NORWEST ADVANTAGE FUNDS, 485BPOS, 1997-06-02

NORWEST ADVANTAGE FUNDS
485BPOS, 1997-06-02

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<PAGE>

As filed with the Securities and Exchange Commission on June 2, 1997
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. 42

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 44

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

NORWEST FUNDS
(Formerly "Norwest Advantage Funds" and "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
- --------------------------------------------------------------------------------

Catherine S. Wooledge, 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)
- -----
X on June 3, 1997 pursuant to Rule 485, paragraph (b)
- -----
60 days after filing pursuant to Rule 485, paragraph (a)(i)
- -----
on [ ] pursuant to Rule 485, paragraph (a)(i)
- -----
75 days after filing pursuant to Rule 485, paragraph (a)(ii)
- -----
on [ ] pursuant to Rule 485, paragraph (a)(ii)
- -----
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
- -----

Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. Registrant filed
a Rule 24f-2 notice for its various portfolios with a May 31 fiscal year end on
July 26, 1996.
CASH INVESTMENT FUND, READY CASH INVESTMENT FUND, STABLE INCOME FUND,
TOTAL RETURN BOND FUND, INDEX FUND, INCOME EQUITY FUND, LARGE COMPANY
GROWTH FUND, SMALL COMPANY STOCK FUND, SMALL COMPANY GROWTH FUND,
SMALL CAP OPPORTUNITIES FUND AND INTERNATIONAL FUND OF REGISTRANT ARE
CURRENTLY STRUCTURED AS FEEDER FUNDS. THIS AMENDMENT INCLUDES A MANUALLY
EXECUTED SIGNATURE PAGE FOR THE REGISTRANTS WHOSE PORTFOLIOS ARE MASTER FUNDS:
SCHRODER CAPITAL FUNDS AND CORE TRUST (DELAWARE).

<PAGE>

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

PART A
(Prospectus offering Shares of Cash Investment Fund, U.S. Government
Fund and Treasury Fund, Institutional Shares and Investor Shares
of Municipal Money Market Fund, and Investor Shares of Ready
Cash Investment 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
Information Financial Highlights;
Other Information -
Performance Information

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

Item 5. Management of the Fund Prospectus Summary; Management

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

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

Item 7. Purchase of Securities
Being Offered How to Buy Shares; Management -
Management, Administration and
Distribution Services

Item 8. Redemption or
Repurchase How to Sell Shares

Item 9. Pending Legal
Proceedings Not Applicable

<PAGE>

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

PART A
(Prospectus offering A Shares and B Shares)

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
Information Financial Highlights; Other
Information - Performance Information

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

Item 5. Management of the Fund Prospectus Summary; Management

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

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

Item 7. Purchase of Securities
Being Offered How To Buy Shares; Management,
Administration and Distribution
Services

Item 8. Redemption or
Repurchase How To Sell Shares

Item 9. Pending Legal
Proceedings Not Applicable

<PAGE>

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

PART A
(Any Prospectus offering J Shares)

Form N-1A
Item No. (Caption) Location in Prospectus (Caption)
- --------- ---------------------- --------------------------------

Item 1. Cover Page Cover Page

Item 2. Synopsis Summary

Item 3. Condensed Financial
Information Financial Highlights; Other
Information - Performance Information
Item 4. General Description
of Registrant Summary; Investment Objectives and
Policies; Additional Investment
Policies and Risk Considerations; and
Other Information - The Trust and Its
Shares; The Trust and Its Shares -
Core Trust Structure

Item 5. Management of the Fund Summary; Management

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

Item 6. Capital Stock and
Other Securities Cover; Dividends, Distributions and
Tax Matters; Other Information - The
Trust and Its Shares; The Trust and
Its Shares - Core Trust Structure

Item 7. Purchase of Securities
Being Offered Purchases and Redemptions of Shares;
Management, Administration and
Distribution Services

Item 8. Redemption or
Repurchase Purchases and Redemptions of Shares

Item 9. Pending Legal
Proceedings Not Applicable

<PAGE>

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

PART A
(Prospectus offering Exchange Shares)

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
Information Financial Highlights; Other
Information - Performance Information

Item 4. General Description of
Registrant Prospectus Summary; Investment
Objective and Policies; Additional
Investment Policies; Other
Information - The Trust and Its
Shares

Item 5. Management of the Fund Prospectus Summary; Management

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

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

Item 7. Purchase of Securities
Being Offered Purchases of Shares; Management,
Administration and Distribution
Services

Item 8. Redemption or
Repurchase Redemptions of Shares

Item 9. Pending Legal
Proceedings Not Applicable

<PAGE>

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

PART B

Form N-1A Location in Statement of
Item No (Caption) Additional Information (Caption)
- --------- ---------------------- --------------------------------

Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information
and History Prospectus

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

Item 14. Management of the Fund Management; Additional Information
about the Trust and the Shareholders
of the Funds

Item 15. Control Persons and
Principal Holders of
Securities Additional Information about the
Trust; Shareholdings

Item 16. Investment Advisory
and Other Services Management

Item 17. Brokerage Allocation
and Other Practices Portfolio Transactions

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

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

Item 20. Tax Status Taxation

Item 21. Underwriters Management - Administration and
Distribution

Item 22. Calculation of
Performance Data Performance and Advertising Data

Item 23 Financial Statements Other Information - Financial
Statements
<PAGE>

STOCK FUNDS
- --------------------------------------------------------------------------------

PROSPECTUS

JUNE 1, 1997

INCOME EQUITY FUND
---------------
VALUGROWTH-SM- STOCK FUND
---------------
DIVERSIFIED EQUITY FUND
---------------
GROWTH EQUITY FUND
---------------
SMALL COMPANY STOCK FUND
---------------
SMALL CAP OPPORTUNITIES FUND
---------------
INTERNATIONAL FUND

[LOGO]

NOT FDIC INSURED
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<C> <S> <C> <C>
TABLE OF CONTENTS

1. PROSPECTUS SUMMARY......................... 2
2
Highlights of the Funds....................
8
Expense Information........................
2. FINANCIAL HIGHLIGHTS....................... 12
3. INVESTMENT OBJECTIVES AND POLICIES......... 26
26
Income Equity Fund.........................
26
ValuGrowth Stock Fund......................
27
Diversified Equity Fund....................
28
Growth Equity Fund.........................
29
Core Portfolio Descriptions................
32
Small Company Stock Fund...................
33
Small Cap Opportunities Fund...............
35
International Fund.........................
37
Additional Investment Policies and Risk
Considerations.............................
4. MANAGEMENT................................. 45
45
Investment Advisory Services...............
50
Management, Administration and Distribution
Services...................................
52
Shareholding Servicing and Custody.........
52
Expenses of the Funds......................
5. CHOOSING A SHARE CLASS..................... 54
54
A Shares...................................
57
B Shares...................................
6. HOW TO BUY SHARES.......................... 61
61
Minimum Investment.........................
61
Purchase Procedures........................
63
Account Application........................
63
General Information........................
7. HOW TO SELL SHARES......................... 64
64
General Information........................
64
Redemption Procedures......................
65
Other Redemption Matters...................
8. OTHER SHAREHOLDER SERVICES................. 67
67
Exchanges..................................
68
Automatic Investment Plan..................
69
Individual Retirement Accounts.............
69
Automatic Withdrawal Plan..................
69
Reopening Accounts.........................
9. DIVIDENDS AND TAX MATTERS.................. 70
70
Dividends..................................
70
Tax Matters................................
10. OTHER INFORMATION.......................... 72
72
Banking Law Matters........................
72
Determination of Net Asset Value...........
73
Performance Information....................
73
The Trust and Its Shares...................
75
Core and Gateway Structure.................
</TABLE>
<PAGE>
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- --------------------------------------------------------------------------------

JUNE 1, 1997

This Prospectus offers A Shares and B Shares of Income Equity Fund,
ValuGrowth-SM- Stock Fund, Diversified Equity Fund, Growth Equity Fund, Small
Company Stock Fund, Small Cap Opportunities Fund and International Fund (each a
"Fund" and collectively the "Funds"). The Funds are separate diversified equity
portfolios of NORWEST FUNDS (the "Trust"), which is a registered, open-end,
management investment company.

INCOME EQUITY FUND, SMALL COMPANY STOCK FUND, SMALL CAP OPPORTUNITIES FUND and
INTERNATIONAL FUND each seeks to achieve its investment objective by investing
all of its investable assets in a separate portfolio of another registered,
open-end, management investment company with the same investment objective. See
"Prospectus Summary" and "Other Information - Core and
Gateway-Registered Trademark- Structure."

DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND each seeks to achieve its
investment objective by investing in various equity portfolios of another
registered, open-end, management investment company, each of which invests using
a different investment style. See "Prospectus Summary" and "Other Information -
Core and Gateway Structure."

VALUGROWTH STOCK FUND seeks to achieve its investment objective by investing
directly in portfolio securities.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission (the "SEC") a Statement of
Additional Information ("SAI") with respect to each Fund dated June 1, 1997, as
may be further amended from time to time, which is available for reference on
the SEC's Web Site (http://www.sec.gov) and which contains more detailed
information about the Trust and each of the Funds and is incorporated into this
Prospectus by reference. An investor may obtain a copy of the SAI without charge
by contacting the Trust's distributor, Forum Financial Services, Inc., at Two
Portland Square, Portland, Maine 04101 or by calling (207) 879-0001. Investors
should read this Prospectus and retain it for future reference.

NORWEST FUNDS IS A FAMILY OF 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.

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.

1
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS.

INVESTMENT OBJECTIVES AND POLICIES

INCOME EQUITY FUND seeks to provide long-term capital appreciation consistent
with above-average dividend income. This objective is pursued by investing
primarily in the common stock of large, high-quality domestic companies that
have above-average return potential and pay current dividends.

VALUGROWTH STOCK FUND seeks to provide long-term capital appreciation. This
objective is pursued by investing in a diversified portfolio of common stock
and securities convertible into common stock that, in the view of the Fund's
investment adviser, possess above-average growth prospects and appear to be
undervalued.

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

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

SMALL COMPANY STOCK FUND seeks long-term capital appreciation. This objective
is pursued by investing primarily in the common stock of small- and medium-size
domestic companies that have a market capitalization well below that of the
average company in the Standard & Poor's 500 Composite Stock Price Index.

SMALL CAP OPPORTUNITIES FUND seeks capital appreciation. Current income will be
incidental to the objective of capital appreciation. This objective is pursued
by investing 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.

INTERNATIONAL FUND seeks long-term capital appreciation. This objective is
pursued by investing, in high quality companies based outside the United
States.

FUND STRUCTURES

INCOME EQUITY FUND, SMALL COMPANY STOCK FUND, SMALL CAP OPPORTUNITIES FUND
and INTERNATIONAL FUND each seeks to achieve its investment objective by
investing all of its investable assets in a separate portfolio (each a "Core
Portfolio") of a registered, open-end, management investment company (each

2
<PAGE>

a "Core Trust") that has the same investment objective and substantially
similar investment policies as the Fund. Accordingly, the investment
experience of each of these Funds will correspond directly with the
investment experience of its respective Core Portfolio. See "Other
Information - Core and Gateway Structure." The Core Portfolios in which
they invest are:

FUND CORE PORTFOLIO
- ---- --------------
Income Equity Fund Income Equity Portfolio
Small Company Stock Fund Small Company Stock Portfolio
Small Cap Opportunities Fund Schroder U.S. Smaller Companies Portfolio
International Fund International Portfolio

DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND each seeks to achieve its
investment objective by investing all of its investable assets in various
portfolios (each a "Core Portfolio") of two registered, open-end, management
investment companies (each a "Core Trust"). Each Core Portfolio invests using
a different investment objective and a different investment style. See
"Other Information - Core and Gateway Structure." The Funds and the Core
Portfolios in which they currently invest are:

FUND CORE PORTFOLIOS
- ---- ---------------
Diversified Equity Fund Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Index Portfolio
Income Equity Portfolio
Large Company Growth Portfolio
International Portfolio

Growth Equity Fund Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
International Portfolio

VALUGROWTH STOCK FUND seeks to achieve its investment objective by investing
directly in portfolio securities.

INVESTMENT ADVISERS

Norwest Bank serves as transfer agent, dividend disbursing agent and
custodian of the Trust, serves as the custodian of each Core Portfolio
other than

3
<PAGE>

Schroder U.S. Smaller Companies Portfolio and provides administrative
services to Small Cap Opportunities Fund and International Fund. See
"Management - Shareholder Servicing and Custody" and "- Management,
Administration and Distribution Services."

Each Fund (other than ValuGrowth Stock Fund) incurs investment advisory fees
indirectly through the investment advisory fees paid by the Core Portfolios;
Norwest is paid an investment advisory fee directly by ValuGrowth Stock Fund.
In addition, Diversified Equity Fund and Growth Equity Fund each pay Norwest
a fee for Norwest's services with respect to the allocation of the Fund's
assets to and among the Fund's respective Core Portfolios ("Asset Allocation
Services").

CRESTONE CAPITAL MANAGEMENT, INC. ("Crestone"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Small Company Stock
Fund and of Small Company Stock Portfolio and is an investment subadviser of
Diversified Equity Fund and Growth Equity Fund. Crestone provides investment
advice regarding companies with small capitalization to various clients,
including institutional investors. See "Management - Investment Advisory
Services."

PEREGRINE CAPITAL MANAGEMENT, INC. ("Peregrine"), an investment advisory
subsidiary of Norwest, is the investment subadviser of Small Company Growth
Fund, Small Company Growth Portfolio, Large Company Growth Portfolio and
Small Company Value Portfolio and is an investment subadviser of Diversified
Equity Fund and Growth Equity Fund. Peregrine provides investment
advisory services to corporate and public pension plans, profit sharing
plans, savings-investment plans and 401(k) plans. See "Management - Investment
Advisory Services."

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. ("Schroder") is the investment
adviser of Schroder U.S. Smaller Companies Portfolio and International
Portfolio and is the investment subadviser of Small Cap Opportunities Fund
and International Fund. It is also an investment subadviser of Diversified
Equity Fund and Growth Equity Fund. Schroder specializes in providing
international investment advice to various clients and, as of December 31,
1996, Schroder and its affiliates managed more than $150 billion in assets
worldwide. See "Management - Investment Advisory Services."

Norwest, Crestone, Peregrine and Schroder (or Norwest and a particular
investment subadviser) are sometimes referred to collectively as the "Advisers."

FUND MANAGEMENT AND ADMINISTRATION

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. Forum Administrative Services, Limited
Liability Company ("FAS") provides administrative services for the Funds and
also serves as administrator of each Core Portfolio, except Schroder U.S.
Smaller Companies Portfolio, for which Forum serves as sub-

4
<PAGE>

administrator. Schroder Fund Advisors Inc. serves as administrator of
Schroder U.S. Smaller Companies Portfolio. See "Management - Management,
Administration and Distribution Services."

SHARES OF THE FUNDS

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

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

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

The choice of A Shares or B Shares permits each investor to purchase those
shares that the investor believes to be most beneficial given the amount
purchased, the length of time the investor expects to hold the shares and other
circumstances. A Shares will normally be more beneficial to an investor who
qualifies for reduced initial sales charges. See "Choosing a Share Class."

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

HOW TO BUY AND SELL SHARES

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

EXCHANGES

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

5
<PAGE>

SHAREHOLDER FEATURES

Each Fund offers an Automatic Investment Plan, Automatic Withdrawal Plan and
Directed Dividend Option. Purchases of A Shares may be eligible for Rights of
Accumulation, Cumulative Quantity Discounts or a Reinstatement Privilege. See
"Other Shareholder Services" and "Choosing a Share Class."

DIVIDENDS AND DISTRIBUTIONS

Dividends of the net investment income of Income Equity Fund, ValuGrowth Stock
Fund and Small Company Stock Fund are declared and paid quarterly. Dividends of
the net investment income of Diversified Equity Fund, Growth Equity Fund, Small
Cap Opportunities Fund and International Fund are declared and paid annually.
Each Fund's net capital gain, if any, is distributed annually. All dividends
and distributions are reinvested in additional Fund shares unless the
shareholder elects to have them paid in cash. See "Dividends and Tax Matters."

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

There can be no assurance that any Fund will achieve its investment objective,
and each Fund's net asset value and total return will fluctuate based upon
changes in the value of its portfolio securities. Upon redemption, an
investment in a Fund may be worth more or less than its original value. All of
the Funds invest primarily in equity securities and are subject to the general
risks of investing in the stock market.

All investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as the potential
use of leverage by certain Funds through borrowings, securities lending and
other investment techniques. See "Investment Objectives and Policies -
Additional Investment Policies and Risk Considerations." As noted under
"Financial Highlights," the portfolio turnover rate for certain Funds may from
time to time be high, resulting in increased brokerage costs or short-term
capital gains or losses. See "Investment Objectives and Policies - Additional
Investment Policies and Risk Considerations - Portfolio Transactions."

The policy of investing in securities of smaller companies that is employed by
SMALL COMPANY STOCK FUND and SMALL CAP OPPORTUNITIES FUND and by DIVERSIFIED
EQUITY FUND and GROWTH EQUITY FUND, which invest a portion of their assets in
these securities, entails certain risks in addition to those normally associated
with investments in equity securities. These risks include the fact that the
issuer may have limited product lines, access to financial markets and
management depth. See "Investment Objectives and Policies - Small Company Stock
Fund (or Small Cap Opportunities Fund) - Additional Investment Considerations
and Risk Factors." SMALL COMPANY STOCK FUND and SMALL CAP OPPORTUNITIES FUND are
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.

6
<PAGE>

The policy of investing in foreign issuers employed by INTERNATIONAL FUND and
by DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND, which invest a portion of
their assets in these securities, entails certain risks in addition to those
normally associated with investments in equity securities. These risks
include the risks of foreign political and economic instability, adverse
movements in foreign exchange rates, the imposition or tightening of exchange
controls or other limitations on repatriation of foreign capital, and changes
in foreign governmental attitudes towards private investment, possibly
leading to nationalization, increased taxation or confiscation of foreign
investors' assets. See "Investment Objectives and Policies - International
Fund - Foreign Investments" INTERNATIONAL 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 foreign companies.

By pooling their assets in one or more Core Portfolios with other
institutional investors, INCOME EQUITY FUND, DIVERSIFIED EQUITY FUND, GROWTH
EQUITY FUND, SMALL COMPANY STOCK FUND, SMALL CAP OPPORTUNITIES FUND and
INTERNATIONAL FUND each may be able to achieve certain efficiencies; and
economies of scale and enhanced portfolio diversification. Nonetheless,
these investments could have adverse effects on the Funds which investors
should consider. Investment decisions are made by the portfolio managers of
each Core Portfolio independently. Therefore the portfolio manager of one
Core Portfolio in which a Fund invests may purchase shares of the same issuer
whose shares are being sold by the portfolio manager of another Core
Portfolio in which the Fund invests. This could result in an indirect expense
to the Fund without accomplishing any investment purpose. See "Other
Information - Core and Gateway Structure."

7
<PAGE>

EXPENSE INFORMATION

The purpose of the Shareholder Transaction Expenses and Annual Fund Operating
Expenses tables in this section is to assist investors in understanding the
expenses that an investor in Shares of a Fund will bear directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES
(APPLICABLE TO EACH FUND)

A SHARES B SHARES
-------- --------
Maximum sales charge imposed on purchases
(as a percentage of public offering price) . . . . . 4.5%(1) Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase
price or redemption proceeds). . . . . . . . . . . . Zero(2) 4.0%(1)(3)
Exchange Fee . . . . . . . . . . . . . . . . . . . . . Zero Zero

ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER APPLICABLE FEE WAIVERS AND
REIMBURSEMENTS)

<TABLE>
<CAPTION>
INCOME VALUGROWTH DIVERSIFIED
EQUITY FUND STOCK FUND EQUITY FUND(7)
---------------- ---------------- ----------------
A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees (after fee waivers)(5). . . . . . N/A N/A 0.79% 0.79% 0.17% 0.17%
Rule 12b-1 Fees (after fee waivers)(6) . . . . . . . . . . None 0.75% None 0.63% None 0.75%
Other Expenses (after reimbursements). . . . . . . . . . . 0.34% 0.34% 0.41% 0.53% 0.32% 0.32%
Investment Advisory Fees -- Core Portfolio(s)(5) . . . . . 0.50% 0.50% N/A N/A 0.48% 0.48%
Other Expenses -- Core Portfolio(s)
(after reimbursements) . . . . . . . . . . . . . . . . . 0.01% 0.01% N/A N/A 0.03% 0.03%
---------------- ---------------- ----------------
Total Operating Expenses(8). . . . . . . . . . . . . . . . 0.85% 1.60% 1.20% 1.95% 1.00% 1.75%

<CAPTION>
SMALL CAP
GROWTH SMALL COMPANY OPPORTUNITIES INTERNATIONAL
EQUITY FUND(7) STOCK FUND(7) FUND FUND
---------------- ---------------- ---------------- ----------------
A B A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees (after fee waivers)(5). . . . 0.22% 0.22% N/A N/A N/A N/A N/A N/A
Rule 12b-1 Fees (after fee waivers)(6) . . . . . . . . None 0.75% None 0.75% None 0.75% None 0.75%
Other Expenses (after reimbursements). . . . . . . . . 0.29% 0.29% 0.26% 0.26% 0.40% 0.40% 0.95% 0.95%
Investment Advisory Fees -- Core Portfolio(s)
(after fee waivers)(5) . . . . . . . . . . . . . . . 0.68% 0.68% 0.90% 0.90% 0.53% 0.53% 0.45% 0.45%
Other Expenses -- Core Portfolio(s)
(after reimbursements) . . . . . . . . . . . . . . . 0.06% 0.06% 0.04% 0.04% 0.32% 0.32% 0.10% 0.10%
---------------- ---------------- ---------------- ----------------
Total Operating Expenses(8). . . . . . . . . . . . . . 1.25% 2.00% 1.20% 1.95% 1.25% 2.00% 1.50% 2.25%
</TABLE>

(1) Sales charge waivers and reduced sales charge plans are
available for A and B Shares. See "Choosing a Share Class."

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

(3) The maximum 4.0% deferred sales charge on B Shares applies
to redemptions during the first year after purchase; the
charge declines thereafter, and is 3.0% during the second
and third years, 2.0% during the fourth and fifth years, 1.0%
during the sixth year and zero the following year.

(4) For a further description of the various expenses associated
with investing in the Funds, see "Management." Expenses
associated with I Shares of a Fund differ from those listed
in the table. The table is based on expenses incurred during
the Funds' most recent fiscal year ended May 31, 1996, except
that the expenses for Small Cap Opportunities Fund are based
on estimated expenses for the Fund's first fiscal year of
operations ended May 31, 1997. Expenses are restated to
reflect current fees. To the extent Income Equity Fund,
Diversified Equity Fund, Growth Equity Fund, Small Company
Stock Fund, Small Cap Opportunities Fund and International
Fund invest all or a portion of their assets in various
Core Portfolios (each of which bears expenses as noted under
"Investment Advisory Fees - Core Portfolio(s)" and "Other
Expenses - Core Portfolio(s)"), these Funds indirectly bear
their pro rata portion of the expenses of each Core Portfolio
in which they invest.

(5) For Diversified Equity Fund and Growth Equity Fund, "Investment
Advisory Fees" reflects the fee for Asset Allocation Services.
For Income Equity Fund, Diversified Equity Fund, Growth Equity
Fund, Small Company Stock Fund, Small Cap Opportunities Fund and
International Fund, "Investment Advisory Fees - Core Portfolio(s)"
reflects the investment advisory fees incurred by the Core
Portfolio(s) in which the Fund invests. Absent estimated waivers,
the "Investment Advisory Fee" for ValuGrowth Stock Fund, Growth
Equity Fund and Diversified Equity Fund would be 0.80%, 0.25%
and 0.25%, respectively, and the "Investment Advisory

8 9
<PAGE>

Fees - Core Portfolio(s)" for Small Cap Opportunities Fund would be
0.60%. The "Investment Advisory Fees -- Core Portfolios" paid by each of
Diversified Equity Fund and Growth Equity Fund will vary based on the
percentage of the Fund's assets invested in each Core Portfolio.

(6) Absent fee waivers, "Rule 12b-1 Fees" would be 1.00% for B Shares of each
Fund. Long-term shareholders of B Shares may pay Rule 12b-1 Fees and
contingent deferred sales charges totaling in the aggregate more than the
economic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc.

(7) Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Small Company Stock Fund's total combined
operating expenses through May 31, 1998 at or below 1.20% for A Shares
and 1.95% for B Shares. In addition, Norwest and Forum have agreed to
waive their respective fees through May 31, 1999 in order to ensure that
the fees borne by each of Diversified Equity Fund and Growth Equity Fund
for investment advisory, administrative and management services would not
exceed, in the aggregate, 0.75% and 1.00%, respectively. See
"Management -- Expenses of the Funds."

(8) Absent estimated expense reimbursements and fee waivers, the expenses of A
Shares of Income Equity Fund, ValuGrowth Stock Fund, Diversified Equity
Fund, Growth Equity Fund, Small Company Stock Fund, Small Cap Opportunities
Fund and International Fund would be: "Other Expenses," 1.34%, 0.63%,
0.42%, 0.44%, 0.57%, 0.98% and 1.89%, respectively; "Other Expenses -- Core
Portfolios," 0.11%, N/A, 0.13%, 0.16%, 0.14%, 0.71% and 0.20%,
respectively; and "Total Operating Expenses," 1.95%, 1.43%, 1.29%, 1.53%,
1.62%, 2.29% and 2.55%, respectively." Absent estimated expense
reimbursements and fee waivers, the expenses of B Shares of Income Equity
Fund, ValuGrowth Stock Fund, Diversified Equity Fund, Growth Equity Fund,
Small Company Stock Fund, Small Cap Opportunities Fund and International
Fund would be: "Other Expenses," 1.40%, 0.76%, 0.67%, 0.76%, 0.88%, 0.98%
and 1.49%, respectively; "Other Expenses -- Core Portfolios," 0.11%, N/A,
0.13%, 0.16%, 0.14% and 0.71 and 0.20%, respectively; and "Total
Operating Expenses," 3.01%, 2.56%, 2.54%, 2.89%, 2.93%, 3.29% and 3.15%,
respectively." "Other Expenses" includes transfer agency fees payable
to Norwest Bank of 0.25% and, in the case of Small Cap Opportunities Fund
and International Fund, administration fees payable to Norwest Bank of
0.25%. Except as otherwise noted, expense reimbursements and fee waivers
are voluntary and may be reduced or eliminated at any time.

