<PAGE>
As filed with the Securities and Exchange Commission
on August 9, 1996
File No. 33-9645
File No. 811-4881
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 39
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 41
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
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
It is proposed that this filing will become effective:
__ 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)
X 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
__ on [ ] pursuant to Rule 485, paragraph (a)(ii)
If appropriate, check the following box:
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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. Registrant filed a Rule
24f-2 notice for the most recent fiscal year of its various
portfolios on July 26, 1996.
Small Cap Opportunities Fund of the Registrant is currently
structured as a master-feeder fund. This amendment includes a
Signature Page for the master fund, Schroder U.S. Smaller
Companies Portfolio, a series of Schroder Capital Funds.
It has been proposed that this filing will become effective on
August 12, 1996. Acceleration has been requested.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
(Prospectus offering A Shares and B Shares of
Small Cap Opportunities Fund)
Form N-1A
Item No. (Caption) Location in Prospectus
(Caption)
_______ _________ _______________________
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of Prospectus Summary;
Registrant Investment Objective
and Policies;
and Other Information
- The Trust and
its Shares
Item 5. Management of the Fund Prospectus Summary;
Management
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Cover Page; Dividends,
Other Securities and Tax Matters; Other
Information - The Trust
and its Shares
Item 7. Purchase of Securities How to Buy Shares;
Being Offered Management - Management
and Distribution Services;
Other Shareholder Services
Item 8. Redemption or Repurchase How to Sell Shares; Other
Shareholder Services
Item 9. Pending Legal Proceedings Not Applicable
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CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
(Prospectus offering I Shares of Small Cap Opportunities Fund)
Form N-1A
Item No. (Caption) Location in Prospectus
(Caption)
_______ _________ _______________________
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of Summary;
Registrant Investment Objective,
Policies and Risk
Considerations; and
Other Information -
The Trust and its Shares
Item 5. Management of the Fund Summary; Management
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Cover Page; Dividends,
Other Securities Distributions and Tax
Matters; Other Information
- The Trust and its Shares
Item 7. Purchase of Securities Purchases and Redemptions
Being Offered of Shares; Management -
Administration and
Distribution Services
Item 8. Redemption or Repurchase Purchases and Redemptions
of Shares
Item 9. Pending Legal Proceedings Not Applicable
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CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART B
(SAI offering A Shares, B Shares and I Shares of Small
Cap Opportunities Fund)
Location in Statement of
Form N-1A Additional Information
Item No (Caption) (Caption)
_________ ________________________ ______________________
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Prospectus
and History
Item 13. Investment Objectives and Investment Policies;
Policies Investment Restrictions
Item 14. Management of the Fund Management; Other
Information - Additional
Information about the
Trust
Item 15. Control Persons and Other Information -
Principal Holders of Ownership of Fund Shares
Securities and - Additional
Information about the
Trust
Item 16. Investment Advisory and Management
Other Services
Item 17. Brokerage Allocation Other Information -
and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Information -
Other Securities Ownership of Fund Shares
and - Additional
Information about the
Trust
Item 19. Purchase, Redemption Other Information -
and Pricing of Additional Purchase and
Securities Being Offered Redemption Information
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Item 20. Tax Status Other Information
-Taxation
Item 21. Underwriters Management -
Administration and
Distribution
Item 22. Calculation of Performance Data and
Performance Data Advertising
Item 23. Financial Statements Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
(All other prospectuses offering shares of other
portfolios of Norwest Advantage Funds)
Not Applicable in this Filing
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART B
(All other SAIs offering shares of other portfolios of
Norwest Advantage Funds)
Not Applicable in this Filing
<PAGE>
Small Cap Opportunities 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
August 15, 1996
This Prospectus offers A Shares and B Shares of Small Cap
Opportunities Fund (the "Fund"). The Fund is a separate
diversified equity portfolio of Norwest Advantage Funds (the
"Trust"), which is a registered open-end management investment
company.
The Fund currently seeks to achieve its investment objective by
investing all of its investment assets in Schroder U.S. Smaller
Companies Portfolio (the "Portfolio"), a separate portfolio of a
registered open-end management investment company with an
identical investment objective. Accordingly, the Fund's
investment experience will correspond directly with the
Portfolio's investment experience.
This Prospectus sets forth concisely the information concerning
the Trust and the Fund 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") with respect to the 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 is incorporated into this Prospectus by
reference. An investor may obtain a copy of the SAI without
charge by contacting the Trusts 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.
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.
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AN INVESTMENT IN SHARES OF ANY MUTUAL FUND IS SUBJECT TO
INVESTMENT RISK, INCLUDING THE 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.
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1. Prospectus Summary
HIGHLIGHTS OF THE FUND
The following summary is qualified in its entirety by the more
detailed information contained in this Prospectus.
Investment Objective and Policies
The Funds investment objective is capital appreciation. Current
income will be incidental to the objective of capital
appreciation. Currently, the Fund seeks to achieve its
investment objective by investing exclusively in the Portfolio, a
series of Schroder Capital Funds ("Core Trust"), itself a
registered open-end management investment company. The Portfolio
has substantially the same investment objective and policies as
the Fund. Accordingly, the investment experience of the Fund
will correspond directly with the investment experience of the
Portfolio. The Fund will seek to achieve its investment
objective by investing, under normal market conditions, at least
65% of its total assets in equity securities of companies
domiciled in the United States that, at the time of purchase,
have market capitalizations of $1.5 billion or less.
Investment Advisers
The Fund's investment adviser (the "Adviser") is Norwest
Investment Management, a part of Norwest Bank Minnesota, N.A.
("Norwest"). As the Fund invests all of its assets in the
Portfolio, the Fund does not actively employ the Adviser to
manage its investment portfolio. See "Management--Investment
Advisory Services." Norwest serves as the Trusts transfer agent,
dividend disbursing agent and custodian. See "Management-
- -Shareholder Servicing and Custody."
The Portfolio's investment adviser is Schroder Capital Management
International Inc. ("Schroder"), a registered investment adviser
under the Investment Advisers Act of 1940. The advisory fee paid
to Schroder by the Portfolio is borne indirectly by the Fund and
any other investors in the Portfolio. See "Management-
- -Investment Advisory Services." Schroder and the Adviser are
sometimes referred to collectively as the Advisers.
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 the
Fund. Schroder Fund Advisors ("Schroder Advisors") serves as
administrator of Core Trust, for which Forum also provides
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certain administrative services. See "Management--Management and
Distribution Services."
Shares of the Fund
The 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 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 the 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 investors 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."
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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
The 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 the Fund's net investment income are declared and
paid at least annually. The Funds 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 the Fund will achieve its
investment objective, and the 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 the Fund
may be worth more or less than its original value.
All investments made by the Fund entail some risk. Certain
investments and investment techniques, however, entail additional
risks, such as the potential use of leverage through borrowings,
securities lending and other investment techniques. See
"Investment Objective and Policies--Additional Investment
Policies and Risk Considerations."
The Funds' policy of investing in smaller companies entails
certain risks in addition to those normally associated with
investments in equity securities. See "Investment Objective and
Policies--Additional Investment Policies and Risk
Considerations." By investing solely in the Portfolio, the Fund
may achieve certain efficiencies and economies of scale.
Nonetheless, this investment could also have 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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EXPENSE INFORMATION
The purpose of the table below is to assist investors in
understanding the expenses of both the Fund the Portfolio that an
investor in Shares of the Fund will bear directly or indirectly.
Shareholder Transaction Expenses
(applicable to the Fund)
A B
Shares(1) Shares(2)
_________ _________
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 4.0%
Exchange Fee Zero Zero
Annual Operating Expenses (3)
(as a percentage of average
daily net assets)
A B
Shares Shares
Investment Advisory Fee (4) 0.60% 0.60%
Rule 12b-1 Fees (5) (after
fee waivers) None 0.75%
Other Expenses (6) (after
expense reimbursements and fee
waivers) 0.65% 0.65%
Total Operating Expenses 1.25% 2.00%
(1) Sales charge waivers and reduced sales charge plans are
available for A Shares. 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."
(2) 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."
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(3) For a further description of the various expenses
incurred in the operation of the Fund, see "Management."
Expenses associated with the I Shares of the Fund differ from
those of the Shares listed in the table shown above. The Funds
expenses as listed above include the Funds pro rata portion of
all operating expenses of the Portfolio, which will be borne
indirectly by Fund shareholders. The Trust's Board of Trustees
believes that the aggregate per share expenses of the Fund and
the Portfolio will be approximately equal to the expenses the
Fund would incur if its assets were invested directly in
securities.
(4) Investment Advisory Fees are those incurred by the
Portfolio; as long as its assets are invested in the Portfolio,
the Fund pays no investment advisory fees directly. If the Fund
invested directly in securities, the Fund would pay a higher
advisory fee and lower administrative fees than the Fund pays in
connection with its investment in the Portfolio. See
"Investment Objective and Policies and Management--Expenses of
the Fund."
(5) Absent waivers, the Rule 12b-1 Fees would be 1.00% for B
Shares of the 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.
(6) Other expenses for the Fund are based on estimated
amounts for the Fund's first fiscal year of operations ending
May 31, 1997. With respect to A Shares, absent estimated expense
reimbursements and fee waivers, the expenses of the Fund would
be: Other Expenses, 0.98%, and Total Operating Expenses, 1.58%.
With respect to B Shares, absent estimated expense reimbursements
and fee waivers the expenses of the Fund would be: Other
Expenses, 0.98%; and Total Operating Expenses, 2.58%. Other
Expenses include transfer agency fees payable to Norwest at an
annual rate of up to 0.25% of the Fund's average daily net assets
attributable to A Shares and B Shares. Fee waivers are voluntary
and may be reduced or eliminated at any time.
Example
The following is a hypothetical example that indicates the dollar
amount of expenses that an investor would pay, assuming a $1,000
investment in the Fund's Shares, a 5% annual return and
reinvestment of all dividends and distributions.
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1 Year 3 Years
A Shares 57 83
B Shares
Assuming redemption
at the end of the period 60 93
Assuming no redemption 20 63
The example is based on the expenses listed in the Annual
Operating Expenses table. The 5% annual return is not predictive
of and does not represent the Fund's projected returns; rather,
it is required by government regulation. The example assumes
deduction of the maximum initial sales charge for A Shares and
deduction of the contingent deferred sales charge for B Shares
applicable to a redemption at the end of the period. 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.
2. Investment Objective and Policies
The Fund is designed for the investment of that portion of an
investor's funds that can appropriately bear the special risks
associated with an investment in smaller market capitalization
companies with the aim of capital appreciation. The Fund is not
intended for investors whose objective is assured income or
preservation of capital.
INVESTMENT OBJECTIVE
The Fund's investment objective is capital appreciation. Current
income will be incidental to the objective of capital
appreciation. There can be no assurance that the Fund will
achieve its investment objective.
The Fund's investment objective is fundamental and cannot be
changed without shareholder approval. The Fund currently seeks
to achieve its investment objective by investing all of its
investable assets in the Portfolio, which has substantially the
same investment objective and policies as the Fund. Therefore,
although the following discusses the investment policies of the
Portfolio and the responsibilities of the Core Trust's board of
trustees, it applies equally to the Fund and the Trust's board of
trustees (the "Board"). Additional information concerning the
investment policies of the Portfolio and the Fund, including
additional fundamental policies, is contained in the SAI.
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INVESTMENT POLICIES
The Portfolio will seek to achieve its investment objective by
investing, under normal market conditions, at least 65% of its
total assets in equity securities of companies domiciled in the
United States that, at the time of purchase, have market
capitalizations of $1.5 billion or less. Market capitalization
means the market value of a company's outstanding stock.
In its investment approach, Schroder will attempt to identify
securities of companies which it believes can generate above
average earnings growth, selling at favorable prices in relation
to book values and earnings. As part of the investment decision,
Schroder's assessment of the competency of an issuer's management
will be an important consideration. These criteria are not
rigid, and other investments may be included in the Portfolio if
they may help the Portfolio to attain its objective. These
criteria can be changed by the board of trustees of the Core
Trust, without shareholder approval.
The Portfolio will invest principally in equity securities
(common stocks, securities convertible into common stocks or,
subject to special limitations, rights or warrants to subscribe
for or purchase common stocks). The Portfolio may also invest to
a limited degree in non-convertible debt securities and preferred
stocks when, in the opinion of Schroder, such investments are
warranted to achieve the Portfolio's investment objective. 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.
The Portfolio may invest in securities of small, unseasoned
companies (which, together with any predecessors, have been in
operation for less than three years), as well as in securities of
more established companies. In view of the volatility of price
movements of the former, as a non-fundamental policy, the
Portfolio currently intends to invest no more than 5% of its
total assets in securities of small, unseasoned issuers.
Although there is no minimum rating for debt securities
(convertible or non-convertible) in which the Portfolio may
invest, it is the present intention of the Portfolio to invest no
more than 5% of its net assets in debt securities rated below Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard
& Poor's Ratings Services ("S&P"), such securities being commonly
known as "high yield/high risk" securities or "junk bonds," and
it will not invest in debt securities that are in default. High
yield/high risk securities are predominantly speculative with
respect to the capacity to pay interest and repay principal and
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generally involve a greater volatility of price than securities
in higher rated categories. In the event the Portfolio intends
in the future to invest more than 5% of its net assets in junk
bonds, appropriate disclosures will be made to existing and
prospective shareholders. It should be noted that even bonds
rated Baa by Moody's or BBB by S&P are described by those rating
agencies as having speculative characteristics and that changes
in economic conditions or other circumstances are more likely to
lead to a weakened capacity of issuers of such bonds to make
principal and interest payments than is the case with higher
grade bonds. The Portfolio is not obligated to dispose of
securities due to changes by the rating agencies. See the SAI
for information about the risks associated with investing in junk
bonds.
For temporary defensive purposes, the Portfolio may invest
without limitation in (or enter into repurchase agreements
maturing in seven days or less with U.S. banks and broker-dealers
with respect to) short-term debt securities, including commercial
paper, U.S. Treasury bills, other short-term U.S. Government
securities, certificates of deposit and bankers' acceptances of
U.S. banks. The Portfolio also may hold cash and time deposits
in U.S. banks. See "Investment Policies" in the SAI for further
information about all these securities.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
General Policy Information
The investment objective and all investment policies of each of
the Fund and the Portfolio 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 or the Portfolio,
as applicable. A majority of outstanding voting securities means
the lesser of (i) 67% of the shares present or represented at a
shareholder meeting at which the holders of more than 50% of the
outstanding shares are present or represented, or (ii) more than
50% of outstanding shares. Unless otherwise indicated, all
investment policies are nonfundamental and may be changed by the
Board without approval of shareholders of the Fund. Likewise,
nonfundamental investment policies of the Portfolio may be
changed by the board of trustees of Core Trust without
shareholder approval. For more information concerning
shareholder voting, see "Other Information--The Trust and Its
Shares--Shareholder Voting and Other Rights" and "--Core Trust
Structure."
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Investment Types
Common and Preferred Stock and Warrants. The Portfolio 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, generally, 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 the
Portfolio may be traded in the over-the counter market or on a
securities exchange, but may not be traded every day or in the
volume typical of securities traded on a major U.S. national
securities exchange. As a result, disposition by the Portfolio
of a security to meet redemptions by interest holders or
otherwise may require the Portfolio 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 a
lengthy 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. The
Portfolio may also 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.
Repurchase Agreements. The Portfolio may invest in repurchase
agreements. A repurchase agreement is a means of investing
monies for a short period. In a repurchase agreement, a seller -
a U.S. bank or recognized broker-dealer - sells securities to the
Portfolio and agrees to repurchase the securities at the
Portfolio's cost plus interest within a specified period
(normally one day). In these transactions, the values of the
underlying securities purchased by the Portfolio are monitored at
all times by Schroder to insure that the total value of the
securities equals or exceeds the value of the repurchase
agreement, and the Portfolio's custodian bank holds the
securities until they are repurchased. In the event of default
by the seller under the repurchase agreement, the Portfolio may
have difficulties in exercising its rights to the underlying
securities and may incur costs and experience time delays in
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disposing of them. To evaluate potential risks, Schroder reviews
the creditworthiness of those banks and dealers with which the
Portfolio enters into repurchase agreements.
