
MADE IN ACCORDANCE WITH SUCH WRITTEN INSTRUCTIONS. SIGNATURE GUARANTEES MAY BE
PROVIDED BY ANY ELIGIBLE INSTITUTION, AS DEFINED IN RULE 17AD-15 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, THAT IS AUTHORIZED TO GUARANTEE SIGNATURES, AND
IS ACCEPTABLE TO NORWEST.

SECTION 23. ADOPTION OF PROCEDURES. The parties hereto may adopt
procedures as may be appropriate or practical under the circumstances, and
Norwest may conclusively rely on the determination of the Trust that any
procedure that has been approved by the Trust does not conflict with or violate
any requirement of its Trust Instrument, By-Laws or Registration Statement, or
any rule, regulation or requirement of any regulatory body.

SECTION 24. TRUST BOARD RESOLUTIONS. The Trust shall file with Norwest a
certified copy of the operative resolution of the

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<PAGE>

Board authorizing the execution of Written Instructions or the transmittal of
Oral instructions.

SECTION 25. RETURNED CHECKS. In the event that any check or other order
for the payment of money is returned unpaid for any reason, Norwest shall
promptly notify the Trust of the non-payment.

SECTION 26. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to
the Trust shall be given as follows until further notice:

Norwest Funds
c/o Forum Financial Services, Inc.
61 Broadway, Suite 2770
New York, NY 10006

Notice to Norwest shall be given as follows until further notice:

Institutional Custody Services
Norwest Bank Minnesota, N.A.
Eighth Street and Marquette Avenue
Minneapolis, MN 55479

SECTION 27. REPRESENTATIONS AND WARRANTIES. The Trust represents and
warrants to Norwest that the execution and delivery of this Agreement by the
undersigned officer of the Trust has been duly and validly authorized by
resolution of the Board. Norwest represents and warrants to the Trust that the
execution and delivery of this Agreement by the undersigned officer of Norwest
has also been duly and validly authorized.

SECTION 28. EFFECTIVENESS, DURATION AND TERMINATION. This Agreement may
be executed in more than one counterpart, each of which shall be deemed to be an
original, and shall become effective on the date hereof. This Agreement shall
remain in effect for a period of one year from the date of its effectiveness and
shall continue in effect for successive twelve-month periods; provided that such
continuance is specifically approved at least annually by the Board and by a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party.

Either party may terminate this Agreement upon sixty (60) days written
notice to the other, such termination to take effect at the time specified in
the notice. Upon receiving notice of termination by Norwest, the Trust shall
use its best efforts to obtain a successor transfer agent. If a successor
transfer agent is not appointed prior to the date of termination, the Board
shall designate the Trust as its transfer agent. Upon receipt of

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<PAGE>

written notice from the Trust of the appointment of the successor transfer
agent and upon receipt of Oral or Written Instructions Norwest shall, upon
request of the Trust and the successor transfer agent and upon payment of
Norwest's reasonable charges and disbursements, promptly transfer to the
successor transfer agent the original or copies of all books and records
maintained by Norwest hereunder including, in the case of records maintained on
computer systems, copies of such records in machine-readable form, and shall
cooperate with, and provide reasonable assistance to, the successor transfer
agent in the establishment of the books and records necessary to carry out the
successor transfer agent's responsibilities hereunder.

SECTION 29. MISCELLANEOUS.

(a) This Agreement shall extend to and shall bind the parties hereto and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Trust without the written consent of Norwest or
by Norwest without the written consent of the Trust. Notwithstanding the
foregoing, either party may assign this Agreement without the consent of the
other party so long as the assignee is an affiliate of or successor to the
parent or subsidiary of the assigning party and is qualified to act under the
Act.

(b) This Agreement shall be governed and construed in accordance with the
laws of the State of Minnesota.

(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/s/ Jay Kiedrowski
Jay Kiedrowski
Executive Vice President

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<PAGE>

NORWEST FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX A

Fee as a % of
the Annual Average Daily
Funds (Classes) of the Trust Net Assets of the Class
- ---------------------------- -----------------------

Each Class of each Series
not otherwise listed 0.25%

Municipal Money Market Fund
Institutional Class 0.10%

Ready Cash Investment Fund
Institutional Class 0.10%
Advantage Class 0.10%

<PAGE>

NORWEST FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX B

[Norwest Bank Minnesota, N.A. Letterhead]

(date)

[Processing Organization]
[Address]
[City, State Zip]

Ladies and Gentlemen:

As is disclosed in the current prospectuses of Norwest Funds (the "Trust"),
we propose to make payments to you with respect to [sub-transfer agency]
[shareholder servicing, administrative accounting] services provided to us by
you or by your agents in connection with your purchase and redemption of the
Trust's shares at the direction of, and as agent for, your customers.

Accordingly, you agree that you will perform the services described in
Exhibit A hereto and that you will bear all expenses incurred by you in
performing these services. As compensation for these services, we will pay you,
on a monthly basis, fees as shall be agreed between us from time to time (the
"Payments").

By executing this letter below, you represent to us and to the Trust that
you will comply with all recordkeeping, reporting, account maintenance and other
requirements imposed on you by applicable state and federal laws in connection
with the services you are undertaking to perform on the Trust's behalf and with
respect to your receipt of the Payments, including any requirement you may have
to disclose to your customers your receipt, and the amount, of the Payments.

By executing this letter you also represent to us that to the extent
required by the Internal Revenue Code of 1986 and applicable Internal Revenue
Service regulations you will (i) obtain and maintain for each customer for which
you maintain an account and, unless otherwise agreed to, for each customer to
whom you otherwise provide service, a certified taxpayer identification number
and (ii) prepare and distribute all Form 1099s and Individual Retirement Account
reporting forms to each of your or your affiliates' customers who hold Fund
shares through an omnibus account with us.

<PAGE>

You understand that the arrangements covered by this Agreement may be
terminated or modified at any time by written notice given by you or us, and
that any failure by you to conform to the agreements and undertakings made
herein will result in the discontinuance of the Payments. You understand also
that the Payments may be subject to modification or discontinuance at any time
to enable the Trust, us or you to comply with any regulatory requirements or
policy positions which may be imposed or adopted in the future by any
governmental authority with jurisdiction over you, us or the Trust.

If you agree to the terms hereof, please execute both copies of this letter
and return one executed copy to us.

Very truly yours,

Name: ________________________
Title:________________________

[Processing Organization]

Name: ________________________
Title:________________________

Date:_________________________

B-2

<PAGE>

Exhibit A
Services to be Performed
[Cross out those not applicable]

Maintain customer account detail for Trust shares held as agent for customers.

Issue and deliver periodic statements to customers.

Break down daily dividend accruals and apply them to customer account records.

Receive, break down and pay or, at customers' direction, consolidate and
reinvest customer dividends on monthly payment date.

Consolidate and remit to the Trust customer monies in connection with their
purchases of Trust shares.

Receive from the Trust and break down and remit to customers monies associated
with their redemption of Trust shares.

Maintain all proof procedures between customer sub-accounts and the central
account with the Trust.

Assist customers in initiating and changing Trust account designation and
addresses, and verify customer signatures in connection with changes in account
registration.

Perform all special mailings to customers required by the Trust, such as annual
prospectus mailings, proxy solicitations, and semi-annual and annual reports.

Perform all customer service functions for the Trust, including responding to
telephone inquiries and requests.

Fill all customer requests (other than initial requests) for prospectuses and
statements of additional information.

Receive and process customer registration forms.

Retain records regarding the services to be performed, as required by applicable
law and regulations.

NORWEST FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX C

Series Class
------ -----
Cash Investment Fund Only One Class

B-3

<PAGE>

U.S. Government Fund Only One Class

Treasury Fund Only One Class

Ready Cash Investment Fund Investor Class
Exchange Class
Advantage Class
Institutional Class

Municipal Money Market Fund Investor Class
Institutional Class

ValuGrowth Stock Fund Trust Class
Investor A Class
Investor B Class

Income Stock Fund Trust Class
Investor A Class
Investor B Class

Government Income Fund Trust Class
Investor A Class
Investor B Class

Income Fund Trust Class
Investor A Class
Investor B Class

Adjustable U.S. Government
Reserve Fund Trust Class
Investor A Class
Investor B Class

Total Return Bond Fund Trust Class
Investor A Class
Investor B Class

Tax-Free Income Fund Trust Class
Investor A Class
Investor B Class

Series Class
------ -----
Minnesota Tax-Free Fund Trust Class
Investor A Class
Investor B Class

Colorado Tax-Free Fund Trust Class
Investor A Class
Investor B Class

Arizona Tax-Free Fund Trust Class

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<PAGE>

Investor A Class
Investor B Class

Small Company Stock Fund Trust Class
Investor A Class
Investor B Class

Contrarian Stock Fund Trust Class
Investor A Class
Investor B Class

Diversified Equity Fund Advantage Class

Growth Equity Fund Advantage Class

Large Company Growth Fund Advantage Class

Small Company Growth Fund Advantage Class

International Fund Advantage Class

Income Equity Fund Advantage Class

Index Fund Advantage Class

Conservative Balanced Fund Advantage Class

Moderate Balanced Fund Advantage Class
Growth Balanced Fund Advantage Class

Intermediate U.S. Government Fund Advantage Class

Managed Fixed Income Fund Advantage Class

Stable Income Fund Advantage Class

-3-

<PAGE>

EXHIBIT 9 (a)

<PAGE>

NORWEST ADVANTAGE FUNDS
MANAGEMENT AGREEMENT

October 1, 1995

AGREEMENT made this 1st day of October, 1995, between Norwest Advantage
Funds (the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at 61 Broadway, New York, New York
10006, and Forum Financial Services, Inc. ("Forum"), a corporation organized
under the laws of State of Delaware with its principal place of business at 61
Broadway, New York, New York 10006.

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act") as an open-end management investment company and may
issue its shares of beneficial interest, no par value, in separate series and
classes; and

WHEREAS, the Trust desires that Forum perform administrative services for
each of the series of the Trust as listed in Appendix A hereto (each a "Fund"
and collectively the "Funds") and Forum is willing to provide those services on
the terms and conditions set forth in this Agreement;

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in the Trust's Trust Instrument, By-Laws and registration statement
filed with the Securities and Exchange Commission (the "SEC") under the Act and
the Securities Act of 1933 (the "Securities Act"), including any representations
made in a prospectus ("Prospectus") or statement of additional information
("SAI") relating to a Fund contained therein and as may be supplemented from
time to time, all in such manner and to such extent as may from time to time be
authorized by the Trust's Board of Trustees (the "Board"). The Trust is
currently authorized to issue thirty-one series of shares and the Board is
authorized to issue any unissued shares in any number of additional series or
classes. The Trust has delivered copies of the documents listed in this Section
to Forum and will from time to time furnish Forum with any amendments thereof.