EXAMPLE

The following is a Hypothetical Expense Example indicates the dollar amount
of expenses that an investor would pay, assuming a $1,000 investment in a
Fund's Shares, the expenses listed in the "Annual Fund Operating Expenses"
table, a 5% annual return and reinvestment of all dividends and
distributions. The example also assumes deduction of the maximum initial
sales charge for A Shares, deduction of the contingent deferred sales charge
for B Shares applicable to a redemption at the end of the period and the
conversion of B Shares to A Shares at the end of seven years. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN INDICATED.
The 5% annual return is not predictive of and does not represent the Funds'
projected returns; rather, it is required by government regulation.

10
<PAGE>

HYPOTHETICAL EXPENSE EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------
<S> <C> <C> <C> <C>
INCOME EQUITY FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 53 71 90 145
B Shares
Assuming redemption at the end of the period . . . 56 80 107 190
Assuming no redemption . . . . . . . . . . . . . . 16 50 87 190
----------------------------------------------------
VALUGROWTH STOCK FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 57 81 108 184
B Shares
Assuming redemption at the end of the period . . . 60 91 125 227
Assuming no redemption . . . . . . . . . . . . . . 20 61 105 227
----------------------------------------------------
DIVERSIFIED EQUITY FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 55 75 98 162
B Shares
Assuming redemption at the end of the period . . . 58 85 115 206
Assuming no redemption . . . . . . . . . . . . . . 18 55 95 206
----------------------------------------------------
GROWTH EQUITY FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 57 83 111 189
B Shares
Assuming redemption at the end of the period . . . 60 93 128 233
Assuming no redemption . . . . . . . . . . . . . . 20 63 108 233
----------------------------------------------------
SMALL COMPANY STOCK FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 57 81 108 184
B Shares
Assuming redemption at the end of the period . . . 60 91 125 227
Assuming no redemption . . . . . . . . . . . . . . 20 61 105 227
----------------------------------------------------
SMALL CAP OPPORTUNITIES FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 57 83 111 189
B Shares. . . . . . . . . . . . . . . . . . . . . . .
Assuming redemption at the end of the period . . . 60 93 128 233
Assuming no redemption . . . . . . . . . . . . . . 20 63 108 233
----------------------------------------------------
INTERNATIONAL FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 60 90 123 216
B Shares
Assuming redemption at the end of the period . . . 63 100 140 258
Assuming no redemption . . . . . . . . . . . . . . 23 70 120 258
</TABLE>

11
<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for the Funds. This
information represents selected data for a single outstanding A Share and B
Share of each Fund for the periods shown. Information for the period ended
November 30, 1996 is unaudited and information for the years ended May 31, 1994,
1995 and 1996 and the period ended November 30, 1995 were audited by KPMG Peat
Marwick LLP, independent auditors. Information for prior periods was audited by
other independent auditors. Each Fund's financial statements for the period
ended November 30, 1996 are contained in the Fund's Semi-Annual report. Each
Fund's financial statements for the fiscal year ended May 31, 1996, and
independent auditors' report thereon are contained in the Fund's Annual Report.
These financial statements are incorporated by reference into the SAI. Further
information about each Fund's performance is contained in the Fund's Semi-Annual
and Annual Reports, which may be obtained from the Trust without charge.

INCOME EQUITY FUND

<TABLE>
<CAPTION>
A SHARES B SHARES
--------------------------------- ---------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
---------------- --------------- ----------------- --------------
1996* 1996(a) 1996* 1996(a)
---------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . . . . . . . . . $27.56 $26.94 $27.94 $26.94
Net Investment Income. . . . . . . . . . . . . . . . . . . 0.29 0.07 0.19 0.02
Net Realized and Unrealized Gain (Loss) on Investments . . 2.99 0.55 2.99 0.58
Dividends from Net Investment Income . . . . . . . . . . . (0.24) -- (0.18) --
Distributions from Net Realized Gain . . . . . . . . . . . -- -- -- --
---------------- --------------- ----------------- --------------
Ending Net Asset Value per Share . . . . . . . . . . . . . $30.60 $27.56 $30.34 $27.54
---------------- --------------- ----------------- --------------
---------------- --------------- ----------------- --------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . . . . . . . . . 0.85%(c) 0.91%(c) 1.59%(c) 1.72%(c)
Net Investment Income . . . . . . . . . . . . . . . . . 2.07%(c) 3.69%(c) 1.35%(c) 2.92%(c)
Total Return . . . . . . . . . . . . . . . . . . . . . . . 25.19%(c) 2.30% 24.33%(c) 2.23%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 0.61% 0.69% 0.61% 0.69%
Average Commission Rate(d) . . . . . . . . . . . . . . . . $0.0909 $0.0942 $0.0909 $0.0942
Net Assets at End of
Period (000's omitted). . . . . . . . . . . . . . . . . $39,043 $31,448 $23,883 $17,318

- ---------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) Income Equity Fund commenced the offering of A and B Shares on May 2, 1996.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers
and reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . . . . . . . . . . . . . . 0.94%(c) 1.91%(c) 1.72%(c) 2.63%(c)
(c) Annualized.
(d) Represents the average commission per share paid to brokers on the purchase or sale of equity securities.
</TABLE>

12 13
<PAGE>

VALUGROWTH STOCK FUND

<TABLE>
<CAPTION>
A SHARES
------------------------------------------------------------------------------------------------------
SIX
MONTHS
PERIOD ENDED ENDED
NOVEMBER 30, YEAR ENDED MAY 31, MAY 31, YEAR ENDED NOVEMBER 30,
------------ ------------------------------------- ---------- --------------------------------------
1996* 1996 1995 1994 1993 1992 1991 1990 1989 1988(a)
------------ ------------------------------------- ---------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share. . . . . $22.63 $18.82 $17.17 $17.27 $16.30 $14.48 $11.67 $12.67 $10.03 $10.00
Net Investment Income. . . 0.09 0.13 0.17 0.10 0.17 0.09 0.18 0.21 0.18 0.15
Net Realized and
Unrealized Gain
(Loss) on Investments. . 2.68 3.93 1.66 0.19 1.34 1.83 2.82 (0.55) 2.61 0.03
Dividends from Net
Investment Income. . . . (0.05) (0.13) (0.18) (0.17) (0.17) (0.10) (0.19) (0.21) (0.15) (0.15)
Distributions from
Net Realized Gain. . . . -- (0.12) -- (0.22) (0.37) -- -- (0.45) -- --
------------ ------------------------------------- ---------- ---------------------------------------
Ending Net Asset
Value per Share. . . . . $25.35 $22.63 $18.82 $17.17 $17.27 $16.30 $14.48 $11.67 $12.67 $10.03
------------ ------------------------------------- ---------- ---------------------------------------
------------ ------------------------------------- ---------- ---------------------------------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . 1.03%(c) 1.20% 1.20% 1.20% 1.20% 1.19%(c) 1.19% 1.20% 1.20% 1.19%(c)
Net Investment Income. . 0.79%(c) 0.63% 1.01% 1.06% 1.02% 1.34%(c) 1.57% 1.88% 1.58% 1.84%(c)
Total Return . . . . . . . 25.80%(c) 21.69% 10.72% 1.68% 9.32% 26.46%(c) 25.84% (2.91%) 28.00% 2.04%(c)
Portfolio Turnover Rate. . 36.07% 105.43% 63.82% 86.07% 57.34% 29.50% 31.17% 38.67% 65.89% 30.90%
Average Commission
Rate(d). . . . . . . . . $0.0817 $0.0603 -- -- -- -- -- -- -- --
Net Assets at the End
of Period
(000's omitted). . . . . $17,160 $15,232 $12,138 $12,922 $109,669 $68,659 $4,853 $750 $411 $281
- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) ValuGrowth Stock Fund commenced operations on January 8, 1988. The Fund's original class of shares subsequently became
A Shares. The Fund commenced the offering of B Shares on August 5, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . 1.41%(c) 1.42% 1.43% 1.43% 1.42% 1.64%(d) 4.33% 11.73% 8.38% 2.50%(c)
(c) Annualized.
(d) Represents the average commission per share paid to brokers on the purchase or sale of equity securities.
Prior to 1996, this data was not reported in mutual fund financial statements.

VALUGROWTH STOCK FUND
<CAPTION>
B SHARES
--------------------------------------------------------
PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
------------ ----------------------------------------
1996* 1996 1995 1994(a)
------------ ----------------------------------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . . $22.28 $18.65 $17.10 $17.12
Net Investment Income. . . . . . . . . . . . -- (0.02) 0.07 0.07
Net Realized and
Unrealized Gain
(Loss) on Investments . . . . . . . . . . 2.64 3.87 1.61 0.23
Dividends from Net
Investment Income . . . . . . . . . . . . (0.01) (0.10) (0.13) (0.10)
Distributions from Net
Realized Gain . . . . . . . . . . . . . . -- (0.12) -- (0.22)
------------ ----------------------------------------
Ending Net Asset Value
per Share . . . . . . . . . . . . . . . . $24.91 $22.28 $18.65 $17.10
------------ ----------------------------------------
------------ ----------------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . . 1.77%(c) 1.96% 1.95% 1.95%(c)
Net Investment Income . . . . . . . . . . (0.01%)(c) (0.12%) 0.28% 0.25%(c)
Total Return . . . . . . . . . . . . . . . . 24.81%(c) 20.79% 9.88% 2.36%(c)
Portfolio Turnover Rate. . . . . . . . . . . 36.07% 105.43% 63.82% 86.07%
Average Commission
Rate(d) . . . . . . . . . . . . . . . . . $0.0817 $0.0603 -- --
Net Assets at the End of Period
(000's omitted) . . . . . . . . . . . . . $5,768 $5,130 $3,569 $2,218

- ------------------------------------------------------------------------------------------------------
* Unaudited.
(a) ValuGrowth Stock Fund commenced operations on January 8, 1988. The Fund's original class of shares subsequently
became A Shares. The Fund commenced the offering of B Shares on August 5, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . . . . . . . 2.60%(c) 2.54% 2.51% 2.55%(c)
(c) Annualized.
(d) Represents the average commission per share paid to brokers on the purchase or sale of equity securities.
Prior to 1996, this data was not reported in mutual fund financial statements.
</TABLE>

14 15
<PAGE>

DIVERSIFIED EQUITY FUND

- ---------------------------------------------------------------------------------------------------
* Unaudited.
(a) Diversified Equity Fund commenced the offering of A Shares on May 2, 1996, and B Shares on
May 6, 1996.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had
these waivers and reimbursements not occurred, the ratio of expenses to average net assets
would have been:
Expenses . . . . . . . . . . . . 1.34%(c) 4.06%(c)(d) 2.20%(c) 4.95%(c)(d)
(c) Annualized.
(d) Includes expenses allocated from Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware) for A Shares and B Shares of 0.62% and 0.70%,
respectively, net of waivers of 1.30% and 1.49%, respectively.
(e) Represents the average commission per share paid to brokers on the purchase or sale of equity securities.
</TABLE>

16 17

<PAGE>

GROWTH EQUITY FUND

<TABLE>
<CAPTION>
A SHARES B SHARES
---------------------------- ----------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
------------ ------------ ------------ ------------
1996* 1996(a) 1996* 1996(a)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value
per Share. . . . . . . . . . . . . . $29.08 $28.50 $29.07 $28.18
Net Investment Income. . . . . . . . . (0.04) -- (0.09) --
Net Realized and Unrealized
Gain (Loss) on Investments . . . . . 1.28 0.58 1.22 0.89
Dividends from Net
Investment Income . . . . . . . . . -- -- -- --
Distributions from Net
Realized Gain . . . . . . . . . . . -- -- -- --
------------ ------------ ------------ ------------
Ending Net Asset Value
per Share. . . . . . . . . . . . . $30.32 $29.08 $30.32 $29.07
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Ratios to Average Net Assets:
Expenses(b). . . . . . . . . . . . 1.33%(c) 2.08%(c)(d) 2.08%(c) 2.92%(c)(d)
Net Investment Income (Loss) . . . (0.21%)(c) 0.34%(c) (0.99%)(c) (0.40%)(c)
Total Return . . . . . . . . . . . . . 8.64%(c) 2.04% 7.86%(c) 3.16%
Portfolio Turnover Rate. . . . . . . . 8.29% 7.39% 8.12% 7.39%
Average Commission Rate(e) . . . . . . $0.0564 $0.0617 $0.0564 $0.0617
Net Assets at the End of Period
(000's omitted). . . . . . . . . . . $11,603 $3,338 $4,372 $703
- ---------------------------------------------------------------------------------------------------
* Unaudited.
(a) Growth Equity Fund commenced the offering of A Shares on May 2, 1996. The Fund commenced the
offering of B Shares on May 6, 1996.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had
these waivers and reimbursements not occurred, the ratio of expenses to average net assets
would have been:
Expenses . . . . . . . . . . . . 1.88%(c) 6.40%(c)(d) 3.00%(c) 7.44%(c)(d)
(c) Annualized.
(d) Includes expenses allocated from Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware) for A Shares and B Shares of 0.83% and 0.94%,
respectively, net of waivers of 2.99% and 3.42%, respectively.
(e) Represents the average commission per share paid to brokers on the purchase or sale of equity
securities. Prior to 1996, this data was not required to be reported in mutual fund financial
statements.
</TABLE>

18 19
<PAGE>

SMALL COMPANY STOCK FUND

<TABLE>
<CAPTION>
A SHARES B SHARES
---------------------------------------------- ---------------------------------------------------
PERIOD ENDED PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31, NOVEMBER 30, YEAR ENDED MAY 31,
------------ -------------------------------- --------------- ----------------------------------
1996* 1996 1995 1994(a) 1996* 1996 1995 1994(a)
------------ -------------------------------- --------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share. . . . . . . . . . $14.02 $10.64 $9.84 $10.00 $13.83 $10.56 $9.82 $10.00
Net Investment Income. . . . . (0.03) 0.01 0.12 0.07 (0.07) (0.08) 0.07 0.06
Net Realized and Unrealized
Gain (Loss) on Investments. . (0.05) 3.93 0.87 (0.15) (0.07) 3.90 0.84 (0.17)
Dividends from Net
Investment Income . . . . . -- (0.03) (0.11) (0.08) -- (0.02) (0.09) (0.07)
Distributions from Net
Realized Gain . . . . . . . -- (0.53) (0.08) -- -- (0.53) (0.08) --
------------ -------------------------------- --------------- ----------------------------------
Ending Net Asset Value
per Share . . . . . . . . . $13.94 $14.02 $10.64 $9.84 $13.69 $13.83 $10.56 $9.82
------------ -------------------------------- --------------- ----------------------------------
------------ -------------------------------- --------------- ----------------------------------
Ratios to Average Net
Assets:
Expenses(b). . . . . . . . . 1.19%(c) 1.21% 0.53% 0.22%(c) 1.94%(c) 1.96% 1.27% 0.98%(c)
Net Investment Income. . . . (0.45%)(c) 0.03% 1.14% 1.95%(c) (1.20%)(c) (0.74%) 0.38% 1.27%(c)
Total Return . . . . . . . . . (1.13%)(c) 38.22% 10.19% (1.98%)(c) (2.00%)(c) 37.32% 9.31% (2.77%)(c)

Portfolio Turnover Rate. . . . 97.01% 134.53% 68.09% 14.98% 97.01% 134.53% 68.09% 14.98%
Average Commission Rate(d) . . $0.0848 $0.0555 -- -- $0.0848 $0.0555 -- --
Net Assets at the End of
Period (000's omitted) . . . $6,174 $5,426 $1,540 $265 $4,243 $4,125 $963 $195

- ----------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) Small Company Stock Fund commenced the offering of A and B 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 ratio of expenses to average net assets would have been:
Expenses . . . . . . . . 1.71%(c) 1.87% 2.32% 10.66%(c) 2.83%(c) 2.96% 3.56% 20.87%(c)
(c) Annualized.
(d) Amount represents the average commission per share paid to brokers on the purchase or sale of equity securities. Prior
to 1996, this data was not reported in mutual fund financial statements.
</TABLE>

20 21
<PAGE>

SMALL CAP OPPORTUNITIES FUND

<TABLE>
<CAPTION>
A SHARES B SHARES
---------------- ---------------
PERIOD ENDING PERIOD ENDING
NOVEMBER 30, NOVEMBER 30,
---------------- ---------------
1996*(a) 1996*(a)
---------------- ---------------
<S> <C> <C>
Beginning Net Asset Value
per Share. . . . . . . . . . . . . . . . . $17.39 $17.41
Net Investment Income. . . . . . . . . . . . . -- --
Net Realized and Unrealized
Gain (Loss) on Investments . . . . . . . . 0.41 0.38
Dividends from Net
Investment Income . . . . . . . . . . . . . -- --
Distributions from Net
Realized Gain . . . . . . . . . . . . . . . -- --
---------------- ---------------
Ending Net Asset Value
per Share . . . . . . . . . . . . . . . . . $17.80 $17.79
---------------- ---------------
---------------- ---------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . . . . . . . . . 1.28%(c) 2.08%(c)
Net Investment Income. . . . . . . . . . 0.41%(c) (0.07%)(c)
Total Return . . . . . . . . . . . . . . . . . (0.22%)(c) 0.00%(c)
Portfolio Turnover Rate(d) . . . . . . . . . . 17.39% 17.39%
Average Commission Rate(e) . . . . . . . . . . $0.0553 $0.0553
Net Assets at the End of
Period (000's omitted). . . . . . . . . . . $65 $28

- ----------------------------------------------------------------------------------------
* Unaudited.
(a) Small Cap Opportunities Fund commenced operations with the offering of I Shares on
August 15, 1996. The Fund commenced the offering of A Shares and B Shares on
October 9, 1996 and November 8, 1996, respectively.
(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratio of
expenses to average net assets would have been:
Expenses: . . . . . . . . . . . . . . . . 2.12%(c) 3.44%(c)
(c) Annualized.
(d) Reflects the rate of Schroder U.S. Smaller Companies Portfolio.
(e) Represents the average commission per share paid to brokers on the purchase or
sale of equity securities.
</TABLE>

22 23
<PAGE>

INTERNATIONAL FUND

<TABLE>
<CAPTION>
A SHARES B SHARES
----------------------------------------- ---------------------------------------------
PERIOD ENDED PERIOD ENDED
----------------------------------------- ---------------------------------------------
NOVEMBER 30, MAY 31, OCTOBER 31, NOVEMBER 30, MAY 31, OCTOBER 31,
1996* 1996 1995(a) 1996* 1996 1995(a)
----------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . . . . $19.82 $17.97 $16.50 $19.71 $17.91 $16.50
Net Investment Income. . . . . . . 0.01 0.35 0.01 (0.05) 0.25 0.01
Net Realized and Unrealized
Gain (Loss) on
Investments . . . . . . . . . . 0.33 1.83 1.46 0.31 1.83 1.40
Dividends from Net
Investment Income . . . . . . . -- (0.33) -- -- (0.28) --
Distributions from Net
Realized Gain . . . . . . . . . -- -- -- -- -- --
----------------------------------------- ---------------------------------------------
Ending Net Asset Value
per Share . . . . . . . . . . . $20.16 $19.82 $17.97 $19.97 $19.71 $17.91
----------------------------------------- ---------------------------------------------
----------------------------------------- ---------------------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . 1.42% 1.50%(c)(d) 1.32%(c)(d) 2.16%(c) 2.25%(c)(d) 1.27%(c)(d)
Net Investment Income (Loss) . 0.24%(c) 0.92%(c) 0.26%(c) (0.49%)(c) (0.02%)(c) 0.17%(c)
Total Return . . . . . . . . . . . 3.43%(c) 12.31%(c) 8.91%(c) 2.63%(c) 11.79%(c) 8.55%(c)
Portfolio Turnover Rate(e) . . . . 34.75% 14.12% 29.41% 2.45% 14.12% 29.41%
Average Commission
Rate(f). . . . . . . . . . . . . $0.0213 $0.0325 -- $0.0213 $0.0325 --
Net Assets at the End of
Period (000's omitted). . . . . $1,385 $1,080 $216 $1,239 $995 $395

- ------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) International Fund commenced operations on November 11, 1994. The Fund commenced the offering of A and B Shares on
April 1, 1995.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . . 1.56%(c) 2.51%(c)(d) 20.95%(c)(d) 2.56%(c) 3.11%(c)(d) 14.57%(c)(d)
(c) Annualized.
(d) Includes expenses allocated from International Portfolio of Core Trust (Delaware) for the period ended
May 31, 1996 of 0.82%, net of waivers of 0.02%, for each of A and B Shares, and for the period ended October 31, 1995 of
1.55%, net of waivers of 0.17% for A Shares, and 1.82%, net of waivers of 0.20% for B Shares.
(e) Reflects the rate of International Portfolio.
(f) Represents the only commission per share paid to brokers on the purchase or sale of equity securities. Prior to 1996, this
data was not reported in mutual fund financial statements.
</TABLE>

24 25
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3.INVESTMENT OBJECTIVES AND POLICIES

There can be no assurance that any Fund or any Core Portfolio will achieve its
investment objective.

INCOME EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation consistent with above-average dividend income.
The Fund currently pursues its investment objective by investing all of its
investable assets in Income Equity Portfolio, which has the same investment
objective and substantially similar investment policies as the Fund. Therefore,
although the following discusses the investment policies of that Portfolio, it
applies equally to the Fund.

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

VALUGROWTH STOCK FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation.

INVESTMENT POLICIES. The Fund invests primarily in the common stock and
convertible securities of medium- and large-capitalization companies (companies
with a market capitalization of greater than $500 million) that, in the view of
Norwest, possess above average growth characteristics and appear to be
undervalued.

The Fund seeks to identify and invest in companies whose earnings and dividends
Norwest believes will grow both faster than inflation and faster than the
economy in general and whose growth Norwest believes has not yet been fully
reflected in the market price of the companies' shares. In seeking

26
<PAGE>
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- ----
these investments, Norwest relies primarily on a company by company analysis
(rather than on a broader analysis of industry or economic sector trends) and
considers such matters as the quality of a company's management, the existence
of a leading or dominant position in a major product line or market, the
soundness of the company's financial position, and the maintenance of a
relatively high rate of return on invested capital and shareholder's equity.
Once companies are identified as possible investments, Norwest applies a number
of valuation measures to determine the relative attractiveness of each company
and selects those companies whose shares are most attractively priced.

The Fund also may invest in selected companies that Norwest regards as "special
situations." Special situation companies often have the potential for
significant future earnings growth but have not performed well in the recent
past. These situations may include management turnarounds, corporate or asset
restructurings, or significantly undervalued assets. These investments are the
exception, not the rule, and must satisfy Norwest's valuation parameters. In
addition, the Fund may invest up to 20% of its assets in securities of foreign
issuers, American Depository Receipts, European Depository Receipts and other
similar securities of foreign issuers. See "Investment Objectives and Policies -
International Fund - Foreign Investment Considerations and Risk Factors." The
Fund may invest in convertible debt and convertible preferred stock.

DIVERSIFIED EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation while moderating annual return volatility by
diversifying its investments in accordance with different equity investment
styles. The Fund invests in various Core Portfolios, each of which invests using
a different investment style.

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
minimize the volatility and risk of investing in equity securities. The Fund's
investment portfolio combines five different equity investment styles: (i) an
index investment style; (ii) the investment style of Income Equity Fund; (iii) a
large company growth investment style; (iv) small company investment styles; and
(v) the investment style of International Fund. In addition, the Fund allocates
the assets dedicated to small company investments to three distinct small
company investment styles. The Fund utilizes different equity investment styles
in order to reduce the risk of price and return volatility associated with
reliance on a single investment style. Because Diversified Equity Fund blends
five equity investment styles, it is anticipated that its price and return
volatility will be less than that of Growth Equity Fund, which blends three
equity investment styles.

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<PAGE>
- ----
- ----

DIVERSIFIED EQUITY FUND ALLOCATION
Set forth below are the ranges of investments by the Fund in each Core Portfolio
and the current allocation among the Core Portfolios.

CURRENT RANGE OF
ALLOCATION INVESTMENT
- ---------------------------------------------------------------
<S> <C> <C>
Index Portfolio....................... 25% 23% - 27%
Income Equity Portfolio............... 25% 23% - 27%
Large Company Growth Portfolio........ 25% 23% - 27%
Small Company style................... 10% 8% - 12%
Small Company Stock Portfolio....... 31/3%
Small Company Growth Portfolio...... 31/3%
Small Company Value Portfolio....... 31/3%
International Portfolio............... 15% 13% - 17%
--
TOTAL FUND ASSETS..................... 100%
</TABLE>

Investors should refer to the descriptions below under "Investment Objectives
and Policies - Core Portfolio Descriptions" for a discussion of the investment
objectives, policies and risks involved in the investments and investment
techniques of each investment style.

GROWTH EQUITY FUND

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

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
reduce the volatility and risk of investing in equity securities. The Fund's
investment portfolio combines three different equity investment styles: (i) a
large company growth investment style; (ii) small company investment styles; and
(iii) the investment style of International Fund. In addition, the Fund
allocates the assets dedicated to small company investments to three distinct
small company investment styles. The Fund utilizes different equity investment
styles in order to reduce the risk of price and return volatility associated

28
<PAGE>
- ----
- ----
with reliance on a single investment style. It is anticipated that the Fund's
price and return volatility will be somewhat greater than those of Diversified
Equity Fund, which blends five equity investment styles.

GROWTH EQUITY FUND ALLOCATION
Set forth below are the ranges of investments by the Fund in each Core Portfolio
and current allocation among the Core Portfolios.