Illiquid and Restricted Securities. As a non-fundamental policy,
the Portfolio will not purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets (taken at
current value) would be invested in securities that are illiquid
by virtue of the absence of a readily available market or because
of legal or contractual restrictions on resale ("restricted
securities"). There may be undesirable delays in selling
illiquid securities at prices representing their fair value.
This policy includes over-the-counter options held by the
Portfolio and the in the money portion of the assets used to
cover such options. As stated above, this policy also includes
assets which are subject to material legal restrictions on
repatriation. The limitation on investing in restricted
securities does not include securities that may not be resold to
the general public but may be resold to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of
1933. If Schroder determines that "a Rule 144A security" is
liquid pursuant to guidelines adopted by the board of trustees of
the Core Trust, it will not be deemed illiquid. These guidelines
take into account trading activity for 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, that security may become illiquid, which
could affect the Portfolio's liquidity. See "Investment
Policies--Illiquid and Restricted Securities" in the SAI for
further details.
Loans of Portfolio Securities. The Portfolio may lend portfolio
securities (other than in repurchase transactions) to brokers,
dealers and other financial institutions meeting specified credit
conditions, if the loan is collateralized in accordance with
applicable regulatory requirements and if, after any loan, the
value of the securities loaned does not exceed 25% of the value
of the Portfolio's total assets. By so doing, the Portfolio
attempts to earn income through the receipt of interest on the
loan. In the event of the bankruptcy of the other party to a
securities loan, the Portfolio could experience delays in
recovering the securities it lent. To the extent that, in the
meantime, the value of the securities the Portfolio lent has
increased, the Portfolio could experience a loss.
The Portfolio may lend securities from its portfolio if liquid
assets in an amount at least equal to the current market value of
the securities loaned (including accrued interest thereon) plus
the interest payable to the Portfolio with respect to the loan is
maintained as collateral by the Portfolio in a segregated
account. Any securities that the Portfolio may receive as
11
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collateral will not become a part of its portfolio at the time of
the loan, and, in the event of a default by the borrower, the
Portfolio will, if permitted by law, dispose of such collateral
except for such part thereof that is a security in which the
Portfolio is permitted to invest. During the time that the
securities are on loan, the borrower will pay the Portfolio any
accrued income on those securities, and the Portfolio may invest
the cash collateral and earn income or receive an agreed upon fee
from a borrower that has delivered cash equivalent collateral.
Cash collateral received by the Portfolio will be invested in
U.S. Government securities and liquid high-grade debt
obligations. The value of securities loaned will be marked to
market daily. Portfolio securities purchased with cash
collateral are subject to possible depreciation. Loans of
securities by the Portfolio will be subject to termination at the
Portfolio's or the borrower's option. The Portfolio may pay
reasonable negotiated fees in connection with loaned securities,
so long as such fees are set forth in a written contract and
approved by the board of trustees of Core Trust.
Options and Futures Transactions. While the Portfolio does not
presently intend to do so, it may write covered call options and
purchase certain put and call options, stock index futures, and
options on stock index futures and broadly-based stock indices,
all of which are referred to as "Hedging Instruments." In
general, the Portfolio may use Hedging Instruments: (1) to
attempt to protect against declines in the market value of the
Portfolio's securities and thus protect the Fund's net asset
value per share against downward market trends, or (2) to
establish a position in the equities markets as a temporary
substitute for purchasing particular equity securities. The
Portfolio will not use Hedging Instruments for speculation. The
Hedging Instruments which the Portfolio is authorized to use have
certain risks associated with them. Principal among such risks
are: (a) the possible failure of such instruments as hedging
techniques in cases where the price movements of the securities
underlying the options or futures do not follow the price
movements of the portfolio securities subject to the hedge; (b)
potentially unlimited loss associated with futures transactions
and the possible lack of a liquid secondary market for closing
out a futures position; and (c) possible losses resulting from
the inability of the Portfolio's investment adviser to correctly
predict the direction of stock prices, interest rates and other
economic factors. The Hedging Instruments the Portfolio may use
and the risks associated with them are described in greater
detail under "Options and Futures Transactions" in the SAI.
Short Sales Against-the-Box. The Portfolio may not sell
securities short except in "short sales against-the-box." For
Federal income tax purposes, short sales against-the-box may be
made to defer recognition of gain or loss on the sale of
12
<PAGE>
securities until the short position is closed out. See "Short
Sales Against-the-Box" in the SAI for further details.
Risk Considerations
All investments involve certain risks. Investments in smaller
capitalization companies involve greater risks than those risks
associated with investments in larger capitalization companies.
Smaller capitalization companies generally experience higher
growth rates and higher failure rates than do larger
capitalization companies. The trading volume of securities of
smaller capitalization companies is normally less than that of
larger capitalization companies and, consequently, generally has
a disproportionate effect on their market price, tending to make
them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger
capitalization companies.
Investments in small, unseasoned issuers generally involve
greater risk than is customarily associated with larger, more
seasoned companies. Such issuers often have products and
management personnel which have not been thoroughly tested by
time or the marketplace and their financial resources may not be
as substantial as those of more established companies. Their
securities, which the Portfolio may purchase when they are
offered to the public for the first time, may have a limited
trading market, which may adversely affect their sale by the
Portfolio and may result in such securities being priced lower
than otherwise might be the case. If other institutional
investors engage in trading this type of security, the Portfolio
may be forced to dispose of its holdings at prices lower than
might otherwise be obtained.
3. Management
The business of the Trust is managed under the direction of its
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 Fund and
generally meets quarterly to review the results of the Fund,
monitor investment activities and practices and discuss other
matters affecting the Fund and the Trust. The SAI contains
general background information about the Trustees and Officers of
the Trust and of Core Trust. The Trust's Board consists of seven
members.
INVESTMENT ADVISORY SERVICES
The Fund currently invests all of its assets in the Portfolio and
has since its inception. The Fund may withdraw its investment
from the Portfolio, for which Schroder serves as investment
13
<PAGE>
adviser, at any time if the Board determines that it is in the
best interests of the Fund and its shareholders to do so. See
"Other Information Certain Risks of Investing in the Portfolio."
Accordingly, the Fund has retained the Adviser as its investment
adviser and Schroder as its investment subadviser to manage the
Fund's assets in the event the Fund so withdraws its investment.
Neither the Adviser or Schroder will receive any advisory or
subadvisory fees with respect to the Fund as long as the Fund
remains completely invested in the Portfolio or any other
investment company.
Schroder Capital Management International Inc. Schroder acts as
investment adviser to the Portfolio pursuant to an advisory
agreement with Core Trust. Subject to the general control of
Core Trust's board of trustees, Schroder manages the investment
and reinvestment of the assets included in the Portfolio's
investment portfolio and continuously reviews, supervises and
administers the Portfolio's investments. In this regard, it is
the responsibility of Schroder to make decisions relating to the
Portfolio's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected by it
in its discretion. Schroder receives an advisory fee from Core
Trust with respect to the Portfolio at an annual rate of 0.60% of
the Portfolio's average daily net assets.
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
June 30, 1996, had assets under management of approximately $100
billion.
Norwest Investment Management. Subject to the general
supervision of the Board, Norwest Investment Management would
continuously review, supervise and administer the Fund's
investment program or oversee the investment decisions of the
investment subadviser, as applicable, if the Fund were to invest
directly in securities. 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 $23 billion.
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The investment advisory agreement for the Fund provides for an
investment advisory fee payable to Norwest by the Trust at an
annual rate of 0.925% of the average daily net assets of the Fund
in the event that the Fund is not completely invested in the
Portfolio or another investment company. The Fund would not be
completely invested in the Portfolio or another investment
company only upon a determination by the Board that it is no
longer in the best interests of the Fund to be so invested.
Schroder would assist the Adviser in carrying out the Adviser's
obligations under the investment advisory agreement pursuant to
an investment subadvisory agreement among the Trust, Norwest and
Schroder. Pursuant to the Fund's investment subadvisory
agreement with Schroder, the Adviser (and not the Trust) would
pay Schroder a fee for its investment subadvisory services. This
compensation would not increase the amount paid by the Trust to
the Adviser pursuant to the Adviser's investment advisory
agreement. The investment advisory agreement between Schroder
and Core Trust with respect to the Portfolio is the same in all
material respects as the Fund's investment subadvisory agreement
except as to the parties and the circumstances under which fees
will be paid.
Portfolio Managers. The Fund invests all of its assets in the
Portfolio and, accordingly, there is currently no portfolio
manager for the Fund. Fariba Talebi, a Vice President of the
Trust and a First Vice President of Schroder, with the assistance
of an investment committee, is primarily responsible for the day-
to-day management of the Portfolio's investment portfolio, and
has so managed the Portfolio since its inception. Ms. Talebi has
been employed by Schroder in the investment research and
portfolio management areas since 1987.
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 $16 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
15
<PAGE>
receives from the 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 Fund.
In addition, pursuant to a separate services agreement, Norwest
receives a fee at an annual rate of 0.25% of the average annual
daily net assets of the 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
the Portfolio, monitoring and reporting to the Board on the
performance of the Portfolio and reimbursing the Fund for certain
excess expenses. No fees are payable under this service
agreement in the event that the Fund is not completely invested
in the Portfolio or another investment company.
On behalf of the Portfolio, Core Trust has entered into an
administrative services contract with Schroder Fund Advisors Inc.
("Schroder Advisors"), 787 Seventh Avenue, New York, New York
10019. Schroder Advisors is a wholly-owned subsidiary of
Schroder. On behalf of the Portfolio, Core Trust has also
entered into an administrative services contract with Forum.
Pursuant to these agreements, Schroder Advisors and Forum provide
certain management and administrative services necessary for the
Portfolio's operations, other than the administrative services
provided to the Portfolio by Schroder. Forum receives a monthly
fee at the annual rate of 0.075% of the Portfolio's average daily
net assets. Schroder Advisors receives no fee from the Portfolio
for the administrative services it provides the Portfolio.
Forum may subcontract any or all of its duties with respect to
the Fund 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 made
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 the Fund. As authorized by
a distribution plan with respect to B Shares of the 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-dealers 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
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Arrangements. Pursuant to separate agreements, Forum also
provides portfolio accounting services to the Fund and to the
Portfolio.
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 Trusts shareholders to one or more
qualified sub-transfer agents or processing agents, which may be
its or Forums affiliates, who agree to comply with the terms of
the Transfer Agents agreement with the Trust. 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, no such compensation may increase the
aggregate amount of payments by the Trust to the Transfer Agent.
For its services, the Transfer Agent receives from the Fund a fee
at an annual rate of 0.25% of the average daily net assets
attributable to each class of the Fund and may be reimbursed for
certain expenses related to its transfer agency services.
Norwest also serves as the Trusts 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 with respect to the Fund,
but the Fund will incur the expenses and costs of any
subcustodian. In addition, the Fund indirectly incurs its pro
rata portion of the custodial fees of Core Trust. The Chase
Manhattan Bank, N.A. serves as custodian of the Portfolio and is
paid a fee by Core Trust for its services.
EXPENSES OF THE FUND
Subject to the obligation of Norwest to reimburse the Trust for
certain expenses of the Fund, the Trust has confirmed its
obligation to pay all the Trusts expenses. The Funds expenses
include Trust expenses attributable to the Fund, which are
allocated to the Fund, and expenses not specifically attributable
to the Fund, which are allocated among the Fund 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 (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 the Funds performance for the period during
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<PAGE>
which the waiver is in effect. No fee waivers may be recouped at
a later date. Fee waivers are voluntary and may be reduced or
eliminated at any time.
Norwest and Forum and their agents and affiliates also may act in
various capacities for, and receive compensation from, their
customers who are shareholders of the 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 the Fund.
Subject to the obligation of Norwest to reimburse the Trust for
certain excess expenses, under the Investment Advisory
Agreements, the Trust has confirmed its obligation to pay all the
Trusts expenses, including: interest charges, taxes, brokerage
fees and commissions; certain insurance premiums; fees, interest
charges and expenses of any subcustodian, 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
prospectus, SAI, 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 Fund; costs of
reproduction, stationery and supplies; compensation of trustees,
officers and employees of the Fund or 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 Fund pursuant to the distribution plan.
The Funds expenses include the Funds pro rata share of the
operating expenses of the Portfolio, which are borne indirectly
by the Funds shareholders.
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 Fund. The 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
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Shareholder Services--Automatic Investment Plan and Dividends and
Tax Matters."
Fund Shares become entitled to receive dividends and
distributions on the next Fund Business Day after the order is
accepted. 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 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.
2. By Bank Wire. Investors may make an initial investment
in the 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 investors money
immediately to:
Norwest Bank Minnesota, N.A.
ABA 091 000 019
For Credit to: Norwest Advantage Funds
0844-131
Re: Small Cap Opportunities 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 investors 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 the Fund, may receive payments
19
<PAGE>
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 Fund.
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
the Fund directly. These investors should acquaint themselves
with their institutions procedures and should read this
Prospectus in conjunction with any materials and information
provided by their institution. Customers who purchase the Fund's
shares through a Processing Organization may or may not be the
shareholder of record and, subject to their institution's and the
Fund's 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 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 Fund to be purchased and
redeemed only through registered broker-dealers, including the
Fund's 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.
ACCOUNT APPLICATION
Investors may obtain the account application form necessary to
open an account by writing the Trust at the following address:
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<PAGE>
Norwest Advantage Funds
Small Cap Opportunities 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
shareholders 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 Fund may be made either through certain
financial institutions or by an investor directly. An investor
who invests in the 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 the 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 the Fund is listed under "Prospectus
Summary--Expense Information." Sales personnel of selected
broker-dealers distributing the Fund's shares may receive
differing compensation for selling A Shares and B Shares.
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<PAGE>
Because initial sales charges are deducted at the time of
purchase, investors purchasing the 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
purchasing A Shares, which are subject to a 4.5% initial sales
charge, who elects to reinvest all dividends and distributions
would have to hold the A Shares approximately six years for the B
Share's distribution services fee and maintenance fee to exceed
the initial sales charge imposed when purchasing A Shares. 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 the 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):
Broker-Dealers'
Sales Charge Reallowance As
As a Percentage a Percentage
Offering Net Asset of Offering
Amount of Purchase Price Value* 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
22
<PAGE>
resources) to selected broker-dealers of up to 1.00% of the value
of Fund shares purchased at net asset value.
In addition, from time to time and at its own expense, Forum may
provide compensation, including financial assistance, to dealers
in connection with conferences, sales or training programs for
their employees, seminars for the public, advertising campaigns
or other dealer- sponsored special events. Compensation may
include: (i) the provision of travel arrangements and lodging,
(ii) tickets for entertainment events and (iii) merchandise.
No sales charge is assessed on purchases by: (a) any bank,
broker-dealer, trust company or other institution acting on
behalf of its fiduciary customer accounts or any other account
maintained by the trust department of a bank, trust company or
other institution (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 Fund 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 the 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 the 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 the Fund with the proceeds of a
redemption at net asset value, within the preceding 60 days, of
shares of a mutual fund that imposed 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 the Fund. Investors
should contact the Trust for further information and to obtain
the necessary forms.
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<PAGE>
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 the 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 the 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 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 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 the 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") also may
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 the 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 also may 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 the 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 the Fund
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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 the 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 Amount of Purchase
Amount Subject to Charge Period Shares Held Dollar
________________________ __________________ _________________
$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 Funds shares. For A shareholders with a Statement of
Intention that do not purchase $1,000,000 of the 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 of the 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, the Fund has
adopted a distribution plan pursuant to Rule 12b-1 under the 1940
Act (the "Plan") providing for distribution payments, at an
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<PAGE>
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 the Fund to Forum, to compensate Forum for its
distribution activities. The distribution payments due to Forum
from the 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 the 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 the 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 B Shares.