SECTION 2. APPOINTMENT

The Trust hereby employs Forum, subject to the direction and control of the
Board, to manage all aspects of the Trust's operations with respect to each Fund
except those which are the responsibility of Norwest Bank Minnesota, N.A., each
Fund's investment adviser, or any other investment adviser or investment
subadviser to a Fund (each an "Adviser"), or Norwest Bank

-1-
<PAGE>

Minnesota, N.A. in its capacity as administrator pursuant to an investment
administration or similar agreement.

SECTION 3. ADMINISTRATIVE DUTIES

(a) On behalf of the Trust and with respect to each Fund, Forum will

(i) oversee (A) the preparation and maintenance by the Advisers and
the Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant (or if appropriate, prepare and maintain) in such form, for such
periods and in such locations as may be required by applicable law, of all
documents and records relating to the operation of the Trust required to be
prepared or maintained by the Trust or its agents pursuant to applicable
law; (B) the reconciliation of account information and balances among the
Advisers and the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (C) the transmission of purchase and redemption
orders for Shares; (D) the notification of the Advisers of available funds
for investment; and (E) the performance of fund accounting, including the
calculation of the net asset value per Share;

(ii) provide the Trust, at the Trust's expense, with the services of
persons competent to perform such supervisory, administrative and clerical
functions as are necessary to provide effective operation of the Trust,
including the services described in Section 3(a) hereof;

(iii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its custodian, transfer
agent and dividend disbursing agent, as well as accounting, auditing, legal
and other services performed for the Trust;

(iv) provide the Trust with adequate general office space and
facilities and provide, at the Trust's request and expense, persons
suitable to the Board to serve as officers of the Trust;

(v) oversee the preparation and the printing of the periodic updating
of the Trust's registration statement, Prospectuses and SAIs, the Trust's
tax returns, and reports to its stockholders, the SEC and state and other
securities administrators;

(vi) oversee the preparation of proxy and information statements and
any other communications to shareholders;

(vii) prepare, file and maintain the Trust's governing documents,
including the Trust Instrument, Bylaws and minutes of meetings of Trustees,
Board committees and shareholders;

(viii) with the cooperation of the Trust's counsel, Advisers and other
relevant parties, prepare and disseminate materials for meetings of the
Board;

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<PAGE>

(ix) monitor sales of shares and ensure that such shares are properly
and duly registered with the SEC and applicable state and other securities
commissions;

(x) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for sales
literature of the Trust and other appropriate purposes;

(xi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each Fund
as a regulated investment company under the Internal Revenue Code of 1986,
as amended, and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to
shareholders; and

(xii) advise the Trust and the Board on matters concerning the Trust
and its affairs.

(b) Forum shall maintain records relating to its services, such as
journals, ledger accounts and other records, as are required to be maintained by
Forum and the Trust under the Act and Rule 31a-1 under the Act. The books and
records pertaining to the Trust which are in possession of Forum shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during Forum's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by Forum to the Trust or the
Trust's authorized representatives.

SECTION 4. STANDARD OF CARE

The Trust shall expect of Forum, and Forum will give the Trust the benefit
of, Forum's best judgment and efforts in rendering these services to the Trust,
and the Trust agrees as an inducement to Forum's undertaking these services that
Forum shall not be liable under this Agreement for any mistake of judgment or in
any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, Forum against any
liability to the Trust or to its security holders to which Forum would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of Forum's duties under this Agreement, or by reason of Forum's
reckless disregard of its obligations and duties under this Agreement.

SECTION 5. COMPENSATION; EXPENSES

(a) In consideration of the administrative services performed by Forum as
described herein, the Trust will pay Forum, with respect to each class of Shares
of each Fund a fee at the annual rate as listed in Appendix A hereto. Forum's
fees shall be accrued by the Trust daily and shall be payable monthly in arrears
on the first day of each calendar month for services performed under the
Agreement during the prior calendar month.

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<PAGE>

(b) Notwithstanding that other persons may, in investment advisory
agreements or otherwise, agree to assume certain expenses of the Trust or of any
Fund or class of Shares thereof, the Trust shall be responsible and hereby
assumes the obligation for payment of all the Trust's expenses, including (i)
payment of the fee payable to Forum under this Section 5 hereof and the fee
payable to the Advisers of each Fund pursuant to any investment advisory or
similar agreement between the Adviser and the Trust; (ii) interest charges,
taxes, brokerage fees and commissions; (iii) insurance and fidelity bond
premiums; (iv) fees, interest charges and expenses of the Trust's custodian,
transfer agent and dividend disbursing agent and providers of pricing, credit
analysis and dividend services; (v) telecommunications expenses; (vi) auditing,
legal and compliance expenses; (vii) costs of forming the Trust and maintaining
its existence; (viii) costs of preparing and printing the Trust's Prospectuses,
SAIs, subscription application forms and stockholder reports and their delivery
to existing and prospective stockholders; (ix) costs of maintaining books of
original entry for portfolio and fund accounting and other required books and
accounts and of calculating the net asset value of the Trust's shares; (x) costs
of reproduction, stationery and supplies; (xi) compensation of the Trust's
trustees, officers and employees and costs of other personnel performing
services for the Trust, whether or not any such persons are affiliated persons
of Forum or any Adviser of ; (xii) costs of Board, Board committee, shareholder
and other corporate meetings; (xiii) SEC registration fees and related expenses;
(xiv) state and other jurisdiction securities laws registration fees and related
expenses, including costs of personnel to perform such securities registration;
and (xv) all costs borne by the Trust pursuant to any distribution plan adopted
by the Trust pursuant to Rule 12b-1 under the Act, shareholder service or
similar plan.

SECTION 6. EFFECTIVENESS, DURATION; TERMINATION AND ASSIGNMENT

(a) This Agreement shall become effective with respect to each Fund on the
date hereof or, with respect to additional series of the Trust to which this
agreement shall apply by amendment of Appendix A, upon the date of such
amendment. Upon effectiveness of this Agreement, it shall supersede all
previous agreements between the parties hereto covering the subject matter
hereof insofar as such Agreement may have been deemed to relate to the Funds.

(b) This Agreement shall continue in effect with respect to a Fund for a
period of one year from its effectiveness and shall continue in effect for
successive one year periods; provided, however, that continuance is specifically
approved at least annually (i) by the Board or by a vote of a majority of the
outstanding voting securities of the Fund and (ii) by a vote of a majority of
Trustees of the Trust who are not parties to this agreement or interested
persons of any such party (other than as Trustees of the Trust); provided
further, however, that if the continuation of this agreement is not approved as
to a Fund, Forum may continue to render to the Fund the services described
herein in the manner and to the extent permitted by the Act and the rules and
regulations thereunder.

(c) This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, (i) by the Board on 60 days' written notice
to Forum or (ii) by Forum on 60 days' written notice to the Trust.

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<PAGE>

(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.

SECTION 7. ACTIVITIES OF FORUM

(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's officers, directors or employees who may
also be a trustee, officer or employee of the Trust, or persons otherwise
affiliated persons of the Trust 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 corporation, trust, firm, individual or association.

(b) Forum may subcontract any or all of its functions or responsibilities
pursuant to this Agreement to one or more corporations, trusts, firms,
individuals or associations, which may be affiliates of Forum, who agree to
comply with the terms of this Agreement. Forum may pay those persons for their
services, but no such payment will increase Forum's compensation from the Trust.

SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

SECTION 9. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.

(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.

(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

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<PAGE>

(d) Notices, requests, instructions and communications received by the
parties at their respective principal addresses, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.

(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.

(f) The terms "vote of a majority of the outstanding voting securities",
"interested person," and "assignment" shall have the meanings ascribed thereto
in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST ADVANTAGE FUNDS

/s/ David I. Goldstein
David I. Goldstein
Vice President

FORUM FINANCIAL SERVICES, INC.

/s/ John Y. Keffer
John Y. Keffer
President

<PAGE>

NORWEST ADVANTAGE FUNDS
MANAGEMENT AGREEMENT

October 1, 1995

APPENDIX A

Fee as a % of
the Annual Average Daily
Funds of the Trust Net Assets of each Class of the Fund
- ------------------ ------------------------------------
Cash Investment Fund 0.10% of the first $300 million of assets
0.075% for the next $400 million of assets
0.05% of remaining assets.

U.S. Government Fund 0.10% of the first $300 million of assets
0.075% for the next $400 million of assets
0.05% of remaining assets.

Treasury Fund 0.10% of the first $300 million of assets
0.075% for the next $400 million of assets
0.05% of remaining assets.

Municipal Money Market Fund 0.20%
Ready Cash Investment Fund 0.20%

Income Stock Fund 0.20%
ValuGrowth Stock Fund 0.20%
Contrarian Stock Fund 0.20%
Small Company Stock Fund 0.20%

Adjustable U.S. Government
Reserve Fund 0.20%
Government Income Fund 0.20%
Income Fund 0.20%
Total Return Bond Fund 0.20%

Tax-Free Income Fund 0.20%
Arizona Tax-Free Fund 0.20%
Colorado Tax-Free Fund 0.20%
Minnesota Tax-Free Fund 0.20%

Fee as a % of

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<PAGE>

the Annual Average Daily
Funds of the Trust Net Assets of each Class of the Fund
- ------------------ ------------------------------------
Diversified Equity Fund 0.10%
Growth Equity Fund 0.10%

Large Company Growth Fund 0.10%
Small Company Growth Fund 0.10%
International Fund 0.15%
Income Equity Fund 0.10%
Index Fund 0.10%

Conservative Balanced Fund 0.10%
Moderate Balanced Fund 0.10%
Growth Balanced Fund 0.10%

Intermediate U.S. Government Fund 0.10%
Managed Fixed Income Fund 0.10%
Stable Income Fund 0.10%

<PAGE>

EXHIBIT 9 (b)

<PAGE>

NORWEST ADVANTAGE FUNDS
FUND ACCOUNTING AGREEMENT

November 17, 1995

AGREEMENT made the 17th day of November, 1995, between Norwest Advantage
Funds (the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at 61 Broadway, New York, New York
10006, and Forum Financial Corp. ("FFC"), a corporation organized under the laws
of the State of Delaware with its principal place of business at 2 Portland
Square, Portland, Maine 04101.