CURRENT RANGE OF
ALLOCATION INVESTMENT
- ------------------------------------------------------------------
<S> <C> <C>
Large Company Growth Portfolio........... 35% 32% - 38%
Small Company style...................... 35% 32% - 38%
Small Company Stock Portfolio.......... 112/3%
Small Company Growth Portfolio......... 112/3%
Small Company Value Portfolio.......... 112/3%
International Portfolio.................. 30% 27% - 33%
---
TOTAL FUND ASSETS........................ 100%
</TABLE>

CORE PORTFOLIO DESCRIPTIONS

INDEX PORTFOLIO. The investment objective of Index Portfolio is to duplicate the
return of the Standard & Poor's 500 Composite Stock Index (the "Index") with
minimum tracking error, while also minimizing transaction costs. The Portfolio
invests in stocks representing 96% or more of the capitalization-weighted market
values of the Index. Portfolio transactions with respect to this style generally
are executed only to duplicate the composition of the Index, to invest cash
received from portfolio security dividends or from shareholder investments and
to raise cash for fund management purposes. For this and other reasons, the
performance of assets allocated to this investment style can be expected to
approximate, but not equal, the performance of the Index.

Norwest may utilize index futures contracts to a limited extent. Index futures
contracts are bilateral agreements pursuant to which two parties agree to take
or make delivery of an amount of cash equal to a specified dollar

29
<PAGE>
- ----
- ----
amount times the difference between the index value at the close of trading of
the contract and the price at which the futures contract is originally struck.
As no physical delivery of the securities comprising the index is made, a
purchaser of index futures contracts may participate in the performance of the
securities contained in the index without the required capital commitment. Index
futures contracts may be used for several reasons: (i) to simulate full
investment in the underlying index while retaining a cash balance for fund
management purposes; (ii) to facilitate trading; or (iii) to reduce transaction
costs. The Portfolio does not invest in futures contracts for speculative
purposes or to leverage the Portfolio. For a description of futures contracts
and their risks see "Additional Investment Policies and Risk Considerations -
Index Futures Contracts."

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

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

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

INCOME EQUITY PORTFOLIO. See "Investment Objectives and Policies - Income Equity
Fund."

LARGE COMPANY GROWTH PORTFOLIO. The investment objective of the Large Company
Growth Portfolio is to provide long-term capital appreciation by investing
primarily in large, high-quality domestic companies that Norwest believes have
superior growth potential. Large companies are those whose market capitalization
is at least $500 million at the time of purchase and whose equity trading volume
would permit the sale or purchase of a large position in the securities of the
company in two or three trading days. In

30
<PAGE>
- ----
- ----
selecting securities, Norwest seeks issuers whose stock is attractively valued
and whose fundamental characteristics both are significantly better than the
market average and support internal earnings growth capability. The Portfolio
may invest in the securities of companies whose growth potential is, in
Norwest's opinion, generally unrecognized or misperceived by the market. In
addition, up to 20% of the total assets invested in by the Portfolio may be
invested in American Depository Receipts, European Depository Receipts and
other, similar securities of foreign issuers and Norwest may attempt to reduce
the overall risk of foreign investments by using foreign currency forward
contracts. Under normal circumstances, no more than 10% of the assets of the
Portfolio will be invested in the securities of a single issuer. The Portfolio
does not currently invest in preferred stock or securities convertible into
common stock but reserves the right to do so in the future.

SMALL COMPANY STOCK PORTFOLIO. See "Investment Objectives and Policies - Small
Company Stock Fund."

SMALL COMPANY GROWTH PORTFOLIO. The investment objective of Small Company Growth
Portfolio is to provide long-term capital appreciation by investing in smaller
sized domestic companies. The Portfolio invests primarily in the common stock of
companies that have a market capitalization well below that of the average
company in the Index. The Portfolio will invest primarily in companies whose
market capitalization is $1 billion or less at the time of purchase.

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

SMALL COMPANY VALUE PORTFOLIO. The investment objective of Small Company Value
Portfolio is to provide long-term capital appreciation by investing primarily in
small and medium sized companies. The Portfolio invests primarily in the common
stock of companies that have a market capitalization well below that of the
average company in the Index. Small and medium companies are those whose market
capitalization is less than $1 billion at the time of purchase.

The Advisers focus on securities that are conservatively valued in the
marketplace relative to their underlying fundamentals. Value investing provides

31
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- ----
investors with a less aggressive way to take advantage of the growth
opportunities of small companies. The Advisers seek to invest in stocks priced
low relative to the stock of comparable companies, determined by price/earnings
ratios, cash flows or other measures. Value investing therefore may reduce
downside risk while offering potential for capital appreciation as a stock gains
favor among other investors and its stock price rises. Investing in the
securities of small companies entails certain risks. See "Investment Objectives
and Policies - Small Company Stock Fund - Additional Investment Considerations
and Risk Factors."

INTERNATIONAL PORTFOLIO. See "Investment Objectives and Policies - International
Fund."

SMALL COMPANY STOCK FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation. The Fund currently pursues its investment objective by investing
all of its investable assets in Small Company Stock Portfolio, which has the
same investment objective and substantially similar investment policies as the
Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. Small Company Stock Portfolio invests primarily in the
common stock of small- and medium-size domestic companies that have a market
capitalization well below that of the average company in the Index. Small and
medium companies are those whose market capitalization is less than $1 billion
at the time of purchase, although it is anticipated that investments primarily
will be in companies with capitalization of less than $750 million.

In selecting securities for the Portfolio, the Advisers seek securities with
significant price appreciation potential, and attempts to identify companies
that show above-average growth, as compared to long-term overall market growth.
The companies in which the Portfolio invests may be in a relatively early stage
of development or may produce goods and services that have favorable prospects
for growth due to increasing demand or developing markets. Frequently, such
companies have a small management group and single product or product line
expertise, which, in the view of an Adviser, may result in an enhanced
entrepreneurial spirit and greater focus, thereby allowing such companies to be
successful. The Advisers believe that such companies may develop into
significant business enterprises and that an investment in such companies offers
a greater opportunity for capital appreciation than an investment in larger,
more established entities.

The securities in which the Portfolio invests may be listed on a securities
exchange, included in the National Association of Securities Dealers Automated
Quotation (NASDAQ) National Market System, or traded in the over-the-counter
securities market.

32
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- ----

The Portfolio also may invest up to 20% of its assets in American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers. See "Investment Objectives and Policies - International Fund - Foreign
Investment Considerations and Risk Factors."

ADDITIONAL INVESTMENT CONSIDERATIONS AND RISK FACTORS. While all investments
have risks, investments in smaller capitalization companies carry greater risk
than investments in larger capitalization companies. Smaller capitalization
companies generally experience higher growth rates and higher failure rates than
do larger capitalization companies; and the trading volume of smaller
capitalization companies' securities is normally lower than that of larger
capitalization companies and, consequently, generally has a disproportionate
effect on market price (tending to make prices rise more in response to buying
demand and fall more in response to selling pressure).

Investments in small, unseasoned issuers generally carry greater risk than is
customarily associated with larger, more seasoned companies. Such issuers often
have products and management personnel that have not been 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 can adversely affect their sale by the Portfolio and can
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.

SMALL CAP OPPORTUNITIES FUND
INVESTMENT OBJECTIVE. The investment objective of the Fund is capital
appreciation. Current income will be incidental to the objective of capital
appreciation. The Fund currently pursues its investment objective by investing
all of its investable assets in Schroder U.S. Smaller Companies Portfolio, which
has the same investment objective and substantially similar investment policies
as the Fund. Therefore, although the following discusses the investment policies
of that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. The Portfolio seeks 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.

In its investment approach, Schroder attempts to identify securities of
companies which it believes can generate above average earnings growth, and
which can be bought 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 Schroder
believes they can help the Portfolio to attain its objective.

33
<PAGE>
- ----
- ----

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
consistent with the Portfolio's investment objective.

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, 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 the fourth highest rating category. These securities are commonly
known as "high yield/high risk" securities or "junk bonds." The Portfolio will
not invest in debt securities that are in default. High yield/high risk
securities are predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal and generally involve a greater volatility
of price than securities in higher rated categories. The Portfolio is not
obligated to dispose of securities due to changes by the rating agencies. See
"Additional Investment Policies and Risk Considerations - Debt Securities." See
the SAI for information about the risks associated with investing in junk bonds.

34
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- ----
larger capitalization companies and, consequently, generally has a
disproportionate effect on market price (tending to make prices rise more in
response to buying demand and fall more in response to selling pressure).

INTERNATIONAL FUND

The Fund is designed for investors who desire to achieve international
diversification of their investments by participating in foreign securities
markets. Because foreign investments generally involve risks in addition to
those risks associated with investments in the United States, the Fund should be
considered only as a vehicle for international diversification and not as a
complete investment program.

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation by investing directly or indirectly in high
quality companies based outside the United States. The Fund currently pursues
its investment objective by investing all of its investable assets in
International Portfolio, which has the same investment objective and
substantially similar investment policies as the Fund. Therefore, although the
following discusses the investment policies of that Portfolio, it applies
equally to the Fund.

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

35
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- ----
one type of foreign instrument or in any foreign country; however, to the extent
International Portfolio concentrates its assets in a foreign country, it will
incur greater risks.

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

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

International Portfolio may enter into foreign currency forward contracts or
currency futures or options contracts for the purchase or sale of foreign
currency to "lock in" the U.S. dollar price of the securities denominated in a
foreign currency or the U.S. dollar value of interest and dividends to be paid
on such securities, or to hedge against the possibility that the currency of a
foreign country in which International Portfolio has investments may suffer a
decline against the U.S. dollar. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. This method of attempting to hedge the
value of portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities. Although
the strategy of engaging in foreign currency transactions could reduce the risk
of loss due to a decline in the value of the hedged currency, it could also
limit the potential gain from an increase in the value of the currency.
International Portfolio does not intend to maintain a net exposure to such
contracts where the fulfillment of International Portfolio's obligations under
such contracts would obligate International Portfolio to deliver an amount of
foreign currency in excess of the value of International Portfolio's portfolio
securities or other assets denominated in the currency. International Portfolio
will enter into these contracts for speculative purposes or enter into
non-hedging currency contracts. These contracts involve a risk of loss if
Schroder fails to

36
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- ----
predict currency values correctly. International Portfolio has no present
intention to enter into currency futures or options contracts but may do so in
the future.

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

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

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

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

ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS

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majority of the outstanding voting securities of the Fund (or Core Portfolio). A
majority of outstanding voting securities means the lesser of 67% of the shares
present or represented at a shareholders' meeting at which the holders of more
than 50% of the outstanding shares are present or represented, or more than 50%
of the outstanding shares. Except as otherwise indicated, investment policies of
the Funds are not fundamental and may be changed by the Board of Trustees of the
Trust (the "Board") without shareholder approval. Likewise, nonfundamental
investment policies of a Core Portfolio may be changed by that investment
company's board of trustees ("Core Board") without shareholder approval.

Unless otherwise indicated, the discussion below of the investment policies of
the Funds refers, in the case of Income Equity Fund, Small Company Stock Fund,
Small Cap Opportunities Fund and International Fund, to the investment policies
of those Funds' corresponding Core Portfolios. A further description of the
Funds' investment policies, including additional fundamental policies, is
contained in the SAI.

Each Adviser monitors the creditworthiness of counterparties to the Funds'
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal credit risks and the benefits from the
transaction justify the attendant risks. As used herein, the term U.S.
Government Securities means obligations issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities. All
investment policies relate to each Fund and, unless otherwise noted, not to a
portion of a Fund that invests in a particular investment style.

As part of its regular banking operations, Norwest Bank may make loans to public
companies. Thus, it may be possible, from time to time, for a Fund to hold or
acquire the securities of issuers which are also lending clients of Norwest
Bank. A lending relationship will not be a factor in the selection of portfolio
securities for a Fund.

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

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a security (other than a U.S. Government Security or a security of an investment
company) if, as a result: (i) more than 5% of the Fund's total assets would be
invested in the securities of a single issuer; or (ii) the Fund would own more
than 10% of the outstanding voting securities of any single issuer. Each Fund is
prohibited from concentrating its assets in the securities of issuers in any one
industry. As a fundamental policy, each Fund may not purchase a security if, as
a result, more than 25% of the value of the Fund's total assets would be
invested in the securities of issuers conducting their principal business
activities in the same industry. This limit does not apply to investments in
U.S. Government Securities or repurchase agreements covering U.S. Government
Securities. Each Fund reserves the right to invest up to 100% of its investable
assets in one or more other investment companies such as the Core Portfolios.

COMMON AND PREFERRED STOCK. The Funds may invest in common and preferred stock.
Common stockholders are the owners of the company issuing the stock and,
accordingly, vote on various corporate governance matters such as mergers. They
are not creditors of the company, but rather, upon liquidation of the company,
are entitled to their pro rata share of the company's assets after creditors
(including fixed income security holders) and, if applicable, preferred
stockholders, are paid. Preferred stock is a class of stock having a preference
over common stock as to dividends and, 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 a Fund may be traded on a securities
exchange or in the over-the-counter market and may not be traded every day in
the volume typical of securities traded on a major U.S. national securities
exchange. As a result, disposition by a Fund of a portfolio security to meet
redemptions by interest holders or otherwise may require the Fund to sell these
securities at a discount from market prices, to sell during periods when
disposition is not desirable, or to make many small sales over 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 Funds may
invest in warrants, which are options to purchase an equity security at a
specified price (usually representing a premium over the applicable market value
of the underlying equity security at the time of the warrant's issuance) and
usually during a specified period of time.

CONVERTIBLE SECURITIES. The Funds may invest in convertible securities,
including convertible debt and convertible preferred stock, which may be rated
by a nationally recognized statistical rating organization ("NRSRO") or may be
unrated. Convertible securities are fixed income securities that may be
converted at a stated price within a specific amount of time into a specified
number of shares of common stock. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on

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preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Before conversion, convertible securities have characteristics
similar to nonconvertible debt securities in that they ordinarily provide a
stream of income with generally higher yields than those of common stocks of the
same or similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinate to comparable
nonconvertible securities. In general, the value of a convertible security is
the higher of its investment value (its value as a fixed income security) and
its conversion value (the value of the underlying shares of common stock if the
security is converted). As a fixed income security, the value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise. The value of convertible securities, however, is also
influenced by the value of the underlying common stock.

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

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

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

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may invest in European Depository Receipts ("EDRs"), which are receipts issued
by a European financial institution evidencing an arrangement similar to that of
ADRs, and in other similar instruments representing securities of foreign
companies. EDRs, in bearer form, are designed for use in European securities
markets.

DEBT SECURITIES. The Funds (other than ValuGrowth Stock Fund) may invest in
corporate debt obligations and U.S. Government Securities. These instruments may
have fixed, floating or variable rates of interest. Except for Small Cap
Opportunities Fund, these debt securities must be rated in one of the three
highest rating categories by an NRSRO or, if unrated by any NRSRO, judged by the
Advisers to be of comparable quality. Small Cap Opportunities Fund may not
invest more than 5% of its net assets in debt securities rated below the fourth
highest rating category by an NRSRO (for example Baa by Moody's, or BBB by S&P).
Bonds rated in the fourth highest category 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.

INDEX FUTURES CONTRACTS. Index Portfolio may invest in index futures contracts
to a limited extent. Index futures contracts are bilateral agreements pursuant
to which two parties agree to take or make delivery of an amount of cash equal
to a specified dollar amount times the difference between the index value at the
close of trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the securities comprising the index
is made. Generally, these futures contracts are closed out prior to the
expiration date of the contract.
A Fund's investment in Index Portfolio subjects the Fund to certain investment
risks and transaction costs to which it might not otherwise be subject. These
risks include: (i) imperfect correlations between movements in the prices of
futures contracts and movements in the price of the securities hedged which may
cause a given hedge not to achieve its objective; (ii) the fact that the skills
and techniques needed to trade futures are different from those needed to select
the other securities in which the Fund invests; (iii) lack of assurance that a
liquid secondary market will exist for any particular instrument at any
particular time, which, among other things, may hinder a Fund's ability to limit
exposures by closing its positions; and (iv) the possible need to defer closing
out of certain futures contracts to avoid adverse tax consequences.

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. Each Fund may enter
into repurchase agreements and may lend securities from its portfolio to
brokers, dealers and other financial institutions. These investments may entail
certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty in these transactions or a counterparty

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defaulted on its obligations, a Fund may have difficulty in exercising its
rights to the underlying securities, may incur costs and experience time delays
in disposing of them and may suffer a loss.

Repurchase agreements are transactions in which a fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed-upon
price on an agreed-upon future date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. When a Fund lends a security
it receives payment from the borrower or interest from investing cash
collateral. The Trust or the Core Trust, as applicable, maintains possession of
the purchased securities and the collateral in lending transactions, the total
market value of which on a continuous basis is at least equal to the repurchase
price or value of securities loaned, plus accrued interest. The Funds may pay
fees to arrange securities loans and each Fund will limit securities lending to
not more than 33 1/3% (25% in the case of Small Cap Opportunities Fund) of the
value of its total assets.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each of the Funds (except Small
Cap Opportunities Fund) may purchase securities offered on a "when-issued" basis
and may purchase securities on a "forward commitment" basis. When such
transactions are negotiated, the price is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
Normally, the settlement date occurs within three months after the transaction,
but delayed settlements beyond three months may be negotiated. During the period
between a commitment and settlement, no payment is made for the securities
purchased and the Fund receives no income. At the time a Fund makes a commitment
to purchase securities in this manner, however, the Fund immediately assumes the
risk of ownership, including price fluctuation. It is currently anticipated that
the Funds will not purchase securities on a when-issued or forward commitment
basis to any significant extent.

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

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

SHORT SALES AGAINST-THE-BOX. The Funds may not sell securities short except in
"short sales against-the-box." A short sale is "against the box" to the extent
that the Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short. For federal income tax purposes, short
sales against-the-box may be made to defer recognition of gain or loss on the
sale of securities until the short position is closed out. See the SAI for
further details.

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

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

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

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

The frequency of portfolio transactions of a Fund or Core Portfolio (the
portfolio turnover rate) will vary from year to year depending on many factors.
From time to time a Fund may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues or
markets. The Funds' portfolio turnover is reported under "Financial Highlights."
An annual portfolio turnover rate of 100% would occur if all of the securities
in a Fund or Core Portfolio were replaced once in a period of one year. Higher
portfolio turnover rates may result in increased brokerage costs to the Fund or
Core Portfolio and a possible increase in short-term capital gains or losses.
Tax rules applicable to short-term trading may affect the timing of a Fund's or
Core Portfolio's portfolio transactions or its ability to realize short-term
trading profits or establish short-term positions.

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4. MANAGEMENT

The business of the Trust is managed under the direction of the Board, and the
business of each Core Portfolio is managed under the direction of the Core
Portfolio's Core Board. The Board formulates the general policies of the Funds
and meets periodically to review the results of the Funds, monitor investment
activities and practices and discuss other matters affecting the Funds and the
Trust. The Board consists of eight persons.

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest makes investment decisions for the Funds (except Small Cap Opportunities
Fund and International Fund) and continuously reviews, supervises and
administers each Fund's investment program or oversees the investment decisions
of the investment subadvisers, as applicable. Norwest provides its investment
advisory services directly to ValuGrowth Stock Fund and indirectly to the other
Funds through its investment advisory services to the Core Portfolios (other
than Schroder U.S. Smaller Companies Portfolio and International Portfolio). In
addition, subject to the general supervision of the Board, Norwest continuously
reviews and determines the allocation of the assets of Diversified Equity Fund
and Growth Equity Fund among the various investment styles and Core Portfolios
in which those Funds invest. Norwest, which is located at Norwest Center, Sixth
Street and Marquette, Minneapolis, Minnesota 55479, is an indirect subsidiary of
Norwest Corporation, a multi-bank holding company that was incorporated under
the laws of Delaware in 1929. As of March 31, 1997, Norwest Corporation had
assets of $83.6 billion, which made it the 11th largest bank holding company in
the United States. As of December 31, 1996, Norwest and its affiliates managed
assets with a value of approximately $42.6 billion.

SMALL CAP OPPORTUNITIES FUND AND INTERNATIONAL FUND. Subject to the general
supervision of the Core Boards, Schroder Capital Management International Inc.
makes investment decisions for Schroder U.S. Smaller Companies Portfolio (in
which Small Cap Opportunities Fund invests) and International Portfolio (in
which International Fund invests) and continuously reviews, supervises and
administers those Portfolios' investment programs.

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INVESTMENT SUBADVISERS. To assist Norwest in carrying out its obligations,
certain of the Core Portfolios and Norwest have retained the services of various
investment subadvisers as follows:

INVESTMENT
SUBADVISER
OF CORE
FUND CORE PORTFOLIO(S) PORTFOLIO
- ---------------------------------------------------------------
<S> <C> <C>
Diversified Equity Fund Large Company Growth Peregrine
Portfolio
Small Company Stock Crestone
Portfolio
Small Company Growth Peregrine
Portfolio
Small Company Value Peregrine
Portfolio

Growth Equity Fund Large Company Growth Peregrine
Portfolio
Small Company Stock Crestone
Portfolio
Small Company Growth Peregrine
Portfolio
Small Company Value Peregrine
Portfolio

Small Company Stock Fund Small Company Stock Crestone
Portfolio
</TABLE>

Crestone and Peregrine make investment decisions for the Core Portfolios to
which they act as investment subadviser and continuously review, supervise and
administer those Core Portfolios' investment programs with respect to that
portion, if any, of the Portfolios' assets that Norwest believes should be
managed by Crestone or Peregrine. Currently, Crestone and Peregrine manage all
of the assets of the Core Portfolios that they subadvise. Norwest supervises the
performance of Crestone and Peregrine, including their adherence to the
Portfolios' investment objectives and policies.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. 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 eighteen countries worldwide. The
Schroder Group specializes in providing investment management services and has
assets under management in excess of $150 billion.

CRESTONE CAPITAL MANAGEMENT, INC. Crestone, which is located at 7720 East
Belleview Avenue, Suite 220, Englewood, Colorado 80111, is an investment
advisory subsidiary of Norwest Bank. Crestone provides investment advice
regarding companies with small market capitalization to various clients,
including institutional investors. As of December 31, 1996, Crestone managed
assets with a value of approximately $465 million.

PEREGRINE CAPITAL MANAGEMENT, INC. Peregrine, which is located at LaSalle Plaza,
800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402, is an

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investment advisory subsidiary of Norwest Bank. Peregrine provides investment
advisory services to corporate and public pension plans, profit sharing plans,
savings-investment and 401(k) plans. As of June 1, 1997, Peregrine managed
assets with a value of approximately $4.25 billion.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest, Crestone,
Peregrine and Schroder contribute to the investment services provided to the
Funds and the Core Portfolios. The following persons, however, are primarily
responsible for day-to-day management and, unless otherwise noted, have been
since the inception of the Fund or Portfolio. For periods prior to June 1, 1997,
all persons associated with Norwest served in their current positions with
Norwest Bank. Prior to that date Norwest Bank was each Fund's investment
adviser. In addition to their responsibilities as listed below, each of the
portfolio managers may perform portfolio management and other duties for Norwest
Bank.

INCOME EQUITY FUND/INCOME EQUITY PORTFOLIO - David L. Roberts. Mr. Roberts
has been a Senior Vice President of Norwest since 1991. Mr. Roberts has
been associated with Norwest and its affiliates for over 20 years in
various investment related capacities.

VALUGROWTH STOCK FUND - David S. Lunt, CFA. Mr. Lunt is a Vice President of
Norwest and has been associated with Norwest and its affiliates since 1992.
Prior thereto, he was a portfolio manager for FirsTier Bank and a
securities analyst for Woodman Accident and Life Company. Mr. Lunt received
an MBA from the University of Nebraska at Omaha.

DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND - The day-to-day management
of each Fund, with respect to that portion of a Fund's assets that is
invested in a particular Core Portfolio, is performed by the portfolio
managers listed for the Core Portfolios. For example, there are six
portfolio managers for Growth Equity Fund - the portfolio managers of Large
Company Growth Portfolio, Small Company Stock Portfolio, Small Company
Growth Portfolio, Small Company Value Portfolio, and International
Portfolio.

SMALL COMPANY STOCK FUND/SMALL COMPANY STOCK PORTFOLIO - Kirk McCown, CFA.
Mr. McCown is the founder, President and a Director of Crestone, which was
incorporated in 1990.

SMALL CAP OPPORTUNITIES FUND/SCHRODER U.S. SMALLER COMPANIES FUND - Fariba
Talebi. Ms. Talebi, a Group Vice President of Schroder, leads an investment
committee, and is primarily responsible for the day-to-day management of
the Portfolio's investments. Ms. Talebi has been employed by Schroder
Capital Management International Inc. in the investment research and
portfolio management areas since 1987.

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Capital Management International Inc. investment committee, are primarily
responsible for the day-to-day management of the Portfolio's investment
portfolio. Mr. Smith has been a First Vice President of Schroder Capital
Management International Inc. since April 1990 and a Director thereof since
April 1993. He has been employed by various Schroder Group companies in the
investment research and portfolio management areas since 1983. Mr.
Perelstein has been a Senior Vice President of Schroder Capital Management
International Inc. since January 2, 1997. Prior thereto, Mr. Perelstein was
a Managing Director at MacKay Shields. Mr. Perelstein has more than twelve
years of international and global investment experience. Since January
1997, Messrs. Smith and Perelstein have served as portfolio managers of
International Portfolio.

INDEX PORTFOLIO - David D. Sylvester and Laurie R. White. Mr. Sylvester has
been associated with Norwest for 16 years, the last 8 years as a Vice
President and Senior Portfolio Manager. He has over 20 years' experience in
managing securities portfolios. Ms. White has been a Vice President and
Senior Portfolio Manager of Norwest since 1991; from 1989 to 1991, she was
a Portfolio Manager at Richfield Bank and Trust. Mr. Sylvester and Ms.
White began serving as portfolio managers of Index Portfolio on January 1,
1996.

LARGE COMPANY GROWTH PORTFOLIO - John S. Dale. Mr. Dale is a Senior Vice
President of Peregrine. Mr. Dale has held various investment management
positions with Norwest, Peregrine and their affiliates since 1968.

SMALL COMPANY VALUE PORTFOLIO - Tasso H. Coin, Jr. Mr. Coin has been a
Senior Vice President of Peregrine since 1995. From 1992 to 1995 he was a
research officer at Lord Asset Management, an investment adviser, and prior
thereto was associated with Morgan Stanley Asset Management.