Under the Plan, the Fund will make distribution services fee
payments to Forum only for periods during which there are
outstanding uncovered distribution charges attributable to the
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.
The amount of distribution services fees and contingent deferred
sales charge payments received by Forum with respect to the 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.
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<PAGE>
Pursuant to the Plan, the 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 the 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
the Fund, the Fund may continue to pay maintenance fees.
The distribution services fees payable to Forum by the Fund each
day are accrued on that day as a liability of the Fund with
respect to the B Shares and, as a result, reduce the net assets
of the B Shares. However, the 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 that may become payable
under the Plan in the future.
In the event that the Plan is terminated or not continued with
respect to the Fund, the Fund may, under certain circumstances,
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). Those circumstances are described
in detail in the SAI. In deciding whether to purchase B Shares
of the 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 the Fund. In approving the Plan, the Board
determined that there was a reasonable likelihood that the Plan
would benefit the Fund and its B shareholders.
Periods with a high level of sales of B Shares of the 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 the 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 the 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
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<PAGE>
result in the incurrence and payment of increased interest fees
under the Plan.
Contingent Deferred Sales Charge. B Shares of the Fund that are
redeemed within six years of purchase will be subject to
contingent deferred sales charges equal to the percentages set
forth on the next page 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 the Fund and their
redemption.
The contingent deferred sales charge will be assessed on an
amount equal to the lesser of the cost of the B 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 B 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 the
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 the 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
28
<PAGE>
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 B Shares will automatically convert to A
Shares of the 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 the 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, a corresponding 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 the 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 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 that 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 used 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
29
<PAGE>
suspended nor the payment date postponed for more than seven days
after the tender of the shares to the 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 the 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
shareholders 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 shareholders 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 the 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
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<PAGE>
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
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.
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
Stable Income Fund, Intermediate U.S. Government Fund, Income
31
<PAGE>
Fund, Total Return Bond Fund, Tax-Free Income Fund, Colorado Tax-
Free Fund, Minnesota Tax-Free Fund, Income Equity Fund,
ValuGrowth SM Stock Fund, Diversified Equity Fund, Growth Equity
Fund, Small Company Stock Fund, Contrarian Stock Fund and
International Fund. It is anticipated that the Trust may in the
future create additional funds that will offer shares that 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 Fund, can be obtained through
Forum by contacting the Transfer Agent.
The Fund does not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make. The
Fund reserves 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.
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
funds shares may legally be sold in the shareholder's state of
residence.
Under Federal tax law, the Fund treats 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. 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 A 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
32
<PAGE>
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 the 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 Fund's 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 the 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
33
<PAGE>
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 Fund 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
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.
7. Dividends and Tax Matters
DIVIDENDS
Dividends of the Fund's net investment income are declared and
paid at least annually. Distributions of net capital gain, if
any, realized by the Fund are distributed annually. Dividends
paid by the Fund with respect to each class of shares of the Fund
34
<PAGE>
will be calculated in the same manner at the same time on the
same day. The per share dividends on the 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
the Fund reinvested in shares of the 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 the Fund.
Under the Reinvestment Option, all dividends and distributions of
the Fund are automatically invested in additional shares of the
Fund. All dividends and distributions are reinvested at the
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 the Fund
whose shares in a single account of the 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
The Fund intends 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 Fund will not be liable for
Federal income and excise taxes on the net investment income and
capital gain distributed to its shareholders. Because the Fund
intends to distribute all of its net investment income and net
capital gain each year, the Fund should thereby avoid all Federal
income and excise taxes.
Dividends paid by the 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
the 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
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<PAGE>
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 dividend or distribution received by a shareholder on shares
of the 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 the Fund's dividends from net
investment income will be eligible for the dividends received
deduction for corporations. The amount of such dividends
eligible for the dividends received deduction is limited to the
amount of dividends from domestic corporations received during
the Fund's fiscal year. To the extent the Fund invests in the
securities of domestic issuers, the dividends to shareholders of
the Fund may qualify for the dividends received deduction for
corporations.
The 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 the Fund will be mailed to shareholders
shortly after the close of each year.
The Portfolio. The 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 income tax purposes. All
interest, dividends and gains and losses of the Portfolio are
deemed to have been "passed through" to the Fund in proportion to
its holdings of the Portfolio, regardless of whether such
interest, dividends or gains have been distributed by the
Portfolio or losses have been realized by the Portfolio.
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, or
custodian to an investment company and to purchase shares of the
investment company as agent for and upon the order of a customer
36
<PAGE>
and, in connection therewith, to retain a sales charge or similar
payment. Counsel to the Trust believe 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 Funds 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 the Fund or the Portfolio 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 or the Core Trust board of trustees or pursuant to
procedures approved by the Board or the Core Trust board of
trustees, as applicable. The Trust does not determine net asset
value on the following holidays: New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The per share net asset values of each class of shares of the
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 the 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.
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PERFORMANCE INFORMATION
The 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. The 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, the 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. The 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 the 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 Fund's returns, shareholders should recognize that they are
not the same as actual year-by-year results. To illustrate the
components of overall performance, the 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 the
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.
The Fund's 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. The comparative material found in the Fund's
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 the Fund is calculated on a class
basis. In addition, the Fund may use a benchmark securities
index as a measure of the Fund's performance. This index is not
used in the management of the Fund but rather is a standard by
which the Adviser and shareholders may compare the performance of
the Fund to an unmanaged composite of securities with similar,
but not identical, characteristics as the Fund. The Fund may
from time to time advertise a comparison of its performance
against this or other indices.
38
<PAGE>
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." On October 1, 1995, the Trust changed
its name to "Norwest Advantage 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 Fund) and may divide portfolios or series
into classes of shares (such as A 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-two separate series.
Other Classes of Shares. In addition to the Shares, the Fund may
create and issue shares of other classes of securities. The 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 the 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 Fund investors may contact the
Transfer Agent at 612-667-8833 or 800-338-1348. Investors also
may contact their Norwest sales representative or the Fund's
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 Fund.
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
39
<PAGE>
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 portfolios 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 the Fund. Accordingly, those
shareholders may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
CORE TRUST STRUCTURE
The Fund seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has
substantially the same investment objective and policies as the
Fund. Accordingly, the Portfolio directly acquires its own
securities and the Fund acquires an indirect interest in those
securities. The Portfolio is a separate series of Core Trust, a
business trust organized under the laws of the State of Delaware
in September 1995. Core Trust is registered under the Act as an
open-end management investment company and currently has four
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 the Fund and the Portfolio can be changed
only with shareholder approval. See "Investment Objective and
Policies", and "Management" for a complete description of the
Portfolio's investment objective, policies, restrictions,
management, and expenses.
The Fund's investment in the Portfolio is in the form of a non-
transferable beneficial interest. 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. As of the date of this Prospectus, the
Portfolio has one other investor.
The Portfolio normally will not hold meetings of investors except
as required by the Act. Each investor in the Portfolio will be
entitled to vote in proportion to its relative beneficial
40
<PAGE>
interest in the Portfolio. On most issues subject to a vote of
investors, as required by the Act and other applicable law, the
Fund will solicit proxies from shareholders of the Fund and will
vote its interest in the Portfolio in proportion to the votes
cast by its shareholders. As there are other investors in the
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 Portfolio; indeed,
other investors holding a majority interest in the Portfolio
could have voting control of the Portfolio.
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, and 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. Information regarding any such funds is available
from Core Trust by calling Forum Financial Corp. at (207) 879-
8903.
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 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 or
the investment of all of the Fund's investable assets in another
41
<PAGE>
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
Fund's official sales literature in connection with the offering
of the Fund's 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.
42
47180160.CX3
<PAGE>
Small Cap Opportunities Fund
I 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
August 15, 1996
This Prospectus offers I Shares of Small Cap Opportunities Fund
(the "Fund"). The Fund is a separate diversified equity portfolio
of Norwest Advantage Funds (the "Trust"), an open-end management
investment company (a mutual fund).
The Fund currently seeks to achieve its investment objective by
investing all of its investment assets in Schroder U.S. Smaller
Companies Portfolio (the "Portfolio"), a separate portfolio of a
registered open-end management investment company with an
identical investment objective. Accordingly, the Fund's
investment experience will correspond directly with the
Portfolio's investment experience.
This Prospectus sets forth concisely the information concerning
the Trust and the Fund 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") with respect to the 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 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.
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.
<PAGE>
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.
<PAGE>
1. 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 Fund 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." Participants in a Plan
should consult with their employer or plan sponsor to determine
if the Fund is offered through their Plan. While the Fund is not
intended to provide a complete or balanced investment program, it
can serve as a component of an investor's long-term program to
accumulate assets for retirement or other major goals.
THE FUND
Investment Objective and Policies
The Fund's investment objective is capital appreciation. Current
income will be incidental to the objective of capital
appreciation. Currently, the Fund seeks to achieve its
investment objective by investing exclusively in the Portfolio, a
series of Schroder Capital Funds ("Core Trust"), itself a
registered open-end management investment company. The Portfolio
has substantially the same investment objective and policies as
the Fund. Accordingly, the investment experience of the Fund
will correspond directly with the investment experience of the
Portfolio. The Fund will seek to achieve its investment
objective by investing, under normal market conditions, at least
65% of its total assets in equity securities of companies
domiciled in the United States that, at the time of purchase have
market capitalizations of $1.5 billion or less.
Management of the Fund
The Fund's investment adviser (the "Adviser") is Norwest
Investment Management, a part of Norwest Bank Minnesota, N.A.
("Norwest"). As the Fund invests all of its assets in the
Portfolio, the Fund does not actively employ the Adviser to
manage its investment portfolio. See "Management--Investment
Advisory Services." Norwest serves as the Trust's transfer agent,
dividend disbursing agent and custodian. See "Management-
- -Shareholder Servicing and Custody."
The Portfolio's investment adviser is Schroder Capital Management
International Inc. ("Schroder"), a registered investment adviser
<PAGE>
under the Investment Advisers Act of 1940. The advisory fee paid
to Schroder by the Portfolio is borne indirectly by the Fund and
any other investors in the Portfolio. See "Management-
- -Investment Advisory Services." Schroder and the Adviser are
sometimes referred to collectively as the "Advisers."
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 the
Fund. Schroder Fund Advisors ("Schroder Advisors") serves as
administrator of Core Trust, for which Forum also provides
certain administrative services. See "Management--Administration
and Distribution Services."
Purchase and Redemption of Shares
Shares of beneficial interest of the Fund are offered without a
sales charge and may be redeemed without charge. Shares may be
purchased or redeemed by mail, by bank wire and through certain
broker-dealers, banks, trust companies, or other financial
institutions. 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."
Certain Risk Factors
There can be no assurance that the Fund will achieve its
investment objective, and the 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 the Fund
may be worth more or less than its original value.
All investments made by the Fund entail some risk. Certain
investments and investment techniques, however, entail additional
risks, such as the potential use of leverage through borrowings,
securities lending and other investment techniques. See
"Investment Objective, Policies and Risk Considerations--Risk
Considerations."
The Fund's policy of investing in smaller companies entails
certain risks in addition to those normally associated with
investments in equity securities. See "Investment Objective,
Policies and Risk Considerations--Additional Investment Policies
and Risk Considerations." By investing solely in the Portfolio,
the Fund may achieve certain efficiencies and economies of scale.
Nonetheless, this investment could also have adverse effects on
the Fund. Investors in the Fund should consider these risks, as
described under "Other Information--Core Trust Structure."
<PAGE>
EXPENSES OF INVESTING IN THE FUND
The purpose of the following table is to assist investors in
understanding the various expenses of both the Fund and the
Portfolio that an investor in the Fund will bear directly or
indirectly. There are no transaction charges in connection with
purchases, redemptions or exchanges of Fund shares. The Fund has
not adopted a Rule 12b-1 plan with respect to the Shares and,
accordingly, the Fund incurs no distribution expenses with
respect to the Shares.
Annual Operating Expenses(1)
(As a percentage of average daily net assets)
Investment Advisory Fee(2) 0.60%
Other Expenses
(after expense
reimbursements and
fee waivers)(3) 0.65%
Total Operating Expenses 1.25%
(1) For a further description of the various expenses incurred in
the operation of the Fund, see "Management." Expenses associated
with the A Shares and B Shares of the Fund differ from those of
the Shares listed in the table shown above. The Fund's expenses
as listed above include the Fund's pro rata portion of all
operating expenses of the Portfolio, which will be borne
indirectly by Fund shareholders. The Fund pays Norwest and Forum
for certain administrative services, and Core Trust pays fees for
administrative services rendered to the Portfolio, of which the
Fund bears its pro rata portion. The Trust's Board of Trustees
believes that the aggregate per share expenses of the Fund and
the Portfolio will be approximately equal to the expenses the
Fund would incur if its assets were invested directly in equity
securities.
(2) Investment Advisory Fees are those incurred by the Portfolio;
as long as its assets are invested in the Portfolio, the Fund
pays no investment advisory fees directly. If the Fund invested
directly in securities, the Fund would pay a higher advisory fee
and lower administrative fees than the Fund pays in connection
with its investment in the Portfolio. See "Investment Objective
and Policies" and "Management--Expenses of the Fund."
(4) Other expenses for the Fund are based on estimated amounts
for the Fund's first fiscal year of operations ending May 31,
1997. Absent estimated expense reimbursements and fee waivers
the expenses of the Fund would be: Other Expenses, .98%; and
Total Operating Expenses, 1.58%. Other Expenses include transfer
agency fees payable to Norwest at an annual rate of up to 0.25%
<PAGE>
of the Fund's average daily net assets attributable to I Shares.
In addition, Other Expenses for the Fund include administrative
services fees payable to Norwest of 0.25%. Fee waivers are
voluntary and may be reduced or eliminated at any time.
Example
The following is a hypothetical example that indicates the dollar
amount of expenses that an investor would pay, assuming a $1,000
investment in the Fund's Shares, a 5% annual return and
reinvestment of all dividends and distributions.
Hypothetical Expense Example
1 Year 3 Years
13 40
The Example is based on the expenses listed in the "Annual
Operating Expenses" table. The 5% annual return is not predictive
of and does not represent the Fund's 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.
2. INVESTMENT OBJECTIVE AND POLICIES
The Fund is designed for the investment of that portion of an
investor's funds that can appropriately bear the special risks
associated with an investment in smaller market capitalization
companies with the aim of capital appreciation. The Fund is not
intended for investors whose objective is assured income or
preservation of capital.
INVESTMENT OBJECTIVE
The Fund's investment objective is capital appreciation. Current
income will be incidental to the objective of capital
appreciation. There can be no assurance that the Fund will
achieve its investment objective.
The Fund's investment objective is fundamental and cannot be
changed without shareholder approval. The Fund currently seeks
to achieve its investment objective by investing all of its
investable assets in the Portfolio, which has substantially the
same investment objective and policies as the Fund. Therefore,
although the following discusses the investment policies of the
Portfolio and the responsibilities of the Core Trust's board of
trustees, it applies equally to the Fund and the Trust's board of
trustees (the "Board"). Additional information concerning the
<PAGE>
investment policies of the Portfolio and the Fund, including
additional fundamental policies, is contained in the SAI.
INVESTMENT POLICIES
The Portfolio will seek to achieve its investment objective by
investing, under normal market conditions, at least 65% of its
total assets in equity securities of companies domiciled in the
United States that, at the time of purchase, have market
capitalizations of $1.5 billion or less. Market capitalization
means the market value of a company's outstanding stock.
In its investment approach, Schroder will attempt to identify
securities of companies which it believes can generate above
average earnings growth, selling at favorable prices in relation
to book values and earnings. As part of the investment decision,
Schroder's assessment of the competency of an issuer's management
will be an important consideration. These criteria are not
rigid, and other investments may be included in the Portfolio if
they may help the Portfolio to attain its objective. These
criteria can be changed by the board of trustees of the Core
Trust, without shareholder approval.