WHEREAS, the Trust desires that FFC perform certain fund accounting
services for each of the series of the Trust now existing or that in the future
may be created (each a "Fund" and, collectively, the "Funds") and each separate
class of shares of each Fund now existing or that in the future may be created
(each a "Class " and, collectively, the "Classes ") and FFC willing to provide
those services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and FFC agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument, By-Laws and registration statement filed with
the Securities and Exchange Commission (the "SEC") under the Act and the
Securities Act of 1933, including any representations made in a prospectus or
statement of additional information relating to a Fund contained therein and as
may be supplemented from time to time, all in such manner and to such extent as
may from time to time be authorized by the Trust's Board of Trustees (the
"Board"). The Trust has delivered copies of the documents listed in this
Section as well as copies of any procedures of the Trust related to the subject
matter hereof, including any security valuation or multiple class allocation
procedures, to FFC and will from time to time furnish FFC with any amendments
thereof.

SECTION 2. SERVICES TO BE PERFORMED

For each Fund and Class thereof, FFC shall perform the services listed in
this Section. FFC and the Trust's manager, Forum Financial Services, Inc.
("Forum"), may from time to time adopt such procedures as they agree upon to
implement the terms of this Section.

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<PAGE>

(a) BOOKS AND RECORDS. FFC shall prepare and maintain on behalf of the
Trust the following books and records of each Fund, and Class thereof, pursuant
to Rule 31a-1 under the Act (the "Rule"):

(i) Journals (or other records of original entry) containing an itemized
daily record in detail of all purchases and sales of securities, and other
investments assets (collectively referred to as "securities"), all receipts
and disbursements of cash and all other debits and credits, as required by
sub-section (b)(1) of the Rule;

(ii) General or auxiliary ledgers (or other records) reflecting all asset,
liability, reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required by
subsection (b)(2)(iv);

(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with the purchase or sale of securities, as
required by sub-sections (b)(5) and (b)(6) of the Rule;

(iv) A record of all options, if any, in which the Trust has any direct or
indirect interest or which the Trust has granted or guaranteed and a record
of any contractual commitments to purchase, sell, receive or deliver any
property as required by subsection (b)(7) of the Rule;

(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by sub-section (b)(8) of the Rule;

(vi) A record of historical tax lots for each security; and

(vii) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to these provisions of the Rule
applicable to portfolio transactions and as agreed upon between the parties
hereto.

The forgoing books and records shall be prepared and maintained in such
form, for such periods and in such locations as may be required by applicable
regulation and shall be the property of the Trust. FFC agrees to make such
books and records available for inspection by the Trust or by the SEC at
reasonable times and as otherwise directed by the Trust or Forum.

(b) ACCOUNTING SERVICES. On behalf of each Fund and, as applicable, each
Class thereof, FFC shall:

(i) Calculate the net asset value per share ("NAV") with the frequency
prescribed in the then-current Prospectus of each Fund or Class thereof and
recalculate the NAV wherever, for whatever reason, it is determined to have
been inaccurate;

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<PAGE>

(ii) Calculate the net income and the net income per share of each
Fund at such times and dates and in the manner specified in the then
currently effective Prospectus of the Fund;

(iii) Advise the Fund, Forum, the Fund's custodian and the Fund's
transfer agent of the NAV, the net income and the net income per share of
each Fund or Class thereof upon completion of the computations required to
be made;

(iv) Calculate all capital gains and losses;

(v) Calculate all income dividends and capital gain distributions as
set forth in pertinent resolutions of the Board delivered to FFC by Forum
and as otherwise requested by the Trust;

(vi) In accordance with applicable SEC regulations, calculate the
standardized yield, effective yield, tax equivalent yields and total
returns for each Fund, and Class thereof, and such other measures of
performance as may be agreed upon between the Trust and FFC;

(vii) Provide the Trust and such other persons as Forum may direct with
the following reports and such other reports as the Trust and FFC may from
time to time agree upon: (A) current portfolio positions reports; (B)
purchase and sales activity reports; (C) current cash position and
projection reports; (D) expenses paid and accrued reports; and (E)
pending maturities reports.

(viii) For all Funds which do not value their assets in accordance with
Rule 2a-7 under the Act, prepare and record, as of each time when the NAV
of a Fund or Class thereof is calculated or as otherwise agreed by the
Trust and FFC, (A) a valuation of all assets and liabilities of the Fund
and (B) based upon share information provided by each Fund's transfer
agent, the NAV for the Fund and each Class thereof.

(ix) For all Funds which value their assets in accordance with Rule
2a-7 under the Act, prepare and record, (A) as of each time required by the
Trust's Rule 2a-7 Procedures or similar procedures adopted by the Board
("Rule 2a-7 Procedures"), a calculation of the extent of the deviation
between the current NAV of the Fund or Class thereof, determined in
accordance with the Rule 2a-7 Procedures, and the NAV of the Fund or Class
thereof determined by the amortized cost method of valuation prescribed in
Rule 2a-7 and (B) any other item reasonably required by the Rule 2a-7
Procedures;

(x) Make such adjustments over such periods as FFC deems necessary to
reflect over-accruals or under-accruals of estimated expenses or income;

(xi) Obtain necessary information from Forum and the Funds' transfer
agent and investment advisers in order to prepare, and prepare, the Trust's
Form N-SAR; and

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<PAGE>

(xii) Periodically reconcile account information and balances with the
custodians of each Fund's assets.

(c) VALUATION SERVICES. In valuing the assets and liabilities of each
Fund, FFC shall comply with any procedures or policies adopted by the Board and
delivered to FFC and all provisions in the Prospectus and SAI relating to the
Fund, all as may be supplemented from time to time. FFC shall not be required
to independently value any asset or liability of the Trust, but shall use, to
the extent practicable, (i) the prices provided by independent pricing services
normally used and contracted for this purpose by FFC and the investment company
industry, (ii) broker-dealer quotations or valuations, or (iii) evaluations
conducted in accordance with the Board's instructions.

(d) OTHER SERVICES. FFC shall:

(i) Assist the Trust's independent accountants and, upon approval of
the Trust or Forum, any regulatory body in any
requested review of the Trust's books and records maintained by FFC;

(ii) Obtain necessary information from Forum and the Funds' transfer
agent and investment advisers in order to prepare, and prepare, two semi-
annual financial statements and related material comprising each Fund's
semi-annual and annual reports to shareholders and prepare such other
similar reports as may be agreed to from time to time by the Trust and FFC;
and

(iii) Provide information typically supplied in the investment company
industry to companies that track or report the price, performance or other
information with respect to investment companies and provide NAV and other
information customarily reported in newspapers to the appropriate persons
for publication therein.

(e) SERVICE DAYS. Nothing contained in this Agreement shall require FFC,
in any capacity hereunder, to perform any functions or duties on any day other
than a day upon which shares of a Fund or Class thereof may be purchased or
redeemed ("Fund Business Day"). Functions or duties normally scheduled to be
performed on any day which is not a Fund Business Day shall be performed on, and
as of, the next Fund Business Day, unless otherwise required by law.

SECTION 3. COMPENSATION

(a) FEE. For the services provided by FFC pursuant to this Agreement, the
Trust shall pay to FFC a fee with respect to each Fund, as calculated in
accordance with Appendix A hereto. These fees shall be paid monthly in advance,
with the first month's fee (including start-up fee) payable upon commencement of
the Fund's operations.

(b) REIMBURSEMENT OF EXPENSES. The Trust shall reimburse FFC for all of
FFC's reasonable out-of-pocket expenses incurred in the performance of its
duties hereunder, including

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<PAGE>

the cost of (or appropriate share of the cost of) (i) pricing, interest,
dividend, credit and other reporting services, (ii) taxes, (iii) postage and
delivery services, (iv) telephone services, (v) electronic or facsimile
transmission services, (vi) reproduction and (vii) any items the Trust is
responsible for as described in the Trust's agreements with Forum or any
investment adviser to the Trust. The Trust also shall reimburse FFC for all
reasonable FFC expenses and employee time attributable to any review of the
Trust's accounts and records by the Trust's independent accountants or any
regulatory body outside of routine and normal periodic reviews and for all FFC
expenses for services in connection with FFC's activities in effecting any
termination of this Agreement (except the termination of FFC for cause),
including expenses incurred by FFC to deliver the Trust's property in FFC's
possession (including the copying of all records required to be kept under this
Agreement) to the Trust or other persons.

(c) COUNSEL. FFC may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or its own counsel and shall be entitled to rely on the advice or opinion
of such counsel. The costs of any such advice or opinion shall be borne by the
Trust.

SECTION 4. EFFECTIVENESS; DURATION; TERMINATION AND ASSIGNMENT

(a) This Agreement shall become effective on the date hereof. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.

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<PAGE>

SECTION 5. STANDARD OF CARE; LIMITATION OF LIABILITY

(a) FFC shall be under no duty to take any action except as specifically
set forth herein or as may be specifically agreed to by FFC in writing. FFC
shall use its best judgment and efforts in rendering the services described
herein and shall not be liable to the Trust or the Trust's shareholders for any
action or inaction of FFC in the absence of bad faith, willful misconduct or
gross negligence. FFC shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. Without limiting the generality
of the foregoing or of any other provision of this Agreement, FFC shall not be
under any duty or obligation to inquire into and shall not be liable for or in
respect of the validity or invalidity or authority or lack thereof of any
instruction, notice or other instrument which FFC reasonably believes to be
genuine.

(b) Notwithstanding anything to the contrary in this Agreement, FFC shall
not be liable for the errors of other service providers to the Trust, including
the errors of pricing services (other than to pursue all reasonable claims
against the pricing service based on the pricing services' standard contracts
entered into by FFC) and errors in information provided by an investment adviser
(including prices and pricing formulas), custodian or transfer agent to the
Trust.

(c) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the Act, notwithstanding anything to the contrary in this
Agreement, FFC shall not be liable to the Trust or any shareholder of the Trust
for (i) any loss to the Trust if an NAV Difference for which FFC would otherwise
be liable under this Agreement is less than or equal to 0.001 (1/10 of 1%) or
(ii) any loss to a shareholder of the Trust if the NAV difference for which FFC
would otherwise be liable under this Agreement is less than or equal to 0.005
(1/2 of 1%) or if the loss in the shareholder's account with the Trust is less
than or equal to $10.