SMALL COMPANY GROWTH PORTFOLIO - Robert B. Mersky. Mr. Mersky is the
President of Peregrine. Mr. Mersky has held various investment management
positions with Norwest, Peregrine and their affiliates since 1977. From
1980 to 1984 he was head of investments for Norwest Bank.

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- ----

ADVISORY FEES. For their services, Norwest or Schroder, as applicable, receives
investment advisory fees from the Funds (or to the extent a Fund invests in a
single Core Portfolio, from that Core Portfolio) at the following annual rates
of the Fund's or Portfolio's average daily net assets.

FUND INVESTMENT ADVISORY FEE
- --------------------------------------------------------------
<S> <C>
Income Equity Fund (Income Equity
Portfolio)...................... 0.50%
0.80% (first $300 million
ValuGrowth Stock Fund............. of assets)
0.76% (next $400 million
of assets)
0.72% (remaining assets)
Small Company Stock Fund (Small
Company Stock Portfolio)........ 0.90%
Small Cap Opportunities Fund
(Schroder U.S. Smaller Companies
Portfolio)...................... 0.60%
International Fund (International
Portfolio)...................... 0.45%
</TABLE>

With respect to Diversified Equity Fund and Growth Equity Fund, Norwest receives
investment advisory fees from the Funds for its Asset Allocation Services and
Norwest and Schroder receive investment advisory fees from the Core Portfolios
in which the Funds invest at the following annual rates of the Fund's or
Portfolio's average daily net assets. The total fee payable by a Fund through
its investments in Core Portfolios will vary based on the percentage of its
assets invested in each Core Portfolio.

<TABLE>
<CAPTION>
FUND OR CORE PORTFOLIO INVESTMENT ADVISORY FEE
- --------------------------------------------------------------
<S> <C>
Diversified Equity Fund
(for Asset Allocation
Services)....................... 0.25%
Growth Equity Fund
(for Asset Allocation
Services)....................... 0.25%

Index Portfolio................... 0.15%
Income Equity Portfolio........... 0.50%
Large Company Growth Portfolio.... 0.65%
Small Company Stock Portfolio..... 0.90%
Small Company Growth Portfolio.... 0.90%
Small Company Value Portfolio..... 0.90%
International Portfolio........... 0.45%
</TABLE>

Norwest (and not the Core Portfolios) pays Crestone and Peregrine a fee for
their investment subadvisory services. This compensation does not increase the
amount paid by the Core Portfolios to Norwest.

Each Fund investing its assets in one or more Core Portfolios may withdraw its
investments from its corresponding Core Portfolio(s) at any time if the

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Board determines that it is in the best interests of the Fund to do so. See
"Other Information - Core and Gateway Structure." Accordingly, each of these
Funds has retained Norwest as its investment adviser. Similarly, in the event
that a Fund withdraws its investment from a Core Portfolio: (i) each of
Diversified Equity Fund, Growth Equity Fund, Small Cap Opportunities Fund and
International Fund (the Funds that invest all or a portion of their assets in a
Core Portfolio advised by Schroder) has retained Schroder as its investment
subadviser; (ii) each of Diversified Equity Fund, Growth Equity Fund and Small
Company Stock Fund (the Funds that invest all or a portion of their assets in a
Core Portfolio advised by Crestone) has retained Crestone as its investment
subadviser; and (iii) each of Diversified Equity Fund and Growth Equity Fund
(the Funds that invest a portion of their assets in a Core Portfolio advised by
Peregrine) has retained Peregrine as its investment subadviser. Under these
"dormant" investment advisory arrangements, none of Norwest, Schroder, Crestone
or Peregrine receives any advisory fees with respect to a Fund as long as the
Fund remains completely invested in its respective Core Portfolio(s) or any
other investment companies. In the event that Income Equity Fund, Small Company
Stock Fund, Small Cap Opportunities Fund or International Fund were to withdraw
their assets from their respective Core Portfolios, Norwest would receive an
investment advisory fee on the withdrawn assets at an annual rate of 0.50%,
0.90%, 0.925% and 0.85% of the Funds' average daily net assets, respectively.
Similarly, to the extent Diversified Equity Fund or Growth Equity Fund were to
withdraw any or all of their assets from their respective Core Portfolios,
Norwest would receive an investment advisory fee on the withdrawn assets at an
annual rate of 0.65% and 0.90% of the Funds' average daily net assets,
respectively. Pursuant to the Funds' dormant investment subadvisory agreements,
Norwest (and not the Funds) would pay Schroder, Crestone and Peregrine, as
applicable, a fee for their investment subadvisory services.

MANAGEMENT, ADMINISTRATION AND
DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity, Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others, including the Funds'
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to each Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring

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the sale of shares and ensuring that such shares are properly and duly
registered with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of dividends and
distributions to shareholders.

FAS also serves as an administrator of each Core Portfolio (except Schroder U.S.
Smaller Companies Portfolio) and provides services to the Core Portfolios that
are similar to those provided to the Funds by Forum and FAS. For its services
FAS receives a fee with respect to each Core Portfolio (other than Schroder U.S.
Smaller Companies Portfolio) at an annual rate of 0.10% of the Portfolio's
average daily net assets. Schroder Advisors Inc. ("Schroder Advisors") serves as
the administrator of Schroder U.S. Smaller Companies Portfolio and Forum serves
as the subadministrator of that Portfolio. 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. For their services, Schroder Advisors receives no fee from the
Portfolio and Forum receives a fee at an annual rate of 0.075% of the
Portfolio's average daily net assets.

In addition, pursuant to a separate agreement, Norwest receives a fee with
respect to Small Cap Opportunities Fund and International Fund at an annual rate
of 0.25% of the Funds' average daily net assets. Under this agreement, Norwest
is responsible for compiling data and preparing communications between the Fund
and its shareholders, maintaining requisite information flows between the Fund
and Schroder, monitoring and reporting to the Board on the performance of the
applicable Core Portfolio and reimbursing the Fund for certain excess expenses.
No fees are payable under this agreement if the Fund is not completely invested
in a Core Portfolio. Small Cap Opportunities Fund and International Fund incur
total management and administrative fees at a higher rate than many other mutual
funds, including other funds of the Trust.

Pursuant to a separate agreement, Forum Accounting Services, Limited Liability
Company ("Forum Accounting") provides portfolio accounting services to each Fund
and to each Core Portfolio. Forum, FAS, and Forum Accounting are members of the
Forum Financial Group of companies which together provide a full range of
services to the investment company and financial services industry. As of June
1, 1997, Forum, FAS and Forum Accounting were controlled by John Y. Keffer,
President and Chairman of the Trust.

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Forum also acts as the distributor of the Shares. As the Funds' distributor,
Forum pays a broker-dealers' reallowance on A Shares and a sales commission on B
Shares to broker-dealers who sell shares of the Funds. Normally, Forum will make
payments to broker-dealers as discussed under "Characteristics of The Shares."
From its own resources, Forum may pay additional fees to broker-dealers or other
persons for distribution or other services related to the Funds. For further
information about the Funds' distribution plan, including the fees payable
thereunder, see "Characteristics of The Shares."

SHAREHOLDER SERVICING AND CUSTODY

Norwest Bank 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
functions and acts as dividend disbursing agent for the Trust. The Transfer
Agent is permitted to subcontract any or all of its functions with respect to
all or any portion of the Trust's shareholders to one or more qualified
sub-transfer agents or processing agents, which may be affiliates of the
Transfer Agent. Sub-transfer agents and processing agents may be "Processing
Organizations" as described under "How to Buy Shares - Purchase Procedures." The
Transfer Agent is permitted to compensate those agents for their services;
however, that compensation may not increase the aggregate amount of payments by
the Trust to the Transfer Agent. For its services, the Transfer Agent receives a
fee with respect to each Fund at an annual rate of 0.25% of each Fund's average
daily net assets attributable to each class of the Fund.

Norwest Bank also serves as each Fund's and each Core Portfolio's (other than
Schroder U.S. Smaller Companies Portfolio's) custodian and may appoint
subcustodians for the foreign securities and other assets held in foreign
countries. For its custodial service, Norwest Bank receives a fee with respect
to each Fund and each Core Portfolio at an annual rate of: 0.02% of the first
$100 million of the Fund's or Core Portfolio's average daily net assets, 0.01%
of the next $200 million of the Fund's or Core Portfolio's average daily net
assets and 0.005% of the Fund's or Core Portfolio's remaining average daily net
assets. No fee is payable by a Fund to the extent the Fund is invested in a Core
Portfolio. With respect to International Portfolio, Norwest Bank receives a fee
at an annual rate of 0.075% of the Portfolio's average daily net assets. The
Chase Manhattan Bank, N.A. serves as custodian of Schroder U.S. Smaller
Companies Portfolio and is paid a fee for its services.

EXPENSES OF THE FUNDS

Subject to the obligation of Norwest to reimburse the Trust for certain expenses
of the Funds, the Trust (as well as each Core Trust) is obligated to

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pay all of its expenses. The Funds' expenses include Trust expenses attributable
to the Funds, which are allocated to each Fund, and expenses not specifically
attributable to the Funds, which are allocated among the Funds and all other
funds of the Trust in proportion to their average net assets. Each service
provider to a Fund may elect to waive (or continue to waive) all or a portion of
their fees. Any such waivers will have the effect of increasing a Fund's
performance for the period during which the waiver is in effect. Except as
otherwise noted fee waivers are voluntary and may be reduced or eliminated at
any time.

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Small Company Stock Fund's total combined
operating expenses through May 31, 1998 at the same levels as the Fund's total
operating expenses prior to May 31, 1997 (1.20% for A Shares and 1.95% for B
Shares). After May 31, 1998, any proposed reduction in the amounts of those
waivers and reimbursements would be reviewed by the Board.

Norwest and Forum have agreed to waive their respective fees through May 31,
1999 in order to ensure that the fees borne by each of Diversified Equity Fund
and Growth Equity Fund for investment advisory, administrative and management
services would not exceed, in the aggregate, 0.75% and 1.00%, respectively (the
"Waiver"). After May 31, 1999, each Fund's aggregate payment for those services
could increase if the Waiver was reduced or eliminated. Any reduction or
elimination of the Waiver, however, would require Board approval (and notice to
shareholders), which would be given only if the Board determined that the amount
of the fees to be paid to Norwest or Forum after the reduction or elimination
would be fair and reasonable.

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

The expenses of each Fund (other than ValuGrowth Stock Fund) include the Fund's
pro rata share of the expenses of the Core Portfolios in which the Fund invests,
which are borne indirectly by the Fund's shareholders.

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<PAGE>
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5.CHOOSING A SHARE CLASS

Investors should compare sales charges and fees before selecting a particular
class of shares. Investors should consider whether, during the anticipated life
of their investment in a Fund, the accumulated distribution services fee and
maintenance fee and contingent deferred sales charges on B Shares prior to
conversion would be less than the initial sales charge on A Shares purchased at
the same time and whether that differential would be offset by the higher yield
of A Shares. A summary of the charges applicable to shares of each Fund is
listed under "Prospectus Summary - Expense Information." Sales personnel of
broker-dealers and other financial institutions selling a Fund's shares may
receive differing compensation for selling A Shares and B Shares.
Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge were
not deducted and, accordingly, do not have the entire purchase price invested.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
whether, in light of the initial sales charge and its effect on the amount of
the purchase price invested, purchases of A Shares are more or less advantageous
than purchases of B Shares with their associated accumulated continuing
distribution and maintenance charges. For example, based on estimated current
fees and expenses, an investor 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 Shares'
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 each Fund's A Shares is their next-determined net
asset value plus an initial sales charge assessed as follows (no sales charge is
assessed on the reinvestment of dividends or distributions):

BROKER-
DEALERS'
SALES CHARGE REALLOWANCE AS
AS A PERCENTAGE OF A PERCENTAGE
................................ OF OFFERING
AMOUNT OF PURCHASE OFFERING PRICE NET ASSET VALUE* PRICE

- -------------------------------------------------------------------------
<S> <C> <C> <C>
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
</TABLE>

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

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: (i) by any bank, trust company or
other institution acting on behalf of its fiduciary customer accounts or any
other account maintained by its trust department (including a pension, profit
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code of 1986, as amended), (ii) by
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, (iii) 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; (iv) of A Shares of a Fund made through the
Directed Dividend Option from a fund of the Trust that charges a front-end sales
charge (see "Dividends and Tax Matters,") or (v) of at least $50,000 through an
individual retirement account in A Shares of Diversified Equity Fund or Growth
Equity Fund, when the shareholder makes a non-binding commitment to subsequently
enroll the assets in the Norwest WealthBuilder IRA program, an asset allocation
program offered by Norwest Investment Services, Inc. ("NISI"). In connection
with purchases of A Shares of Diversified Equity Fund or Growth Equity Fund with
no sales charge as described in clause (v), Forum makes payments to NISI of up
to 1.00% of the value of the shares purchased. Shares sold without a sales
charge may not be resold except to the Funds and share purchases must be made
for investment purposes.

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

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INVESTORS IN OTHER FUND FAMILIES. No sales charge is assessed on purchases of A
Shares of a Fund with the proceeds of a redemption at net asset value, within
the preceding 60 days, of shares of a mutual fund that 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 that Fund. Investors should contact the Trust
for further information and to obtain the necessary forms.

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

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

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

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

STATEMENT OF INTENTION. A Shares investors 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 a
Fund within a period of 13 months. Each purchase of shares under a Statement of
Intention will be made at net asset value plus the sales charge applicable at
the time of the purchase to a single transaction of the dollar amount indicated
in the Statement.

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

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

CONTINGENT DEFERRED
SALES CHARGE AS A % OF
PERIOD SHARES DOLLAR AMOUNT SUBJECT
AMOUNT OF PURCHASE HELD TO CHARGE
- -----------------------------------------------------------------
<S> <C> <C>
$1,000,000 to Less than one
$2,499,999......... year 1.00%
One to two years 0.75%
$2,500,000 to Less than one
$4,999,999......... year 0.50%
Less than one
Over $5,000,000...... year 0.25%
</TABLE>

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

B SHARES

DISTRIBUTION PLAN. B Shares of a Fund are sold at their net asset value per
share without the imposition of a sales charge at the time of purchase. With
respect to B Shares, each Fund has adopted a distribution plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan") providing for distribution payments, at an
annual rate of up to 0.75% of the average daily net assets of the Fund
attributable to the B Shares (the "distribution services fee"), by each Fund to
Forum, to compensate Forum for its distribution activities. The distribution
payments due to Forum from each Fund comprise: (i) sales

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commissions at levels set from time to time by the Board ("sales commissions");
and (ii) an interest fee calculated by applying the rate of 1% over the prime
rate to the outstanding balance of uncovered distribution charges (as described
below). The current sales commission rate is 4.0% and Forum currently expects to
pay sales commissions to each broker-dealer at the time of sale of up to 4.0% of
the purchase price of B Shares of each Fund sold by the broker-dealer.

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

Under the Plan, a Fund will make distribution services fee payments to Forum
only for periods during which there are outstanding uncovered distribution
charges attributable to that Fund. Uncovered distribution charges are equivalent
to all sales commissions previously due (plus interest), less amounts received
pursuant to the Plan and all contingent deferred sales charges previously paid
to Forum. At May 31, 1996, Income Equity Fund, ValuGrowth Stock Fund,
Diversified Equity Fund, Growth Equity Fund, Small Company Stock Fund and
International Fund had uncovered distribution expenses of $565,223, $138,168,
$88,615, $20,558, $117,941 and $34,880, respectively, or approximately 3.26%,
2.69%, 3.62%, 2.92%, 2.86% and 3.51% of each respective Fund's net assets
attributable to B Shares as of the same date.

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

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customers of the broker-dealers. The distribution services fee and the
maintenance fee are each accrued daily and paid monthly and will cause a Fund's
B Shares to have a higher expense ratio and to pay lower dividends than A Shares
of that Fund. Notwithstanding the discontinuation of distribution services fees
with respect to a Fund, the Fund may continue to pay maintenance fees.

A Fund does not accrue future distribution services fees as a liability of the
Fund with respect to the B Shares or reduce the Fund's current net assets in
respect of distribution services fees which may become payable under the Plan in
the future.

In the event that the Plan is terminated or not continued with respect to a
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 a
Fund, investors should consider that payments of distribution services fees
could continue until such time as there are no uncovered distribution charges
under the Plan attributable to that Fund. In approving the Plan, the Board
determined that there was a reasonable likelihood that the Plan would benefit
each Fund and its B shareholders.

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

CONTINGENT DEFERRED SALES CHARGE. B Shares of a Fund 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 a Fund and their redemption.

The contingent deferred sales charge will be assessed on an amount equal to the
lesser of the cost of the B Shares being redeemed and their net asset value at
the time of redemption. Accordingly, no sales charge will be imposed on

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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 AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ---------------------------------------------------------------
<S> <C>
First................................... 4.0%
Second.................................. 3.0%
Third................................... 3.0%
Fourth.................................. 2.0%
Fifth................................... 2.0%
Sixth................................... 1.0%
Seventh................................. None
</TABLE>

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

No contingent deferred sales charge is imposed on: (i) redemptions of Shares
acquired through the reinvestment of dividends and distributions; (ii)
involuntary redemptions by a Fund of shareholder accounts with low account
balances; (iii) redemptions of Shares following the death or disability of a
shareholder if the Fund is notified within one year of the shareholder's death
or disability; (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; and (v) redemptions 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. 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 that Fund. The conversion will be on
the basis of the relative net asset values of the Shares, without the imposition
of any sales load, fee or other charge. For purposes of conversion, B Shares of
a Fund purchased by a shareholder through the reinvestment of dividends and
distributions will be considered to be held in a separate sub-account. Each time
any B Shares in the shareholder's account (other than those in the sub-account)
convert, 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 a
Fund's B Shares to A Shares may be suspended if such an opinion is no longer
available at the time the conversion is to occur. In that event, no further
conversions of the Fund's B Shares would occur and shares might continue to be
subject to a distribution services and maintenance fee for an indefinite period.

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6. HOW TO BUY SHARES

MINIMUM INVESTMENT

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

PURCHASE PROCEDURES
INITIAL PURCHASES
THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

1. BY MAIL. Investors may send a check or money order (cash cannot be accepted)
along with a completed account application form to the Trust at the address
listed under "Account Application." Checks or money orders are accepted at full
value subject to collection. If a check or money order does not clear, the
purchase order will be canceled and the investor will be liable for any losses
or fees incurred by the Trust, the Transfer Agent or Forum.

For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Norwest Funds" or to
one or more owners of that account and endorsed to Norwest Funds. No other
method of payment by check will be accepted. For corporation, partnership,
trust, 401(k) plan or other non-individual type accounts, the check used to
purchase shares of a Fund must be made payable on its face to "Norwest Funds."
No other method of payment by check will be accepted.

2. BY BANK WIRE. Investors may make an initial investment in a Fund using the
wire system for transmittal of money among banks. The investor should first
telephone the Transfer Agent at (612) 667-8833 or (800) 338-1348 to obtain an
account number. The investor should then instruct a bank to wire the investor's
money immediately to:

NORWEST BANK MINNESOTA, N.A.
ABA 091 000 019
FOR CREDIT TO: NORWEST FUNDS
0844-131
RE: [NAME OF FUND]
[DESIGNATE A SHARES OR B SHARES]
ACCOUNT NO.:
ACCOUNT NAME:

The investor should then promptly complete and mail the account application
form. There may be charges by the investor's bank for transmitting the

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money by bank wire. The Trust does not charge investors for the receipt of wire
transfers. Payment by bank wire is treated as a federal funds payment when
received.

3. THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Processing
Organizations"). The Transfer Agent, Forum and their affiliates may be
Processing Organizations. Processing Organizations may receive as a
broker-dealer's reallowance a portion of the sales charge paid by their
customers who purchase A Shares of a Fund, may receive payments from Forum with
respect to sales of B Shares and may receive payments as a processing agent from
the Transfer Agent. In addition, financial institutions, including Processing
Organizations, may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.

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

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

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

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ACCOUNT APPLICATION

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

NORWEST FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040

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

GENERAL INFORMATION

Fund shares are continuously sold on every weekday except customary national
business holidays and Good Friday ("Fund Business Day"). The purchase price for
Fund shares equals their net asset value next-determined after acceptance of an
order plus, in the case of the A Shares, any applicable sales charge imposed at
the time of purchase.

Fund shares become entitled to receive dividends and distributions on the next
Fund Business Day after a purchase order is accepted. The Funds reserve the
right to reject any subscription for the purchase of their shares. Share
certificates are issued only to shareholders of record upon their written
request and no certificates are issued for fractional shares.

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

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7.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.

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 suspended nor the payment date postponed for more than
seven days after the tender of the shares to a Fund, except when the New York
Stock Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings, for any period during
which an emergency exists as a result of which disposal by the Fund of its
portfolio securities or determination by the Fund of the value of its net assets
is not reasonably practicable and for such other periods as the SEC may permit.

REDEMPTION PROCEDURES

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

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signature guaranteed, and all certificates submitted for redemption must be
endorsed by the shareholder with signature guaranteed. See "How to Sell Shares -
Other Redemption Matters."

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

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

OTHER REDEMPTION MATTERS

To protect shareholders and the Funds against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (i)
endorsement on a share certificate, (ii) instruction to change a shareholder's
record name; (iii) modification of a designated bank account for wire
redemptions, (iv) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan, (v) dividend and distribution election, (vi)
telephone redemption, (vii) exchange option election or any other option
election in connection with the shareholder's account, (viii) written
instruction to redeem Shares whose value exceeds $50,000, (ix) redemption in an
account in which the account address has changed within the last 30 days, (x)
redemption when the proceeds are deposited in a Norwest Funds account under a
different account registration and (xi) the remitting of redemption proceeds to
any address, person or account for which there are not established standing
instructions on the 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.

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resulting transactions to be sent to shareholders. If the Trust and Transfer
Agent did not employ such procedures, they could be liable for losses due to
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.

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8. 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 Government Income Fund, Income Fund, Total Return Bond Fund,
Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota Tax-Free 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 Funds, can be obtained through Forum
by contacting the Transfer Agent.

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

Exchanges may only be made between identically registered accounts or by opening
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.

Under federal tax law, the Funds treat an exchange as a redemption and a
purchase. Accordingly, a shareholder may realize a capital gain or loss
depending on whether the value of the shares redeemed is more or less than the
shareholder's basis in the shares at the time of the exchange. 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

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charge, the shareholder would pay an additional 1% sales charge on the exchange.
A Shares acquired through the reinvestment of dividends or distributions are
deemed to have been acquired with a sales charge rate equal to that applicable
to the shares on which the dividends or distributions were paid.

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

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

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

AUTOMATIC INVESTMENT PLAN

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

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INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). An IRA account application form
may be obtained by contacting the Trust at (800) 338-1348 or (612) 667-8833.
Generally, all contributions and investment earnings in an IRA will be
tax-deferred until withdrawn. 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.

An employer may also contribute to an individual's IRA as part of a Savings
Incentive Match Plan for Employees, or "SIMPLE plan," established after December
31, 1996. Under a SIMPLE plan, an employee may contribute up to $6,000 annually
to the employee's IRA, and the employer must generally match such contributions
up to 3% of the employee's annual salary. Alternatively, the employer may elect
to contribute to the employee's IRA 2% of the lesser of the employee's earned
income or $150,000.

The foregoing discussion regarding IRAs is based on regulations in effect as of
June 1, 1997 and summarizes only some of the important federal tax
considerations generally affecting IRA contributions made by individuals or
their employers. It is not intended as a substitute for tax planning. Investors
should consult their tax advisors with respect to their specific tax situations
as well as with respect to state and local taxes.

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.

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9.DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of Income Equity Fund's, ValuGrowth Stock Fund's and Small Company
Stock Fund's net investment income are declared and paid quarterly. Dividends
and distributions of each other Fund's net investment income are declared and
paid at least annually. Distributions of net capital gain, if any, realized by a
Fund are distributed annually. Dividends paid by a Fund with respect to each
class of shares are calculated in the same manner and at the same time. The per
share dividends on a Fund's B Shares will be lower than the per share dividends
on A Shares as a result of the distribution services fees and maintenance fees
applicable to B Shares.
Shareholders may choose to have dividends and distributions of a Fund reinvested
in shares of that Fund (the "Reinvestment Option"), to receive dividends and
distributions in cash (the "Cash Option") or to direct dividends and
distributions to be reinvested in shares of another fund of the Trust (the
"Directed Dividend Option"). All dividends and distributions are treated in the
same manner for federal income tax purposes whether received in cash or
reinvested in shares of a fund.

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

TAX MATTERS

Each 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, each Fund will not be liable for federal income and excise taxes on the
net investment income and capital gain distributed to its shareholders. Because
each Fund intends to distribute all of its net investment income and net capital
gain each year, each Fund should thereby avoid all federal income and excise
taxes.

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time the shareholder may have held Shares in the Fund at the time of
distribution. If a shareholder holds Shares for six months or less and during
that period receives a long-term capital gain distribution, any loss realized on
the sale of the Shares during that six-month period will be a long-term capital
loss to the extent of the distribution. Dividends and distributions reduce the
net asset value of the Fund paying the dividend or distribution 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, will be taxable to the
shareholder as described above.

It is expected that a portion of each Fund's dividends (except International
Fund's) 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 a Fund's fiscal year. To the extent International
Fund invests in the securities of domestic issuers, dividends received by
corporate shareholders of the Fund may qualify for the dividends received
deduction for corporations.

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

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

CORE PORTFOLIOS. Each Core 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
a Core Portfolio are deemed to have been "passed through" to the Funds investing
in the Core Portfolio in proportion to the Funds' interests in the Core
Portfolio, regardless of whether such amounts have been distributed by the Core
Portfolio to the Funds.

FUNDS INVESTING IN FOREIGN SECURITIES. Investment income received by a Fund from
sources within foreign countries may be subject to foreign income or other
taxes. International Fund intends to elect, if eligible to do so, to permit its
shareholders to take a credit (or a deduction) for foreign income and other
taxes paid by International Portfolio. Shareholders of that Fund will be
notified of their share of those foreign taxes and will be required to treat the
amount of such foreign taxes as additional income. In that event, the
shareholder may be entitled to claim a credit or deduction for those taxes.

