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NORWEST ADVANTAGE FUNDS
(FORMERLY NORWEST FUNDS)
Supplement Dated December 27, 1995 to the Prospectus of Diversified Equity Fund,
Growth Equity Fund, Large Company Growth Fund, Small Company Growth Fund, Income
Equity Fund, Index Fund, Conservative Balanced Fund, Moderate Balanced Fund,
Growth Balanced Fund, Intermediate U.S. Government Fund, Managed Fixed Income
Fund and Stable Income Fund Dated June 1, 1995
Prospectus of International Fund, Dated June 1, 1995, as amended October 1, 1995
Prospectus of Small Company Stock Fund, Contrarian Stock Fund,
Total Return Bond Fund
and Ready Cash Investment Fund
Dated October 1, 1994, as amended October 1, 1995
1. ALL FUNDS
Effective October 1, 1995, Norwest Funds (the "Trust"), changed its name to
Norwest Advantage Funds and the name of each Fund's class of securities
formerly designated as advantage class ("Advantage Shares") or trust class
("Trust Shares") are redesignated as I class ("I Shares"). I shares are
offered solely to fiduciary, agency, and custodial clients of bank trust
departments, trust companies and their affiliates. Also effective October 1,
1995, the following individuals were elected Trustees: Donald C. Willeke,
Principal of the law firm of Willeke & Daniels, and Timothy J. Penny, Senior
Counselor to the public relations firm Himle-Horner.
2. SMALL COMPANY STOCK FUND, CONTRARIAN STOCK FUND, TOTAL RETURN BOND FUND AND
READY CASH INVESTMENT FUND - SUMMARY: EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table (which, with respect to these Funds, replaces
the "Annual Fund Operating Expenses" table on Page 6 of the Prospectus) is to
assist investors in understanding the expenses that an investor in shares of a
Fund will bear directly or indirectly. There are no transaction charges in
connection with purchases, redemptions and exchanges of shares of the Funds.
None of the Funds has adopted a Rule 12b-1 plan with respect to the Shares and,
accordingly, no Fund incurs distribution expenses with respect to the I Shares
or Institutional Shares.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets after
applicable fee waivers and expense reimbursements) (1):
TOTAL
INVESTMENT SHAREHOLDER OTHER OPERATING
ADVISORY FEES SERVICING EXPENSES(2) EXPENSES
------------- --------- ----------- --------
Contrarian Stock Fund 0.40% 0.25% 0.47% 1.12%
Small Company Stock Fund 0.00% 0.25% 0.27% 0.52%
Total Return Bond Fund 0.10% 0.25% 0.36% 0.71%
Ready Cash Investment Fund 0.37% 0.10% 0.01% 0.48%
(1) For a further description of the various expenses incurred in the operation
of the Funds, see "Management of the Funds." Expenses associated with other
classes of shares of the Funds differ from those of I Shares or Institutional
Shares listed in the table. The amounts of expenses for each Fund are based on
amounts incurred during the Funds' most recent fiscal year ended May 31, 1995.
Absent expense reimbursements and fee waivers, the Investment Advisory Fees,
Other Expenses, and Total Operating Expenses of each Fund would be,
respectively: Contrarian Stock Fund: 0.80%, 0.52%, 1.57%; Small Company Stock
Fund: 1.00%, 0.56%, 1.81%; Total Return Bond Fund: 0.50%, 0.42%, and 1.17%; and
Ready Cash Investment Fund: 0.38%, 0.17%, and 0.65%.
(2) Other Expenses for all Funds include custodial fees payable to Norwest at
an annual rate of up to 0.05% of each Fund's average daily net assets
attributable to I Shares or Institutional Shares, as applicable.
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EXAMPLE OF EXPENSES
Following is a hypothetical example (which, with respect to these Funds,
replaces the "Example of Expenses" table on Page 7 of the Prospectus) that
indicates the dollar amount of expenses that an investor would pay assuming a
$1,000 investment, a 5% annual return, reinvestment of all dividends and
distributions, and full redemption at the end of each period:
One Year Three Years Five Years Ten Years
------- ----------- ---------- ---------
Contrarian Stock Fund 11 36 62 136
Small Company Stock Fund 5 17 29 65
Total Return Bond Fund 7 23 40 88
Ready Cash Investment Fund 5 15 27 60
The example is based on the expenses listed in the "Annual Fund Operating
Expenses" table above. The 5% annual return is not a prediction 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.
3. SMALL COMPANY STOCK FUND, CONTRARIAN STOCK FUND, TOTAL RETURN BOND FUND AND
READY CASH INVESTMENT FUND - FINANCIAL HIGHLIGHTS
The following tables provide financial highlights for each Fund. This
information represents selected data for a single outstanding I Share or
Institutional Share, as applicable, of a Fund for the periods shown.