(d) For purposes of Section 5(c), (i) the NAV Difference shall mean the
difference between the NAV at which a shareholder purchase or redemption should
have been effected ("Recalculated NAV") and the NAV at which the purchase or
redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any FFC liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
FFC would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which FFC would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.

SECTION 6. ACTIVITIES OF FORUM

(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any

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<PAGE>

of Forum's officers, directors or employees who may also be a trustee, officer
or employee of the Trust, or persons otherwise affiliated persons of the Trust
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 corporation,
trust, firm, individual or association.

(b) FFC may subcontract any or all of its functions or responsibilities
pursuant to this Agreement to one or more corporations, trusts, firms,
individuals or associations, which may be affiliates of FFC, who agree to comply
with the terms of this Agreement. FFC may pay those persons for their services,
but no such payment will increase FFC's compensation from the Trust.

SECTION 7. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

SECTION 8. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.

(c) Section and paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.

(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.

(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the meanings ascribed thereto
in the Act.

-8-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST ADVANTAGE FUNDS

/s/ David I. Goldstein
David I. Goldstein
Vice President

FORUM FINANCIAL CORP.

/s/ John Y. Keffer
John Y. Keffer
President

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<PAGE>

NORWEST ADVANTAGE FUNDS
FUND ACCOUNTING AGREEMENT

November 17, 1995

APPENDIX A

Standard Fee per Fund $36,000/year
Fee for each additional Class of the Fund above one $12,000/year

Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million $6,000/year
Portfolios with asset levels exceeding $250 million $12,000/year
Portfolios with asset levels exceeding $500 million $18,000/year
Portfolios with asset levels exceeding $1,000 million $24,000/year
(ii) Portfolios requiring international custody $12,000/year
(iii) Portfolios with more than 30 international positions $24,000/year
(iv) Tax free money market Funds $12,000/year
(v) Portfolios with more than 25% of net assets invested
in asset backed securities $12,000/year
(vi) Portfolios with more than 50% of net assets invested
in asset backed securities $24,000/year
(vii) Portfolios with more than 100 security positions $12,000/year
(viii) Portfolios with a monthly portfolio turnover rate of
10% or greater $12,000/year

Standard Fee per Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(E) of the Act) $12,000/year
Fee for each additional Class of a Gateway Fund above one $12,000/year

Fund Start-Up Fee $2,000

Note 1: Surcharges are paid on a monthly basis, and are determined based upon
the total assets, security positions or other factors as of the end of the prior
month and on the portfolio turnover rate for the prior month. Portfolio
turnover rate shall have the meaning ascribed thereto in SEC Form N-1A.

Note 2: The rates set forth above shall remain fixed through December 31, 1995.
On January 1, 1996, and on each successive January 1, the rates shall be
adjusted automatically and without action of either party hereto to reflect
changes in the Consumer Price Index for the preceding calendar year, as
published by the U.S. Department of Labor, Bureau of Labor Statistics. FFC
shall notify the Trust each year of the new rates. Only one surcharge in clause
(i) is to be applied and surcharge (v) will not apply if surcharge (vi) applies.

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<PAGE>

EXHIBIT 9 (c)

<PAGE>

NORWEST FUNDS (ADVANTAGE)
ADMINISTRATION SERVICES AGREEMENT

November 11, 1994

AGREEMENT made this 11th day of November, 1994 between Norwest Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at 61 Broadway, New York, New York 10006
and Norwest Bank Minnesota, N.A. (the "Administrator"), a banking association
organized under the laws of the United States of America with its principal
place of business at Sixth Street and Marquette, Minneapolis, Minnesota 55479.

WHEREAS, the International Fund (the "Fund") of the Trust, a separate
series thereof, may invest all of its investment assets in the International
Portfolio (the "Portfolio") of Core Trust, a registered open-end management
investment company; and

WHEREAS, the Trust desires that the Administrator perform certain
administrative services for the Fund not otherwise provided by Forum Financial
Services, Inc.("Forum") pursuant to Forum's management agreements relating to
the Fund and the Portfolio or by Schroder Capital Management International, Inc.
pursuant to its investment advisory agreement Relating to the Portfolio and the
Administrator is willing to provide those services on the terms and conditions
set forth in this Agreement;

NOW THEREFORE, the Trust and the Administrator agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in our Articles of Incorporation, By-Laws and registration statement
filed with the Securities and Exchange Commission (the "SEC"), under the Act and
the Securities Act of 1933 (the "Securities Act"), including any representations
made in a prospectus ("Prospectus") or statement of additional information
("Statement of Additional Information") relating to the Fund contained therein
and as may be supplemented from time to time, all in such manner and to such
extent as may from time to time be authorized by the Trust's Board of Trustees
(the "Board"). The Trust is currently authorized to issue thirty-one series of
shares and the Board is authorized to issue any unissued shares in any number of
additional classes or series. The Trust has delivered copies of the documents
listed in this Section and will from time to time furnish Administrator with any
amendments thereof.

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<PAGE>

SECTION 2. APPOINTMENT

The Trust hereby employs Administrator, subject to the direction and
control of the Board, to oversee the ministerial, administrative and oversight
functions described herein.

SECTION 3. ADMINISTRATIVE DUTIES

The Administrator shall be responsible for:

(a) obtaining, compiling, verifying, formatting and transmitting to the
investment adviser to the Portfolio on or before such times during each business
day as are determined by the Administrator and the Advisor to the Portfolio all
information concerning the amounts of purchases and redemptions of shares of the
Portfolio;

(b) obtaining, compiling, verifying, formatting and transmitting to the
Fund's shareholders and the Trustees such information concerning the
performance of the Portfolio and the fees paid and other expenses incurred by
the Portfolio and such information about the performance of comparable
portfolios and relevant financial and economic indices as is required to be
provided under applicable laws and regulations, is useful to the Fund's
shareholders and the Trustees in evaluating the Portfolio's performance and
operation and may be requested by the Trustees in order to carry out their
obligations to the Fund and its shareholders;

(c) making available personnel to meet with and report to the Trustees
periodically at their request on all matters relating tot he performance of the
Portfolio and the appropriateness of the fees paid and expenses incurred by the
Portfolio;

(d) furnishing the investment adviser to the Portfolio and other providers
of services to the Fund such assistance in the operation of the Portfolio as any
of them or the Trustees may request or as the Administrator shall believe to be
appropriate; and

(e) maintain records relating to its services as are required to be
maintained by the Trust under the Act. The books and records pertaining to the
Trust which are in possession of Administrator shall be the property of the
Trust. The Trust, or the Trust's authorized representatives, shall have access
to such books and records at all times during Administrator's normal business
hours. Upon the reasonable request of the Trust, copies of any such books and
records shall be provided promptly by Administrator to the Trust or the Trust's
authorized representatives.

SECTION 4. EXPENSES

The Administrator shall be responsible for that portion of the net expenses
of each Fund (except interest, taxes, brokerage, fees and other expenses paid by
the Fund in accordance with an effective plan pursuant to Rule 12b-1 under the
Act and organization expenses, all to the extent such exceptions are permitted
by applicable state law and regulation) incurred by the Fund during each of the
Fund's fiscal years or portion thereof that this Agreement is in effect which,
as

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<PAGE>

to the Fund, in any such year exceeds the limits applicable to the Fund under
the laws or regulations of any state in which shares of the Fund are qualified
for sale (reduced pro rata for any portion of less than a year) and which is not
assumed by Forum Financial Services, Inc., the Trust's manager and distributor,
or any other person.

The Trust hereby confirms that, subject to the foregoing, the Trust shall
be responsible and shall assume the obligation for payment of all the Trust's
other expenses, including: interest charges, taxes, brokerage fees and
commissions; certain insurance premiums; fees, interest charges and expenses of
the Trust's custodian, transfer agent and dividend disbursing agent;
telecommunications expenses; auditing, legal and compliance expenses; costs of
the Trust's formation and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information, account
application forms and shareholder reports and delivering them to existing and
prospective shareholders; costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares of the Trust; costs of reproduction,
stationery and supplies; compensation of the Trust's trustees, officers,
employees and other personnel performing services for the Trust who are not the
Administrator's employees or employees of Forum Financial Services, Inc. or
affiliated persons of either; costs of corporate meetings; registration fees and
related expenses for registration with the SEC and the securities regulatory
authorities of other countries in which the Trust's shares are sold; state
securities law registration fees and related expenses; fees and out-of-pocket
expenses payable to Forum Financial Services, Inc. under any distribution,
management or similar agreement; and all other fees and expenses paid by the
Trust pursuant to any distribution or shareholder service plan adopted pursuant
to Rule 12b-1 under the Act.

SECTION 5. STANDARD OF CARE

The Trust shall expect of Administrator, and Administrator will give the
Trust the benefit of, Administrator's best judgment and efforts in rendering
these services to the Trust, and the Trust agrees as an inducement to
Administrator's undertaking these services that Administrator shall not be
liable hereunder for any mistake of judgment or in any event whatsoever, except
for lack of good faith, provided that nothing herein shall be deemed to protect,
or purport to protect, Administrator against any liability to the Trust or to
its security holders to which Administrator would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
Administrator's duties hereunder, or by reason of Administrator's reckless
disregard of its obligations and duties hereunder.

SECTION 6. COMPENSATION

(a) In consideration of the services performed by Administrator as
described herein, the Trust will pay Administrator, with respect to the Fund, a
fee at the annual rate of 0.25% of the average daily net assets of the Fund.
Such fee shall be accrued by the Trust daily and shall be payable monthly in
arrears on the first day of each calendar month for services performed hereunder
during the prior calendar month.

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<PAGE>

(b) If at any time that Fund ceases to invest all of its investment assets
in the Portfolio, and for any period thereafter in which the Fund does not have
substantially all of its investment assets invested in the Portfolio, no fee
shall be payable hereunder.

SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION

(b) This Agreement shall continue in effect for a period of one year from
its effectiveness and shall continue in effect for successive twelve-month
periods; provided, however, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this agreement or interested persons of any such party
(other than as Trustees of the Trust); provided further, however, that if the
continuation of this agreement is not approved, Administrator may continue to
render to the Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.

(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board on 60 days' written notice to Administrator or
(ii) by Administrator on 60 days' written notice to the Trust.