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10.OTHER INFORMATION

BANKING LAW MATTERS

Federal banking rules generally permit a bank or bank affiliate to act as
investment adviser, transfer agent, or custodian to an investment company and to
purchase shares of the investment company as agent for and upon the order of a
customer and, in connection therewith, to retain a sales charge or similar
payment. Forum believes that Norwest and any bank or other bank affiliate also
may perform Processing Organization or similar services for the Trust and its
shareholders without violating applicable federal banking rules. If a bank or
bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the 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 net asset value per share of each class of each Fund is determined as of
4:00 p.m., Eastern Time, on each Fund Business Day by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. Securities owned by a Fund or 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 Board or pursuant to
procedures approved by the Board or the Core Board, as applicable. The Funds do
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.

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

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

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PERFORMANCE INFORMATION

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

The Funds' advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Inc., Lipper
Analytical Services, Inc. and IBC/Donoghue, Inc. In addition, the performance of
a Fund may be compared to securities indices. These indices may be comprised of
a composite of various recognized securities indices to reflect the investment
policies of a Fund that invests its assets using different investment styles.
Indices are not used in the management of a Fund but rather are standards by
which an Adviser and shareholders may compare the performance of a Fund to an
unmanaged composite of securities with similar, but not identical,
characteristics as the Fund. This material is not to be considered
representative or indicative of future performance. All performance information
for a Fund is calculated on a class basis

THE TRUST AND ITS SHARES

OTHER CLASSES OF SHARES. The Funds currently issue three classes of shares, A
Shares, B Shares and I Shares. I Shares are offered to fiduciary, agency and

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custodial clients of bank trust departments, trust companies and their
affiliates without any sales charges. Each class of a Fund will have a different
expense ratio and may have different sales charges (including distribution
fees). Each class' performance is affected by its expenses and sales charges.
For more information on any other class of shares of the Funds investors may
contact the Transfer Agent at (612) 667-8833 or (800) 338-1348 or the Funds'
distributor. Investors may also contact their Norwest sales representative to
obtain information about the other classes.

SHAREHOLDER VOTING AND OTHER RIGHTS. Each share of each series 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 pertains 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 series
or class, except if the matter affects only one series or class or voting by
series or class is required by law, in which case shares will be voted
separately by series 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 (and Trustees) 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 series is entitled to
the shareholder's pro rata share of all dividends and distributions arising from
that series' assets and, upon redeeming shares, will receive the portion of the
series' net assets represented by the redeemed shares.

Each Core Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in a Core Portfolio will be entitled to
vote in proportion to its relative beneficial interest in the Core Portfolio.
When required by the 1940 Act and other applicable law, a Fund will solicit
proxies from its shareholders and will vote its interest in a Core Portfolio in
proportion to the votes cast by its shareholders.

As of May 1, 1997, BHC Securities, Inc. owned of record more than 25% of the
outstanding A Shares of Income Equity Fund, ValuGrowth Stock Fund, Diversified
Equity Fund, Growth Equity Fund. From time to time certain shareholders may own
a large percentage of the Shares of a Fund and, accordingly, may be able to
greatly affect (if not determine) the outcome of a shareholder vote.

74
<PAGE>
- ----
- ----

CORE AND GATEWAY STRUCTURE

Income Equity Fund, Small Company Stock Fund, Small Cap Opportunities Fund and
International Fund each seek to achieve its investment objective by investing
all of its investable assets in its corresponding Core Portfolio that has the
same investment objective and substantially identical investment policies as the
Fund. Diversified Equity Fund and Growth Equity Fund each seek to achieve its
investment objective by investing all or part of its assets in two or more Core
Portfolios. Accordingly, each Core Portfolio directly acquires portfolio
securities and a Fund investing in the Core Portfolio acquires an indirect
interest in those securities. Schroder U.S. Smaller Companies Portfolio is a
separate series of Schroder Capital Funds, a business trust organized under the
laws of the State of Delaware in 1995. Each other Core Portfolio is a separate
series of Core Trust (Delaware), a business trust organized under the laws of
the State of Delaware in 1994. Each Core Trust is registered under the 1940 Act
as an open-end, management, investment company. The assets of each Core
Portfolio belong only to, and the liabilities of each Core Portfolio are borne
solely by, that Core Portfolio and no other portfolio of a Core Trust.

THE CORE PORTFOLIOS. A Fund's investment in a Core Portfolio is in the form of a
non-transferable beneficial interest. All investors in a Core Portfolio will
invest on the same terms and conditions and will pay a proportionate share of
the Core Portfolio's expenses. As of June 1, 1997, one other mutual fund
invested in Schroder U.S. Smaller Companies Portfolio and several other funds of
the Trust invested a portion of their assets in each other Core Portfolio.

A Core Portfolio will not sell its shares directly to members of the general
public. Another investor in a Core 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 any Fund, and
could have different advisory and other fees and expenses than a Fund.
Therefore, Fund shareholders may have different returns than shareholders in
another investment company that invests in a Core Portfolio. Information
regarding any such funds is available from the Core Trusts by calling Forum at
(207) 879-0001.

CERTAIN RISKS OF INVESTING IN CORE PORTFOLIOS. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in that Core
Portfolio. For example, if International Portfolio had a large investor other
than International Fund that redeemed its interest, International Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses, thereby producing lower returns. As there may be
other investors in a Core Portfolio, there can be no assurance that any issue
that receives a majority of the votes cast by a Fund's shareholders will receive
a majority of votes cast by all investors in a Core Portfolio; indeed, other
investors holding a majority interest in a Core Portfolio could have voting
control of the Core Portfolio.

75
<PAGE>
- ----
- ----

Each Fund may withdraw its entire investment from a Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in a Core Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective or policies of
the Core 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 Core 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 would incur brokerage fees or other transaction costs. If
the Fund withdrew its investment from a Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets
directly by the Advisers or the investment of the Fund's assets in another
pooled investment entity. The inability of the Fund to find a suitable
replacement investment, in the event the Board decided not to permit the
Advisers to manage the Fund's assets directly, could have a significant impact
on shareholders of the Fund.

Investment decisions are made by the portfolio managers of each Core Portfolio
independently. Therefore the portfolio manager of one Core Portfolio in which a
Fund invests may purchase shares of the same issuer whose shares are being sold
by the portfolio manager of another Core Portfolio in which the Fund invests.
This could result in an indirect expense to the Fund without accomplishing any
investment purpose.

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

76
<PAGE>

-----------------------------------------------------------------------
---------------
[LOGO] BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3489
MINNEAPOLIS, MN
---------------

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

[LOGO]

SHAREHOLDER INFORMATION:

Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 (MINNEAPOLIS/ST. PAUL)
800-338-1348 (ELSEWHERE)

-COPYRIGHT- 1997 NORWEST ADVANTAGE FUNDS
MFBPS003 6/97

<PAGE>

TAX-FREE INCOME FUNDS
- --------------------------------------------------------------------------------

PROSPECTUS

JUNE 1, 1997

TAX-FREE INCOME FUND
---------------
COLORADO TAX-FREE FUND
---------------
MINNESOTA TAX-FREE FUND

[LOGO]

NOT FDIC INSURED
<PAGE>
- --------------------------------------------------------------------------------

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

TABLE OF CONTENTS

1. PROSPECTUS SUMMARY.............................................. 2
Highlights of the Funds......................................... 2
Expense Information............................................. 5

2. FINANCIAL HIGHLIGHTS............................................ 8

3. INVESTMENT OBJECTIVES AND POLICIES.............................. 14
Tax-Free Income Fund............................................ 14
Colorado Tax-Free Fund.......................................... 15
Minnesota Tax-Free Fund......................................... 16
Additional Investment Policies and Risk Considerations.......... 18
Investment Considerations and Risk Factors...................... 24

4. MANAGEMENT...................................................... 27
Investment Advisory Services.................................... 27
Management, Administration and Distribution Services............ 28
Shareholder Servicing and Custody............................... 29
Expenses of the Funds........................................... 29

5. CHOOSING A SHARE CLASS.......................................... 31
A Shares........................................................ 32
B Shares........................................................ 35

6. HOW TO BUY SHARES............................................... 39
Minimum Investment.............................................. 39
Purchase Procedures............................................. 39
Account Application............................................. 41
General Information............................................. 41

7. HOW TO SELL SHARES.............................................. 42
General Information............................................. 42
Redemption Procedures........................................... 42
Other Redemption Matters........................................ 43

8. OTHER SHAREHOLDER SERVICES...................................... 45
Exchanges....................................................... 45
Automatic Investment Plan....................................... 46
Automatic Withdrawal Plan....................................... 47
Reopening Accounts.............................................. 47

9. DIVIDENDS AND TAX MATTERS....................................... 48
Dividends....................................................... 48
Tax Matters..................................................... 48

10. OTHER INFORMATION............................................... 52
Banking Law Matters............................................. 52
Determination of Net Asset Value................................ 52
Performance Information......................................... 52
The Trust and Its Shares........................................ 53

<PAGE>
PROSPECTUS

JUNE 1, 1997

This Prospectus offers A Shares and B Shares of Tax-Free Income Fund, Colorado
Tax-Free Fund and Minnesota Tax-Free Fund (each a "Fund" and collectively the
"Funds"). The Funds are separate tax-exempt, fixed income portfolios of Norwest
Funds (the "Trust"), which is a registered, open-end, management investment
company. Tax-Free Income Fund is a diversified portfolio; the other Funds are
non-diversified portfolios.

Shares of the Colorado and Minnesota Tax-Free Funds are offered solely to
residents of Colorado and Minnesota, respectively.

NORWEST FUNDS IS A FAMILY OF 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.

1
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS.

INVESTMENT OBJECTIVES AND POLICIES

TAX-FREE INCOME FUND seeks to produce current income exempt from federal income
taxes. This objective is pursued by investing primarily in a portfolio of
investment grade municipal securities, the interest on which is free from
federal income tax.

COLORADO TAX-FREE FUND seeks to provide shareholders with a high level of
current income exempt from both federal and Colorado state income taxes
(including the alternative minimum tax) consistent with preservation of capital.
This objective is pursued by investing primarily in a portfolio of investment
grade municipal securities of Colorado issuers.

MINNESOTA TAX-FREE FUND seeks to provide shareholders with a high level of
current income exempt from both federal and Minnesota state income taxes
(including the alternative minimum tax) without assuming undue risk. This
objective is pursued by investing primarily in a portfolio of investment grade
municipal securities of Minnesota issuers.

INVESTMENT ADVISER

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is the Funds' investment adviser. Norwest
provides investment advice to various institutions, pension plans and other
accounts and, as of December 31, 1996, managed over $42.6 billion in assets.
See "Management -- Investment Advisory Services." Norwest Bank serves as
transfer agent, dividend disbursing agent and custodian of the Trust. See
"Management -- Shareholder Servicing and Custody."

FUND MANAGEMENT AND ADMINISTRATION

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. Forum Administrative Services, Limited
Liability Company ("FAS") provides administrative services for the Funds. See
"Management -- Management, Administration and Distribution Services."

SHARES OF THE FUNDS

<PAGE>

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

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

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

HOW TO BUY AND SELL SHARES

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

EXCHANGES

SHAREHOLDER FEATURES

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

<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Dividends of each Fund's net investment income are declared daily and paid
monthly. Dividends paid out of tax-exempt interest income generally will not be
subject to federal income tax and applicable state taxes. Each Fund's net
capital gain, if any, is distributed annually. All dividends and distributions
are reinvested in additional Fund shares unless the shareholder elects to have
them paid in cash. See "Dividends and Tax Matters."

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

There can be no assurance that any Fund will achieve its investment objective,
and a Fund's net asset value and total return will fluctuate based upon changes
in the value of its portfolio securities. Normally, the value of a Fund's
investments varies inversely with changes in interest rates. Upon redemption,
an investment in a Fund may be worth more or less than its original value. The
Fund's investments are subject to "credit risk" relating to the financial
condition of the issuers of the securities that each Fund holds. Each Fund
(other than Minnesota Tax-Free Fund), however, invests only in investment grade
securities (those rated in the top four grades by a nationally recognized
statistical rating organization ("NRSRO") such as Standard & Poor's). MINNESOTA
TAX-FREE FUND may invest in non-investment grade municipal securities, which may
entail certain risks. See "Investment Objectives and Policies -- Minnesota Tax-
Free Fund -- Non-Investment Grade Securities."

All investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as the potential
use of leverage by certain Funds through borrowings, purchasing when-issued
securities and securities on a forward commitment basis and other investment
techniques. See "Investment Objectives and Policies -- Additional Investment
Policies and Risk Considerations." As noted under "Financial Highlights," the
portfolio turnover rate for certain Funds may from time to time be high,
resulting in increased brokerage costs or short-term capital gains or losses.
See "Additional Investment Policies and Risk Considerations -- Portfolio
Transactions."

COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE FUND each invests principally in
securities issued by the government of and municipalities in the State of
Colorado or Minnesota, respectively, and is therefore more susceptible to
factors adversely affecting issuers in those states than would be a more
geographically diverse municipal securities portfolio. Each of these Funds is
non-diversified, which means they have greater latitude than a diversified Fund
to invest in fewer issuers and to invest more of their assets in any one issuer.
Non-diversified funds may present greater risks than a diversified fund. See
"Investment Objectives and Policies -- Investment Considerations and Risk
Factors -- Diversification Matters."

<PAGE>

EXPENSE INFORMATION

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

SHAREHOLDER TRANSACTION EXPENSES
(APPLICABLE TO EACH FUND)
A B
SHARES SHARES
--------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price). . . . . . . . . 3.75%(1) Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase
price or redemption proceeds). . . . . . . . . . . . Zero(2) 3.0%(1)(3)
Exchange Fee . . . . . . . . . . . . . . . . . . . . . Zero Zero

(1) Sales charge waivers and reduced sales charge plans are available for A
and B Shares. See "Choosing a Share Class."

(2) If A Shares of a Fund purchased without an initial sales charge
(purchases of $1,000,000 or more) are redeemed within one year after
purchase, a deferred sales charge of up to 0.75% will be applied to the
redemption. If A Shares of a Fund purchased without an initial sales charge
(purchases of $1,000,000 or more) are redeemed within two years after
purchase, a deferred sales charge of up to 0.50% will be applied to the
redemption.

(3) The maximum 3.0% deferred sales charge on B Shares of a Fund applies to
redemptions during the first year after purchase; the charge declines
thereafter, and is 2.0% during the second and third years, 1.0% during the
fourth year and zero the following year.

<PAGE>

ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER APPLICABLE
FEE WAIVERS AND EXPENSE REIMBURSEMENTS).

COLORADO MINNESOTA
TAX-FREE TAX-FREE TAX-FREE
INCOME FUND(7) FUND FUND(6)
--------------- --------------- ---------------
A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES
--------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees(5) (after fee waivers) . . . . . . . . . 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%
Rule 12b-1 Fees(6) (after fee waivers) . . . . . . . . . . . . . None 0.70% None 0.75% None 0.75%
Other Expenses (after reimbursements) . . . . . . . . . . . . . . 0.30% 0.35% 0.30% 0.30% 0.30% 0.30%
--------------- --------------- ---------------
Total Operating Expenses(7) . . . . . . . . . . . . . . . . . . . 0.60% 1.35% 0.60% 1.35% 0.60% 1.35%

</TABLE>

(4) For a further description of the various expenses associated with the
Shares see "Management." Expenses associated with the I Shares of a Fund
differ from those listed in the table. The tables are based on amounts
incurred during the Funds' most recent fiscal year ended May 31, 1996,
restated to reflect the current fees.

(5) Absent waivers, the Investment Advisory Fees for A Shares and B Shares of
each Fund would be 0.50%.

(7) Absent estimated expense reimbursements and fee waivers, the expenses of
A Shares of Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota
Tax-Free Fund would be: "Other Expenses", 0.56%, 0.64% and 0.77%,
respectively; and "Total Operating Expenses", 1.06%, 1.14% and 1.27%,
respectively. Absent estimated expense reimbursements and fee waivers,
the expenses of B Shares of Tax-Free Income Fund, Colorado Tax-Free Fund
and Minnesota Tax-Free Fund would be: "Other Expenses", 0.73%, 0.67% and
0.80%, respectively; and "Total Operating Expenses", 2.23%, 2.17% and 2.30%,
respectively. "Other Expenses" includes transfer agency fees payable to
Norwest Bank of 0.25% of each Fund's average daily net assets
attributable to A Shares and B Shares. Expense reimbursements and fee
waivers are voluntary and may be reduced or eliminated at any time.

EXAMPLE

The following Hypothetical Expense Example indicates the dollar amount of
expenses that an investor would pay assuming a $1,000 investment in a Fund's
Shares, a 5% annual return and reinvestment of all dividends and distributions.

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
Funds' projected returns; rather, it is required by government regulation. The
example assumes deduction of the maximum initial sales charge for A Shares,
deduction of the contingent deferred sales charge for B Shares applicable to a
redemption at the end of the period and the conversion of B Shares to A Shares
at the end of six years.

HYPOTHETICAL EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------
<S> <C> <C> <C> <C>
TAX-FREE INCOME FUND

A Shares. . . . . . . . . . . . . . . . . . . . . . . 43 56 70 110
B Shares
Assuming redemption at the end of the period . . . 44 63 74 162
Assuming no redemption . . . . . . . . . . . . . . 14 43 74 162
--------------------------------------
COLORADO TAX-FREE FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 43 56 70 110
B Shares
Assuming redemption at the end of the period . . . 44 63 74 162
Assuming no redemption . . . . . . . . . . . . . . 14 43 74 162
--------------------------------------
MINNESOTA TAX-FREE FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 43 56 70 110
B Shares
Assuming redemption at the end of the period . . . 44 63 74 162
Assuming no redemption . . . . . . . . . . . . . . 14 43 74 162
</TABLE>

6 7

<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for each Fund. This
information represents selected data for a single outstanding A and B Share of
each Fund for the periods shown. Information for the period ended November 30,
1996 is unaudited and information for the period ended May 31, 1992, and years
ended May 31, 1993, 1994, 1995 and 1996, was audited by KPMG Peat Marwick LLP,
independent auditors. Information for prior periods was audited by other
independent auditors. Each Funds' financial statements for the period ended
November 30, 1996 are contained in the Funds' Semi-Annual Report. Each Fund's
financial statements for the fiscal year ended May 31, 1996, and independent
auditors' report thereon are contained in the Fund's Annual Report. These
financial statements are incorporated by reference into the SAI. Further
information about each Fund's performance is contained in the Semi-Annual and
Annual Reports, which may be obtained from the Trust without charge.

TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
A SHARES
--------------------------------------------------------------
PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
------------ ------------------------------------------------
1996* 1996 1995 1994 1993 1992
------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . . . . . . . . $9.78 $9.82 $9.60 $10.06 $9.98 $9.95
Net Investment Income. . . . . . . . . . . . . . . . . . 0.27 0.55 0.55 0.58 0.66 0.70
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . . . . . . 0.35 (0.04) 0.22 (0.39) 0.11 0.04
Dividends from Net Investment Income . . . . . . . . . . (0.27) (0.55) (0.55) (0.58) (0.66) (0.70)
Distributions from Net Realized Gain . . . . . . . . . . -- -- -- (0.07) (0.03) (0.01)
------------ ------------------------------------------------
Ending Net Asset Value per Share . . . . . . . . . . . . $10.13 $9.78 $9.82 $9.60 $10.06 $9.98
------------ ------------------------------------------------
------------ ------------------------------------------------

Ratios to Average Net Assets
Expenses(b) . . . . . . . . . . . . . . . . . . . . . 0.41%(c) 0.40% 0.60% 0.60% 0.60% 0.34%
Net Investment Income . . . . . . . . . . . . . . . . 5.46%(c) 5.54% 5.87% 5.77% 6.47% 7.03%
Total Return . . . . . . . . . . . . . . . . . . . . . . 13.22%(c) 5.29% 8.42% 1.74% 7.86% 7.65%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . 69.47% 126.20% 130.90% 116.54% 42.81% 73.66%
Net Assets at the End of
Period (000's omitted). . . . . . . . . . . . . . . . $27,826 $33,914 $30,786 $34,426 $109,983 $56,250

- ------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operating on August 1, 1989. The Fund's original class of shares subsequently became A Shares.
The Fund commenced the offering of B Shares on August 6, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . . . . . . . . . . . . 1.09%(c) 1.06% 1.12% 1.14% 1.12% 1.14%
(c) Annualized.

A SHARES B SHARES
----------------------- ----------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED
MAY 31, NOVEMBER 30, MAY 31,
----------------------- ------------------ --------------------------------------
1991 1990(a) 1996* 1996 1995 1994(a)
----------------------- ------------------ --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . . . . $9.78 $10.00 $9.78 $9.82 $9.60 $10.17
Net Investment Income. . . . . . . 0.70 0.57 0.23 0.48 0.48 0.39
Net Realized and
Unrealized Gain (Loss)
on Investments . . . . . . . . . 0.17 (0.22) 0.35 (0.04) 0.22 (0.50)
Dividends from Net
Investment Income . . . . . . . (0.70) (0.57) (0.23) (0.48) (0.48) (0.39)
Distributions from Net
Realized Gain. . . . . . . . . . -- -- -- -- -- (0.07)
----------------------- ------------------ --------------------------------------
Ending Net Asset Value
per Share . . . . . . . . . . . $9.95 $9.78 $10.13 $9.78 $9.82 $9.60
----------------------- ------------------ --------------------------------------
----------------------- ------------------ --------------------------------------
Ratios to Average Net Assets
Expenses(b). . . . . . . . . . . 0.14% 0.03%(c) 1.16%(c) 1.14% 1.35% 1.31%(c)
Net Investment Income. . . . . . 7.09% 6.96%(c) 4.69%(c) 4.77% 5.05% 4.76%(c)
Total Return . . . . . . . . . . . 9.16% 4.34%(c) 12.32%(c) 4.50% 7.61% (0.98%)(c)
Portfolio Turnover Rate. . . . . . 101.11% 41.16% 69.47% 126.20% 130.90% 116.54%
Net Assets at the End of
Period (000's omitted) . . . . . $35,215 $17,439 $6,677 $5,897 $3,729 $2,674

- -----------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operating on August 1, 1989. The Fund's original class of shares subsequently became A Shares.
The Fund commenced the offering of B Shares on August 6, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . 1.08% 0.97%(c) 2.26%(c) 2.21% 2.21% 2.24%(c)
(c) Annualized.

</TABLE>

8 9

<PAGE>

COLORADO TAX-FREE FUND
<TABLE>
<CAPTION>
A SHARES
------------------------------------------------------
PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
---------------- ------------------------------------
1996* 1996 1995 1994(a)
---------------- ------------------------------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . $9.89 $9.90 $9.69 $10.00
Net Investment Income. . . . . . . . . 0.28 0.53 0.48 0.51
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . 0.36 (0.01) 0.21 (0.30)
Dividends from Net Investment Income. (0.28) (0.53) (0.48) (0.51)
Distributions from Net Realized Gain . -- -- -- (0.01)
---------------- ------------------------------------
Ending Net Asset Value per Share . . . $10.25 $9.89 $9.90 $9.69
---------------- ------------------------------------
---------------- ------------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . 0.32%(c) 0.30% 0.30% 0.07%(c)
Net Investment Income . . . . . . . 5.50%(c) 5.30% 5.10% 4.94%(c)
Total Return . . . . . . . . . . . . . 13.35%(c) 5.35% 7.47% 2.02%(c)
Portfolio Turnover Rate. . . . . . . . 46.98% 171.41% 47.88% 40.92%
Net Assets at the End of Period
(000's omitted) . . . . . . . . . . $27,816 $26,991 $25,997 $31,724

- ----------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on June 1, 1993. The Fund's original class of shares
subsequently became A Shares. The Fund commenced the offering of B Shares on
August 2, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively.
Had these waivers and reimbursements not occurred, the ratio of expenses to average
net assets would have been:
Expenses . . . . . . . . . . . 1.14%(c) 1.13% 1.15% 1.23%
(c) Annualized.

B SHARES
-------------------------------------------------------
PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
---------------- -------------------------------------
1996* 1996 1995 1994(a)
---------------- -------------------------------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . $9.90 $9.91 $9.70 $10.04
Net Investment Income. . . . . . . . . 0.24 0.46 0.41 0.35
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . . . 0.36 (0.01) 0.21 (0.33)
Dividends from Net Investment Income. (0.24) (0.46) (0.41) (0.35)
Distributions from Net Realized Gain . -- -- -- (0.01)
---------------- -------------------------------------
Ending Net Asset Value per Share . . . $10.26 $9.90 $9.91 $9.70
---------------- -------------------------------------
---------------- -------------------------------------
Ratios to Average Net Assets:
Expenses(b). . . . . . . . . . . . . 1.06%(c) 1.05% 1.05% 0.85%(c)
Net Investment Income. . . . . . . . 4.75%(c) 4.64% 4.32% 4.08%(c)
Total Return . . . . . . . . . . . . . 12.51%(c) 4.56% 6.67% 0.27%(c)
Portfolio Turnover Rate. . . . . . . . 46.98% 171.41% 47.88% 40.92%
Net Assets at the End of Period
(000's omitted). . . . . . . . . . . $6,846 $6,400 $5,198 $4,494

- -----------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on June 1, 1993. The Fund's original class of shares
subsequently became A Shares. The Fund commenced the offering of B Shares on
August 2, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively.
Had these waivers and reimbursements not occurred, the ratio of expenses to average
net assets would have been:
Expenses . . . . . . . . . . . 2.14%(c) 2.16% 2.16% 2.24%(c)
(c) Annualized.