The Portfolio will invest principally in equity securities
(common stocks, securities convertible into common stocks or,
subject to special limitations, rights or warrants to subscribe
for or purchase common stocks). The Portfolio may also invest to
a limited degree in non-convertible debt securities and preferred
stocks when, in the opinion of Schroder, such investments are
warranted to achieve the Portfolio's investment objective. 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.
The Portfolio may invest in securities of small, unseasoned
companies (which, together with any predecessors, have been in
operation for less than three years), as well as in securities of
more established companies. In view of the volatility of price
movements of the former, as a non-fundamental policy, the
Portfolio currently intends to invest no more than 5% of its
total assets in securities of small, unseasoned issuers.
Although there is no minimum rating for debt securities
(convertible or non-convertible) in which the Portfolio may
invest, it is the present intention of the Portfolio to invest no
more than 5% of its net assets in debt securities rated below Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard
& Poor's Ratings Services ("S&P"), such securities being commonly
known as "high yield/high risk" securities or "junk bonds," and
<PAGE>
it will not invest in debt securities that are in default. High
yield/high risk securities are predominantly speculative with
respect to the capacity to pay interest and repay principal and
generally involve a greater volatility of price than securities
in higher rated categories. In the event the Portfolio intends
in the future to invest more than 5% of its net assets in junk
bonds, appropriate disclosures will be made to existing and
prospective shareholders. It should be noted that even bonds
rated Baa by Moody's or BBB by S&P are described by those rating
agencies as having speculative characteristics and that changes
in economic conditions or other circumstances are more likely to
lead to a weakened capacity of issuers of such bonds to make
principal and interest payments than is the case with higher
grade bonds. The Portfolio is not obligated to dispose of
securities due to changes by the rating agencies. See the SAI
for information about the risks associated with investing in junk
bonds.
For temporary defensive purposes, the Portfolio may invest
without limitation in (or enter into repurchase agreements
maturing in seven days or less with U.S. banks and broker-dealers
with respect to) short-term debt securities, including commercial
paper, U.S. Treasury bills, other short-term U.S. Government
securities, certificates of deposit and bankers' acceptances of
U.S. banks. The Portfolio also may hold cash and time deposits
in U.S. banks. See "Investment Policies" in the SAI for further
information about all these securities.
ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS
General Policy Information
The investment objective and all investment policies of each of
the Fund and the Portfolio 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 or the Portfolio,
as applicable. A majority of outstanding voting securities means
the lesser of (i) 67% of the shares present or represented at a
shareholder meeting at which the holders of more than 50% of the
outstanding shares are present or represented, or (ii) more than
50% of outstanding shares. Unless otherwise indicated, all
investment policies are nonfundamental and may be changed by the
Board without approval of shareholders of the Fund. Likewise,
nonfundamental investment policies of the Portfolio may be
changed by the board of trustees of Core Trust without
shareholder approval. For more information concerning
shareholder voting, see "Other Information--The Trust and Its
Shares--Shareholder Voting and Other Rights" and "--Core Trust
Structure."
<PAGE>
Investment Types
Common and Preferred Stock and Warrants. The Portfolio 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, generally, 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 the
Portfolio may be traded in the over-the counter market or on a
securities exchange, but may not be traded every day or in the
volume typical of securities traded on a major U.S. national
securities exchange. As a result, disposition by the Portfolio
of a security to meet redemptions by interest holders or
otherwise may require the Portfolio 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 a
lengthy 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. The
Portfolio may also 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.
Repurchase Agreements. The Portfolio may invest in repurchase
agreements. A repurchase agreement is a means of investing
monies for a short period. In a repurchase agreement, a seller -
a U.S. bank or recognized broker-dealer - sells securities to the
Portfolio and agrees to repurchase the securities at the
Portfolio's cost plus interest within a specified period
(normally one day). In these transactions, the values of the
underlying securities purchased by the Portfolio are monitored at
all times by Schroder to insure that the total value of the
securities equals or exceeds the value of the repurchase
agreement, and the Portfolio's custodian bank holds the
securities until they are repurchased. In the event of default
by the seller under the repurchase agreement, the Portfolio may
have difficulties in exercising its rights to the underlying
securities and may incur costs and experience time delays in
<PAGE>
disposing of them. To evaluate potential risks, Schroder reviews
the creditworthiness of those banks and dealers with which the
Portfolio enters into repurchase agreements.
Illiquid and Restricted Securities. As a non-fundamental policy,
the Portfolio will not purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets (taken at
current value) would be invested in securities that are illiquid
by virtue of the absence of a readily available market or because
of legal or contractual restrictions on resale ("restricted
securities"). There may be undesirable delays in selling
illiquid securities at prices representing their fair value.
This policy includes over-the-counter options held by the
Portfolio and the in the money portion of the assets used to
cover such options. As stated above, this policy also includes
assets which are subject to material legal restrictions on
repatriation. The limitation on investing in restricted
securities does not include securities that may not be resold to
the general public but may be resold to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of
1933. If Schroder determines that "a Rule 144A security" is
liquid pursuant to guidelines adopted by the board of trustees of
the Core Trust, it will not be deemed illiquid. These guidelines
take into account trading activity for 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, that security may become illiquid, which
could affect the Portfolio's liquidity. See "Investment
Policies--Illiquid and Restricted Securities" in the SAI for
further details.
Loans of Portfolio Securities. The Portfolio may lend portfolio
securities (other than in repurchase transactions) to brokers,
dealers and other financial institutions meeting specified credit
conditions, if the loan is collateralized in accordance with
applicable regulatory requirements and if, after any loan, the
value of the securities loaned does not exceed 25% of the value
of the Portfolio's total assets. By so doing, the Portfolio
attempts to earn income through the receipt of interest on the
loan. In the event of the bankruptcy of the other party to a
securities loan, the Portfolio could experience delays in
recovering the securities it lent. To the extent that, in the
meantime, the value of the securities the Portfolio lent has
increased, the Portfolio could experience a loss.
The Portfolio may lend securities from its portfolio if liquid
assets in an amount at least equal to the current market value of
the securities loaned (including accrued interest thereon) plus
the interest payable to the Portfolio with respect to the loan is
maintained as collateral by the Portfolio in a segregated
account. Any securities that the Portfolio may receive as
<PAGE>
collateral will not become a part of its portfolio at the time of
the loan, and, in the event of a default by the borrower, the
Portfolio will, if permitted by law, dispose of such collateral
except for such part thereof that is a security in which the
Portfolio is permitted to invest. During the time that the
securities are on loan, the borrower will pay the Portfolio any
accrued income on those securities, and the Portfolio may invest
the cash collateral and earn income or receive an agreed upon fee
from a borrower that has delivered cash equivalent collateral.
Cash collateral received by the Portfolio will be invested in
U.S. Government securities and liquid high-grade debt
obligations. The value of securities loaned will be marked to
market daily. Portfolio securities purchased with cash
collateral are subject to possible depreciation. Loans of
securities by the Portfolio will be subject to termination at the
Portfolio's or the borrower's option. The Portfolio may pay
reasonable negotiated fees in connection with loaned securities,
so long as such fees are set forth in a written contract and
approved by the board of trustees of Core Trust.
Options and Futures Transactions. While the Portfolio does not
presently intend to do so, it may write covered call options and
purchase certain put and call options, stock index futures, and
options on stock index futures and broadly-based stock indices,
all of which are referred to as "Hedging Instruments." In
general, the Portfolio may use Hedging Instruments: (1) to
attempt to protect against declines in the market value of the
Portfolio's securities and thus protect the Fund's net asset
value per share against downward market trends, or (2) to
establish a position in the equities markets as a temporary
substitute for purchasing particular equity securities. The
Portfolio will not use Hedging Instruments for speculation. The
Hedging Instruments which the Portfolio is authorized to use have
certain risks associated with them. Principal among such risks
are: (a) the possible failure of such instruments as hedging
techniques in cases where the price movements of the securities
underlying the options or futures do not follow the price
movements of the portfolio securities subject to the hedge; (b)
potentially unlimited loss associated with futures transactions
and the possible lack of a liquid secondary market for closing
out a futures position; and (c) possible losses resulting from
the inability of the Portfolio's investment adviser to correctly
predict the direction of stock prices, interest rates and other
economic factors. The Hedging Instruments the Portfolio may use
and the risks associated with them are described in greater
detail under "Options and Futures Transactions" in the SAI.
Short Sales Against-the-Box. The Portfolio may not sell
securities short except in "short sales against-the-box." For
Federal income tax purposes, short sales against-the-box may be
made to defer recognition of gain or loss on the sale of
<PAGE>
securities until the short position is closed out. See "Short
Sales Against-the-Box" in the SAI for further details.
Risk Considerations
All investments involve certain risks. Investments in smaller
capitalization companies involve greater risks than those risks
associated with investments in larger capitalization companies.
Smaller capitalization companies generally experience higher
growth rates and higher failure rates than do larger
capitalization companies. The trading volume of securities of
smaller capitalization companies is normally less than that of
larger capitalization companies and, consequently, generally has
a disproportionate effect on their market price, tending to make
them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger
capitalization companies.
Investments in small, unseasoned issuers generally involve
greater risk than is customarily associated with larger, more
seasoned companies. Such issuers often have products and
management personnel which have not been thoroughly tested by
time or the marketplace and their financial resources may not be
as substantial as those of more established companies. Their
securities, which the Portfolio may purchase when they are
offered to the public for the first time, may have a limited
trading market, which may adversely affect their sale by the
Portfolio and may result in such securities being priced lower
than otherwise might be the case. If other institutional
investors engage in trading this type of security, the Portfolio
may be forced to dispose of its holdings at prices lower than
might otherwise be obtained.
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 the 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.
Subject to the Fund's policy of obtaining the best price
consistent with quality of execution of transactions, each
Adviser may employ Norwest Investment Services, Inc., Schroder
Wertheim & Company and other broker-dealer affiliates of an
Adviser (collectively "Affiliated Brokers") to effect brokerage
transactions for the Fund. The Fund's payment of commissions to
Affiliated Brokers is subject to procedures adopted by the Board
<PAGE>
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 the 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.
Tax rules applicable to short-term trading may affect the timing
of the Fund's portfolio transactions or its ability to realize
short-term trading profits or establish short-term positions.
An annual turnover rate of 100 percent would occur if all of the
securities in the Fund were replaced once in a period of 1 year.
Higher portfolio turnover rates may result in higher taxable
income for shareholders and may result in increased brokerage
costs to the Fund. For more information about the portfolio
transactions of the Fund and the Portfolio, see the SAI.
3. MANAGEMENT
The business of the Trust is managed under the direction of its
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 Fund and
generally meets quarterly to review the results of the Fund,
monitor investment activities and practices and discuss other
matters affecting the Fund and 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
The Fund currently invests all of its assets in the Portfolio and
has since its inception. The Fund may withdraw its investment
from the Portfolio, for which Schroder serves as investment
adviser, at any time if the Board determines that it is in the
best interests of the Fund and its shareholders to do so. See
"Other Information Certain Risks of Investing in the Portfolio."
Accordingly, the Fund has retained the Adviser as its investment
adviser and Schroder as its investment subadviser to manage the
Fund's assets in the event the Fund so withdraws its investment.
Neither the Adviser or Schroder will receive any advisory or
subadvisory fees with respect to the Fund as long as the Fund
remains completely invested in the Portfolio or any other
investment company.
Schroder Capital Management International Inc. Schroder acts as
investment adviser to the Portfolio pursuant to an advisory
<PAGE>
agreement with Core Trust. Subject to the general control of
Core Trust's board of trustees, Schroder manages the investment
and reinvestment of the assets included in the Portfolio's
investment portfolio and continuously reviews, supervises and
administers the Portfolio's investments. In this regard, it is
the responsibility of Schroder to make decisions relating to the
Portfolio's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected by it
in its discretion. Schroder receives an advisory fee from Core
Trust with respect to the Portfolio at an annual rate of 0.60% of
the Portfolio's average daily net assets.
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
June 30, 1996, had assets under management of approximately $100
billion.
Norwest Investment Management. Subject to the general
supervision of the Board, Norwest Investment Management would
continuously review, supervise and administer the Fund's
investment program or oversee the investment decisions of the
investment subadviser, as applicable, if the Fund were to invest
directly in securities. 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 $23 billion.
The investment advisory agreement for the Fund provides for an
investment advisory fee payable to Norwest by the Trust at an
annual rate of 0.925% of the average daily net assets of the Fund
in the event that the Fund is not completely invested in the
Portfolio or another investment company. The Fund would not be
completely invested in the Portfolio or another investment
company only upon a determination by the Board that it is no
longer in the best interests of the Fund to be so invested.
Schroder would assist the Adviser in carrying out the Adviser's
obligations under the investment advisory agreement pursuant to
an investment subadvisory agreement among the Trust, Norwest and
Schroder. Pursuant to the Fund's investment subadvisory
agreement with Schroder, the Adviser (and not the Trust) would
pay Schroder a fee for its investment subadvisory services. This
<PAGE>
compensation would not increase the amount paid by the Trust to
the Adviser pursuant to the Adviser's investment advisory
agreement. The investment advisory agreement between Schroder
and Core Trust with respect to the Portfolio is the same in all
material respects as the Fund's investment subadvisory agreement
except as to the parties and the circumstances under which fees
will be paid.
Portfolio Managers. The Fund invests all of its assets in the
Portfolio and, accordingly, there is currently no portfolio
manager for the Fund. Fariba Talebi, a Vice President of the
Trust and a First Vice President of Schroder, with the assistance
of an investment committee, is primarily responsible for the day-
to-day management of the Portfolio's investment portfolio, and
has so managed the Portfolio since its inception. Ms. Talebi has
been employed by Schroder in the investment research and
portfolio management areas since 1987.
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 $16 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 the 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 Fund.
In addition, pursuant to a separate services agreement, Norwest
receives a fee at an annual rate of 0.25% of the average annual
daily net assets of the 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
the Portfolio, monitoring and reporting to the Board on the
performance of the Portfolio and reimbursing the Fund for certain
<PAGE>
excess expenses. No fees are payable under this service
agreement in the event that the Fund is not completely invested
in the Portfolio or another investment company.
On behalf of the Portfolio, Core Trust has entered into an
administrative services contract with Schroder Fund Advisors Inc.
("Schroder Advisors"), 787 Seventh Avenue, New York, New York
10019. Schroder Advisors is a wholly-owned subsidiary of
Schroder. On behalf of the Portfolio, Core Trust has also
entered into an administrative services contract with Forum.
Pursuant to these agreements, Schroder Advisors and Forum provide
certain management and administrative services necessary for the
Portfolio's operations, other than the administrative services
provided to the Portfolio by Schroder. Forum receives a monthly
fee at the annual rate of 0.075% of the Portfolio's average daily
net assets. Schroder Advisors receives no fee from the Portfolio
for the administrative services it provides the Portfolio.
Forum may subcontract any or all of its duties with respect to
the Fund 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 made
by the Trust to Forum pursuant to the management agreement.
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% of the 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 Fund will incur the expenses and costs of any
subcustodian. The Fund indirectly incurs its pro rata portion of
<PAGE>
the custodial fees of Core Trust. The Chase Manhattan Bank, N.A.
serves as custodian of the Portfolio and is paid a fee by Core
Trust for its services.
EXPENSES OF THE FUNDS
The Fund (as well as the Portfolio) is obligated to pay for all
of its expenses, although Norwest has agreed to reimburse the
Trust for certain of the 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 more information about
Fund expenses, see "Prospectus Summary--Expense Information."
These expenses include: interest 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 subcustodian; 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.
The 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 Fund and the portfolio
in proportion to their average net assets. The Fund's expenses
include the Fund's pro rata share of the operating expenses of
the Portfolio, which are borne indirectly by the Fund's
shareholders.