SECTION 8. ACTIVITIES OF ADMINISTRATOR

Except to the extent necessary to perform Administrator's obligations
hereunder, nothing herein shall be deemed to limit or restrict Administrator's
right, or the right of any of Administrator's officers, directors or employees
who may also be a trustee, officer or employee of the Trust, or persons
otherwise affiliated persons of the Trust 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 corporation, trust, firm, individual or association.

SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of the Fund shall not be
liable for any obligations of the Trust or of the Fund under this Agreement, and
Administrator agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which Administrator's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Fund.

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<PAGE>

SECTION 10. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

NORWEST FUNDS

/s/ John Y. Keffer
John Y. Keffer
President

NORWEST BANK MINNESOTA, N.A.

/s/ Jay Kiedrowski
Jay Kiedrowski
Executive Vice President

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<PAGE>

EXHIBIT 10 (a)

<PAGE>

[SEWARD & KISSEL LETTERHEAD]

July 28, 1994

Norwest Funds
61 Broadway
New York, New York 10006

Dear Sir or Madam:

We have acted as counsel for Norwest Funds, a Delaware business trust with
transferable shares (the "Trust"), in connection with the organization of the
Trust, the registration of the Trust under the Investment Company Act of 1940
and the registration of an indefinite number of shares beneficial interest of
its Cash Investment Fund, U.S. Government Fund, Treasury Fund, Ready Cash
Investment Fund, Municipal Money Market Fund, Adjustable U.S. Government Reserve
Fund, Government Income Fund, Income Fund, Total Return Bond Fund, Tax-Free
Income Fund, Arizona Tax-Free Fund, Colorado Tax-Free Fund, Minnesota Tax-Free
Fund, Income Stock Fund, ValuGrowth Stock Fund, Contrarian Stock Fund, Small
Company Stock Fund, Diversified Equity Fund, Growth Equity Fund, Large Company
Growth Fund, Small Company Growth Fund, International Fund, Income Equity Fund,
Index Fund, Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced
Fund, Intermediate U.S. Government Fund, Managed Fixed Income Fund, Stable
Income Fund and Short Maturity Investment Fund (the "Funds") under the
Securities Act of 1933. The shares of each Fund of the Trust may be offered

<PAGE>

in one or more classes in accordance with the terms of an exemptive order
received from the Securities and Exchange Commission.

As counsel for the Trust, we have participated in the preparation of the
Registration Statement on Form N-1A (the "Registration Statement") and the
prospectuses contained therein (the "Prospectuses") relating to such shares and
have examined and relied upon such records of the Trust and such other
documents, including certificates as to factual matters, as we have deemed
necessary to render the opinions expressed herein.

Based on such examination, we are of the opinion that:

1. The Trust has been duly organized and is validly existing as a
business trust with transferable shares of the type commonly called a Delaware
business trust.

2. The Trust is authorized to issue an unlimited number of shares. The
currently issued and outstanding shares of each class of the Cash Investment
Fund, U.S. Government Fund, Treasury Fund, Ready Cash Investment Fund, Municipal
Money Market Fund, Adjustable U.S. Government Reserve Fund, Government Income
Fund, Income Fund, Total Return Bond Fund, Tax-Free Income Fund, Arizona Tax-
Free Fund, Colorado Tax-Free Fund, Minnesota Tax-Free Fund, Income Stock Fund,
ValuGrowth Stock Fund, Contrarian Stock Fund and Small Company Stock Fund of the
Trust have been validly and legally issued and are fully paid and non-assessable
shares of beneficial interest of the Trust (the "Outstanding Shares"). The
shares to be offered for sale by the Prospectuses (the "Registered Shares") and
the Outstanding Shares have been duly and validly authorized by all requisite
action of the Trustees of the Trust and no action of the shareholders of the
Trust is or was required in connection therewith.

3. When the Registered Shares have been duly sold, issued and paid for as
contemplated by the Prospectuses, they will be validly and legally issued, fully
paid and non-assessable by the Trust.

Our opinion above stated is expressed as members of the bar of the District
of Columbia and the State of New York. This opinion does not extend to the
securities or "blue sky" laws of any state.

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the caption "Counsel and Auditors" in the Statement
of Additional Information of the Funds.

Very truly yours,
/s/ Seward & Kissel

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<PAGE>

CONSENT OF INDEPENDENT AUDITORS

The Board of Trustees
Norwest Advantage Funds:

We consent to the use of our report, incorporated by reference into the
statement of additional information, and to the reference to our Firm under
the headings "Financial Highlights" in the prospectuses and "Counsel and
Auditors" in the statements of additional information.

/s/ KPMG Peat Marwick LLP

Boston, Massachusetts
February 28, 1996

<PAGE>

EXHIBIT 15

<PAGE>

NORWEST ADVANTAGE FUNDS
DISTRIBUTION PLAN

August 1, 1993
As Amended January 29, 1996

This Distribution Plan (the "Plan") is adopted by Norwest Funds (the
"Trust") with respect to the shares of each class (the "Shares") of each of the
Funds identified in Appendix A attached hereto (individually a "Fund" and
collectively the "Funds") in accordance with the provisions of Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "Act").

SECTION 1. DISTRIBUTION RELATED SERVICES

Each entity selected from time to time to act as principal agent for the
Trust for the distribution of Shares of a Fund (each, a "Distributor" and
collectively, the "Distributors") will provide the Funds with distribution-
related services that are primarily intended to result in the sale of Shares,
including, but not limited to, compensation of employees of each such
Distributor, compensation and expenses, including overhead and telephone and
other communication expenses, of each such Distributor and other broker-dealers,
banks and other financial intermediaries that engage in or support the
distribution of Shares, the preparation, printing and distribution of
prospectuses, statements of additional information, sales literature and
advertising materials relating to the Shares, and such other promotional
activities in such amounts as each such Distributor deems necessary or
appropriate.

SECTION 2. COMPENSATION

Each Fund will pay to or on the order of, each entity, that has served from
time to time as Distributor, a distribution services fee composed of (i) a sales
commission equal to such percentage as may be determined from time to time by
the Trustees (such determination to be evidenced by the distribution servicing
agreement between such Distributor and the Trust (each a "Distribution
Agreement")) not in excess of the percentage permitted by law of the amount
received by the Fund for each Share sold (excluding reinvestment of dividends
and distributions) prior to the termination of the Distribution Agreement and
(ii) a separate interest fee (calculated in accordance with Section 3(c) hereof)
to be paid in the manner set forth in, and subject to the terms of, this Plan.
The amount of the sales commission with respect to a Fund shall be established
from time to time by vote or other action of a majority of (i) the Trustees and
(ii) those Trustees of the Trust who are not interested persons of the Trust and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Rule 12b-1 Trustees"). All sales commissions
paid hereunder with respect to a Fund shall, unless otherwise expressly required
by an applicable rule or regulation of the Securities and Exchange Commission
("Commission"), be charged to the capital of the

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<PAGE>

Fund attributable to the Shares. The separate interest fee paid hereunder with
respect to a Fund shall, unless otherwise expressly required by an applicable
rule or regulation of the Commission, be charged to the operating expenses of
the Fund attributable to the Shares. All distribution services fees are being
paid to each Distributor in consideration for the distribution services
furnished by each such Distributor in connection with the distribution of shares
of a Fund, including the payment of compensation to broker-dealers, banks and
other financial intermediaries selling Shares of such Fund.

SECTION 3. PAYMENT TO THE DISTRIBUTOR

(a) Subject to the provisions of Sections 9 and 11 hereof, the amount of
the distribution services fee payable pursuant to Section 2 in respect of Shares
of each Fund shall be paid by the Trust in respect of such Fund to the
Distributor in respect of such Shares or, if more than one institution has acted
or is acting as Distributor in respect of such Shares, then the amount of the
distribution services fee payable pursuant to Section 2 in respect of such
Shares shall be paid to each such Distributor in proportion to the number of
such Shares sold by or attributable to such Distributor's distribution efforts
in respect of such Shares in accordance with allocation provisions (the
"Allocation Procedures") set forth in such Distributor's Distribution Agreement
(the "Allocable Portion") notwithstanding that such Distributor's Distribution
Agreement with the Trust may have been terminated. A Distributor shall be
deemed to have fully earned its Allocable Portion of distribution services fees
upon the sale of each Commission Shares (as defined in the Allocation
Procedures) taken into account in computing its Allocable Portion.

(b) Payment of the distribution services fee by the Trust in respect of
each Fund shall be spread over a period of time, and the aggregate amount of all
such payments during any fiscal year of the Trust shall not exceed 0.75% of the
average daily net assets of the Fund attributable to the Shares for such year,
computed in accordance with the governing documents of the Trust and applicable
votes and determinations of the Trustees of the Trust. Accordingly, each Fund
shall accrue distribution services fees on a daily basis at the rate of 0.75%
per annum of the daily net assets of the Fund attributable to the Shares. The
amount of such distribution services fees in respect of a Fund shall be
determined daily with respect to such Fund, but Distributors for such Fund shall
not be entitled to any amount with respect to any day on which there exist no
outstanding Uncovered Distribution Charges, as defined below, attributable to
such Fund. The amount of such Uncovered Distribution Charges shall be
calculated daily. Subject to such limitations, the Trust shall pay each
Distributor its Allocable Portion of the accrued and unpaid distribution
services fee at least monthly and no later than the 10th day following the end
of the calendar month of accrual.

(c) For purposes of calculating Uncovered Distribution Charges in respect
of any Fund, Distribution Charges attributable to such Fund shall be the
aggregate of (i) all sales commissions attributable to the Fund that each
Distributor is entitled to be paid pursuant to Section 2 hereof since inception
of this Plan through and including the day

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<PAGE>

next preceding the date of calculation and (ii) an amount equal to the
aggregate of all separate interest fees referred to below that are
attributable to such Fund that each Distributor is entitled to be paid
pursuant to Section 2 hereof since inception of this Plan through and
including the day next preceding the date of calculation. From Distribution
Charges attributable to such Fund as so computed there shall be subtracted
with respect to each Fund (i) an amount equal to the aggregate amount of
distribution services fees paid pursuant to this Section 3 in respect of such
Fund since inception of this Plan through and including the day next
preceding the date of calculation and (ii) an amount equal to the aggregate
amount of all contingent deferred sales charges paid by such Fund to each
Distributor since inception of this Plan through and including the day next
preceding the date of calculation. If the result of such subtraction is a
positive amount, a separate interest fee (computed at the rate of 1% per
annum above the prime rate (being the base rate on corporate loans at large
U.S. money center commercial banks) then being reported in the Eastern
Edition of the Wall Street Journal or if such prime rate is not so reported
such other rate as may be designated from time to time by vote or other
action of a majority of (i) the Trustees and (ii) the Rule 12b-1 Trustees
shall be computed on such amount and added to such amount, with the resulting
sum constituting the amount of outstanding Uncovered Distribution Charges
attributable to such Fund with respect to such day for all purposes of this
Plan. The amount of distribution services fee to be accrued or paid in
respect of a Fund to the Distributors with respect to any day shall be the
lesser of the Uncovered Distribution Charges attributable to such Fund with
respect to that day and the maximum distribution services fee payable to the
Distributors by such Fund with respect to that day. The amount of such
distribution services fees, as so determined, shall first be applied and
charged to all unpaid sales commissions attributable to such Fund, and the
balance, if any, shall then be applied and charged to all unpaid interest
fees attributable to such Fund.