</TABLE>

10 11

<PAGE>

MINNESOTA TAX-FREE FUND
<TABLE>
<CAPTION>

A SHARES
-------------------------------------------------------------------------
SIX
MONTHS
PERIOD ENDED YEAR ENDED ENDED
NOVEMBER 30, MAY 31, MAY 31,
---------------- ----------------------------------------- ------------
1996* 1996 1995 1994 1993 1992
---------------- ----------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share. . . . . . . . . $10.30 $10.45 $10.15 $10.65 $10.27 $10.20
Net Investment Income. . . . . . . 0.27 0.56 0.53 0.53 0.55 0.30
Net Realized and
Unrealized Gain (Loss)
on Investments . . . . . . . . . 0.39 (0.15) 0.30 (0.31) 0.39 0.11
Dividends from Net
Investment Income. . . . . . . . (0.27) (0.56) (0.53) (0.53) (0.55) (0.30)
Distributions from Net
Realized Gain. . . . . . . . . . -- -- -- (0.19) (0.01) (0.04)
---------------- ----------------------------------------- ------------
Ending Net Asset Value
per Share. . . . . . . . . . . . $10.69 $10.30 $10.45 $10.15 $10.65 $10.27
---------------- ----------------------------------------- ------------
---------------- ----------------------------------------- ------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . 0.60%(c) 0.48% 0.49% 0.61% 0.75% 0.90%(c)
Net Investment Income . . . . . 5.11%(c) 5.26% 5.25% 4.92% 5.13% 5.86%(c)
Total Return . . . . . . . . . . . 13.23%(c) 3.97% 8.55% 1.94% 9.35% 8.10%(c)
Portfolio Turnover Rate. . . . . . 54.16% 77.10% 139.33% 84.23% 44.29% 6.70%
Net Assets at the End of Period
(000's omitted). . . . . . . . . $25,468 $26,610 $15,559 $10,008 $10,852 $4,896

- -------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 12, 1988. The Fund's original class of shares subsequently became
A Shares. The Fund commenced the offering of B Shares on August 6, 1993.
(b) During the periods indicated, various fees and expenses were waived and reimbursed, respectively. Had such
waivers and reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . 1.22%(c) 1.26% 1.61% 1.52% 1.79% 2.38%(c)
(c) Annualized.

<CAPTION>
A SHARES B SHARES
-------------------------------------------- -----------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, MAY 31,
-------------------------------------------- -------------- -------------------------------
1991 1990 1989 1988(a) 1996* 1996 1995 1994(a)
-------------------------------------------- -------------- -------------------------------
-------------------------------------------- -------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share. . . . . . . . . $10.15 $10.14 $ 9.78 $10.00 $10.30 $10.44 $10.15 $10.77
Net Investment Income. . . . . . . 0.61 0.62 0.62 0.55 0.23 0.48 0.45 0.35
Net Realized and
Unrealized Gain
(Loss) on Investments. . . . . . 0.12 0.02 0.36 (0.22) 0.38 (0.14) 0.29 (0.43)
Dividends from Net
Investment Income. . . . . . . . (0.61) (0.62) (0.62) (0.55) (0.23) (0.48) (0.45) (0.35)
Distributions from Net
Realized Gain. . . . . . . . . . (0.07) (0.01) -- -- -- -- -- (0.19)
-------------------------------------------- -------------- -------------------------------
Ending Net Asset Value
per Share. . . . . . . . . . . . $10.20 $10.15 $10.14 $9.78 $10.68 $10.30 $10.44 $10.15
-------------------------------------------- -------------- -------------------------------
-------------------------------------------- -------------- -------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . 0.90% 0.90% 0.90% 0.76%(c) 1.34%(c) 1.23% 1.21% 1.31%(c)
Net Investment Income . . . . . 6.01% 6.21% 6.21% 6.51%(c) 4.35%(c) 4.51% 4.52% 3.99%(c)
Total Return . . . . . . . . . . . 7.40% 6.50% 10.30% 4.03%(c) 12.18%(c) 3.28% 7.63% (0.58%)(c)
Portfolio Turnover Rate. . . . . . 37.32% 30.86% 26.31% 32.34% 54.16% 77.10% 139.33% 84.23%
Net Assets at the End of
Period (000's omitted). . . . . $4,575 $4,243 $5,309 $5,904 $10,477 $8,825 $5,090 $2,485

- ---------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 12, 1988. The Fund's original class of shares subsequently became
A Shares. The Fund commenced the offering of B Shares on August 6, 1993.
(b) During the periods indicated, various fees and expenses were waived and reimbursed, respectively. Had such
waivers and reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . . . 2.63% 2.37% 1.70% 1.47%(c) 2.21%(c) 2.29% 2.62% 2.45%(c)
(c) Annualized.

</TABLE>

12 13
<PAGE>
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3.INVESTMENT OBJECTIVES AND POLICIES

TAX-FREE INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of Tax-Free Income Fund is to
produce current income exempt from federal income taxes. The Fund pursues this
objective by investing primarily in a portfolio of investment grade fixed income
securities the interest on which is free from federal income tax. There can be
no assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES. Substantially all of the Fund's total assets normally will
be invested in municipal securities, which are debt obligations issued by or on
behalf of the states, territories or possessions of the United States, the
District of Columbia and their subdivisions, authorities, instrumentalities and
corporations the interest on which is exempt from federal income tax and not
treated as a preference item for individuals for purposes of the federal
alternative minimum tax ("municipal securities"). As a fundamental investment
policy, except during periods when the Fund assumes a temporary defensive
position, the Fund will invest at least 80% of its total assets in securities
exempt from federal income taxes (including the federal alternative minimum
tax). In order to respond to business and financial conditions, the Fund may
invest up to 20% of its assets in instruments on which the interest is subject
to federal taxation. See "Additional Investment Policies and Risk Considerations
- - Temporary Defensive Position;" "- Taxable Investments" and "Dividends and Tax
Matters."

The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years. Depending on market conditions, however, the average
dollar-weighted maturity could be higher or lower. In general, the longer the
maturity of a municipal security, the higher the rate of interest it pays.
However, a longer maturity is generally associated with a higher level of
volatility in the market value of a security. Since the Fund's objective is to
provide high current income, the Fund will invest in municipal securities with
an emphasis on income rather than stability of the Fund's net asset value, and
the average maturity of the Fund's portfolio will vary depending on anticipated
market conditions.

14
<PAGE>
- ----
- ----

although Moody's indicates that municipal securities rated Baa have speculative
characteristics. The Fund also may invest in unrated securities that Norwest
believes are comparable in quality to rated securities in which the Fund may
invest. A description of the rating categories of certain NRSROs is contained in
the SAI.

COLORADO TAX-FREE FUND

INVESTMENT OBJECTIVE. The investment objective of Colorado Tax-Free Fund is to
seek to provide shareholders with a high level of current income exempt from
both federal and Colorado state income taxes (including the alternative minimum
tax) consistent with the preservation of capital. Shares of the Fund are offered
only to residents of the State of Colorado. There can be no assurance that the
Fund will achieve its investment objective.

INVESTMENT POLICIES. Substantially all the Fund's total assets normally will be
invested in investment grade municipal securities, which are debt obligations
issued by the state of Colorado and its political subdivisions, various
authorities, instrumentalities, public corporations and special districts
("municipal securities"). Municipal securities also include the securities
issued by the various territories and possessions of the United States, such as
Puerto Rico. As a fundamental policy, except during periods when the Fund
assumes a temporary defensive position, the Fund will invest at least 80% of its
total assets in securities exempt from both federal and Colorado state income
taxes (including the federal alternative minimum tax). In order to respond to
business and financial conditions, the Fund may invest up to 20% of its assets
in instruments on which the interest is subject to taxation. See "Additional
Investment Policies - Temporary Defensive Position;" "- Taxable Investments" and
"Dividends and Tax Matters."

The yields of Colorado municipal securities depend on, among other things,
conditions in the Colorado municipal bond market and fixed income markets
generally, the size of a particular offering, the maturity of the obligation and
the rating of the issue. In some cases, Colorado issues may have yields that are
slightly less than the yields of municipal obligations of issuers located in
other states because of the favorable Colorado state tax exemption on Colorado
issues.

There are no restrictions on the Fund's average portfolio maturity, but the
average portfolio maturity is currently expected to be greater than 10 years.
Average portfolio maturity may reach or exceed 20 years in the future. In
general, the longer the maturity of a municipal security, the higher the rate of
interest it pays. However, a longer average maturity is generally associated
with a higher level of volatility in the market value of a security. Since the
Fund's objective is to provide high current income, the Fund will invest in

15
<PAGE>
- ----
- ----
municipal securities with an emphasis on income rather than maintaining a stable
net asset value. However, the Fund attempts to limit net asset value
fluctuations.

Substantially all of the Fund's assets will be invested in municipal securities
that are rated within the top four grades by an NRSRO at the time of purchase.
For example, for municipal bonds, these grades are Aaa, Aa, A and Baa in the
case of Moody's Investors Service ("Moody's") and AAA, AA, A and BBB in the case
of Standard & Poor's and Fitch Investors Services, L.P. These securities are
generally considered to be investment grade securities, although Moody's
indicates that municipal securities rated Baa have speculative characteristics.
The Fund also may invest in unrated securities that Norwest believes are
comparable in quality to rated securities in which the Fund may invest. A
description of the rating categories of certain NRSROs is contained in the SAI.

MINNESOTA TAX-FREE FUND

INVESTMENT OBJECTIVE. The investment objective of Minnesota Tax-Free Fund is to
provide shareholders with a high level of current income exempt from both
federal and Minnesota state income taxes (including the alternative minimum tax)
without assuming undue risk. Shares of the Fund are offered only to residents of
the State of Minnesota. There can be no assurance that the Fund will achieve its
investment objective.

INVESTMENT POLICIES. Substantially all the Fund's total assets normally will be
invested in investment grade municipal securities, which are debt obligations
issued by the state of Minnesota and its political subdivisions, duly
constituted authorities and corporations ("municipal securities"). Municipal
securities also include the securities issued by the various territories and
possessions of the United States, such as Puerto Rico. In order to respond to
business and financial conditions, the Fund may invest up to 20% of its assets
in instruments on which the interest is subject to taxation. See "Additional
Investment Policies - Temporary Defensive Position;" "- Taxable Investments" and
"Dividends and Tax Matters." As a fundamental policy, except during periods when
the Fund assumes a temporary defensive position, the Fund will invest at least
80% of its total assets in securities exempt from both federal and Minnesota
state income taxes (including the federal alternative minimum tax).

16
<PAGE>
- ----
- ----
Minnesota issues. See "Dividends and Tax Matters - Taxes - Minnesota Tax-Free
Fund" for a description of certain tax matters that may effect the Fund and its
shareholders.

There are no restrictions on the Fund's average portfolio maturity, but the
average dollar-weighted maturity is currently expected to be greater than 10
years. Average portfolio maturity may reach or exceed 20 years in the future.
Depending on market conditions, however, the average dollar-weighted maturity
could be higher or lower. In general, the longer the maturity of a municipal
security, the higher the rate of interest it pays. However, a longer average
maturity is generally associated with a higher level of volatility in the market
value of a municipal security. Since the Fund's objective is to provide high
current income, the Fund will invest in municipal securities with an emphasis on
income rather than stability of the Fund's net asset value.

Normally, at least 75% of the Fund's assets will be invested in municipal
securities that are rated within the top four grades by an NRSRO at the time of
purchase. For example, for municipal bonds, these grades are Aaa, Aa, A and Baa
in the case of Moody's Investors Service ("Moody's") and AAA, AA, A and BBB in
the case of Standard & Poor's ("S&P") and Fitch Investors Services, L.P.
("Fitch"). These securities are generally considered to be investment grade
securities, although Moody's indicates that municipal securities rated Baa have
speculative characteristics. The Fund also may invest in unrated securities that
Norwest believes are comparable in quality to rated securities in which the Fund
may invest. A description of the rating categories of certain NRSROs is
contained in the SAI.

NON-INVESTMENT GRADE SECURITIES. Minnesota Tax-Free Fund may invest up to 25% of
its total assets in municipal bonds rated in the fifth highest rating category
of an NRSRO (Ba by Moody's or BB by S&P or Fitch), or which are unrated and
judged by Norwest to be of comparable quality to securities rated in the fifth
highest category. Such securities (commonly referred to as "junk bonds") are not
considered to be investment grade and have speculative or predominantly
speculative characteristics. Non-investment grade, high risk securities provide
poor protection for payment of principal and interest but may have greater
potential for capital appreciation than do higher quality securities. These
lower rated securities involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than do higher quality securities. The
market for these securities may be thinner and less active than that for higher
quality securities, which may affect the price at which the lower rated
securities can be sold. In addition, the market prices of lower rated securities
may fluctuate more than the market prices of higher quality securities and may
decline significantly in periods of general economic difficulty or rising
interest rates.

17
<PAGE>
- ----
- ----

During the fiscal year ended May 31, 1996, the Fund had 93% of its average
annual assets in municipal securities rated by Moody's or S&P and 7.0% of its
average annual assets in unrated investments, including cash and short-term cash
equivalents which are typically unrated. During that year, the Fund had the
following percentages of its average annual net assets invested in rated
securities: Aaa/AAA - 52%, Aa/AA - 24%, A/A - 14%, Baa/BBB - 3% and Ba/BB and
below - 0%. For this purpose, securities with different ratings from Moody's and
S&P were assigned the higher rating. This information reflects the average
composition of the Fund's assets for the Fund's last fiscal year and is not
necessarily representative of the Fund as of the current fiscal year or any
other time.

ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS

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

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

BORROWING. As a fundamental policy, each Fund may borrow money from banks or by
entering into reverse repurchase agreements and will limit borrowings to amounts
not in excess of 33 1/3% of the value of the Fund's total

18
<PAGE>
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- ----
assets. Borrowing for other than temporary or emergency purposes or meeting
redemption requests may not exceed 5% of the value of any Fund's assets. Each
Fund may enter reverse repurchase agreements, transactions in which a Fund sells
a security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date.

MUNICIPAL SECURITIES. The municipal securities in which the Funds may invest
include municipal bonds, notes and leases. Municipal securities may be
zero-coupon securities. Yields on municipal securities are dependent on a
variety of factors, including the general conditions of the municipal security
markets and the fixed income markets in general, the size of a particular
offering, the maturity of the obligation and the rating of the issue. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of municipal securities in which the Fund
invests to meet their obligations for the payment of principal and interest when
due.

The market value of the interest-bearing debt securities, including municipal
securities, held by the Funds will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
e.g., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the affect of interest
rate changes on the market value of that security. In addition, fixed income
investments held by the Funds are subject to "credit risk." Changes in the
ability of an issuer to make payments of interest and principal and the market's
perception of an issuer's creditworthiness will affect the market value of the
debt securities of that issuer. Obligations of issuers of debt securities,
including municipal issuers, are also subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors which
may restrict the ability of any issuer to pay, when due, the principal of and
interest on its debt securities. The possibility exists that, the ability of any
issuer to pay, when due, the principal of and interest on its debt securities
may become impaired.

The Funds may retain securities whose rating has been lowered below the lowest
permissible rating category or, in the case of an unrated security, determined
by Norwest to be of comparable quality, if Norwest determines that retaining
such security is in the best interests of the Fund. Because a downgrade often
results in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.

MUNICIPAL BONDS. Municipal bonds can be classified as either "general
obligation" bonds or "revenue" bonds. General obligation bonds are secured by a
municipality's pledge of its full faith, credit and taxing power for the payment

19
<PAGE>
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- ----
of principal and interest. Revenue bonds are usually payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other tax, but not from general
tax revenues.

Municipal bonds also include industrial development bonds and private activity
bonds, which in most cases are revenue bonds and generally are not secured by a
pledge of the credit of the municipality. The payment of the principal and
interest on such bonds is dependent solely on the ability of an initial or
subsequent user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment.

MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are intended to fulfill the short-term
capital needs of the issuer and generally have original maturities not exceeding
one year. They include tax anticipation notes, revenue anticipation notes (which
generally are issued in anticipation of various seasonal revenues), bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Municipal leases, which may take the form of a lease or an installment purchase
or conditional sale contract, are issued by state and local governments and
authorities to acquire a wide variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications equipment and other capital assets.

PARTICIPATION INTERESTS. The Funds may purchase participation interests in
municipal securities that are held by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or other financial institution permitting the
holder to tender them back to the bank or other financial institution. Prior to
purchasing any participation interest, each Fund will obtain appropriate
assurances from counsel that the interest earned by the Fund from the
obligations in which it holds participation interests is exempt from federal
and, in the case of Colorado Tax-Free Fund and Minnesota Tax-Free Fund,
applicable state income tax.

20
<PAGE>
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- ----

and does not exercise its rights thereunder for trading purposes. Stand-by
commitments involve certain expenses and risks, including the inability of the
issuer of the commitment to pay for the securities at the time the commitment is
exercised, non-marketability of the commitment, and differences between the
maturity of the underlying security and the maturity of the commitment. The
Funds' policy is to enter into stand-by commitment transactions only with
municipal securities dealers which, in the view of Norwest, present minimal
credit risks.

PUTS ON MUNICIPAL SECURITIES. The Funds may acquire "puts" on municipal
securities they purchase. A put gives the Fund the right to sell the municipal
security at a specified price at any time on or before a specified date. The
Fund will acquire puts only to enhance liquidity, shorten the maturity of the
related municipal security or permit the Fund to invest its funds at more
favorable rates. Generally, the Fund will buy a municipal security that is
accompanied by a put only if the put is available at no extra cost. In some
cases, however, the Fund may pay an extra amount to acquire a put, either in
connection with the purchase of the related municipal security or separately
from the purchase of the security. Puts involve the same risks discussed above
with respect to stand-by commitments.

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

21
<PAGE>
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There may not be an active secondary market for certain floating or variable
rate instruments (particularly inverse floaters and similar instruments) which
could make it difficult for a Fund to dispose of the instrument during periods
that the Fund is not entitled to exercise any demand rights (such as puts) it
may have. A Fund could, for this or other reasons, suffer a loss with respect to
an instrument. Norwest monitors the liquidity of each Fund's investment in
variable and floating rate instruments, but there can be no guarantee that an
active secondary market will exist.

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

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

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

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payment for the securities take place at a later date. Normally, the settlement
date occurs within three months after the transaction, but delayed settlements
beyond three months may be negotiated.

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

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

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TAXABLE INVESTMENTS. Apart from temporary defensive purposes, each Fund may
invest up to 20% of the value of its total assets in cash equivalents the
interest on which is not exempt from federal income tax or is treated as a
preference item for purposes of the federal alternative minimum tax. For more
information regarding the alternative minimum tax, see "Dividends and Tax
Matters." In addition, the Funds may hold a portion of their assets in cash and
cash-equivalents pending investment in municipal securities, to meet requests
for redemptions or to assume a temporary defensive position. With respect to
Tax-Free Income Fund, these securities include debt securities of corporate
issuers meeting the Fund's investment quality standards described above and
bonds or notes issued by or on behalf of a municipality, the interest on which
is an item of tax preference for purposes of the federal alternative minimum tax
on individuals.

PORTFOLIO TRANSACTIONS. The frequency of portfolio transactions of each Fund
(the portfolio turnover rate) will vary from year to year depending on many
factors. From time to time a Fund may engage in active short-term trading to
take advantage of price movements affecting individual issues, groups of issues
or markets. The Funds' portfolio turnover is reported under "Financial
Highlights." An annual portfolio turnover rate of 100% would occur if all the
securities in a Fund were replaced once in a period of one year. Higher
portfolio turnover rates may result in increased short-term capital gains, which
are not tax-exempt, and losses. It is each Fund's policy to obtain best net
results in effecting portfolio transactions. Norwest may effect transactions for
the Funds through brokers who sell Fund shares. The Funds have no obligation to
deal with any specific broker or dealer in the execution of portfolio
transactions. Tax rules applicable to short-term trading may effect the timing
of a Fund's portfolio transactions or its ability to realize short-term trading
profits or establish short-term positions.

INVESTMENT CONSIDERATIONS
AND RISK FACTORS

GEOGRAPHIC CONCENTRATION. Because Colorado Tax-Free Fund and Minnesota Tax-Free
Fund invest principally in municipal securities issued by issuers within a
particular state and the state's political subdivisions, those Funds are more
susceptible to factors adversely affecting issuers of those municipal securities
than would be a more geographically diverse municipal securities portfolio.
Tax-Free Income Fund will be subject to similar risks to the extent it
concentrates its investments in a particular jurisdiction. These risks arise
from the financial condition of the state and its political subdivisions. To the
extent state or local governmental entities are unable to meet their financial
obligations, the income derived by a Fund, its ability to preserve or realize
appreciation of its portfolio assets or its liquidity could be impaired.

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To the extent a Fund's investments are primarily concentrated in issuers located
in a particular state, the value of the Fund's shares may be especially affected
by factors pertaining to that state's economy and other factors specifically
affecting the ability of issuers of that state to meet their obligations. As a
result, the value of the Fund's assets may fluctuate more widely than the value
of shares of a portfolio investing in securities relating to a number of
different states. The ability of state, county or local governments and
quasi-government agencies to meet their obligations will depend primarily on the
availability of tax and other revenues to those governments and on their fiscal
conditions generally. The amounts of tax and other revenues available to
governmental issuers may be affected from time to time by economic, political
and demographic conditions within their state. In addition, constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. The availability of federal, state and local aid to governmental
issuers may also affect their ability to meet obligations. Payments of principal
of and interest on private activity securities will depend on the economic
condition of the facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by economic, political or
demographic conditions in the state.

The Colorado constitution restricts the ability of the state and local
governments to increase taxes, revenues, debt and spending. In particular, prior
voter approval is now required to impose any new tax or tax rate increase or to
issue any "multiple-fiscal year" debt and revenues collected in excess of
certain limits must be refunded unless voters authorize their retention. The
future impact on the financial operations and obligations of the state and local
governments cannot be determined at this time. Norwest will continue to monitor
the situation closely and will, if necessary, seek the advice of counsel
concerning its effect on instruments being considered for purchase by the Fund.
A further discussion of potential risks of investment in Colorado municipal
securities is contained in the SAI.

RELATED ISSUERS. Some municipal securities are related in such a way that an
economic, business or political development affecting one municipal security
would have a similar effect on another municipal security. For example, the
repayment of different obligations may depend on similar types of projects. No
Fund will invest more than 25% of its total assets in securities that are so
related or invest more than 25% of its total assets in a single type of revenue
bond (e.g., electric revenue, housing revenue, etc.) Similarly, under normal
circumstances, Tax-Free Income Fund will not invest more than 25% of its total
assets in issuers located in the same state.

DIVERSIFICATION MATTERS. Each of Colorado Tax-Free Fund and Minnesota Tax-Free
Fund is non-diversified, which means that it has greater latitude than a
diversified fund with respect to the investment of its assets in the securities
of a relatively few municipal issuers. As non-diversified portfolios,

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these Funds may present greater risks than a diversified fund. However, each
Fund intends to comply with applicable diversification requirements of the
Internal Revenue Code. These requirements provide that, as of the last day of
each fiscal quarter, with respect to 50% of its assets, a Fund may not: (i) own
the securities of a single issuer with a value of more than 5% of the Fund's
total assets; or (ii) own more than 10% of the outstanding voting securities of
a single issuer. Tax-Free Income Fund is diversified and, therefore, as a
fundamental policy, with respect to 75% of its assets, may not purchase a
security if, as a result, more than 5% of the Fund's total assets would be
invested in the securities of a single issuer. These limits do not apply to U.S.
Government securities and the securities of investment companies. Each Fund
reserves the right to invest up to 100% of its investable assets in one or more
other investment companies.

Except for investment in U.S. Government Securities, no more than 25% of the
total assets of Colorado Tax-Free Fund, and no more than 20% of the total assets
of Minnesota Tax-Free Fund, may be invested in securities of any one issuer.
These limitations do not apply to securities of an issuer payable solely from
the proceeds of escrowed U.S. Government Securities.

The "issuer" of securities is deemed to be the entity whose assets and revenues
secure the securities, whether that entity is a governmental entity (so long as
its revenues and assets are separate from the government which created it) or a
non-governmental user of facilities financed through industrial development
bonds issued by or on behalf of a public authority or entity.

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4. MANAGEMENT

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

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest makes investment decisions for the Funds and continuously reviews,
supervises and administers each Fund's investment program. Norwest, which is
located at Norwest Center, Sixth Street and Marquette, Minneapolis, Minnesota
55479, is an indirect subsidiary of Norwest Corporation, a multi-bank holding
company that was incorporated under the laws of Delaware in 1929. As of March
31, 1997, Norwest Corporation had assets of $83.6 billion, which made it the
11th largest bank holding company in the United States. As of December 31, 1996,
Norwest and its affiliates managed assets with a value of approximately $42.6
billion.

For its services, Norwest receives an advisory fee at an annual rate of 0.50% of
the average daily net assets of Tax-Free Income Fund and, with respect to each
of the Colorado Tax-Free Fund and Minnesota Tax-Free Fund, at an annual rate of
0.50% of the first $300 million of the Fund's average daily net assets, 0.46% of
the next $400 million of the Fund's average daily net assets and 0.42% of the
Fund's remaining average daily net assets.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest contribute to
the investment services provided to the Funds. The following persons, however,
are primarily responsible for day-to-day management and, unless otherwise noted,
have been since the inception of the Fund. For periods prior to June 1, 1997,
all persons served in their current positions with Norwest Bank. Prior to that
date Norwest Bank was each Fund's investment adviser. In addition to their
responsibilities as listed below, each of the portfolio managers may perform
portfolio management and other duties for Norwest Bank.

TAX-FREE INCOME FUND and COLORADO TAX-FREE FUND Mr. William T. Jackson. Mr.
Jackson has been a Vice President of Norwest since 1993. Prior thereto, Mr.
Jackson was a Senior Vice President and Institutional Sales Manager with Norwest
Investment Services from 1992 to 1993; a Vice President and Municipal Bond
Trading Manager from 1991 to 1992; and a Vice President and Municipal Bond
Trader with Kemper Securities, Inc., from 1984 to 1991.

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MINNESOTA TAX-FREE FUND Ms. Patricia D. Hovanetz, CFA. Ms. Hovanetz, a Vice
President of Norwest, has been associated with Norwest for more than 25 years in
various capacities related to municipal bond investments. She has been a
municipal bond fund portfolio manager since 1988 and has served as portfolio
manager of the Fund since 1991.

MANAGEMENT, ADMINISTRATION AND
DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others, including the Funds'
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to each Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring the
sales of shares and ensuring that such shares are properly and duly registered
with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of dividends and
distributions to shareholders.