Information for the years ended May 31, 1994 and 1995 was audited by KPMG Peat
Marwick LLP, independent auditors. The Funds' (other than International Fund's)
financial statements for the fiscal year ended May 31, 1995 and independent
auditors' report thereon are contained in the Annual Report of the Funds and are
incorporated by reference into the SAI. Further information about each Fund's
performance is contained in the Annual Report, which may be obtained from the
Trust without charge. Information for the period ended April 30, 1995, for
International Fund is unaudited. International Fund's unaudited financial
statements for the semi-annual period ended April 30, 1995, are contained in the
Semi-Annual Report of International Fund and are incorporated by reference into
the SAI.
<TABLE>
<CAPTION>
CONTRARIAN STOCK FUND SMALL COMPANY STOCK FUND
--------------------- ------------------------
YEAR ENDED MAY 31 YEAR ENDED MAY 31
1995 1994(a) 1995 1994(a)
---- ------ ---- ------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share $ 9.71 $ 10.00 $ 9.80 10.00
Net Investment Income 0.11 0.07 0.12 0.08
Net Realized and Unrealized Gain (Loss)
on Investments 1.19 (0.29) 0.87 (0.20)
Dividends from Net Investment Income (0.11) (0.07) (0.12) (0.08)
Distributions from Net Realized Gains (0.003) -- (0.08) --
-------- ------- -------- -------
Ending Net Asset Value per Share $ 10.90 $ 9.71 $ 10.59 $ 9.80
-------- ------- -------- -------
-------- ------- -------- -------
Ratios to Average Net Assets:
Expenses (b) 1.12% 0.62%(c) 0.52% 0.20%(c)
Net Investment Income 0.91% 1.82%(c) 1.14% 2.03%(c)
Total Return 13.52% (5.35%)(c) 10.13% (2.93%)(c)
Portfolio Turnover Rate 30.32% 2.67% 68.09% 14.98%
Net Assets at the End of Period (000's Omitted) $ 45,832 $ 4,548 $ 54,240 $ 9,251
(a) Contrarian Stock Fund and Small Company Stock Fund commenced the offering
of I Shares (formerly Trust Shares) on December 31, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the
ratios of expenses to average net assets would have been:
Expenses: 1.57% 3.52%(c) 1.82% 4.33%(c)
(c) Annualized
</TABLE>
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<TABLE>
<CAPTION>
INTERNATIONAL FUND TOTAL RETURN BOND FUND READY CASH
INVESTMENT FUND
PERIOD ENDED
APRIL 30 YEAR ENDED MAY 31 YEAR ENDED MAY 31
1995(a) 1995 1994(a) 1995 1994(a)
------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C>
Beginning Net Asset Value per Share $ 17.28 $ 9.54 $ 10.00 $ 1.00 $ 1.00
Net Investment Income 0.01 0.67 0.27 0.049 0.013
Net Realized and Unrealized Gain (Loss)
on Investments (0.15) 0.19 (0.46) -- --
Dividends from Net Investment Income -- (0.67) (0.27) (0.049) (0.013)
Distributions from Net Realized Gains -- -- -- -- --
------- ------- ------- ------- -------
Ending Net Asset Value per Share $ 17.14 $ 9.73 $ 9.54 $ 1.00 $ 1.00
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios to Average Net Assets:
Expenses (b) 1.50%(c)(d) 0.71% 0.46%(c) 0.48% 0.43%(c)
Net Investment Income 0.08%(c) 7.04% 6.81%(c) 4.97% 3.12%(c)
Total Return (1.72%)(c) 9.43% (4.62%)(c) 4.98% 3.17%(c)
Portfolio Turnover Rate 21.25% 35.19% 37.50% -- --
Net Assets at the End of Period
(000's Omitted) $ 83,222 $ 96,199 $ 11,694 $ 506,243 $ 333,464
(a) International Fund commenced the offering of I Shares (formerly Advantage
Shares) on November 11, 1994. Total Return Bond Fund commenced the
offering of I Shares (formerly Trust Shares) on December 31, 1993. Ready
Cash Investment Fund commenced operations on January 20, 1988 and the
offering of Institutional Shares on January 4, 1994.
(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the
ratios of expenses to average net assets would have been:
Expenses: 1.63%(c)(d) 1.17% 2.10%(c) 0.73% 0.81%(c)
(c) Annualized.
(d) Includes expenses allocated from International Portfolio of Core Trust
(Delaware) of 0.80%, net of waivers of 0.08%, and reflects International
Fund fee waivers of 0.05%.