The Advisers, Forum, the Transfer Agent and any other service
provider to the Fund or the Portfolio may elect to waive all or a
portion of their fees. Any such waivers will have the effect of
increasing the 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. Fee waivers
are voluntary and may be reduced or eliminated at any time.
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 of the 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
<PAGE>
Trust with respect to assets of those customers invested in the
Fund.
4. Purchases and Redemptions of Shares
Shares of the 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.
GENERAL PURCHASE INFORMATION
Investments in the Fund may be made either through certain
financial institutions or by an investor directly. An investor
who invests in the 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. 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.
Shares of the Fund are offered without a sales charge and may be
redeemed without charge. The minimum initial 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."
PURCHASE PROCEDURES
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 the
cover 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
<PAGE>
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.
By Bank Wire
To make an initial investment in the 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 Advantage Funds 0844-131
Re: Small Cap Opportunities 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.
Through Financial Institutions
Shares may be purchased and redeemed (and in the case of Plans,
generally will be purchased and redeemed) through certain broker-
dealers, 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 Fund.
Investors who purchase shares through a Processing Organization
may be charged a fee if they effect transactions in Fund Shares
through a broker or agent and will be subject to the procedures
of their Processing Organization, which may include limitations,
investment minimums, cutoff times and restrictions in addition
<PAGE>
to, or different from, those applicable to shareholders who
invest in the 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 the 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 Fund's 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 for purchase orders until
several business days after a purchase order has been received by
the 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
Fund to be purchased and redeemed only through registered broker-
dealers, including the Fund's distributor.
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.
GENERAL REDEMPTION INFORMATION
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
<PAGE>
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.
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.
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 Trust 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 a Fund account with an aggregate net asset
value of less than $1,000. The Trust will not redeem accounts
<PAGE>
that fall below that amount solely as a result of a reduction in
net asset value.
REDEMPTION PROCEDURES
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 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 the 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's Transfer Agent.
<PAGE>
EXCHANGES
Shareholders may exchange their Shares for certain other
portfolios 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 Fund.
The Fund does not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make; the Fund
reserves 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."
<PAGE>
SHAREHOLDER SERVICES
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.
Automatic Investment Plan
Under the Automatic Investment Plan which is available to
shareholders of the 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 the
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 the 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
<PAGE>
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.
5. 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. Dividends of net investment income
currently are declared and paid at least annually by the Fund in
accordance with the Fund's dividend policy. The Fund's net
capital gain, if any, is distributed at least annually, typically
in December.
Shareholders may choose to have dividends and distributions of
the Fund reinvested in shares of the 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
are automatically invested in additional Shares of the Fund. All
dividends and distributions are reinvested at the 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 the 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
<PAGE>
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. The Fund is treated as a corporation for
Federal tax purposes and intends to qualify for each fiscal year
as a regulated investment company under the Internal Revenue Code
of 1986, as amended. In addition, the Fund intends to distribute
all of its net investment income and capital gain each year.
Accordingly, it is anticipated that the Fund will not be liable
for Federal income or excise taxes on its net investment income
and capital gain.
The Portfolio. The 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 the Portfolio are
deemed to have been "passed through" to the Fund in proportion to
its holdings of the Portfolio, regardless of whether such
interest, dividends or gains have been distributed by the
Portfolio or losses have been realized by the Portfolio.
SHAREHOLDER TAX MATTERS
General. Dividends paid by the Fund out of its net investment
income (including any realized net short-term capital gain) are
taxable to shareholders as ordinary income. Distributions by the
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 and dividends paid by the 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.
It is expected that a substantial portion of the dividends to
shareholders will qualify for the dividends received deduction
for corporations. The amount of such dividends eligible for the
dividends received deduction is limited to the amount of
dividends from domestic corporations received during the Fund's
fiscal year.
<PAGE>
The Fund 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 Fund 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 the
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.
6. 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.
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
<PAGE>
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 the 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 the Fund or the Portfolio 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 or the Core Trust board of trustees or pursuant to
procedures approved by the Board or the Core Trust board of
trustees, as applicable. The Trust does not determine net asset
value on the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PERFORMANCE INFORMATION
The 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 Fund's
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 the Fund may be compared to recognized indices of
market performance. The comparative material found in the Fund's
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. The 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. The 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.
<PAGE>
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. The Fund uses a benchmark securities
index as a measure of the Fund's performance. This index is not
used in the management of the Fund but rather is a standard by
which the Advisers and shareholders may compare the performance
of the Fund to an unmanaged composite of securities with similar,
but not identical, characteristics as the Fund. Accordingly, the
Adviser generally uses the index as a comparison to measure the
performance of the Fund. The Fund may from time to time advertise
a comparison of its performance against any index.
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." On October 1, 1995, the Trust changed
its name to "Norwest Advantage 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 Fund) 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 31 series.
Other Classes of Shares. The Fund may issue shares of other
classes. The Fund currently issues 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 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. Investor Shares
are offered with a minimum investment of $1,000 and incur greater
transfer agency and other expenses than Institutional Shares.
Each class of a Fund will have a different expense ratio and may
have different sales charges (including distribution fees). Each
class's performance is affected by its expenses and sales
charges. For more information on any other class of shares of the
Fund 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 Fund.
<PAGE>
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 the Portfolio, the Fund will be entitled to
vote in proportion to its relative beneficial interest in the
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 Portfolio in proportion to the votes cast by its
shareholders. If there are other investors in the 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 Portfolio; indeed, if other
investors hold a majority interest in the Portfolio, they could
hold have voting control of the Portfolio.
From time to time, a shareholder may own a large percentage of
the Fund. Accordingly, that shareholder may be able to greatly
affect (if not determine) the outcome of a shareholder vote.
<PAGE>
CORE TRUST STRUCTURE
The Fund seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has
substantially the same investment objective and policies as the
Fund. Accordingly, the Portfolio directly acquires its own
securities and the Fund acquires an indirect interest in those
securities. The Portfolio is a separate series of Core Trust, a
business trust organized under the laws of the State of Delaware
in September 1995. Core Trust is registered under the Act as an
open-end management investment company and currently has four
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 the Fund and the Portfolio can be changed
only with shareholder approval. See "Investment Objective and
Policies", and "Management" for a complete description of the
Portfolio's investment objective, policies, restrictions,
management, and expenses.
The Fund's investment in the Portfolio is in the form of a non-
transferable beneficial interest. 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. As of the date of this Prospectus, the
Portfolio has one other investor.
The Portfolio normally will not hold meetings of investors except
as required by the Act. Each investor in the Portfolio will be
entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subject to a vote of
investors, as required by the Act and other applicable law, the
Fund will solicit proxies from shareholders of the Fund and will
vote its interest in the Portfolio in proportion to the votes
cast by its shareholders. As there are other investors in the
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 Portfolio; indeed,
other investors holding a majority interest in the Portfolio
could have voting control of the Portfolio.
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, and could have different
advisory and other fees and expenses than the Fund. Therefore,
<PAGE>
Fund shareholders may have different returns than shareholders in
another investment company that invests exclusively in the
Portfolio. Information regarding any such funds is available
from Core Trust by calling Forum Financial Corp. at (207) 879-
8903.
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 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 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.
<PAGE>
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
Fund's official sales literature in connection with the offering
of the Fund's 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.
33
47180160.CX3
<PAGE>
//
NORWEST ADVANTAGE FUNDS
Statement of Additional Information
August 15, 1996
Small Cap Opportunities Fund
A Shares
B Shares
I Shares
<PAGE>
Statement of Additional Information
August 15, 1996
This Statement of Additional Information ("SAI") supplements the
Prospectus offering A Shares, B Shares and I Shares of Small Cap
Opportunities Fund. The Fund is a diversified series of Norwest
Advantage Funds, a registered open-end, management investment
company (the "Trust"). The Fund currently invests all of its
investment assets in the Portfolio of Core Trust (Delaware)
("Portfolio"), a registered open-end, management investment
company. This SAI should be read only in conjunction with the
Fund's Prospectus, copies of which may be obtained without
charge.
TABLE OF CONTENTS
Page
1. Norwest Advantage Funds
2. Investment Policies
3. Investment Restrictions
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.
<PAGE>
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 The 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 Schroder Capital Funds, 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 the separate portfolio 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 U.S. Smaller Companies Portfolio, a
separate portfolio of Core Trust.
"Schroder" shall mean Schroder Capital Management, the Fund's
investment subadviser and the Portfolio's investment adviser.
"Schroder Advisors" shall mean Schroder Fund Advisors Inc.,
the Portfolio's administrator.
"Stock Index Futures" shall mean futures contracts that
relate to broadly-based stock indices.
<PAGE>
"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
The following discussion is intended to supplement the disclosure
in the Prospectus concerning the Fund's investments, investment
techniques and strategies and the risks associated therewith (as
well as those of the Portfolio, which has the same investment
objective and policies). The Fund is designed for the investment
of that portion of an investor's funds which can appropriately
bear the special risks associated with investment in smaller
capitalization companies with the aim of capital appreciation.
The Fund is not intended for investors whose objective is assured
income or preservation of capital. The Fund may make no
investment or employ any investment technique or strategy not
referenced in the Prospectus as relates to the Fund. 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.
U.S. Government Securities
The Portfolio may invest in obligations issued or guaranteed by
the United States government or its agencies or instrumentalities
which have remaining maturities not exceeding one year. Agencies
and instrumentalities which issue or guarantee debt securities
and which have been established or sponsored by the United States
government include the Bank for Cooperatives, the Export-Import
Bank, the Federal Farm Credit System, the Federal Home Loan
Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal
National Mortgage Association, the Government National Mortgage
Association and the Student Loan Marketing Association. Except
for obligations issued by the United States Treasury and the
Government National Mortgage Association, none of the obligations
of the other agencies or instrumentalities referred to above are
backed by the full faith and credit of the United States
government.
<PAGE>
Bank Obligations
The Portfolio may invest in obligations of U.S. banks (including
certificates of deposit and bankers' acceptances) having total
assets at the time of purchase in excess of $1 billion. Such
banks must be members of the Federal Deposit Insurance
Corporation.
A certificate of deposit is an interest-bearing negotiable
certificate issued by a bank against funds deposited in the bank.
A bankers' acceptance is a short-term draft drawn on a commercial
bank by a borrower, usually in connection with an international
commercial transaction. Although the borrower is liable for
payment of the draft, the bank unconditionally guarantees to pay
the draft at its face value on the maturity date.
Short-Term Debt Securities
The Portfolio may invest in commercial paper, that is short-term
unsecured promissory notes issued in bearer form by bank holding
companies, corporations and finance companies. The commercial
paper purchased by the Portfolio for temporary defensive purposes
consists of direct obligations of domestic issuers which, at the
time of investment, are rated "P-1" by Moody's Investors Service
("Moody's") or "A-1" by Standard & Poor's ("S&P"), or securities
which, if not rated, are issued by companies having an
outstanding debt issue currently rated Aa by Moody's or AAA or AA
by S&P. The rating "P-1" is the highest commercial paper rating
assigned by Moody's and the rating "A-1" is the highest
commercial paper rating assigned by S&P.
Repurchase Agreements
The Portfolio may invest in securities subject to repurchase
agreements with U.S. banks or broker-dealers maturing in seven
days or less. In a typical repurchase agreement the seller of a
security commits itself at the time of the sale to repurchase
that security from the buyer at a mutually agreed-upon time and
price. The repurchase price exceeds the sale price, reflecting
an agreed-upon interest rate effective for the period the buyer
owns the security subject to repurchase. The agreed-upon rate is
unrelated to the interest rate on that security. Schroder will
monitor the value of the underlying security at the time the
transaction is entered into and at all times during the term of
the repurchase agreement to insure that the value of the security
always equals or exceeds the repurchase price. In the event of
default by the seller under the repurchase agreement, the
Portfolio may have difficulties in exercising its rights to the
underlying securities and may incur costs and experience time
delays in connection with the disposition of such securities. To
evaluate potential risks, Schroder reviews the credit-worthiness
<PAGE>
of those banks and dealers with which the Portfolio enters into
repurchase agreements.
Warrants. Warrants are options to purchase equity securities at
specific prices valid for a specific period of time. Their
prices do not necessarily move parallel to the prices of the
underlying securities. Warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the
issuer. The Portfolio may not invest in warrants if, as a result
more than 5% of its net assets would be so invested or if, more
than 2% of its net assets would be so invested in warrants that
are not listed on the New York or American Stock Exchanges.
High Yield/Junk Bonds
The Portfolio may invest up to 5% of its assets in bonds rated
below Baa by Moody's or BBB by S&P (commonly known as "high
yield/high risk securities" or "junk bonds"). Securities rated
less than Baa by Moody's or BBB by S&P are classified as non-
investment grade securities and are considered speculative by
those rating agencies. Junk bonds may be issued as a consequence
of corporate restructurings, such as leveraged buyouts, mergers,
acquisitions, debt recapitalizations, or similar events or by
smaller or highly leveraged companies. Although the growth of
the high yield securities market in the 1980's had paralleled a
long economic expansion, recently many issuers have been affected
by adverse economic and market conditions. It should be
recognized that an economic downturn or increase in interest
rates is likely to have a negative effect on (i) the high yield
bond market, (ii) the value of high yield securities and (iii)
the ability of the securities' issuers to service their principal
and interest payment obligations, to meet their projected
business goals or to obtain additional financing. In addition,
the market for high yield securities, which is concentrated in
relatively few market makers, may not be as liquid as the market
for investment grade securities. Under adverse market or
economic conditions, the market for high yield securities could
contract further, independent of any specific adverse changes in
the condition of a particular issuer. As a result, the Portfolio
could find it more difficult to sell these securities or may be
able to sell the securities only at prices lower than if such
securities were widely traded. Prices realized upon the sale of
such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating
the Portfolio's net asset value.
In periods of reduced market liquidity, junk bond prices may
become more volatile and may experience sudden and substantial
price declines. Also, there may be significant disparities in
the prices quoted for junk bonds by various dealers. Under such
conditions, a Portfolio may have to use subjective rather than
<PAGE>
objective criteria to value its junk bond investments accurately
and rely more heavily on the judgment of the Portfolio's
investment adviser.
Prices for junk bonds also may be affected by legislative and
regulatory developments. For example, new federal laws require
the divestiture by federally insured savings and loans
associations of their investments in high yield bonds. Also,
from time to time, Congress has considered legislation to
restrict or eliminate the corporate tax deduction for interest
payments or to regulate corporate restructurings such as
takeovers, mergers or leveraged buyouts. These laws could
adversely affect the Portfolio's net asset value and investment
practices, the market for high yield securities, the financial
condition of issuers of these securities and the value of
outstanding high yield securities.
Lower rated or unrated debt obligations also present risks based
on payment expectations. If an issuer calls the obligation for
redemption, the Portfolio may have to replace the security with a
lower yielding security, resulting in a decreased return for
investors. If the Portfolio experiences unexpected net
redemptions, it may be forced tosell its higher rated securities,
resulting in a decline in the overall credit quality of the
Portfolio's portfolio and increasing the exposure of the
Portfolio to the risks of high yield securities.
Illiquid and Restricted Securities
"Illiquid and Restricted Securities" under "Investment Objectives
and Policies - Additional Investment Policies" in the Prospectus
sets forth the circumstances in which the Portfolio may invest in
"restricted securities". In connection with the Portfolio's
original purchase of restricted securities it may negotiate
rights with the issuer to have such securities registered for
sale at a later time. Further, the expenses of registration of
restricted securities that are illiquid may also be negotiated by
the Portfolio with the issuer at the time such securities are
purchased by the Portfolio. When registration is required,
however, a considerable period may elapse between a decision to
sell the securities and the time the Portfolio would be permitted
to sell such securities. A similar delay might be experienced in
attempting to sell such securities pursuant to an exemption from
registration. Thus, the Portfolio may not be able to obtain as
favorable a price as that prevailing at the time of the decision
to sell.