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SHAREHOLDER SERVICING AND
CUSTODY

Norwest Bank 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
functions and acts as dividend disbursing agent for the Trust. The Transfer
Agent is permitted to subcontract any or all of its functions with respect to
all or any portion of the Trust's shareholders to one or more qualified
sub-transfer agents or processing agents, which may be affiliates of the
Transfer Agent. Sub-transfer agents and processing agents may be "Processing
Organizations" as described under "How to Buy Shares - Purchase Procedures." The
Transfer Agent is permitted to compensate those agents for their services;
however, that compensation may not increase the aggregate amount of payments by
the Trust to the Transfer Agent. For its services, the Transfer Agent receives a
fee a fee with respect to each Fund at an annual rate of 0.25% of each Fund's
average daily net assets attributable to each class of the Fund.

Norwest Bank also serves as each Fund's custodian. For its custodial services,
Norwest Bank receives a fee with respect to each Fund at an annual rate of:
0.02% of the first $100 million of the Fund's average daily net assets, 0.01% of
the next $200 million of the Fund's average daily net assets and 0.005% of the
Fund's remaining average daily net assets.

EXPENSES OF THE FUNDS

Subject to the obligation of Norwest to reimburse the Trust for certain expenses
of the Funds, the Trust has confirmed its obligation to pay all of its expenses.
The Funds' expenses include Trust expenses attributable to the Funds, which are
allocated to each Fund, and expenses not specifically attributable to the Funds,
which are allocated among the Funds and all other funds of the Trust in
proportion to their average net assets. Each service provider to a Fund may
elect to waive (or continue to waive) all or a portion of their fees.

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Any such waivers will have the effect of increasing a Fund's performance for the
period during which the waiver is in effect. Fee waivers are voluntary and may
be reduced or eliminated at any time.

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

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5. CHOOSING A SHARE CLASS

Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge were
not deducted and, accordingly, do not have the entire purchase price invested.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
whether, in light of the initial sales charge and its effect on the amount of
the purchase price invested, purchases of A Shares are more or less advantageous
than purchases of B Shares with their associated accumulated continuing
distribution and maintenance charges. For example, based on estimated current
fees and expenses, an investor subject to the 3.75% initial sales charge who
elects to reinvest all dividends would have to hold the shareholder's investment
approximately five years for the B Shares' distribution services fee and
maintenance fee to exceed the initial sales charge. 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.

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A SHARES

The public offering price of A Shares is their next-determined net asset value
plus an initial sales charge assessed as follows (no sales charge is assessed on
the reinvestment of dividends or distributions):

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

- -------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000...... 3.75% 3.90% 3.40%
$50,000 to $99,999..... 3.25% 3.36% 2.95%
$100,000 to $499,000... 2.25% 2.30% 2.05%
$500,000 to $999,000... 1.75% 1.78% 1.60%
$1,000,000 and over.... None None None

* Rounded to the nearest one-hundredth percent
</TABLE>

Forum may pay a broker-dealers' reallowance to selected broker-dealers
purchasing shares as principal or agent, which may include banks, bank
affiliates and Processing Organizations. Normally, Forum will reallow discounts
to selected broker-dealers in the amounts indicated in the table above. In
addition, Forum may elect to reallow the entire sales charge to selected
broker-dealers for all sales with respect to which orders are placed with Forum.
The broker-dealers' reallowance may be changed from time to time. Forum may make
additional payments (out of its own resources) to selected broker-dealers of up
to 0.75% 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.

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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; (iii) 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; and (iv) of A Shares of a Fund made through the
Directed Dividend Option from a fund of the Trust that charges a front-end sales
charge (see, "Dividends and Tax Matters"). Shares sold without a sales charge
may not be resold except to the Funds and share purchases must be made for
investment purposes.

CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An investor's purchase of
additional A Shares of a Fund may qualify for rights of accumulation ("ROA")
under which the applicable sales charge will be based on the total of the
investor's current purchase and the net asset value (at the end of the previous
Fund Business Day) of all A Shares of that Fund held by the investor. For
example, if an investor owned A Shares of a Fund worth $500,000 at the then
current net asset value and purchased A Shares of that Fund worth an additional
$50,000, the sales charge for the $50,000 purchase would be at the 1.75% rate
applicable to a $550,000 purchase, rather than at the 3.25% rate applicable to a
$50,000 purchase.

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Shares of Eligible Funds with current purchases of A Shares of the Fund to
determine the applicable sales charge. In addition, purchases of A Shares of a
Fund by an investor and the investor's spouse, direct ancestor or direct
descendant may be combined for purposes of ROA.

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

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

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to their Statement, no contingent deferred sales charge is imposed. The
Statement of Intention provides for a contingent deferred sales charge in
certain other cases. Further information about the contingent deferred sales
charge is contained in the SAI.

B SHARES

DISTRIBUTION PLAN. B Shares are sold at their net asset value per share without
the imposition of a sales charge at the time of purchase. With respect to B
Shares, each Fund has adopted a distribution plan pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act providing for distribution payments, at an annual
rate of up to 0.75% of the average daily net assets of the Fund attributable to
B Shares (the "distribution services fee"), by each Fund to Forum, to compensate
Forum for its distribution activities. The distribution payments due to Forum
from each Fund comprise: (i) sales commissions at levels set from time to time
by the Board ("sales commissions"); and (ii) an interest fee calculated by
applying the rate of 1% over the prime rate to the outstanding balance of
uncovered distribution charges (as described below). The current sales
commission rate is 3% and Forum currently expects to pay sales commissions to
each broker-dealer at the time of sale of up to 3% of the purchase price of B
Shares of each Fund sold by the broker-dealer.

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charges previously paid to Forum. At May 31, 1996, unrecovered distribution
expenses for Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota Tax-Free
Fund were $115,529, $119,334 and $206,736, respectively, or approximately 1.96%,
1.86%, and 2.34% of each respective Fund's net assets attributable to B Shares
as of the same date.

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

A Fund does not accrue future distribution services fees as a liability of the
Fund with respect to the B Shares or reduce the Fund's current net assets in
respect to distribution services fees which may become payable under the Plan in
the future.

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

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

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

Contingent Deferred
Sales Charge as a %
of Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------------------------------------------------
<S> <C>
First................................... 3.0%
Second.................................. 2.0%
Third................................... 2.0%
Fourth.................................. 1.0%
Fifth................................... None
Sixth................................... None
</TABLE>

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

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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; and (v) redemptions 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. See
the SAI for further information.

CONVERSION FEATURE. After six 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 that Fund (the "conversion"). The
conversion will be on the basis of the relative net asset values of the A and B
Shares, without the imposition of any sales load, fee or other charge. For
purposes of conversion, B Shares of a Fund purchased through the reinvestment of
dividends and distributions will be considered to be held in a separate
sub-account. Each time any B Shares in the shareholder's account (other than
those in the sub-account) convert, an equal pro rata portion of those shares in
the sub-account will also convert. The conversion is subject to the continuing
availability of certain opinions of counsel and 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 would occur, and shares might continue to be
subject to distribution services and maintenance fees for an indefinite period.

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6. HOW TO BUY SHARES

MINIMUM INVESTMENT

PURCHASE PROCEDURES

INITIAL PURCHASES

THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

NORWEST BANK MINNESOTA, N.A.
ABA 091 000 019
FOR CREDIT TO: NORWEST FUNDS

0844-131
RE: [NAME OF FUND]
[DESIGNATE A SHARES OR B SHARES]

ACCOUNT NO.:
ACCOUNT NAME:

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

3. THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Processing
Organizations"). The Transfer Agent, Forum and their affiliates may be
Processing Organizations. Processing Organizations, may receive as a
broker-dealer's reallowance a portion of the sales charge paid by their
customers who purchase A Shares of a Fund, may receive payments from Forum with
respect to sales of B Shares and may receive payments as a processing agent from
the Transfer Agent. In addition, financial institutions, including Processing
Organizations, may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.

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

SUBSEQUENT PURCHASES

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

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ACCOUNT APPLICATION

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

NORWEST FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040

GENERAL INFORMATION

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

41
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7.HOW TO SELL SHARES

GENERAL INFORMATION

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

REDEMPTION PROCEDURES

1. BY MAIL. Shareholders may redeem shares by sending a written request to the
Transfer Agent accompanied by any share certificate that may have

42
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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."

OTHER REDEMPTION MATTERS

To protect shareholders and the Funds against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (i) any
endorsement on a share certificate; (ii) instruction to change a shareholder's
record name; (iii) modification of a designated bank account for wire
redemptions; (iv) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (v) dividend and distribution election; (vi)
telephone redemption; (vii) exchange option election or any other option
election in connection with the shareholder's account; (viii) written
instruction to redeem Shares whose value exceeds $50,000; (ix) redemption in an
account in which the account address has changed within the last 30 days; (x)
redemption when the proceeds are deposited in a Norwest Funds account under a
different account registration; and (xi) the remitting of redemption proceeds to
any address, person or account for which there are not established standing
instructions on the account.

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Shareholders who want telephone redemption or exchange privileges must elect
those privileges. The Trust and Transfer Agent 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 and Transfer Agent did not
employ such procedures, they could be liable for losses due to 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.

44
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- ----

8. 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 Government Income Fund, Income Fund, Total Return Bond Fund,
Income Equity Fund, ValuGrowth-SM- Stock Fund, Diversified Equity Fund, Growth
Equity Fund, Small Company Stock Fund, Small Cap Opportunities Fund, Contrarian
Stock Fund and International Fund. It is anticipated that the Trust may in the
future create additional funds that will offer Shares which will be exchangeable
with the Funds' Shares. In addition, A Shares may be exchanged for Investor
Shares of Ready Cash Investment Fund and Municipal Money Market Fund of the
Trust. B Shares may be exchanged for Exchange Shares of Ready Cash Investment
Fund. Prospectuses for the shares of the funds listed above, as well as a
current list of the funds of the Trust that offer shares exchangeable with the
Shares of the Funds, can be obtained through Forum by contacting the Transfer
Agent.

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

45
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of that fund's initial sales charge attributable to the number of shares being
acquired in the exchange over any initial sales charge paid by the shareholder
for the shares being exchanged. For example, if a shareholder paid a 2% initial
sales charge in connection with a purchase of shares and then exchanged those
shares into A Shares of another fund with a 3% initial sales charge, the
shareholder would pay an additional 1% sales charge on the exchange. A Shares
acquired through the reinvestment of dividends or distributions are deemed to
have been acquired with a sales charge rate equal to that applicable to the
shares on which the dividends or distributions were paid.

AUTOMATIC INVESTMENT PLAN

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may be obtained by writing or calling the Transfer Agent. The Trust may modify
or terminate the automatic investment plan with respect to any shareholder in
the event that the Trust is unable to settle any transaction with the
shareholder's bank. If the Automatic Investment Plan is terminated before the
shareholder's account totals $1,000, the Trust reserves the right to close the
account in accordance with the procedures described under "How to Sell Shares -
Other Redemption Matters."

AUTOMATIC WITHDRAWAL PLAN

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

REOPENING ACCOUNTS

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9.DIVIDENDS AND TAX MATTERS

DIVIDENDS

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

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

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

TAX MATTERS

Dividends paid by a Fund out of tax-exempt interest income earned by the Fund
("exempt-interest dividends") generally will not be subject to federal income
tax in the hands of the Fund's shareholders. Persons who are "substantial users"
or "related persons" thereof of facilities financed by private

48
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activity securities held by a Fund, however, may be subject to federal income
tax on their pro rata share of the interest income from those securities and
should consult their tax advisers before purchasing Shares. Interest on certain
private activity securities issued after August 7, 1986 is treated as an item of
tax preference for purposes of the AMT imposed on individuals and corporations.
In addition, exempt-interest dividends are included in the "adjusted current
earnings" of corporations for AMT purposes.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
a Fund generally is not deductible for federal income tax purposes. Under rules
for determining when borrowed funds are used for purchasing or carrying
particular assets, Shares of a Fund may be considered to have been purchased or
carried with borrowed funds even though those funds are not directly linked to
the Shares.

Substantially all of the dividends paid by each Fund are anticipated to be
exempt from federal income taxes. Shortly after the close of each calendar year,
a statement is sent to each shareholder advising the shareholder of the portion
of the Fund's dividends that is derived from obligations of issues on the
various states and the portion of the Fund's dividends that is exempt from
federal income taxes. These portions are determined for a Fund's entire year
and, thus, are annual averages, rather than day-by-day determinations for each
shareholder. Dividends paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders of the Fund
as ordinary income.

Distributions of net long-term capital gain by a Fund are taxable to
shareholders of the Fund as long-term capital gain, regardless of the length of
time the shareholder may have held Shares in the Fund at the time of
distribution. If a shareholder holds Shares for six months or less and during
that period receives a long term capital gain distribution, any loss realized on
the sale of the Shares during that six-month period will be a long-term capital
loss to the extent of the distribution. Distributions of capital gain reduce the
net asset value of the Fund paying the distribution by the amount of the
distribution. Furthermore, a distribution made shortly after the purchase of
Shares by a shareholder, although in effect a return of capital to that
particular shareholder, will be taxable to the shareholder as described above.

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TAX-FREE INCOME FUND. The exemption for federal income tax purposes of dividends
derived from interest on municipal securities does not necessarily result in an
exemption under the income or other tax laws of any state or local taxing
authority. Shareholders of the Fund may be exempt from state and local taxes on
distributions of tax-exempt interest income derived from obligations of the
state and/or municipalities of the state in which they reside but may be subject
to tax on income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in the Fund which may differ
from the federal income tax consequences described above.

COLORADO TAX-FREE FUND. It is anticipated that substantially all of the
dividends paid by the Fund to individuals will be exempt from Colorado personal
income tax. Dividends and distributions made by the Fund to Colorado
individuals, trusts, estates and corporations subject to the Colorado income tax
generally will be treated for Colorado income tax purposes in the same manner as
they are treated under the Code for federal income tax purposes. Some
differences may arise for taxpayers subject to the AMT, because interest on
Colorado private activity bonds is not a preference item for Colorado income tax
purposes. Furthermore, Colorado has no corporate alternative minimum tax.
Because the Fund may, except as indicated, purchase only Colorado municipal
securities, none of the exempt interest dividends paid by the Fund will be
subject to Colorado income tax.

MINNESOTA TAX-FREE FUND. It is anticipated that substantially all of the
dividends paid by the Fund to individuals will be exempt from Minnesota personal
income tax. Interest earned on Minnesota municipal securities is generally
excluded from gross income for Minnesota state income tax purposes, while
interest earned on securities issued by municipal issuers from other states is
not excluded. At least 95% of the exempt-interest dividends paid by the Fund
must be derived from Minnesota municipal securities in order for any portion of
the exempt-interest dividends paid by the Fund to be exempt from the Minnesota
personal income tax. Exempt-interest dividends paid by the Fund to shareholders
that are corporations are subject to Minnesota franchise tax.

50
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discrimination be remedied by adding interest on Minnesota municipal securities
to the taxable income of Minnesota residents. Such treatment would begin with
the taxable years that begin during the calendar year in which the court's
decision is final. If the interest on Minnesota municipal securities is
determined in general to be taxable income for Minnesota income tax, the Fund
will consider what actions are to be taken, in light of its current investment
objectives and investment policies.

The Minnesota alternative minimum tax on resident individuals is based in part
on their federal alternative minimum taxable income. Accordingly, individual
shareholders of the Fund may be subject to the Minnesota alternative minimum tax
on exempt-interest dividends paid by the Fund which are attributable to interest
received by the Fund on certain private activity securities issued after August
7, 1986, even though these dividends are exempt from the regular Minnesota
personal income tax.

51
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10.OTHER INFORMATION

BANKING LAW MATTERS

Federal banking rules generally permit a bank or bank affiliate to act as
investment adviser, transfer agent and custodian to an investment company and to
purchase shares of the investment company as agent for and upon the order of a
customer and, in connection therewith, to retain a sales charge or similar
payment. Forum believes that Norwest and any bank or other bank affiliate also
may perform Processing Organization or similar services for the Trust and its
shareholders without violating applicable federal banking rules. If a bank or
bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the 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 net asset value per share of each class of each Fund is determined as of
4:00 p.m., Eastern Time, on each Fund Business Day by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. Securities owned by a Fund for which market quotations are readily
available are valued at current market value or, in their absence, at fair value
as determined by the Board. The Funds do 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

A Fund's performance may be quoted in terms of yield or total return. All
performance information is based on historical results and are not intended to
indicate future performance. A Fund's yield is a way of showing the rate of
income the Fund earns on its investments as a percentage of the Fund's share
price. To calculate standardized yield, a Fund takes the income it earned from
its investments for a 30-day period (net of expenses), divides it by the average
number of shares entitled to receive dividends, and expresses the result as an
annualized percentage rate based on the Fund's share price at the end of the
30-day period. A Fund may also quote tax-equivalent yield, which shows the
taxable yield a shareholder would have to earn to equal the Fund's tax-free
yield, after taxes. A tax-equivalent yield is calculated by dividing a Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate.

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A Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and distributions are
reinvested. A cumulative total return reflects a Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same cumulative total
return if the Fund's performance had been constant over the entire period.
Because average annual returns tend to smooth out variations in the Funds'
returns, shareholders should recognize that they are not the same as actual
year-by-year results. Published yield quotations are, and total return figures
may be, based on amounts invested in a Fund net of sales charges that may be
paid by an investor. A computation of yield or total return that does not take
into account sales charges paid by an investor will be higher than a similar
computation that takes into account payment of sales charges.

THE TRUST AND ITS SHARES

OTHER CLASSES OF SHARES. The Funds currently issue 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. Each class of a Fund will have a different
expense ratio and may have different sales charges (including distribution
fees). Each class' performance is affected by its expenses and sales charges.
For more information on any other class of shares of the Funds investors may
contact the Transfer Agent at (612) 667-8833 or (800) 338-1348 or the Funds'
distributor. Investors may also contact their Norwest sales representative to
obtain information about the other classes.

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are borne solely by those shares and each class votes separately with respect to
the provisions of any Rule 12b-1 plan which pertains 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 series or class, except if the matter affects only one series or
class or voting by series or class is required by law, in which case shares will
be voted separately by series 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 (and Trustees) 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 series is entitled to the shareholder's pro rata share of all dividends and
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.

As of May 1, 1997, Dentru & Co., a nominee of Norwest Bank Colorado, N.A.
through which some of its customers own shares of the Funds, may be deemed to
have controlled Colorado Tax-Free Fund. As of the same date, Norwest Tax-Exempt
Bond Fund, a Norwest-sponsored collective trust fund that comprises assets of
customers of Norwest, may be deemed to have controlled Tax-Free Income Fund.
From time to time, this shareholder or other shareholders may own a large
percentage of the Shares of a Fund and, accordingly, may be able to greatly
affect (if not determine) the outcome of a shareholder vote.

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------------------------------------------------------------
---------------
[LOGO] BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3489
MINNEAPOLIS, MN
---------------

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

[LOGO]

SHAREHOLDER INFORMATION:

Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 (MINNEAPOLIS/ST. PAUL)
800-338-1348 (ELSEWHERE)

-COPYRIGHT- 1997 NORWEST ADVANTAGE FUNDS
MFBPT004 6/97

<PAGE>

MONEY MARKET FUNDS
- --------------------------------------------------------------------------------

PROSPECTUS

JUNE 1, 1997

CASH INVESTMENT FUND
---------------
U.S. GOVERNMENT FUND
---------------
TREASURY FUND
---------------
MUNICIPAL MONEY MARKET FUND
---------------
READY CASH INVESTMENT FUND

[LOGO]

NOT FDIC INSURED
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<C> <S> <C> <C>
TABLE OF CONTENTS

1. PROSPECTUS SUMMARY......................... 2
2
Highlights of the Funds....................
5
Expense Information........................

2. FINANCIAL HIGHLIGHTS....................... 8

3. INVESTMENT OBJECTIVES AND POLICIES......... 18
18
Investment Objectives......................
18
Investment Policies........................
18
Cash Investment Fund and Ready Cash
Investment Fund............................
20
U.S. Government Fund.......................
21
Treasury Fund..............................
21
Municipal Money Market Fund................
25
Additional Investment Policies and Risk
Considerations.............................

4. MANAGEMENT................................. 31
31
Investment Advisory Services...............
33
Management, Administration and Distribution
Services...................................
34
Shareholder Servicing and Custody..........
34
Expenses of the Funds......................

5. HOW TO BUY SHARES.......................... 36
36
Minimum Investment.........................
37
Purchase Procedures........................
38
Account Application........................
39
General Information........................

6. HOW TO SELL SHARES......................... 40
40
General Information........................
41
Redemption Procedures......................
41
Other Redemption Matters...................

7. OTHER SHAREHOLDER SERVICES................. 43
43
Exchanges..................................
44
Automatic Investment Plan..................
44
Individual Retirement Accounts.............
44
Automatic Withdrawal Plan..................
45
Checkwriting...............................
45
Reopening Accounts.........................

8. DIVIDENDS AND TAX MATTERS.................. 46
46
Dividends..................................
46
Tax Matters................................

9. OTHER INFORMATION.......................... 49
49
Banking Law Matters........................
49
Determination of Net Asset Value...........
49
Performance Information....................
50
The Trust and Its Shares...................
51
Core and Gateway Structure.................
</TABLE>
<PAGE>
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- --------------------------------------------------------------------------------

JUNE 1, 1997

This Prospectus offers shares of Cash Investment Fund, U.S. Government Fund,
Treasury Fund, Institutional Shares and Investor Shares of Municipal Money
Market Fund and Investor Shares of Ready Cash Investment Fund (each a "Fund" and
collectively the "Funds"). The Funds are separate diversified, money market
portfolios of Norwest Funds (the "Trust"), which is a registered, open-end,
management investment company.

CASH INVESTMENT FUND seeks to achieve its investment objective by investing in
two money market portfolios of another registered, open-end, management
investment company each of which invests using a similar investment style. See
"Prospectus Summary" and "Other Information - Core and
Gateway-Registered Trademark- Structure."

READY CASH INVESTMENT FUND seeks to achieve its investment objective by
investing all of its investable assets in a separate portfolio of another
registered, open-end, management investment company with the same investment
objective. See "Prospectus Summary" and "Other Information - Core and Gateway
Structure."

U.S. GOVERNMENT FUND, TREASURY FUND and MUNICIPAL MONEY MARKET FUND each seeks
to achieve its investment objective by investing directly in portfolio
securities.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission (the "SEC") a Statement of
Additional Information ("SAI") dated June 1, 1997, as may be amended from time
to time, which is available for reference on the SEC's Web Site (http://
www.sec.gov) and which contains more detailed information about the Trust and
each of the Funds and is incorporated into this Prospectus by reference. An
investor may obtain a copy of the SAI without charge by contacting the Trust's
distributor, Forum Financial Services, Inc., at Two Portland Square, Portland,
Maine 04101 or by calling (207) 879-0001. Investors should read this Prospectus
and retain it for future reference.

NORWEST FUNDS IS A FAMILY OF 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. THERE CAN BE NO ASSURANCE THAT ANY OF
THE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

1
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS.

INVESTMENT OBJECTIVES AND POLICIES

CASH INVESTMENT FUND seeks to provide high current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
This objective is pursued by investing in a broad spectrum of high quality money
market instruments of United States and foreign issuers.

READY CASH INVESTMENT FUND seeks to provide high current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
This objective is pursued by investing in a broad spectrum of high quality money
market instruments of United States and foreign issuers.

U.S. GOVERNMENT FUND seeks to provide high current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
This objective is pursued by investing primarily in securities that are issued
or guaranteed by the U.S. Government, its instrumentalities or agencies.

TREASURY FUND seeks to provide high current income to the extent consistent with
the preservation of capital and the maintenance of liquidity. This objective is
pursued by investing solely in obligations that are issued or guaranteed by the
United States Treasury.

MUNICIPAL MONEY MARKET FUND seeks to provide high current income which is exempt
from federal income tax to the extent consistent with the preservation of
capital and the maintenance of liquidity. This objective is pursued by
investing primarily in tax-exempt municipal securities.

FUND STRUCTURE

CASH INVESTMENT FUND seeks to achieve its investment objective by investing all
of its investable assets evenly in two portfolios (each a "Core Portfolio") of
Core Trust (Delaware) ("Core Trust"), a registered, open-end, management
investment company. These Portfolios, Money Market Portfolio and Prime Money
Market Portfolio, have identical investment objectives and investment policies
except that Prime Money Market Portfolio seeks to maintain a rating from a
nationally recognized statistical rating organization ("NRSRO"). Accordingly,
the Fund's investment experience will correspond directly with the investment
experience of the two Core Portfolios. See "Other Information - Core and
Gateway Structure."

READY CASH INVESTMENT FUND seeks to achieve its investment objective by
investing all of its investable assets in Money Market Portfolio (a "Core
Portfolio"), a separate portfolio of Core Trust (Delaware) ("Core Trust"), a
registered, open-end, management investment company, that has the same

2
<PAGE>

investment objective and substantially similar investment policies.
Accordingly, the Fund's investment experience will correspond directly with the
investment experience of Money Market Portfolio. See "Other Information - Core
and Gateway Structure."

U.S. GOVERNMENT FUND, TREASURY FUND and MUNICIPAL MONEY MARKET FUND each seek to
achieve its investment objective by investing directly in portfolio securities.

INVESTMENT ADVISER

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is the Funds' investment adviser. Norwest
also is the investment adviser of each Core Portfolio. Norwest Bank provides
investment advice to various institutions, pension plans and other accounts
and, as of December 31, 1996, with its affiliates, managed over $42.6 billion
in assets. See "Management - Investment Advisory Services."

Norwest Bank serves as transfer agent, dividend disbursing agent and
custodian of the Trust and serves as the custodian of each Core Portfolio.
See "Management - Shareholder Servicing and Custody" and "- Management,
Administration and Distribution Services."

Cash Investment Fund and Ready Cash Investment Fund each incur investment
advisory fees indirectly through the investment advisory fees paid by their
respective Core Portfolios; Norwest is paid an advisory fee directly by U.S.
Government Fund, Treasury Fund and Municipal Money Market Fund.