SECTION 4. ASSIGNMENT

(a) Any Distributor may assign, transfer or pledge ("Transfer") to one or
more designees (each an "Assignee"), its rights to all or a designated portion
of its Allocable Portion of the distribution services fee relating to any Fund
from time to time (but not such Distributor's duties and obligations pursuant
hereto or pursuant to any Distribution Agreement), free and clear of any offsets
or claims the Trust may have against such Distributor. Each such Assignee's
interest in a specific designated portion of a Distributor's Allocable Portion
of the distribution services fee relating to any Fund transferred in a Transfer
is hereafter referred to as an "Assignee's Portion." A Transfer pursuant to
this Section 4(a) shall not reduce or extinguish any claims of the Trust against
the Distributor.

(b) Each Distributor shall promptly notify the Trust in writing of each
such Transfer by providing the Trust with the name and address of each such
Assignee and request the Trust to pay such Assignee's Portion to such Assignee.
In accordance with such request, the Trust shall pay to such Assignee such
Assignee's portion.

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<PAGE>

(c) Alternatively, in connection with a Transfer, a Distributor may direct
the Trust to pay all of such Distributor's Allocable Portion of the distribution
services fee relating to any Fund from time to time to a depository or
collection agent designated by any Assignee, which depository or collection
agent may be delegated the duty of dividing such Distributor's Allocable Portion
of the distribution services fee relating to any Fund between the Assignee's
Portion and the balance of such Distributor's Allocable Portion (such balance,
when distributed to such Distributor by the depository or collection agent, the
"Distributor's Share"), in which case no portion of the Distributor's Share may
be subject to offsets or claims the Trust may have against such Distributor,
until and unless such Distributor's Share has been paid to such Distributor by
such depository.

SECTION 5. CONTINGENT DEFERRED SALES CHARGES

Each Distributor shall be entitled to receive all contingent deferred sales
charges imposed with respect to any early redemption of the Shares of any Fund
that are sold while this Plan or the Distribution Agreement between such
Distributor and the Trust is in effect. If there exist no Uncovered
Distribution Charges attributable to a Fund on the day on which any such
contingent deferred sales charge is imposed on Shares of that Fund and either
this Plan or the Distribution Agreement is in effect, the amount of such
contingent deferred sales charge shall be used to reduce any distribution
services fees which may otherwise be payable by the Fund to Distributors in the
future pursuant to the Plan.

SECTION 6. MAINTENANCE FEES

In addition to the payments of distribution services fees to the
Distributor as provided for in Section 3 hereof, each Fund will pay to the
Distributor each month for providing services to shareholder accounts a
maintenance fee with respect to the Shares of the Fund in an amount equal to, on
an annualized basis, 0.25% of the average daily net assets attributable to the
Shares of the Fund.

SECTION 7. ASSUMPTION OF UNCOVERED DISTRIBUTION CHARGES

With respect to the Shares of each Fund identified in Appendix B attached
hereto, upon approval of the Rule 12b-1 Trustees, a Fund may assume and pay to
the Distributors or their Assignees, as appropriate, the Uncovered Distribution
Charges of any other registered investment company or series thereof, or any
other amounts expended for distribution on behalf of such registered investment
company or series and not reimbursed or paid by such registered investment
company or series, upon the merger or combination with or acquisition of
substantially all of the assets of that registered investment company or series
by the Fund. Payments by a Fund pursuant to this Section 7 are subject to all
of the terms and conditions of this Plan.

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<PAGE>

SECTION 8. NO OTHER PAYMENTS

No Fund is obligated to pay any expense of distribution or maintenance of
shareholder accounts in excess of the distribution services fee and maintenance
fee described in Sections 3 and Section 6, respectively, hereof. The amount of
distribution services fees, maintenance fees and contingent deferred sales
charges payable to any Distributor with respect to Shares of a Fund is not
related directly to the amount of expenses incurred by such Distributor in
connection with providing distribution services and personal services to the
Shares of the Fund, which expenses may be greater or less than those fees and
charges. The Fund will not be obligated to reimburse any Distributor for those
expenses.

SECTION 9. AGREEMENTS BY THE DISTRIBUTOR

Payments to broker-dealers, depository institutions and other financial
intermediaries for the purposes set forth in Section 1 hereof are subject to the
terms and conditions of the written agreements between the Distributor and each
broker-dealer, depository institution or other financial intermediary. These
agreements will be in a form satisfactory to the Trust's Board of Trustees (the
"Board").

SECTION 10. REVIEW AND RECORDS

(a) The Trust and the Distributor will prepare and furnish to the Board,
and the Board will review, at least quarterly, written reports complying with
the requirements of Rule 12b-1 setting forth all amounts expended hereunder and
identifying the amounts paid to agents upon issuance of the Shares.

(b) The Trust shall preserve copies of the Plan, each agreement related to
the Plan and each report prepared and furnished pursuant to this Section in
accordance with Rule 12b-1 under the Act.

SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Plan will become effective on the date hereof and, with respect
to any Fund created subsequent to the date hereof, on the date the Board adopts
this Plan with respect to that Fund.

(b) This Plan will remain in effect with respect to each Fund for a period
of one year from the date of its effectiveness, unless earlier terminated in
accordance with its terms and shall continue in effect thereafter, provided that
such continuance is specifically approved at least annually by a majority of the
Board, including a majority of the Rule 12b-1 Trustees, pursuant to a vote cast
in person at a meeting called for the purpose of voting on the approval of the
Plan.

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<PAGE>

(c) The Plan may be terminated without penalty at any time with respect to
a Fund by (i) a vote of a majority of the Rule 12b-1 Trustees or (ii) by a vote
of a majority of the outstanding voting securities of the Fund. This Plan may
remain in effect for the Shares of any particular Fund even if the Plan has been
terminated for Shares of one or more other Funds. A termination of this Plan
with respect to any or all Shares of any or all Funds shall not affect the
obligation of the Trust to withhold and pay to any Distributor contingent
deferred sales charges to which such Distributor is entitled pursuant to any
Distribution Agreement.

(d) Notwithstanding anything to the contrary contained herein, the Trust
may agree with any Distributor that, so long as no Complete Termination (as
defined in Section 11(e) hereof) of this Plan has occurred and is continuing,
payments of such Distributor's Allocable Portion of the distribution services
fees will continue to be made to or at the direction of such Distributor
notwithstanding either the termination of the Distribution Agreement with such
Distributor, the termination of the role of such Distributor as Distributor
hereunder or the termination of this Plan.

(e) For purposes of this Section 11 a "Complete Termination" of this Plan
in respect of any Fund shall mean a termination of this Plan in respect to such
Fund so long as: (i) the 12b-1 Trustees of the Trust shall have acted in good
faith and shall have determined that such termination is in the best interest of
the Trust and the shareholders of such Fund; (ii) the Trust does not alter the
terms of the contingent deferred sales charges applicable to Shares outstanding
at the time of such termination; (iii) unless the applicable Distributor at the
time of such termination was in material breach under the Distribution Agreement
in respect of such Fund, the Trust shall not, in respect of such Fund, pay to
any person or entity, other than such Distributor or its Assignee, either the
asset based sales charge or the service fee (or any similar fee) in respect of
Shares taken into account in computing such Distributor's Allocable Portion; and
(iv) this Plan is terminated for such Shares and such Fund has not adopted a
distribution plan relating to any "Similar Class" of shares of such Fund. For
purposes of determining whether any termination of this Plan for the Shares of a
Fund is a Complete Termination, a "Similar Class" is any class of shares of such
Fund that has a sales load structure substantially similar to that of the class
for which this Plan was terminated taking into account the total sales load
borne directly or indirectly by holders of such class of shares including
commissions paid directly by such holders to brokers on issuance of shares of
such class, asset based sales charges paid by the Fund and allocated to shares
of such class, contingent deferred sales charges payable by holders of shares of
such class, installment or deferred sales charges payable by holders of shares
of such class, and similar charges borne directly or indirectly by holders of
shares of such class. A class of shares would not be considered substantially
similar to the Shares if (i) a front end sales charge is paid by the purchaser;
or (ii)(A) the shares are purchased at net asset value, (B) any commission to
any selling agent(s) on issuance of the shares does not exceed 1.0% of the
purchase amount, (C) the period during which any contingent deferred sales
charge applies does not exceed 12 months from the purchase date, and (D) there
is no other sales load feature borne directly or indirectly by holders of such
class of shares.

(f) In the event of a termination of this Plan with respect to any Fund
(other than a Fund listed on Appendix B) that does not constitute a Complete
Termination because the termination does not satisfy clause (ii), (iii) or
(iv) of the definition of Complete Termination set forth in paragraph (e)
above, the Fund shall continue to pay distribution services fees as
provided herein until the earlier of (i) four years after the date of such
termination or discontinuance or (ii) such time as there exist no outstanding
Uncovered Distribution Charges attributable to the Fund.

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SECTION 12. AMENDMENTS

The Plan may be amended with respect to a Fund at any time with the
approval of the Board, provided that (i) any material amendments to the terms of
the Plan will become effective only upon approval by a majority of the Board,
including a majority of the Rule 12b-1 Trustees, pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of the
Plan, and (ii) any amendment to increase materially the amount expended with
respect to a Fund for sales commissions or distribution services fees pursuant
to the Plan will be effective as to the Fund only upon the additional approval
by a vote of a majority of the outstanding voting securities of such Fund. For
purposes of this Section 11, an amendment to any Distribution Agreement
providing for an increase in the distribution services fees or aggregate fees
with respect to a Fund from an annual rate of 0.75% of the average daily net
assets of the Fund attributable to the Shares will be deemed an amendment to the
Plan which increases materially the amount which may be spent by that Fund
pursuant to the Plan.