<PAGE>
Loans of Portfolio Securities
The Portfolio may lend its portfolio securities subject to the
restrictions stated in the Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the market
value of the loaned securities and must consist of cash, bank
letters of credit, U.S. Government securities, or other cash
equivalents in which the Portfolio is permitted to invest. To be
acceptable as collateral, letters of credit must obligate a bank
to pay amounts demanded by the Portfolio if the demand meets the
terms of the letter. Such terms and the issuing bank must be
satisfactory to the Portfolio. In a portfolio securities lending
transaction, the Portfolio receives from the borrower an amount
equal to the interest paid or the dividends declared on the
loaned securities during the term of the loan as well as the
interest on the collateral securities, less any finders' or
administrative fees the Portfolio pays in arranging the loan.
The Portfolio may share the interest it receives on the
collateral securities with the borrower as long as it realizes at
least a minimum amount of interest required by the lending
guidelines established by the Trust's Board of Trustees. The
Portfolio will not lend its portfolio securities to any officer,
director, employee or affiliate of the Portfolio or Schroder. The
terms of the Portfolio's loans must meet certain tests under the
Internal Revenue Code and permit the Portfolio to reacquire
loaned securities on five business days' notice or in time to
vote on any important matter.
Covered Calls and Hedging
As described in the Prospectus, the Portfolio may write covered
calls on up to 100% of its total assets or employ one or more
types of Hedging Instruments. When hedging to attempt to protect
against declines in the market value of the Portfolio's
securities, to permit the Portfolio to retain unrealized gains in
the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, the
Portfolio would: (i) sell Stock Index Futures; (ii) purchase puts
on such Futures or securities; or (iii) write covered calls on
securities or on Stock Index Futures. When hedging to establish
a position in the equities markets as a temporary substitute for
purchasing particular equity securities (which the Portfolio will
normally purchase and then terminate the hedging position), the
Portfolio would: (i) purchase Stock Index Futures, or
(ii) purchase calls on such Futures or on securities. The
Portfolio's strategy of hedging with Stock Index Futures and
options on such Futures will be incidental to the Portfolio's
activities in the underlying cash market.
<PAGE>
Writing Covered Call Options. The Portfolio may write (i.e.,
sell) call options ("calls") if: (i) the calls are listed on a
domestic securities or commodities exchange, and (ii) the calls
are "covered" (i.e., the Portfolio owns the securities subject to
the call or other securities acceptable for applicable escrow
arrangements) while the call is outstanding. A call written on a
Stock Index Future must be covered by deliverable securities or
segregated liquid assets. If a call written by the Portfolio is
exercised, the Portfolio forgoes any profit from any increase in
the market price above the call price of the underlying
investment on which the call was written.
When the Portfolio writes a call on a security, it receives a
premium and agrees to sell the underlying securities to a
purchaser of a corresponding call on the same security during the
call period (usually not more than 9 months) at a fixed exercise
price (which may differ from the market price of the underlying
security), regardless of market price changes during the call
period. The risk of loss will have been retained by the
Portfolio if the price of the underlying security should decline
during the call period, which may be offset to some extent by the
premium.
To terminate its obligation on a call it has written, the
Portfolio may be purchase a corresponding call in a "closing
purchase transaction". A profit or loss will be realized,
depending upon whether the net of the amount of option
transaction costs and the premium previously received on the call
written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses
unexercised, because the Portfolio retains the underlying
security and the premium received. Any such profits are
considered short-term capital gains for Federal income tax
purposes, and when distributed by the Portfolio are taxable as
ordinary income. If the Portfolio could not effect a closing
purchase transaction due to the lack of a market, it would have
to hold the callable securities until the call lapsed or was
exercised.
The Portfolio may also write calls on Stock Index Futures without
owning a futures contract or a deliverable bond, provided that at
the time the call is written, the Portfolio covers the call by
segregating in escrow an equivalent dollar amount of liquid
assets. The fund will segregate additional liquid assets if the
value of the escrowed assets drops below 100% of the current
value of the Stock Index Future. In no circumstances would an
exercise notice require the Portfolio to deliver a futures
contract; it would simply put the Portfolio in a short futures
position, which is permitted by the Portfolio's hedging policies.
<PAGE>
Purchasing Calls and Puts. The Portfolio may purchase put
options ("puts") which relate to: (i) securities held by it,
(ii) Stock Index Futures (whether or not it holds such Stock
Index Futures in its portfolio), or (iii) broadly- based stock
indices. The Portfolio may not sell puts other than those it
previously purchased, nor purchase puts on securities it does not
hold. The fund may purchase calls: (a) as to securities,
broadly-based stock indices or Stock Index Futures, or (b) to
effect a "closing purchase transaction" to terminate its
obligation on a call it has previously written. A call or put
may be purchased only if, after such purchase, the value of all
put and call options held by the Portfolio would not exceed 5% of
the Portfolio's total assets.
When the Portfolio purchases a call (other than in a closing
purchase transaction), it pays a premium and, except as to calls
on stock indices, has the right to buy the underlying investment
from a seller of a corresponding call on the same investment
during the call period at a fixed exercise price. The Portfolio
benefits only if the call is sold at a profit or if, during the
call period, the market price of the underlying investment is
above the sum of the call price plus the transaction costs and
the premium paid for the call and the call is exercised. If the
call is not exercised or sold (whether or not at a profit), it
will become worthless at its expiration date and the Portfolio
will lose its premium payments and the right to purchase the
underlying investment. When the Portfolio purchases a call on a
stock index, it pays a premium, but settlement is in cash rather
than by delivery of an underlying investment.
When the Portfolio purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price.
Buying a put on a security or Stock Index Future the Portfolio
owns enables the Portfolio to attempt to protect itself during
the put period against a decline in the value of the underlying
investment below the exercise price by selling the underlying
investment at the exercise price to a seller of a corresponding
put. If the market price of the underlying investment is equal
to or above the exercise price and, as a result, the put is not
exercised or resold, the put will become worthless at its
expiration date and the Portfolio will lose its premium payment
and the right to sell the underlying investment; the put may,
however, be sold prior to expiration (whether or not at a
profit).
Purchasing a put on either a stock index or on a Stock Index
Future not held by the Portfolio permits the Portfolio either to
resell the put or to buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary
<PAGE>
inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price and, as a result, the put is not exercised, the put will
become worthless on its expiration date. In the event of a
decline in price of the underlying investment, the Portfolio
could exercise or sell the put at a profit to attempt to offset
some or all of its loss on its portfolio securities. When the
Portfolio purchases a put on a stock index, or on a Stock Index
Future not held by it, the put protects the Portfolio to the
extent that the index moves in a similar pattern to the
securities held. In the case of a put on a stock index or Stock
Index Future, settlement is in cash rather than by the
Portfolio's delivery of the underlying investment.
Stock Index Futures. The Portfolio may buy and sell futures
contracts only if they relate to broadly- based stock indices
("Stock Index Futures"). A stock index is "broadly-based" if it
includes stocks that are not limited to issuers in any particular
industry or group of industries. Stock Index Futures obligate
the seller to deliver (and the purchaser to take) cash to settle
the futures transaction, or to enter into an offsetting contract.
No physical delivery of the underlying stocks in the index is
made.
No price is paid or received upon the purchase or sale of a Stock
Index Future. Upon entering into a futures transaction, the
Portfolio will be required to deposit an initial margin payment
in cash or U.S. Treasury bills with a futures commission merchant
(the "futures broker"). The initial margin will be deposited
with the Portfolio's custodian in an account registered in the
futures broker's name; however the futures broker can gain access
to that account only under specified conditions. As the future
is marked to market to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid
to or by the futures broker on a daily basis. Prior to
expiration of the future, if the Portfolio elects to close out
its position by taking an opposite position, a final
determination of variation margin is made, additional cash is
required to be paid by or released to the Portfolio, and any loss
or gain is realized for tax purposes. Although Stock Index
Futures by their terms call for settlement by the delivery of
cash, in most cases the obligation is fulfilled without such
delivery, by entering into an offsetting transaction. All
futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are traded.
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or
loss depends on changes in the index in question (and thus on
price movements in the stock market generally) rather than on
<PAGE>
price movements in individual securities or futures contracts.
When the Portfolio buys a call on a stock index or Stock Index
Future, it pays a premium. During the call period, upon exercise
of a call by the Portfolio, a seller of a corresponding call on
the same index will pay the Portfolio an amount of cash to settle
the call if the closing level of the stock index or Stock Index
Future upon which the call is based is greater than the exercise
price of the call; that cash payment is equal to the difference
between the closing price of the index and the exercise price of
the call times a specified multiple (the "multiplier") which
determines the total dollar value for each point of difference.
When the Portfolio buys a put on a stock index or Stock Index
Future, it pays a premium and has the right during the put period
to require a seller of a corresponding put, upon the Portfolio's
exercise of its put, to deliver to the Portfolio an amount of
cash to settle the put if the closing level of the stock index or
Stock Index Future upon which the put is based is less than the
exercise price of the put; that cash payment is determined by the
multiplier, in the same manner as described above as to calls.
Additional Information About Hedging Instruments and their Use.
The Portfolio's custodian, or a securities depository acting for
the custodian, will act as the Portfolio's escrow agent, through
the facilities of the Options Clearing Corporation ("OCC"), as to
the securities on which the Portfolio has written options, or as
to other acceptable escrow securities, so that no margin will be
required for such transactions. OCC will release the securities
on the expiration of the option or upon the Portfolio's entering
into a closing transaction. An option position may be closed out
only on a market which provides secondary trading for options of
the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
The Portfolio's option activities may affect its portfolio
turnover rate and brokerage commissions. The exercise of calls
written by the Portfolio may cause the Portfolio to sell related
portfolio securities, thus increasing its turnover rate in a
manner beyond the Portfolio's control. The exercise by the
Portfolio of puts on securities or Stock Index Futures may cause
the sale of related investments, also increasing portfolio
turnover. Although such exercise is within the Portfolio's
control, holding a put might cause the Portfolio to sell the
underlying investment for reasons which would not exist in the
absence of the put. The Portfolio will pay a brokerage
commission each time it buys or sells a call, a put or an
underlying investment in connection with the exercise of a put or
call. Such commissions may be higher than those which would
apply to direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of such investments, and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
<PAGE>
trading in options could result in the Portfolio's net asset
value being more sensitive to changes in the value of the
underlying investments.
Regulatory Aspects of Hedging Instruments and Covered Calls. The
Portfolio must operate within certain restrictions as to its long
and short positions in Stock Index Futures and options thereon
under a rule (the "CFTC Rule") adopted by the Commodity Futures
Trading Commission (the "CFTC") under the Commodity Exchange Act
(the "CEA"), which excludes the Portfolio from registration with
the CFTC as a "commodity pool operator" (as defined in the CEA)
if it complies with the CFTC Rule. Under these restrictions the
Portfolio will not, as to any positions, whether short, long or a
combination thereof, enter into Stock Index Futures and options
thereon for which the aggregate initial margins and premiums
exceed 5% of the fair market value of its total assets, with
certain exclusions as defined in the CFTC Rule. Under the
restrictions, the Portfolio also must, as to its short positions,
use Stock Index Futures and options thereon solely for bona-fide
hedging purposes within the meaning and intent of the applicable
provisions under the CEA.
Transactions in options by the Portfolio are subject to
limitations established by each of the exchanges governing the
maximum number of options that may be written or held by a single
investor or group of investors acting in concert, regardless of
whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or
through one or more exchanges or brokers. Thus, the number of
options which the Portfolio may write or hold may be affected by
options written or held by other entities, including other
investment companies having the same or an affiliated investment
adviser. Position limits also apply to Stock Index Futures. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Portfolio purchases a Stock Index Future, the Portfolio will
maintain, in a segregated account or accounts with its custodian
bank, cash or readily-marketable, short-term (maturing in one
year or less) debt instruments in an amount equal to the market
value of the securities underlying such Stock Index Future, less
the margin deposit applicable to it.
Limits on Use of Hedging Instruments. The Portfolio intends to
qualify as a "regulated investment company" under the Internal
Revenue Code of 1986 (the "Code"). One of the tests for such
qualification is that less than 30% of its gross income must be
derived from gains realized on the sale of securities held for
less than three months. Due to this limitation, the Portfolio
will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling
<PAGE>
investments, including Stock Index Futures, held for less than
three months, whether or not they were purchased on the exercise
of a call held by the Portfolio; (ii) purchasing calls or puts
which expire in less than three months; (iii) effecting closing
transactions with respect to calls or puts purchased less than
three months previously; (iv) exercising puts held for less than
three months; and (v) writing calls on investments held for less
than three months.
Possible Risk Factors in Hedging. In addition to the risks
discussed above, there is a risk in using short hedging by
selling Stock Index Futures or purchasing puts on stock indices
that the prices of the applicable index (thus the prices of the
Hedging Instruments) will correlate imperfectly with the behavior
of the cash (i.e., market value) prices of the Portfolio's equity
securities. The ordinary spreads between prices in the cash and
futures markets are subject to distortions due to differences in
the natures of those markets. First, all participants in the
futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through
offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures markets depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of
the Portfolio's portfolio diverges from the securities included
in the applicable index. To compensate for the imperfect
correlation of movements in the price of the equity securities
being hedged and movements in the price of the Hedging
Instruments, the Portfolio may use Hedging Instruments in a
greater dollar amount than the dollar amount of equity securities
being hedged if the historical volatility of the prices of such
equity securities being hedged is more than the historical
volatility of the applicable index. It is also possible that
where the Portfolio has used Hedging Instruments in a short
hedge, the market may advance and the value of equity securities
held in the Portfolio's portfolio may decline. If this occurred,
the Portfolio would lose money on the Hedging Instruments and
also experience a decline in value in its equity securities.
However, while this could occur for a very brief period or to a
very small degree, the value of a diversified portfolio of equity
<PAGE>
securities will tend to move over time in the same direction as
the indices upon which the Hedging Instruments are based.
If the Portfolio uses Hedging Instruments to establish a position
in the equities markets as a temporary substitute for the
purchase of individual equity securities (long hedging) by buying
Stock Index Futures and/or calls on such Futures, on securities
or on stock indices, it is possible that the market may decline;
if the Portfolio then concludes not to invest in equity
securities at that time because of concerns as to possible
further market decline or for other reasons, the Portfolio will
realize a loss on the Hedging Instruments that is not offset by a
reduction in the price of the equity securities purchased.
Short Sales Against-the-Box
After the Portfolio makes a short sale against-the-box, while the
short position is open, the Portfolio must own an equal amount of
the securities sold short, or by virtue of ownership of
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in the box" until the short position is
closed out.
3. INVESTMENT RESTRICTIONS
The Portfolio's significant investment restrictions are described
in the Prospectus. The following investment restrictions, except
where stated to be fundamental policies, are non-fundamental
policies of the Portfolio. The policies defined as fundamental,
together with the fundamental policies and investment objective
described in the Prospectus, cannot be changed without the vote
of a "majority" of the Portfolio's outstanding shares. Under the
Investment Company Act of 1940 (the "1940 Act"), a "majority"
vote is defined as the vote of the holders of the lesser of : (i)
67% of more of the shares present or represented by proxy at a
meeting of shareholders, if the holders of more than 50% of the
outstanding shares are present, or (ii) more than 50% of the
outstanding shares.
The following investment restrictions of the Portfolio are
fundamental policies:
(a) With respect to 75% of its assets, the Portfolio
may not purchase a security other than a U.S.
government security if, as a result, more than 5%
of its total assets would be invested in the
securities of a single issuer or it would own more
<PAGE>
than 10% of the outstanding voting securities of
any single issuer.
(b) The Portfolio may not purchase securities if,
immediately after the purchase, 25% or more of the
value of its 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.
(c) The Portfolio may borrow money from banks or by
entering into reverse repurchase agreements,
provided that such borrowings do not exceed 33 1/3%
of the value of the Portfolio's total assets
(computed immediately after the borrowing).