</TABLE>
4. DIVERSIFIED EQUITY FUND, GROWTH EQUITY FUND, CONSERVATIVE BALANCED FUND,
MODERATE BALANCED FUND AND GROWTH BALANCED FUND
Diversified Equity Fund, Growth Equity Fund, Conservative Balanced Fund,
Moderate Balanced Fund and Growth Balanced Fund (each a "Blended Fund" and
collectively the "Blended Funds") currently invest the portion of their assets
that are managed in the Small Company investment style in Small Company
Portfolio, a series of Core Trust (Delaware). The percentage of the assets of
each Blended Fund that is invested in this investment style is listed on pages
14, 15, 21, and 22 of the Prospectus.
In selecting securities allocated to the Small Company investment style, the
Adviser currently uses two investment styles - those of Small Company Stock Fund
and Small Company Growth Fund - as described on pages 16 and 17 of the
Prospectus. Effective December 11, 1995, the Adviser also will use a "small
company value" investment style (the "Small Company Value investment style").
Upon complete implementation of this policy, assets allocated to the Small
Company investment style will be invested 1/3 in the Small Company Value
investment style, 1/3 in the Small Company Growth Fund style and 1/3 in the
Small Company Stock Fund style. The Small Company investment style is expected
to be allocated completely in this manner by June 1, 1996. Small Company
investment style may in the future allocate its assets to additional investment
styles.
In selecting portfolio investments, the Small Company Value investment style
focuses on securities that are conservatively valued in the marketplace relative
to their underlying fundamentals. These securities generally have lower price-
to-earning ratios, lower price-to-book ratios, and higher yields than the
average security in a universe of comparable companies. In following a policy
that utilizes the Small Company Value investment style as a third investment
style, the investment objective, other investment policies, and risk
considerations of Small Company investment style will not change. Risks
pertaining to investment in small companies are described on page 17 of the
Prospectus.
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5. INDEX FUND, DIVERSIFIED EQUITY FUND, CONSERVATIVE BALANCED FUND, MODERATE
BALANCED FUND AND GROWTH BALANCED FUND
Effective December 27, 1995, Index Fund may invest in index futures contracts in
pursuing its investment objective of duplicating the return of the Standard &
Poor's 500 Composite Stock Index (the "S&P 500 Index").
Index futures contracts are bilateral agreements pursuant to which two parties
agree to take or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the index value at the close of trading of
the contract and the price at which the futures contract is originally struck.
As no physical delivery of the fixed income or equity securities comprising the
index is made, a purchaser of index futures contracts may participate in the
performance of the securities contained in the index without the required
capital commitment. INDEX FUTURES CONTRACTS, ALONG WITH THEIR ATTENDANT RISKS,
ARE DESCRIBED ON PAGES 65 AND 66 OF THE PROSPECTUS.
In seeking to duplicate the return of the S&P 500 Index, Index Fund invests in
the common stocks contained in the S&P 500 Index in approximately the same
proportions as these securities are represented in that index. Although the
Fund seeks to invest in these securities to fullest extent practicable, the Fund
may hold cash or cash equivalents to reduce transaction costs and meet
shareholder redemption requests. Such a cash position may serve to hinder the
Fund's ability to duplicate the return of the index because that portion of the
Fund's investment portfolio remains uncommitted toward the Fund's investment
objective. The Fund's limited use of index futures is designed to nullify the
effect on return of the portfolio's cash position, allowing the portfolio to
simulate full investment in the index while retaining a cash balance for fund
management purposes.
Also effective December 27, 1995, Diversified Equity Fund, Conservative Balanced
Fund, Moderate Balanced Fund and Growth Balanced Fund may engage indirectly in
this investment practice to the extent each Fund invests a portion of its assets
in the Index Fund investment style through investment in Index Portfolio, a
series of Core Trust (Delaware). The percentage of the assets of each of these
Funds that is invested in the Index Fund investment style is listed on pages 14,
21, and 22 of the Prospectus.
6. INTERMEDIATE U.S. GOVERNMENT FUND
Effective October 1, 1995, Ms. Marjorie H. Grace assumed primary responsibility
for the day to day investment management of the Fund. Ms. Grace has been a Vice
President of Norwest Bank Minnesota, N.A. since 1992. Prior to assuming this
responsibility, Ms. Grace was a portfolio manager of Norwest Bank from 1992-
1993; an Institutional Salesperson with Norwest Investment Services, Inc. from
1991-1992; a portfolio manager with United Banks of Colorado from 1989-1991; and
Vice President and portfolio manager with Colombia Savings and Loan from 1987-
1989. Over the past few months, Ms. Grace has worked closely with her
predecessor to assure a smooth transition of management responsibilities.
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