SECTION 13. SELECTION OF RULE 12b-1 TRUSTEES

While the Plan is in effect, the selection and nomination of the Rule 12b-1
Trustees will be committed to the discretion of the Rule 12b-1 Trustees.

SECTION 14. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under the Plan.

SECTION 15. MISCELLANEOUS

(a) The terms "majority of the outstanding voting securities" and
"interested person" shall have the meanings ascribed thereto in the Act.

(b) If any provision of the Plan shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.

(c) Section headings in this Plan are included for convenience only and
are not to be used to construe or interpret the Plan.

-7-

<PAGE>

NORWEST ADVANTAGE FUNDS
DISTRIBUTION PLAN

August 1, 1993
As Amended January 29, 1996

APPENDIX A
Shares of Funds Covered Under the Plan

Fund Class
---- -----
Ready Cash Investment Fund Exchange Shares

ValuGrowth Stock Fund Investor B Shares
Income Stock Fund Investor B Shares
Small Company Growth Fund Investor B Shares
Contrarian Stock Fund Investor B Shares
Government Income Fund Investor B Shares
Income Fund Investor B Shares
Tax-Free Income Fund Investor B Shares
Adjustable U.S. Government
Reserve Fund Investor B Shares
Total Return Bond Fund Investor B Shares
Minnesota Tax-Free Fund Investor B Shares
Colorado Tax-Free Fund Investor B Shares
Arizona Tax-Free Fund Investor B Shares
Stable Income Fund B Shares
Income Equity Fund B Shares
Diversified Equity Fund B Shares
Intermediate U.S.
Government Fund B Shares
Growth Equity Fund B Shares

-8-

<PAGE>

NORWEST ADVANTAGE FUNDS
DISTRIBUTION PLAN

August 1, 1993
As Amended January 29, 1996

APPENDIX B
Shares of Funds Covered Under the Plan

Stable Income Fund B Shares
Income Equity Fund B Shares
Diversified Equity Fund B Shares
Intermediate U.S.
Government Fund B Shares
Growth Equity Fund B Shares

-9-

<PAGE>

EXHIBIT 18

<PAGE>

NORWEST FUNDS
MULTICLASS (RULE 18f-3) PLAN
May 1, 1995
As Amended November 1, 1995

This Plan is adopted by Norwest Funds (the "Trust") pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the "Act") in order to document the
separate arrangements and expense allocations of each class of shares of
beneficial interest (the "Classes") of each of the investment portfolios of the
Trust (the "Funds") and the related exchange privileges and conversion features.

SECTION 1. CLASS DESIGNATIONS

The types of Classes of the Funds that operate pursuant to Rule 2a-7 under
the Act ("Money Funds") are: "Institutional Shares," "Investor Shares,"
"Exchange Shares" and, with respect to certain Money Funds that offer only a
single Class of unnamed shares, "Single Class Shares." The types of Classes of
the other Funds ("Non-Money Funds") are: "I Shares," "A Shares" and "B Shares."
To the extent more than one Class is offered by a Fund, each Class has a
different arrangement for shareholder services or distribution or both, as
follows:

(a) INSTITUTIONAL SHARES. Are offered with no sales charges or
distribution expenses, with an investment minimum of $100,000.

(b) INVESTOR SHARES. Are offered with no sales charges or distribution
expenses, with an investment minimum of $1,000.

(c) EXCHANGE SHARES. Are offered solely through the exchange privilege to
shareholders of B Shares subject to a contingent deferred sales charge (subject
to certain reductions or eliminations of the sales charge as described in the
applicable prospectus) and a distribution plan adopted in accordance with Rule
12b-1 under the Act.

(d) I SHARES. Are offered solely to fiduciary, agency, and custodial
clients of bank trust departments, trust companies and their affiliates with no
sales charges, distribution expenses or Fund imposed investment minimums.

(e) A SHARES. Are offered subject to a front-end sales charge (subject to
certain reductions or eliminations of the sales charge as described in the
applicable prospectus), with an investment minimum of $1,000 to $5,000.

(f) B SHARES. Are offered subject to a contingent deferred sales charge
(subject to certain reductions or eliminations of the sales charge as described
in the applicable prospectus) and a distribution plan adopted in accordance with
Rule 12b-1 under the Act with a minimum investment of $1,000 to $5,000.

-1-
<PAGE>

SECTION 2. VOTING

Each Class shall have exclusive voting rights on any matter submitted to a
shareholder vote that relates solely to the Class' arrangement for shareholder
services or distribution and each Class shall have separate voting rights with
respect to any matter submitted to a shareholder vote in which the interests of
one Class differ from the interests of another Class.

SECTION 3. CLASS EXPENSE ALLOCATIONS

(a) DISTRIBUTION EXPENSES. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act shall be
allocated to that Class.

(b) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with distribution expenses
under Section 3(a) "Class Expenses"), shall be allocated to the Class that
incurred the expenses:

(i) Transfer agent fees and expenses;
(ii) Administrative fees and expenses;
(iii) Litigation, legal and audit fees;
(iv) State and foreign securities registration fees;
(v) Shareholder report expenses;
(vi) Trustee fees and expenses;
(vii) Preparation, printing and related fees and expenses for proxy
statements and, with respect to current shareholders, shareholder
reports, prospectuses and statements of additional information;
and
(viii) Subject to approval by the Trustees, such other fees and expenses
as Forum Financial Services, Inc. ("Forum"), manager of the
Trust, pursuant to Rule 18f-3 deems to be allocable to specified
Classes.

(c) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely
by the Class to which they relate. Items (i) and (ii) of Section 3(b) in their
entirety are incurred by the Funds on a Class by Class basis and, accordingly,
are wholly allocated to specific Classes. All other items in Section 3(b) are
allocated to a specific Class only to the extent they are attributable to the
Classes in different amounts.

SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS

(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than Class
Expenses) incurred by the Trust on behalf of a Fund shall be allocated to that
Fund and expenses (other than Class Expenses) incurred by the Trust on behalf of
more than one Fund shall be allocated among the Funds that incurred the expenses
based on the net asset values of the Funds in relation to the net asset value of
all Funds to which the expense relates.

-2-

<PAGE>

(b) GENERAL ALLOCATION RULE. Unless otherwise noted, income, realized and
unrealized capital gains and losses and expenses other than Class Expenses
related to a Fund shall be allocated to each share of the Fund pro rata on the
basis of its net asset value.

(c) SETTLED SHARE METHOD - MONEY FUNDS. With respect to Money Funds,
income, realized and unrealized capital gains and losses and expenses other than
Class Expenses related to a Fund shall be allocated to each class of the Fund
based on the net asset value of the Class (excluding the value of subscriptions
receivable) in relation to the net asset value of the Fund.

(d) SETTLED SHARE METHOD - OTHER DAILY DIVIDEND FUNDS. With respect to
funds other than Money Funds that declare dividends daily, income and expenses
other than Class Expenses related to a Fund shall be allocated to each class of
the Fund based on the net asset value of the Class (excluding the value of
subscriptions receivable) in relation to the net asset value of the Fund.

(e) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's various service agreements.

SECTION 5. EXCHANGE PRIVILEGES

Shareholders of a Class may exchange their shares of a Class for shares of
another Fund in accordance with Section 11(a) of the Act, the rules thereunder
and the requirements of the applicable prospectuses as follows:

(a) INSTITUTIONAL SHARES. Institutional Shares of a Fund may be exchanged
for (i) Institutional Shares of any other Fund, (ii) I Shares or (iii) shares of
any Single Class Fund; provided that Institutional Shares of Ready Cash
Investment Fund may not be exchanged for shares of Cash Investment Fund.

(b) INVESTOR SHARES. Investor Shares of a Fund may be exchanged for (i)
Investor Shares of any other Fund or (ii) A Shares.

(c) EXCHANGE SHARES. Exchange Shares of a Fund may be exchanged for (i)
Exchange Shares of any other Fund or (ii) B Shares.

(d) I SHARES. I Shares of a Fund may be exchanged for (i) I Shares of any
other Fund or (ii) Institutional Shares.

(e) A SHARES. A Shares of a Fund may be exchanged for (i) A Shares of any
other Fund or (ii) Investor Shares of any other Fund.

-3-
<PAGE>

(f) B SHARES. B Shares of a Fund may be exchanged for (i) B Shares of any
other Fund or (ii) Exchange Shares of any other Fund.

(g) SINGLE CLASS FUNDS. Shares of Single Class Funds may be exchanged for
(i) shares of any other Single Class Fund or (ii) Institutional Shares of any
other Fund; provided that shares of Cash Investment Fund may not be exchanged
for Institutional Shares of Ready Cash Investment Fund.

SECTION 6. CONVERSIONS

(a) AUTOMATIC B SHARE TO A SHARE CONVERSION. B Shares shall automatically
convert into A Shares of the same Fund at the end of the month following the
expiration of a specified holding period (the "Holding Period") for the B
Shares. If the B Shares were obtained through an exchange, the Holding Period
shall be the specified Holding Period for the B Shares of the Fund from which
the shareholder initially exchanged. The Holding Period for B Shares shall be
specified in each prospectus offering B Shares.

(b) AUTOMATIC EXCHANGE SHARE TO INVESTOR SHARE CONVERSION. Exchange
Shares shall automatically convert into Investor Shares of the same Fund at the
end of the month following the expiration of a specified holding period (the
"Holding Period") for the Exchange Shares. If the Exchange Shares were obtained
through an exchange, the Holding Period shall be the specified Holding Period
for the B Shares of the Fund from which the shareholder initially exchanged.
The Holding Period for Exchange Shares shall be specified in each prospectus
offering Exchange Shares.

(c) NON-ELIGIBILITY CONVERSION. I Shares shall automatically convert to A
Shares of the same Fund after the beneficial shareholder of the I Shares becomes
ineligible to own I Shares and is so informed by the Fund.

(d) BASIS OF CONVERSIONS. All conversions shall be effected on the basis
of the relative net asset values per share of the two Classes as last determined
on the day of the conversion without the imposition of any fee or charge.

SECTION 7. AMENDMENTS AND BOARD REVIEW

(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan may be
made at any time by Forum after consultation with the investment advisers of
each Fund affected by the amendment.