(d) The Portfolio may not issue senior securities
except to the extent permitted by the 1940 Act.
(e) The Portfolio may not underwrite securities of
other issuers, except to the extent that it may be
considered to be acting as an underwriter in
connection with the disposition of portfolio
securities.
(f) The Portfolio may not make loans, except it may
enter into repurchase agreements, purchase debt
securities that are otherwise permitted investments
and lend portfolio securities.
(g) The Portfolio may not purchase or sell real estate
or any interest therein, except that it 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.
(h) The Portfolio may not purchase or sell physical
commodities unless acquired as a result of owning
securities or other instruments, but it may
purchase, sell or enter into financial options and
futures and forward currency contracts and other
financial contracts or derivative instruments.
Notwithstanding any other investment policy or restriction,
the Fund may seek to achieve its investment objective by
holding, as its only investment securities, the securities
of another investment company having substantially the same
investment objective and policies as the Fund.
<PAGE>
The following investment restrictions of the Portfolio
are non-fundamental policies:
(a) The Portfolio's borrowings for other than temporary
or emergency purposes or meeting redemption
requests may not exceed an amount equal to 5% of
the value its net assets.
(b) The Portfolio may not acquire securities or invest
in repurchase agreements with respect to any
securities if, as result, more than 15% of its 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 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, as amended ("Restricted
Securities").
(c) The Portfolio may not invest in securities of
another investment company, except to the extent
permitted by the 1940 Act.
(d) The Portfolio 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. The
Portfolio may make margin deposits in connection
with permitted transactions in options, futures
contracts and options on futures contracts.
(e) The Portfolio 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 Portfolio could invest, if, as a
result, more than 5% of the value of the
Portfolio's total assets would be so invested.
(f) The Portfolio may not pledge, mortgage, hypothecate
or encumber any of its assets except to secure
permitted borrowings.
(g) The Portfolio may not invest in or hold securities
of any issuer if, to the Portfolio's knowledge,
officers and portfolioees of the Portfolio or
officers and directors of Schroder, individually
<PAGE>
owning beneficially more than 1/2 of 1% of the
securities of the issuer, in the aggregate own more
than 5% of the issuer's securities.
(h) The Portfolio may not invest in interests in oil
and gas or interests in other mineral exploration
or development programs.
(i) The Portfolio may not lend portfolio securities if
the total value of all loaned securities would
exceed 25% of its total assets.
(j) The Portfolio may not purchase real estate limited
partnership interests.
(k) The Portfolio may not invest in warrants if, as a
result, more than 5% of its net assets would be so
invested or if, more than 2% of its net assets
would be invested in warrants that are not listed
on the New York or American Stock Exchange.
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 Fund is historical and is
not intended to indicate future returns. The Fund's yield and
total return fluctuate in response to market conditions and other
factors. The value of the Fund's shares when redeemed may be
more or less than their original cost.
In performance advertising the Fund may compare any of its
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"). The Fund
may also compare any of its performance information with the
performance of recognized stock, bond and other indices,
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 Fund
may refer to general market performances over past time periods
such as those published by Ibbotson Associates (for instance, its
"Stocks, Bonds, Bills and InflationYearbook"). In addition, the
Fund may refer in such materials to mutual fund performance
<PAGE>
rankings and other data published by Fund Tracking Companies.
Performance advertising may also refer to discussions of the Fund
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 the Fund's performance, investors should be aware that
the 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 the Fund
fees in connection with an investment in the Fund, which will
have the effect of reducing the Fund's net yield to those
shareholders. The yields of the Fund are not fixed or
guaranteed, and an investment in the Fund is not insured or
guaranteed. Accordingly, yield information may not necessarily
be used to compare shares of the 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 the Fund's yield information directly
to similar information regarding investment alternatives which
are insured or guaranteed.
Standardized yields for the Fund used in advertising are computed
by dividing the 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 the 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 the 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.
<PAGE>
Total Return Calculations
Standardized total returns quoted in advertising and sales
literature reflect all aspects of the 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 the 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 Fund.
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:
P(1+T)n = 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, the 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:
<PAGE>
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
The Fund may advertise other forms of performance. For example,
the Fund 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
the 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 Fund may also include various information in their
advertisements. Information included in the 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
portfolio managers of the Fund and Portfolio and 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 the 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 the
Fund or investing in a tax-deferred account, such as an
<PAGE>
individual retirement account or Section 401(k) pension plan and
(x) the net asset value, net assets or number of shareholders of
the 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 the Fund's performance.
The Fund 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
the 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 the 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 the 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.
<PAGE>
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.
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
FinancialServices, 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.
<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
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.
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.
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
<PAGE>
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
<PAGE>
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 currentlyis 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 from 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, 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 nor Norwest Select Funds has adopted any from
of retirement plan covering Trustees or officers.
Trustees and Officers of Core Trust
The following information relates to the principal occupations of
each Trustee and executive officer of the Trust during the past
five years and shows the nature of any affiliation with Schroder.
Messrs. Keffer, Goldstein and Sheehan, officers of Core Trust,
<PAGE>
all currently serve as officers of the Trust. Accordingly, for
background information pertaining to these officers, see
"Trustees and Officers of the Trust" above.
Peter E. Guernsey, Trustee.
Insurance Consultant since August 1986; prior thereto Senior
Vice President, Marsh & McLennan, Inc., insurance brokers. His
address is Oyster Bay, New York.
Ralph E. Hansmann, Trustee.
Private investor; Director, First Eagle Fund of America,
Inc.; Director, Verde Exploration, Ltd.; Trustee Emeritus,
Institute for Advanced Study; Trustee and Treasurer, New York
Public Library; Life Trustee, Hamilton College. His address is
40 Wall Street, New York, New York.
John I. Howell, Trustee.
Private Consultant since February 1987; Director, American
International Group, Inc.; Director, American International Life
Assurance Company of New York. His address is 7 Riverside Road,
Greenwich, Connecticut.
Laura E. Luckyn-Malone(a) (b) (c), President and Trustee.
Managing Director of Schroder since October 1995; Director of
SWIS since July 1995; prior thereto, Director and Senior Vice
President of Schroder since February 1990; Director and
President, Schroder Advisors. Her address is 787 Seventh Avenue,
New York, New York.
Clarence F. Michalis, Trustee.
Chairman of the Board of Directors, Josiah Macy, Jr.
Foundation (charitable foundation). His address is 44 East 64th
Street, New York, New York.
Hermann C. Schwab, Chairman (Honorary) and Trustee.
Retired since March, 1988; prior thereto, consultant to
Schroder since February 1, 1984. His address is 787 Seventh
Avenue, New York, New York.
Mark J. Smith(a) (b), Vice President and Trustee.
First Vice President of Schroder since April 1990; Director
and Vice President, Schroder Advisors. His address is 33 Gutter
Lane, London, England.
<PAGE>
Robert G. Davy, Vice President.
Director of Schroder and Schroder Capital Management
International Ltd. since 1994; First Vice President of Schroder
since July, 1992; prior thereto, employed by various affiliates
of Schroders plc in various positions in the investment research
and portfolio management areas since 1986. His address is 787
Seventh Avenue, New York, New York.
Richard R. Foulkes, Vice President.
Deputy Chairman of Schroder since October 1995; Director of
Schroder since 1979, Director of Schroder Capital Management
International Ltd. since 1989, and Executive Vice President of
both of these entities. His address is 787 Seventh Avenue, New
York, New York.
John Y. Keffer, Vice President.
Jane P. Lucas(c), Vice President.
Director and Senior Vice President Schroder; Director of SWIS
since September 1995; Assistant Director Schroder Investment
Management Ltd. since June 1991. His address is 787 Seventh
Avenue, New York, New York.
Catherine A. Mazza(b), Vice President.
Senior Vice President Schroder Advisors since December 1995;
Vice President of Schroder since October 1994; prior thereto,
held various marketing positions at Alliance Capital, an
investment adviser, since July 1985. His address is Oyster Bay,
New York. Her address is 787 Seventh Avenue, New York, New York.
Fariba Talebi, Vice President.
First Vice President of Schroder since April 1993, employed
in various positions in the investment research and portfolio
management areas since 1987. Her address is 787 Seventh Avenue,
New York, New York.
John A. Troiano(b), Vice President.
Managing Director of Schroder since October 1995; Director of
Schroder Advisors since October 1992, Director and Senior Vice
President of Schroder since 1991; prior thereto, employed by
various affiliates of Schroder in various positions in the
investment research and portfolio management areas since 1981.
His address is 787 Seventh Avenue, New York, New York.
<PAGE>
Ira L. Unschuld, Vice President.
Vice President of Schroder since April, 1993 and an Associate
from July, 1990 to April, 1993; prior to July, 1990, employed by
various financial institutions as a securities or financial
analyst. His address is 787 Seventh Avenue, New York, New York.
Robert Jackowitz(b) (c), Treasurer.
Vice President of SWIS since September 1995; Treasurer of
SWIS and Schroder Advisers since July 1995; Vice President of
Schroder since June 1995; and Assistant Treasurer of Schroders
Incorporated since January 1993. His address is 787 Seventh
Avenue, New York, New York.
Margaret H. Douglas-Hamilton(b) (c), Secretary.
Secretary of SWIS since July 1995; Secretary of Schroder
Advisers since April 1990; First Vice President and General
Counsel of Schroders Incorporated(b) since May 1987; prior
thereto, partner of Sullivan & Worcester, a law firm. Her
address is 787 Seventh Avenue, New York, New York.
David I. Goldstein, Assistant Treasurer and Assistant Secretary.
Thomas G. Sheehan, Assistant Treasurer and Assistant Secretary.
Barbara Gottlieb(c), Assistant Secretary.
Assistant Vice President of SWIS since July 1995 prior
thereto held various positions with SWIS affiliates. Her address
is 787 Seventh Avenue, New York, New York.
Gerardo Machado, Assistant Secretary.
Associate, Schroder. His address is 787 Seventh Avenue, New
York, New York.
(a) Interested Trustee of Core Trust as defined by the 1940
Act.
(b) Schroder Advisors is a wholly-owned subsidiary of
Schroder, which is a wholly-owned subsidiary of Schroders
Incorporated, which in turn is an indirect, wholly-owned U.S.
subsidiary of Schroders plc.
(c) Schroder Wertheim Investment Services, Inc. ("SWIS") is
a wholly-owned subsidiary of Schroder Wertheim Holdings
Incorporated which is a wholly-owned subsidiary of Schroders,
Incorporated, which in turn is an indirect wholly-owned U.S.
subsidiary of Schroders plc.
<PAGE>
INVESTMENT ADVISORY SERVICES
Adviser of the Fund
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
the Fund's investments and effecting portfolio transactions for
the 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 the Fund.
The Advisory Agreement between the 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 is terminable without penalty by the 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 Agreement also provides that, with
respect to the 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 Fund, Norwest
may also act and be compensated as investment manager for its
clients with respect to assets which are invested in the 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 the 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 the Fund. Norwest has agreed to
reimburse the Trust for certain of the Fund's operating expenses
(exclusive of interest, taxes and brokerage fees, organization
expenses and, if applicable, distribution expenses, all to the
<PAGE>
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, the 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.
No payments will be made under the Fund's Advisory Agreement so
long as all of the Fund's investments consist solely of the
Portfolio or any other registered investment company or series
thereof.
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
subcustodian, 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.
<PAGE>
Subadvisory Arrangements
Norwest and the Trust have entered into a Subadvisory Agreement
with Schroder with respect to the Fund. Schroder makes investment
decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program. Schroder is required
to furnish at its own expense all services, facilities and
personnel necessary in connection with managing of the Fund's
investments and effecting portfolio transactions for the Fund (to
the extent of Norwest's delegation).
The Subadvisory Agreement among the Fund, 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.
The Subadvisory Agreement with respect to the Fund is terminable
without penalty by the 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 Agreement also provides that, with respect to the
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.
No payments will be made under the Fund's Subadvisory Agreement
so long as all of the Fund's investments consist solely of the
Portfolio or any other registered investment company or series
thereof.
Adviser of the Portfolio
Schroder acts as investment adviser to the Portfolio and is
required to furnish at its expense all services, facilities and
personnel necessary in connection with managing the Portfolio's
investments and effecting portfoliotransactions for the
Portfolio. The Advisory Agreement between the 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 Portfolio, and in either case by a majority of the Trustees
<PAGE>
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.
Pursuant to the Advisory Agreement, Schroder is responsible for
managing the investment and reinvestment of the assets included
in the Fund's portfolio and continuously reviews, supervises and
administers the Fund's investments. In this regard, it is the
responsibility of Schroder to make decisions relating to the
Fund's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected by it
in its discretion. Schroder also furnishes to the Board of
Trustees of Core Trust periodic reports on the investment
performance of the Fund. Under the terms of the Advisory
Agreement, Schroder is required to manage the Portfolio's
investment portfolio in accordance with applicable laws and
regulations. In making its investment decisions, Schroder does
not use material inside information that may be in its possession
or in the possession of its affiliates.
The Advisory Agreement will continue in effect provided such
continuance is approved annually (i) by the holders of a majority
of the outstanding voting securities of the Portfolio or by the
Board of Trustees of Core Trust and (ii) by a majority of the
Trustees who are not parties to such Contract or "interested
persons" (as defined in the 1940 Act) of any such party. The
Advisory Agreement may be terminated without penalty by vote of
the Trustees or the shareholders of the Portfolio on 60 days'
written notice to the Adviser, or by the Adviser on 60 days'
written notice to the Trust and it will terminate automatically
if assigned. The Advisory Agreement also provides that, with
respect to the 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 Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of the Schroder's or their
duties or by reason of reckless disregard of its or their
obligations and duties under the Advisory Agreement.
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 the Portfolio.
ADMINISTRATION AND DISTRIBUTION
The Trust
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
<PAGE>
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.
The Management Agreement terminates automatically if it is
assigned and may be terminated without penalty by vote of the
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 the 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 Manager is also the Trust's Distributor and acts as the agent
of the Trust in connection with the offering of shares of the
Fund on a "best efforts" basis pursuant to a Distribution
Agreement. Under a servicing agreement between the Trust and
Norwest with respect to the 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 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 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.
<PAGE>
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.
Core Trust
Core Trust has entered into an Administrative Services Agreement
with Schroder Fund Advisors Inc. ("Schroder Advisors"), 787
Seventh Avenue, New York, New York 10019, pursuant to which
Schroder Advisors provides management and administrative services
necessary for the operation of the Portfolio, including
coordination of the services performed by the Portfolio's
investment adviser, transfer agent, custodian, independent
accountants, legal counsel and others. Schroder Advisors is a
wholly-owned subsidiary of Schroder, and is a registered broker-
dealer organized to act as administrator and distributor of
mutual funds. Effective July 5, 1995, Schroder Advisors changed
its name from Schroder Capital Distributors Inc.
For these services, Schroder Advisors will receive a fee from
Core Trust at the annual rate of 0.10% of the average daily net
assets of the Portfolio. The Administrative Services Agreement
is terminable with respect to the Portfolio without penalty, at
any time, by vote of a majority of the trustees of Core Trust who
are not "interested persons" of Core Trust and who have no direct
or indirect financial interest in the operation of the
Administrative Services Agreement, upon not more than 60 days'
written notice to Schroder Advisors or by vote of the holders of
a majority of the shares of the Portfolio, or, upon 60 days'
notice, by Schroder Advisors. The Administrative Services
Agreement will terminate automatically in the event of its
assignment.
On behalf of the Portfolio, Core Trust has entered into a Sub-
Administration Agreement with Forum. Pursuant to the Sub-
Administration Agreement, Forum assists Schroder Advisors with
certain of its responsibilities under the Administrative Services
Agreement, including shareholder reporting and regulatory
compliance.
The Sub-Administration Agreement is terminable with respect to
the Portfolio without penalty, at any time, by the board of
trustees of Core Trust upon 60 days' written notice to Forum or
by Forum upon 60 days' written notice to the Portfolio.