(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes affected by
the amendment and of the Fund and the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.

-4-

<PAGE>

(c) BOARD REVIEW. The Board, including a majority of those Trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically (i) this Plan for its continuing appropriateness and (ii) any fee
waivers and expense reimbursements to determine that the Funds are in compliance
with Section 4(d).

-5-

<PAGE>

OTHER (A)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that James C. Harris constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, Anthony C.J.
Nuland and Robert M. Nelson and each of them, as true and lawful attorneys-in-
fact and agents with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities to sign the Registration
Statement on Form N-1A and any or all amendments thereto of Norwest Funds, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

/s/ James C. Harris
James C. Harris

Dated: December 8, 1993

-1-

<PAGE>

OTHER(B)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Richard M. Leach constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, Anthony C.J.
Nuland and Robert M. Nelson and each of them, as true and lawful attorneys-in-
fact and agents with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities to sign the Registration
Statement on Form N-1A and any or all amendments thereto of Norwest Funds, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

/s/ Richard M. Leach
Richard M. Leach

Dated: December 8, 1993

-2-

<PAGE>

OTHER(C)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Robert C. Brown constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, Anthony C.J.
Nuland and Robert M. Nelson and each of them, as true and lawful attorneys-in-
fact and agents with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities to sign the Registration
Statement on Form N-1A and any or all amendments thereto of Norwest Funds, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

/s/ Robert C. Brown
Robert C. Brown

Dated: December 8, 1993

-3-
<PAGE>

OTHER(D)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Donald H. Burkhardt constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, Anthony C.J.
Nuland and Robert M. Nelson and each of them, as true and lawful attorneys-in-
fact and agents with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities to sign the Registration
Statement on Form N-1A and any or all amendments thereto of Norwest Funds, and
to file the same, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

/s/ Donald H. Burkhardt
Donald H. Burkhardt

Dated: December 8, 1993

-4-

<PAGE>

OTHER(E)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that John Y. Keffer constitutes and
appoints David I. Goldstein, Thomas G. Sheehan, Anthony C.J. Nuland and Robert
M. Nelson and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Norwest Funds, and to file the same,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof;
the execution of this power of attorney shall revoke any and all previous powers
of attorney with respect to the same matters.

/s/ John Y. Keffer
John Y. Keffer

Dated: December 8, 1993

-5-

<PAGE>

OTHER(F)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Donald C. Willeke constitutes and
appoints David I. Goldstein, Thomas G. Sheehan, John Y. Keffer and Anthony C.J.
Nuland and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Norwest Advantage Funds, and to file
the same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof; the execution of this power of attorney shall revoke any
and all previous powers of attorney with respect to the same matters.

/s/ Donald C. Willeke
Donald C. Willeke

Dated: October 16, 1995

-6-

<PAGE>

OTHER(G)

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Timothy J. Penny constitutes and
appoints David I. Goldstein, Thomas G. Sheehan, John Y. Keffer and Anthony C.J.
Nuland and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Norwest Advantage Funds, and to file
the same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof; the execution of this power of attorney shall revoke any
and all previous powers of attorney with respect to the same matters.

/s/ Timothy J. Penny
Timothy J. Penny

Dated: October 23, 1995

-7-

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORWEST
ADVANTAGE FUNDS ANNUAL REPORT DATED 10/31/95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 028
<NAME> CONSERVATIVE BALANCED FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 128,287,469
<INVESTMENTS-AT-VALUE> 18,154,224
<RECEIVABLES> 1,138,354
<ASSETS-OTHER> 2,649,115
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 139,520,883
<PAYABLE-FOR-SECURITIES> 12,600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,798,472
<TOTAL-LIABILITIES> 2,811,072
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,967,271
<SHARES-COMMON-STOCK> 7,506,036
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 5,722,348
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,622,358
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,397,834
<NET-ASSETS> 136,709,811
<DIVIDEND-INCOME> 556,754
<INTEREST-INCOME> 6,076,035
<OTHER-INCOME> 0
<EXPENSES-NET> 973,043
<NET-INVESTMENT-INCOME> 5,659,746
<REALIZED-GAINS-CURRENT> 1,684,960
<APPREC-INCREASE-CURRENT> 7,397,834
<NET-CHANGE-FROM-OPS> 14,742,540
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 156,541,668
<NUMBER-OF-SHARES-REDEEMED> (34,574,397)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 136,709,811
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 547,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,136,274
<AVERAGE-NET-ASSETS> 126,126,225
<PER-SHARE-NAV-BEGIN> 16.19
<PER-SHARE-NII> 0.75
<PER-SHARE-GAIN-APPREC> 1.27
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.21
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 601,661,192
<INVESTMENTS-AT-VALUE> 713,951,433
<RECEIVABLES> 1,078,068
<ASSETS-OTHER> 41,220,563
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 756,298,175
<PAYABLE-FOR-SECURITIES> 2,360,202
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,827,064
<TOTAL-LIABILITIES> 45,187,266
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 582,114,003
<SHARES-COMMON-STOCK> 25,833,522
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 7,056,692
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,649,973
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 112,290,241
<NET-ASSETS> 711,110,909
<DIVIDEND-INCOME> 10,345,112
<INTEREST-INCOME> 1,212,227
<OTHER-INCOME> 0
<EXPENSES-NET> 5,749,697
<NET-INVESTMENT-INCOME> 5,807,642
<REALIZED-GAINS-CURRENT> 10,899,023
<APPREC-INCREASE-CURRENT> 112,290,241
<NET-CHANGE-FROM-OPS> 128,996,906
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 685,366,078
<NUMBER-OF-SHARES-REDEEMED> (103,252,075)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 711,110,909
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,737,147
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,125,909
<AVERAGE-NET-ASSETS> 596,179,472
<PER-SHARE-NAV-BEGIN> 22.21
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 5.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.53
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 331,483,179
<INVESTMENTS-AT-VALUE> 376,158,499
<RECEIVABLES> 1,551,843
<ASSETS-OTHER> 25,261,556
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 403,020,009
<PAYABLE-FOR-SECURITIES> 899,788
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,228,061
<TOTAL-LIABILITIES> 28,127,849
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 318,399,018
<SHARES-COMMON-STOCK> 17,646,020
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,984,346
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,833,476
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,675,320
<NET-ASSETS> 374,892,160
<DIVIDEND-INCOME> 3,880,336
<INTEREST-INCOME> 7,446,004
<OTHER-INCOME> 0
<EXPENSES-NET> 2,965,869
<NET-INVESTMENT-INCOME> 8,360,471
<REALIZED-GAINS-CURRENT> 3,457,351
<APPREC-INCREASE-CURRENT> 44,675,320
<NET-CHANGE-FROM-OPS> 56,493,142
<EQUALIZATION> 0
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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</TABLE>

<S> <C>
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<PER-SHARE-NAV-BEGIN> 25.08
<PER-SHARE-NII> 1.65
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.92
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 344,909,203
<INVESTMENTS-AT-VALUE> 375,030,535
<RECEIVABLES> 2,988,870
<ASSETS-OTHER> 26,615,642
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 404,683,158
<PAYABLE-FOR-SECURITIES> 3,192,897
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,492,030
<TOTAL-LIABILITIES> 30,684,927
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 326,725,838
<SHARES-COMMON-STOCK> 18,851,385
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 12,483,311
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,667,750
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,121,332
<NET-ASSETS> 373,998,231
<DIVIDEND-INCOME> 2,589,123
<INTEREST-INCOME> 12,451,104
<OTHER-INCOME> 0
<EXPENSES-NET> 2,859,405
<NET-INVESTMENT-INCOME> 12,180,822
<REALIZED-GAINS-CURRENT> 4,970,239
<APPREC-INCREASE-CURRENT> 30,121,332
<NET-CHANGE-FROM-OPS> 47,272,393
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 406,543,073
<NUMBER-OF-SHARES-REDEEMED> (79,817,235)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 373,998,231
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,722,174
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,126,455
<AVERAGE-NET-ASSETS> 336,939,035
<PER-SHARE-NAV-BEGIN> 17.25
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 1.94
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.84
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
NORWEST ADVANTAGE FUNDS ANNUAL REPORT DATED 10/31/95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 19
<NAME> SMALL COMPANY GROWTH FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 231,337,976
<INVESTMENTS-AT-VALUE> 274,933,053
<RECEIVABLES> 4,121,609
<ASSETS-OTHER> 35,559,725
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 314,662,498
<PAYABLE-FOR-SECURITIES> 610,986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,993,638
<TOTAL-LIABILITIES> 36,604,624
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 207,673,086
<SHARES-COMMON-STOCK> 9,272,470
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,789,711
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 43,595,077
<NET-ASSETS> 278,057,874
<DIVIDEND-INCOME> 951,456
<INTEREST-INCOME> 771,311
<OTHER-INCOME> 0
<EXPENSES-NET> 2,756,324
<NET-INVESTMENT-INCOME> (1,033,557)
<REALIZED-GAINS-CURRENT> 27,823,268
<APPREC-INCREASE-CURRENT> 43,595,077
<NET-CHANGE-FROM-OPS> 70,384,788
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 252,183,307
<NUMBER-OF-SHARES-REDEEMED> (44,510,221)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 278,057,874
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,984,348
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,938,341
<AVERAGE-NET-ASSETS> 228,625,971
<PER-SHARE-NAV-BEGIN> 21.88
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 8.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.99
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 47,742,178
<INVESTMENTS-AT-VALUE> 48,201,487
<RECEIVABLES> 421,987
<ASSETS-OTHER> 5,948,625
<OTHER-ITEMS-ASSETS> 48,111
<TOTAL-ASSETS> 54,440,210
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,353,642
<TOTAL-LIABILITIES> 6,353,642
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,373,286
<SHARES-COMMON-STOCK> 4,485,961
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,247,375
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 186,598
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 279,309
<NET-ASSETS> 48,086,568
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,495,297
<OTHER-INCOME> 0
<EXPENSES-NET> 247,922
<NET-INVESTMENT-INCOME> 2,247,375
<REALIZED-GAINS-CURRENT> 186,598
<APPREC-INCREASE-CURRENT> 279,309
<NET-CHANGE-FROM-OPS> 2,713,282
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73,328,072
<NUMBER-OF-SHARES-REDEEMED> (27,954,786)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 48,086,568
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 114,429
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 366,854
<AVERAGE-NET-ASSETS> 39,551,758
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 0.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.72
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>