<PAGE>
A Shares and B Shares
Under the Distribution Services Agreement related to the Fund,
Forum receives, and may reallow to certain financial
institutions, the initial sales charges assessed on purchases of
A Shares of the Fund. With respect to B Shares of the Fund, the
Fund has 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.
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 Fund 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 the 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.
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 services fees to Forum (or any
subsequent distributor of the Fund's B Shares) but only with
respect to sales that occured prior to any replacement or
termination. Except as described above, in the event that the
<PAGE>
Plan is terminated with respect to a Fund, the Fund will cease
paying any distribution services fees.
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 the Fund a fee computed and paid monthly at the
annual rate of 0.25% of the Fund's average daily net assets
attributable to each class).
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.
<PAGE>
The Chase Manhattan Bank, N.A. serves as custodian to the
Portfolio and is compensated by Core Trust with respect to the
Portfolio.
PORTFOLIO ACCOUNTING
Forum Financial Corp., an affiliate of Forum, performs portfolio
accounting services for the 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
the Fund on behalf of the Trust that are required to be
maintained under the 1940 Act, calculates the net asset value per
share of the 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 the 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 the Fund
if it has more than 100 security positions or 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 the Fund or
based, if applicable, upon information, instructions or requests
with respect to the 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.
FFC performs similar services for the Portfolio and, in addition,
acts as the Portfolio's transfer agent.
<PAGE>
6. OTHER INFORMATION
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases
Shares of the 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 Fund's 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
As more fully described in the Prospectus, investors may obtain
reduced sales charges with respect to the purchase of A Shares of
the Fund 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 the 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 pledge.
<PAGE>
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 Share 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 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
<PAGE>
charge rate equal to that paid on the shares on which the
dividend or distribution was paid.
In addition, A 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.
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 the 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 the 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 Fund and the
Portfolio will only effect a redemption in portfolio securities
if the particular shareholder is redeeming more than $250,000 or
one percent of the Fund's or the Portfolio's total net assets,
whichever is less, during any 90-day period.
<PAGE>
Contingent Deferred Sales Charge (A Shares)
Certain A Shares of the Fund 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 (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 assessedat 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.
<PAGE>
Contingent Deferred Sales Charge (A Shares and B Shares)
With respect to A Shares and B Shares of the Fund, 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 the
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 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 the Fund for which market quotations are
readily available are valued at current market value. The Fund
values its 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
<PAGE>
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 the 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 the
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 theoriginal 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 Fund and the Portfolio.
Investment decisions for the Fund 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 client accounts managed by the Advisers occur
contemporaneously, the purchase or sale orders may be aggregated
<PAGE>
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 Fund (holders of beneficial interest in
the case of the 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.
The 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 the 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
<PAGE>
and analysis may be used by the Advisers in connection with
services to clients other than the Fund, and the Advisers' fees
are not reduced by reason of the Advisers' receipt of the
research services.
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 Fund as a factor in
the selection of broker-dealers to execute portfolio transactions
for the Fund.
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 Fund, 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 Fund's 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 Fund satisfy the foregoing standards.
The Fund has no understanding or arrangement to direct any
specific portion of its brokerage to Schroder Securities or its
affiliates, and will not direct brokerage to Schroder Securities
or its affiliates in recognition of research services.
From time to time, the Fund may purchase securities of a broker
or dealer through which its regularly engages in securities
transactions.
<PAGE>
TAXATION
The 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 the
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 the 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 the Fund on section 1256 contracts generally will be
considered a 60 percent long-term and 40 percent short-term
capital gain or loss. The 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 the 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 the Fund
will be treated as short-term capital gain or loss. In general,
if the Fund exercises an option, or an option that the 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 the Fund in conjunction with any other position held by
the 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 the 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 the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the 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
<PAGE>
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) the deduction of
interest and carrying charges attributable to certain straddle
positions may be deferred. Various elections are available to
the 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 the Fund if all of the offsetting positions consist of section
1256 contracts.
Each Fund shareholder should include in the shareholder's report
of gross income in his Federal income tax return cash dividends
received by the shareholder from the Fund.
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.
________, independent auditors, acts as auditors for the Trust.
OWNERSHIP OF FUND SHARES
Prior to the public issuance of shares of the Fund, due to its
initial investment, Forum owned all outstanding shares of the
Fund and, accordingly, may be deemed to be a controlling person
of the Fund. Upon the investment in the Fund by public
shareholders, Forum ceased to be a controlling person of the
Fund. As of July [ ], 1996, the Trustees and officers of the
Trust in the aggregate owned less than one percent of the
outstanding shares of the Fund.
ADDITIONAL INFORMATION ABOUT THE TRUST
Currently, the Trust is divided into twenty-nine separate series
representing shares of the Fund and shares of Cash Investment
Fund, Ready Cash Investment Fund, U.S. Government Fund, Treasury
Fund, Municipal Money Market Fund, Income Fund, Total Return Bond
Fund, Tax-Free Income Fund, Arizona Tax-Free Fund, Colorado Tax-
Free Fund, Minnesota Tax-Free Fund, ValuGrowth Stock Fund, Small
Company Stock Fund, Contrarian 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,
<PAGE>
Growth Balanced Fund, Intermediate U.S. Government Fund,
Diversified Bond Fund, Stable 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 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, 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 fiscal year end of the Fund is ________. Financial statements
for the Fund's semi-annual period and fiscal year will be
distributed to shareholders of record. The Board in the future
may change the fiscal year end of the Fund.
<PAGE>
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.
50
47180160.CW3
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
Moody's Investors Service ("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
A-1
<PAGE>
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.
Standard and Poor's ("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
A-2
<PAGE>
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.
Fitch Investors Service, L.P. ("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.
A-3
<PAGE>
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.
A-4
<PAGE>
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
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.
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.
A-5
<PAGE>
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
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.
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-6
<PAGE>
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
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
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-3issues have a satisfactory
capacity for timely payment. They are, however, somewhat more
A-7
<PAGE>
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
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.
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.
A-8
47180160.CX3
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Included in the Prospectus:
Not applicable to this filing.
Included in the Statement of Additional Information:
Not applicable to this filing.
(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
as Exhibit 1 to PEA No. 35).
(2)* By-Laws of Registrant as now in effect (filed as Exhibit
2 to PEA No. 35).
(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 as Exhibit 4 to PEA
No. 35).
(5) (a)* 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 as Exhibit 5(a) to PEA No. 35).
C-1
<PAGE>
(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
Government Income Fund (formerly known as
Intermediate U.S. Government Fund), Managed Fixed
Income Fund, Stable Income Fund and Small Cap
Opportunities Fund.
(c)* Investment Sub-Advisory Agreement between
Registrant and Crestone Capital Management, Inc.
relating to Small Company Stock Fund (filed as
Exhibit 5(c) to PEA No. 35).
(d)* 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, Growth Balanced Fund and Small Cap
Opportunities Fund. Except for the addition of
Small Cap Opportunities Fund as a party to the
Sub-Advisory Agreement, the current Sub-Advisory
Agreement is substantially the same as that filed
as Exhibit 5(d) to PEA No. 35.
(6)* Distribution Agreement between Registrant and Forum
Financial Services, Inc. relating to each portfolio of
Registrant (filed as Exhibit 6 to PEA No. 35).
(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 as Exhibit
8(a) to PEA No. 35).
(b)* Transfer Agency Agreement to be between
Registrant and Norwest Bank Minnesota, N.A.
(filed as Exhibit 8(b) to PEA No. 35).
(9) (a)* Management Agreement between Registrant and Forum
Financial Services, Inc. relating to each
portfolio of Registrant (filed as Exhibit 9(a) to
PEA No. 35).
C-2
<PAGE>
(b)* Fund Accounting Agreement between Registrant and
Forum Financial Corp. (filed as Exhibit 9(b) to
PEA No. 35).
(c) Administration Services Agreement between
Registrant and Norwest Bank Minnesota, N.A.
relating to International Fund and Small Cap
Opportunities Fund. Except for the addition of
Small Cap Opportunities Fund as a party to the
Administration Services Agreement, the current
Administration Services Agreement is
substantially the same as that filed as Exhibit
9(c) to PEA No. 35, and is therefore omitted
pursuant to Rule 483(d)(2) under the 1933 Act.
(10) (a)* Opinion of Seward & Kissel (filed on December
31, 1986 as Exhibit 10(a) of PreEA No. 2).
(b)* Opinion of Seward & Kissel (filed as Exhibit
10(b) to PEA No. 35).
(11) Not applicable to this filing.
(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 No.
2).
(14)* Individual Retirement Account materials (filed on April
22, 1994 as Exhibit 14 to PEA No. 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
Government Income Fund (formerly known as Intermediate
U.S. Government Fund), Growth Equity Fund, Exchange
Shares of Ready Cash Investment Fund and Small Cap
Opportunities Fund. Except for the addition of Small
Cap Opportunities Fund to the Rule 12b-1 Plan (as
reflected on Appendix B), the current Rule 12b-1 Plan is
substantially the same as that filed as Exhibit 15 to
PEA No. 35, and is therefore omitted pursuant to Rule
483(d)(2) under the 1933 Act.
C-3
<PAGE>
(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
No. 23).
(17) Not Applicable.
(18)* Multiclass (Rule 18f-3) Plan adopted by Registrant
(filed as Exhibit 18 to PEA No. 35).
Other Exhibits
(A)* Power of Attorney of James C. Harris, Trustee of
Registrant (filed as Other Exhibit A to PEA No. 35).
(B)* Power of Attorney of Richard M. Leach, Trustee of
Registrant (filed as Other Exhibit B to PEA No. 35).
(C)* Power of Attorney of Robert C. Brown, Trustee of
Registrant (filed as Other Exhibit C to PEA No. 35).
(D)* Power of Attorney of Donald H. Burkhardt, Trustee of
Registrant (filed as Other Exhibit D to PEA No. 35).
(E)* Power of Attorney of John Y. Keffer, Trustee of
Registrant (filed as Other Exhibit E to PEA No. 35).
(F)* Power of Attorney of Donald C. Willeke, Trustee of
Registrant (filed as Other Exhibit F to PEA No. 35).
(G)* Power of Attorney of Timothy J. Penny, Trustee of
Registrant (filed as Other Exhibit G to PEA No. 35).
Item 25. Persons Controlled by or under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities as of June 30, 1996.
Number of
Title of Class of Unit of Beneficial Interest Record Holders
_____________________________________________ ______________
Cash Investment Fund 3,531
U.S. Government Fund 598
Treasury Fund 399
Municipal Money Market Fund
Investor Shares 642
Institutional Shares 281
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Ready Cash Investment Fund
Investor Shares 14,671
Institutional Shares 18
Exchange Class 9
Income Fund
A Shares 280
B Shares 242
I Shares 238
Total Return Bond Fund
A Shares 77
B Shares 220
I Shares 119
Colorado Tax-Free Fund
A Shares 446
B Shares 185
I Shares 7
Minnesota Tax-Free Fund
A Shares 483
B Shares 342
I Shares 33
Tax-Free Income Fund
A Shares 657
B Shares 217
I Shares 107
ValuGrowth Stock Fund
A Shares 1,240
B Shares 614
I Shares 291
Contrarian Stock Fund
A Shares 57
B Shares 93
I Shares 60
Small Company Stock Fund
A Shares 529
B Shares 567
I Shares 514
Diversified Equity Fund
A Shares 159
B Shares 268
I Shares 9
Growth Equity Fund
A Shares 154
B Shares 151
I Shares 8
Large Company Growth Fund
I Shares 6
Small Company Growth Fund
I Shares 7
International Fund
A Shares 158
B Shares 154
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I Shares 14
Income Equity Fund
A Shares 1,569
B Shares 1,907
I Shares 19
Index Fund
I Shares 7
Conservative Balanced Fund
I Shares 7
Moderate Balanced Fund
I Shares 7
Growth Balanced Fund
I Shares 7
Intermediate Government Income Fund
A Shares 611
B Shares 548
I Shares 19
Diversified Bond Fund
I Shares 8
Stable Income Fund
A Shares 97
B Shares 33
I Shares 14
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 Sub-
Advisory 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
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<PAGE>
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
provisions of the Investment Advisory Agreements, Investment Sub-
Advisory 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 - Adviser of the Fund" in each Statement of
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<PAGE>
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.
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
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<PAGE>
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
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.
C-9
<PAGE>
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, 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
C-10
<PAGE>
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. 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.
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<PAGE>
John A. Troiano, Managing Director. Mr. Troiano 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 Manager 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
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
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<PAGE>
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.
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.
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<PAGE>
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,
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 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
(c) Not Applicable.
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<PAGE>
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.
(i) Registrant undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the latter of the
effective date of Registrant's Securities Act of 1933
Registration Statement relating to the prospectuses offering
those shares or the commencement of operations; and
(ii) 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.
C-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant 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 7th day of August,
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 7th day of August, 1996.
Signatures Title
(a) Principal Executive Officer
By: /s/ John Y. Keffer President and Chairman
John Y. Keffer
(b) Principal Financial and Accounting Officer
By: /s/ Michael D. Martins Treasurer
Michael D. Martins
(c) A Majority of the Trustees
By: /s/ John Y. Keffer Trustee
John Y. Keffer
James C. Harris* Trustee
Richard M. Leach* Trustee
Robert C. Brown* Trustee
Donald H. Burkhardt* Trustee
John Y. Keffer* Trustee
Donald C. Willeke* Trustee
Timothy J. Penny* Trustee
By: /s/ John Y. Keffer
John Y. Keffer
Attorney in Fact*
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<PAGE>
SIGNATURES
On behalf of Schroder Capital Funds, being duly authorized, I
have duly caused this amendment to the Registration Statement of
Norwest Advantage Funds to be signed in the City of New York,
State of New York on the 7th day of August, 1996.
SCHRODER CAPITAL FUNDS
By: /s/ Laura E. Luckyn-Malone
Laura E. Luckyn-Malone
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 7th day of August, 1996.
Signatures Title
(a) Principal Executive Officer
/s/ Laura E. Luckyn-Malone President and
Laura E. Luckyn-Malone Director
(b) Principal Financial and
Accounting Officer
ROBERT JACKOWITZ* Treasurer
*By: /s/ Thomas G. Sheehan
Thomas G. Sheehan, Attorney-in-Fact
(c) Majority of the Trustees
/s/ Laura E. Luckyn-Malone Trustee
Laura E. Luckyn-Malone
PETER E. GUERNSEY* Trustee
RALPH E. HANSMANN* Trustee
JOHN J. HOWELL* Trustee
HERMANN C. SCHWAB* Trustee
MARK J. SMITH* Trustee
*By: /s/ Thomas G. Sheehan
Thomas G. Sheehan, Attorney-in-Fact
C-17
<PAGE>
INDEX TO EXHIBITS
Exhibit
5(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 Government Income
Fund (formerly known as Intermediate U.S. Government
Fund), Managed Fixed Income Fund, Stable Income Fund
and Small Cap Opportunities Fund.
C-18
47180160.CX3
<PAGE>
EXHIBIT 5 (b)
NORWEST FUNDS (ADVANTAGE)
INVESTMENT ADVISORY 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 "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.
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" 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.
<PAGE>
SECTION 2. INVESTMENT ADVISER; 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.
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 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.
(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
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paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(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.
(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
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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
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
(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
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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.
(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
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,
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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. 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
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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 business other than
that of an investment company registered under the Act without
the permission of the Adviser.
SECTION 12. 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.
(c) This Agreement shall be governed by and shall be
construed in accordance with the laws of the State of Delaware.
(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
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NORWEST FUNDS (ADVANTAGE)
INVESTMENT ADVISORY AGREEMENT
Appendix A
(as amended _________, 1996)
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%
Small Cap Opportunities Fund 0.925%
Stable Income Fund 0.30%
8
47180160.CW9