FUND MANAGEMENT AND ADMINISTRATION

SHARES OF THE FUNDS

Cash Investment Fund, U.S. Government Fund and Treasury Fund offer a single
class of shares. Municipal Money Market Fund offers two classes of shares:
institutional class ("Institutional Shares") and investor class ("Investor
Shares"). Ready Cash Investment Fund offers three classes of shares:
Institutional Shares, Investor Shares and exchange class ("Exchange Shares").
Institutional Shares of a Fund require a higher minimum investment than
Investor Shares and incur lower transfer agency fees. Shares of each Fund
offered through this prospectus are referred to as "Shares." Exchange Shares
may be purchased only in exchange for B class shares of certain funds of the
Trust. Shares of each class of a Fund have identical interests in the
investment portfolio of the Fund and, with certain exceptions, have the same
rights. See "Other Information - The Trust and Its Shares."

3
<PAGE>

HOW TO BUY AND SELL SHARES

Shares may be purchased or redeemed by mail, by bank wire and through an
investor's broker-dealer or other financial institution. The minimum initial
investment in Shares of Cash Investment Fund, U.S. Government Fund and Treasury
Fund, and in Institutional Shares of Municipal Money Market Fund is $100,000;
there is no minimum for subsequent investments. The minimum initial investment
in Investor Shares of a Fund is $1,000; the minimum subsequent investment is
$100. See "How to Buy Shares" and "How to Sell Shares."

EXCHANGES

SHAREHOLDER FEATURES

Each Fund offers an Automatic Withdrawal Plan, a Reinstatement Privilege and
Checkwriting. An Automatic Investment Plan is available to holders of Investor
Shares. See "Other Shareholder Services."

DIVIDENDS AND DISTRIBUTIONS

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

4
<PAGE>

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

There can be no assurance that any Fund or Core Portfolio will achieve its
investment objective or maintain a stable net asset value of $1.00 per share.
An investment in any Fund involves certain risks, depending on the types of
investments made and the types of investment techniques employed. All
investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as investments in
foreign issuers. See "Investment Objectives and Policies - Investment Policies -
Cash Investment Fund and Ready Cash Investment Fund - Foreign Instruments." The
amount of income earned by each Fund will tend to vary with changes in
prevailing interest rates. For more details about each Fund, its investments and
their risks, see "Investment Objectives and Policies."

By pooling their assets in a Core Portfolio with other institutional investors,
CASH INVESTMENT FUND and READY CASH INVESTMENT FUND each may be able to achieve
certain efficiencies and economies of scale that they could not achieve by
investing directly in securities. Nonetheless, these investments could have
adverse effects on the Funds which investors should consider. See "Other
Information - Core and Gateway Structure - Certain Risks of Investing in Core
Portfolios."

EXPENSE INFORMATION

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

<PAGE>

ANNUAL FUND OPERATING EXPENSES(1)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER APPLICABLE FEE WAIVERS AND
EXPENSE REIMBURSEMENTS)

CASH U.S.
INVESTMENT GOVERNMENT TREASURY
FUND(3) FUND FUND
---------- ---------- ----------
Investment Advisory Fees
(after fee waivers)(2) . . . None 0.15% 0.17%
Rule 12b-1 Fees. . . . . . . . None None None
Other Expenses
(after reimbursements) . . . 0.24% 0.35% 0.29%
Investment Advisory Fees
- Core Portfolio(s)(2) . . . 0.22% None None
Other Expenses
- Core Portfolio(s)
(after reimbursements) . . . 0.02% None None
--------------------------------------
Total Operating Expenses(4). . 0.48% 0.50% 0.46%

MUNICIPAL MONEY READY CASH
MARKET INVESTMENT
FUND FUND(3)
--------------------------------------
INSTITUTIONAL INVESTOR INVESTOR
SHARES SHARES SHARES
------------------------ ----------
Investment Advisory Fees
(after fee waivers)(2) . . . 0.29% 0.29% None
Rule 12b-1 Fees. . . . . . . . None None None
Other Expenses
(after reimbursements) . . . 0.16% 0.36% 0.46%
Investment Advisory Fees
- Core Portfolio(s)(2) . . . None None 0.34%
Other Expenses
- Core Portfolio(s)
(after reimbursements) . . . None None 0.02%
--------------------------------------
Total Operating Expenses(4). . 0.45% 0.65% 0.82%

(1) For a further description of the various expenses associated with investing
in the Funds, see "Management". The table is based on expenses incurred
during the Funds' most recent fiscal year ended May 31, 1996, restated to
reflect current fees. Cash Investment Fund and Ready Cash Investment Fund
indirectly bear their pro rata portion of the expenses of the Core
Portfolios in which they invest.

(2) For Cash Investment Fund and Ready Cash Investment Fund, "Investment
Advisory Fees - Core Portfolios" reflects the investment advisory fees
incurred by the Core Portfolio(s) in which the Fund invests. Absent
estimated waivers, the "Investment Advisory Fee" for Municipal Money
Market Fund Institutional Shares and Investor Shares would be 0.35%.
Absent estimated waivers, the "Investment Advisory Fee - Core
Portfolio(s)" for Cash Investment Fund would be 0.24%.

(4) Absent expense reimbursements and fee waivers, the expenses of Cash
Investment Fund, U.S. Government Fund, Treasury Fund, Institutional
Shares and Investor Shares of Municipal Money Market Fund and Investor
Shares of Ready Cash Investment Fund, would be: "Other Expenses," 0.27%,
0.36%, 0.39%, 0.38%, 0.54% and 0.48%, respectively; "Other Expenses -
Core Portfolios," 0.12%, N/A, N/A, N/A, N/A and 0.12%, respectively;
and "Total Operating Expenses," 0.63%, 0.51%, 0.56%, 0.73%, 0.88% and
0.93%, respectively. "Other Expenses" includes transfer agency fees
payable to Norwest Bank of 0.25% (0.10% in the case of Municipal
Money Market Fund - Institutional Shares and 0.20% in the case of Cash
Investment Fund.) Except as otherwise noted, expense reimbursements and fee
waivers are voluntary and may be reduced or eliminated at any time.

EXAMPLE

HYPOTHETICAL EXPENSE EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------
<S> <C> <C> <C> <C>
CASH INVESTMENT FUND . . . . . . . . . . . . . . . . . . $5 $15 $27 $60
----------------------------------------------------
U.S. GOVERNMENT FUND . . . . . . . . . . . . . . . . . . $5 $16 $28 $63
----------------------------------------------------
TREASURY FUND. . . . . . . . . . . . . . . . . . . . . . $5 $15 $26 $58
----------------------------------------------------
MUNICIPAL MONEY MARKET FUND
Institutional Shares. . . . . . . . . . . . . . . . . $5 $14 $25 $57
Investor Shares . . . . . . . . . . . . . . . . . . . $7 $21 $36 $81
----------------------------------------------------
READY CASH INVESTMENT FUND
Investor Shares . . . . . . . . . . . . . . . . . . . $8 $26 $46 $101

</TABLE>

6 7

<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for each Fund. This
information represents selected data for a single share outstanding of each
class of each Fund for the periods shown. Information for the period ended
November 30, 1996 is unaudited and information for the periods ended May 31,
1994, 1995 and 1996, was audited by KPMG Peat Marwick LLP, independent auditors.
Information for prior periods was audited by other independent auditors. Each
Fund's financial statements for the period ended November 30, 1996 are contained
in the Fund's Semi-Annual Report. Each Fund's financial statements for the
fiscal year ended May 31, 1996, and independent auditors' report thereon are
contained in the Fund's Annual Report. These financial statements are
incorporated by reference into the SAI. The Semi-Annual and Annual Reports may
be obtained by shareholders upon request without charge.

CASH INVESTMENT FUND
<TABLE>
<CAPTION>
SIX
MONTHS
PERIOD ENDED ENDED
NOVEMBER 30, YEAR ENDED MAY 31, MAY 31,
------------- ------------------------------------------------------- -------------
1996* 1996 1995 1994 1993 1992
------------- ------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . 0.025 0.054 0.049 0.031 0.033 0.021
Dividends from Net
Investment Income . . . . (0.025) (0.054) (0.049) (0.031) (0.033) (0.021)
------------- ------------------------------------------------------- -------------
Ending Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------- ------------------------------------------------------- -------------
------------- ------------------------------------------------------- -------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . . 0.48%(c) 0.48% 0.48% 0.49% 0.50% 0.50%(c)
Net Investment Income. . . 5.03%(c) 5.36% 4.87% 3.11% 3.29% 4.23%(c)

Total Return . . . . . . . . 5.18%(c) 5.50% 4.96% 3.16% 3.36% 4.29%(c)

Net Assets at the End of
Period (000's omitted). . $2,042,475 $1,739,549 $1,464,304 $1,381,402 $1,944,948 $1,292,196
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on October 14, 1987.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . 0.48%(c) 0.49% 0.50% 0.49% 0.51% 0.56%(c)
(c) Annualized.

Total Return . . . . . . . . 6.31% 8.22% 9.22% 7.32% 7.40%(c)

Net Assets at the End of
Period (000's omitted). . $1,004,979 $747,744 $662,698 $316,349 $53,951
- --------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on October 14, 1987.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these
waivers and reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses. . . . . . . . 0.54% 0.57% 0.64% 0.74% 1.09%(c)
(c) Annualized.
</TABLE>

8 9
<PAGE>

U.S. GOVERNMENT FUND
<TABLE>
<CAPTION>
SIX
MONTHS
PERIOD ENDED ENDED
NOVEMBER 30, YEAR ENDED MAY 31, MAY 31,
-------------- ------------------------------------------------------- ------------
1996* 1996 1995 1994 1993 1992
-------------- ------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . 0.024 0.052 0.047 0.030 0.030 0.020
Dividends from Net
Investment Income . . . . (0.024) (0.052) (0.047) (0.030) (0.030) (0.020)
-------------- ------------------------------------------------------- -------------
Ending Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------- ------------------------------------------------------- -------------
-------------- ------------------------------------------------------- -------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . 0.50%(c) 0.50% 0.50% 0.47% 0.45% 0.45%(c)
Net Investment Income. 4.87%(c) 5.13% 4.68% 3.02% 3.00% 3.99%(c)
Total Return . . . . . . . . 5.01%(c) 5.27% 4.81% 3.07% 3.06% 4.07%(c)
Net Assets at the End of
Period (000's omitted). . $1,751,441 $1,649,721 $1,159,421 $1,091,141 $903,274 $623,685
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on November 16, 1987.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses . . . . . . . 0.50%(c) 0.51% 0.52% 0.53% 0.57% 0.61%(c)
(c) Annualized.

<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------------------------------------------------
1991 1990 1989 1988 1987(a)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . . 0.058 0.077 0.085 0.069 0.003
Dividends from Net
Investment Income . . . . . (0.058) (0.077) (0.085) (0.069) (0.003)
-------------------------------------------------------------------------
Ending Net Asset Value
per Share . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . 0.45% 0.45% 0.45% 0.42%(c) 0.00%(c)
Net Investment Income. . 5.84% 7.66% 8.51% 6.87%(c) 6.89%(c)
Total Return . . . . . . . . . 6.00% 7.94% 8.87% 7.13%(c) 7.35%(c)
Net Assets at the End
of Period (000's omitted). . $469,487 $500,794 $394,137 $254,104 $4,343
- --------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on November 16, 1987.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these
waivers and reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses. . . . . . . . . 0.60% 0.61% 0.65% 0.73% 2.94%(c)
(c) Annualized.

</TABLE>

10 11
<PAGE>

TREASURY FUND
<TABLE>
<CAPTION>
SIX
MONTHS
PERIOD ENDED ENDED YEAR ENDED
NOVEMBER 30, YEAR ENDED MAY 31, MAY 31, NOVEMBER 30,
------------- ------------------------------------------------------- ------------- -------------
1996* 1996 1995 1994 1993 1992 1991(a)
------------- ------------------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . 0.024 0.050 0.046 0.028 0.029 0.020 0.058
Dividends from Net
Investment Income . . . . (0.024) (0.050) (0.046) (0.028) (0.029) (0.020) (0.058)
------------- ------------------------------------------------------- ------------- -------------
Ending Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------- ------------------------------------------------------- ------------- -------------
------------- ------------------------------------------------------- ------------- -------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . 0.46%(c) 0.46% 0.46% 0.46% 0.47% 0.47%(c) 0.31%(c)
Net Investment
Income . . . . . . . . 4.73%(c) 4.91% 4.62% 2.81% 2.93% 4.01%(c) 5.62%(c)
Total Return . . . . . . . . 4.86%(c) 5.04% 4.65% 2.83% 2.98% 4.07%(c) 6.02%(c)
Net Assets at the End of
Period (000's omitted). . $957,449 $802,270 $661,098 $526,483 $384,751 $374,492 $354,200
- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on December 3, 1990.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses. . . . . . . . 0.53%(c) 0.56% 0.57% 0.58% 0.58% 0.59%(c) 0.66%(c)
(c) Annualized.
</TABLE>

12 13
<PAGE>

MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
------------------------------------------------------- -----------------------------------------
PERIOD PERIOD
ENDED ENDED
NOVEMBER 30, YEAR ENDED MAY 31, NOVEMBER 30, YEAR ENDED MAY 31,
------------ ---------------------------------------- -------------- ------------------------
1996* 1996 1995 1994a) 1996* 1996 1995
------------ ---------------------------------------- -------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . . 0.016 0.035 0.033 0.019 0.015 0.033 0.031
Net Realized and
Unrealized Gain (Loss)
on Investments. . . . . . . -- -- (0.004) -- -- -- (0.004)
Dividends from Net
Investment Income . . . . . (0.016) (0.035) (0.033) (0.019) (0.015) (0.033) (0.031)
Capital Contribution
from Adviser. . . . . . . . -- -- 0.004 -- -- -- 0.004
------------ ---------------------------------------- -------------- ------------------------
Ending Net Asset Value
per Share . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------ ---------------------------------------- -------------- ------------------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . 0.45%(c) 0.45% 0.45% 0.45%(c) 0.65%(c) 0.65% 0.65%
Net Investment Income. . 3.17%(c) 3.41% 3.37% 2.33%(c) 2.97%(c) 3.25% 3.10%
Total Return . . . . . . . . . 3.24%(c) 3.52% 3.33%(d) 2.34%(c) 3.03%(c) 3.31% 3.13%(d)
Net Assets at the End of
Period (000's omitted). . . $641,652 $592,436 $278,953 $190,356 $61,454 $57,021 $47,424
- ----------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 7, 1988. The Fund's initial class of shares subsequently became Investor Shares. The
Fund commenced the offering of Institutional Shares on August 3, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses:. . . . . . . 0.69%(c) 0.72% 0.74% 0.77%(c) 0.88%(c) 0.88% 0.93%
(c) Annualized.
(d) Includes the effect of a capital contribution from Norwest. Without the capital contribution, total return would have been
2.59% for Investor Shares and 2.79% for Institutional Shares.

<CAPTION>
INVESTOR SHARES
---------------------------------------
SIX
MONTHS ENDED
MAY 31,
------------------------ -------------
1994 1993 1992
------------------------ -------------
<S> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
Net Investment Income. . . . . . . . . . . . . . . . . . . . 0.021 0.021 0.014
Net Realized and
Unrealized Gain (Loss)
on Investments. . . . . . . . . . . . . . . . . . . . . . -- -- --
Dividends from Net
Investment Income . . . . . . . . . . . . . . . . . . . . (0.021) (0.021) (0.014)
Capital Contribution
from Adviser. . . . . . . . . . . . . . . . . . . . . . . -- -- --
------------------------ -------------
Ending Net Asset Value
per Share . . . . . . . . . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
------------------------ -------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . . . . . . . . . . . . . . . . 0.65% 0.65% 0.63%(c)
Net Investment Income. . . . . . . . . . . . . . . . . 2.03% 2.13% 2.81%(c)
Total Return . . . . . . . . . . . . . . . . . . . . . . . . 2.09% 2.18% 2.89%(c)
Net Assets at the End of
Period (000's omitted). . . . . . . . . . . . . . . . . . $33,554 $75,521 $82,678
- ------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 7, 1988. The Fund's initial class of shares subsequently
became Investor Shares. The Fund commenced the offering of Institutional Shares on August 3, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these
waivers and reimbursements not occurred, the ratio of expenses to average net assets would have
been:
Expenses:. . . . . . . . . . . . . . . . . . . . . . 0.99% 0.97% 0.96%(c)
(c) Annualized.
(d) Includes the effect of a capital contribution from Norwest. Without the capital contribution,
total return would have been 2.59% for Investor Shares and 2.79% for Institutional Shares.

<CAPTION>
INVESTOR SHARES
------------------------------------------------------
1991 1990 1989 1988(a)
------------------------------------------------------
<S> <C> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . . $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . . 0.042 0.053 0.058 0.042
Net Realized and
Unrealized Gain
(Loss) on Investments . . . -- -- -- --
Dividends from Net
Investment Income . . . . . (0.042) (0.053) (0.058) (0.042)
Capital Contribution
from Adviser. . . . . . . . -- -- -- --
------------------------------------------------------
Ending Net Asset Value
per Share . . . . . . . . . $1.00 $1.00 $1.00 $1.00
------------------------------------------------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . . . 0.64% 0.64% 0.62% 0.60%(c)
Net Investment Income. . . . 4.10% 5.34% 5.78% 4.64%(c)
Total Return . . . . . . . . . 4.26% 5.48% 5.94% 4.76%(c)
Net Assets at the End of
Period (000's omitted). . . $66,327 $29,801 $18,639 $8,963
- --------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 7, 1988. The Fund's initial class of
shares subsequently became Investor Shares. The Fund commenced the offering of
Institutional Shares on August 3, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratio of
expenses to average net assets would have been:
Expenses:. . . . . . . 1.08% 1.16% 1.15% 1.20%(c)
(c) Annualized.
(d) Includes the effect of a capital contribution from the Fund's investment adviser.
Without the capital contribution, total return would have been 2.59% for Investor
Shares and 2.79% for Institutional Shares.
</TABLE>

14 15
<PAGE>

READY CASH INVESTMENT FUND
<TABLE>
<CAPTION>
INVESTOR SHARES
----------------------------------------------------------------------
PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
------------- -------------------------------------------------------
1996* 1996 1995 1994 1993
------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . 0.024 0.051 0.045 0.027 0.030
Dividends from Net
Investment Income . . . . (0.024) (0.051) (0.045) (0.027) (0.030)
------------- -------------------------------------------------------
Ending Net Asset Value
per Share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
------------- -------------------------------------------------------
------------- -------------------------------------------------------
Ratios to Average Net
Assets:
Expenses(b). . . . . . 0.82%(c) 0.82% 0.82% 0.82% 0.82%
Net Investment
Income . . . . . . . . 4.73%(c) 5.02% 4.64% 2.70% 3.04%
Total Return . . . . . . . . 4.85%(c) 5.17% 4.62% 2.74% 3.08%
Net Assets at the End of
Period (000's omitted). . $546,335 $473,879 $268,603 $164,138 $162,585
- ----------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 20, 1988. The Fund's initial class of shares
subsequently became Investor Shares.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had
these waivers and reimbursements not occurred, the ratio of expenses to average net assets
would have been:
Expenses: . . . . . . . 0.83%(c) 0.87% 0.91% 0.92% 0.94%
(c) Annualized.

<CAPTION>
INVESTOR SHARES
----------------------------------------------------------------------
SIX
MONTHS
ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
------------- -------------------------------------------------------
1992 1991 1990 1989 1988(a)
------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning Net Asset Value
per Share. . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income. . . . 0.020 0.058 0.076 0.085 0.059
Dividends from Net
Investment Income. . . . . (0.020) (0.058) (0.076) (0.085) (0.059)
------------- -------------------------------------------------------
Ending Net Asset Value
per Share. . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
------------- -------------------------------------------------------
------------- -------------------------------------------------------
Ratios to Average Net
Assets:
Expenses(b). . . . . . . 0.82%(c) 0.82% 0.82% 0.81% 0.77%(c)
Net Investment Income. . 4.01%(c) 5.81% 7.56% 8.51% 7.11%(c)
Total Return . . . . . . . . 4.05%(c) 5.98% 7.83% 8.86% 6.97%(c)
Net Assets at the End of
Period (000's omitted) . . $176,378 $183,775 $166,911 $144,117 $46,736
- ----------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on January 20, 1988. The Fund's initial class of shares
subsequently became Investor Shares.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had
these waivers and reimbursements not occurred, the ratio of expenses to average net assets
would have been:
Expenses: . . . . . . . 0.93%(c) 0.96% 0.97% 0.99% 1.13%(c)
(c) Annualized.
</TABLE>

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3.INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES

The investment objective of each of CASH INVESTMENT FUND, READY CASH INVESTMENT
FUND, U.S. GOVERNMENT FUND AND TREASURY FUND is to provide high current income
to the extent consistent with the preservation of capital and the maintenance of
liquidity.

The investment objective of MUNICIPAL MONEY MARKET FUND is to provide high
current income which is exempt from federal income taxes to the extent
consistent with the preservation of capital and the maintenance of liquidity. As
part of its objective, during periods of normal market condition, the Fund will
have at least 80% of its net assets invested in federally tax-exempt instruments
the income from which may be subject to the federal alternative minimum tax
("AMT"). See "Dividends and Tax Matters."

There can be no assurance that any Fund or any Core Portfolio will achieve its
investment objective or maintain a stable net asset value of $1.00 per share.

INVESTMENT POLICIES

CASH INVESTMENT FUND AND
READY CASH INVESTMENT FUND

CASH INVESTMENT FUND currently pursues its investment objective by investing
equally in two Core Portfolios - Money Market Portfolio and Prime Money Market
Portfolio. READY CASH INVESTMENT FUND currently pursues its investment objective
by investing all of its investable assets in Prime Money Market Portfolio. Cash
Investment Fund, Ready Cash Investment Fund, Money Market Portfolio and Prime
Money Market Portfolio each have the same investment objective and investment
policies, except that Ready Cash Investment Fund and Prime Money Market
Portfolio seek to maintain a rating from at least one NRSRO. Accordingly, Ready
Cash Investment Fund and Prime Money Market Portfolio are limited in the type
and amount of permissible securities (as described below) which they may
purchase. Each Core Portfolio invests in a broad spectrum of high quality money
market instruments of United States and foreign issuers.

Although the following discusses the investment policies of Money Market
Portfolio and Prime Money Market Portfolio, it applies equally to the Funds. It
is anticipated that the percentage of Cash Investment Fund's assets invested in
each Core Portfolio will not change.

OBLIGATIONS OF FINANCIAL INSTITUTIONS. The Portfolios may invest in obligations
of financial institutions. These include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of U.S. banks (including
savings banks and savings associations), foreign branches of U.S. banks,

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foreign banks and their non-U.S. branches (Eurodollars), U.S. branches and
agencies of foreign banks (Yankee dollars), and wholly owned banking-related
subsidiaries of foreign banks. The Portfolios limit their investments in
obligations of financial institutions (including their branches, agencies and
subsidiaries) to institutions which at the time of investment have total assets
in excess of one billion dollars, or the equivalent in other currencies.
Investments in foreign bank obligations are limited to banks, branches and
subsidiaries located in countries which Norwest believes do not present undue
risk.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period. Bank
notes are a debt obligation of a bank. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a customer and are
usually backed by goods in international trade. Time deposits are non-negotiable
deposits with a banking institution that earn a specified interest rate over a
given period. Certificates of deposit and fixed time deposits, which are payable
at the stated maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Portfolios but may be subject to early withdrawal
penalties which could reduce a Portfolio's yield. Unless there is a readily
available market for them, deposits that are subject to early withdrawal
penalties or that mature in more than seven days are treated as illiquid
securities.

Each Portfolio normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. This concentration may result in increased
exposure to risks pertaining to the banking industry. These risks include a
sustained increase in interest rates, which can adversely affect the
availability and cost of a bank's lending activities; exposure to credit losses
during times of economic decline; concentration of loan portfolios in certain
industries; regulatory developments; and competition among financial
institutions. Each Portfolio may not invest more than 25% of its total assets in
any other single industry.

UNITED STATES GOVERNMENT SECURITIES AND RELATED ZERO-COUPON SECURITIES. The
Portfolios may invest without limit in the types of securities eligible for
purchase by U.S. Government Fund. See "Investment Objectives and Policies -
Investment Policies - U.S. Government Fund."

FOREIGN GOVERNMENT SECURITIES. Norwest may invest in U.S. dollar denominated
obligations issued or guaranteed by the governments of countries which Norwest
believes do not present undue risk or of those countries' political
subdivisions, agencies or instrumentalities. The Portfolios may also invest in
the obligations of supranational organizations such as the International Bank
for Reconstruction and Development (the "World Bank") and the Inter-American
Development Bank.

MUNICIPAL SECURITIES. The Portfolios may invest without limit in the types of
municipal securities eligible for purchase by Municipal Money Market Fund. See
"Investment Objectives and Policies - Investment Policies - Municipal Money
Market Fund."

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CORPORATE DEBT SECURITIES. The Portfolios may invest in corporate debt
obligations of domestic or foreign issuers, including commercial paper (short-
term promissory notes) issued by companies to finance their, or their
affiliates', current obligations and corporate notes and bonds. The Portfolios
may invest in privately issued commercial paper or other corporate instruments
which are restricted as to disposition under the federal securities laws. Any
sale of this paper may not be made absent registration under the Securities Act
of 1933 or the availability of an appropriate exemption therefrom. Some of these
restricted securities, however, are eligible for resale to institutional
investors, and accordingly, a liquid market may exist for them. Pursuant to
guidelines adopted by the Board, Norwest will determine whether each such
investment is liquid.

PARTICIPATION INTERESTS. The Portfolios may purchase from financial institutions
participations in loans or securities. A participation interest gives a
Portfolio an undivided interest in the loan or security in the proportion that
the Portfolio's interest bears to the total principal amount of the security.
For certain participation interests a Portfolio will have the right to demand
payment, on not more than seven days' notice, for all or a part of the
Portfolio's participation interest. The Portfolios intend to exercise any demand
rights they may have only upon default under the terms of the loan or security,
to provide liquidity or to maintain or improve the quality of the Portfolios'
investment portfolio. Neither Portfolio will invest more than 10% of its total
assets in participation interests in which the Portfolio does not have demand
rights.

FOREIGN INSTRUMENTS. The Portfolios' investments in securities of foreign
entities may involve certain risks that are different from investments in
domestic securities. These risks may include unfavorable political and economic
developments; the imposition of foreign withholding taxes on interest income
payable on these securities; the seizure or nationalization of foreign deposits;
the existence of accounting, auditing and financial reporting standards which
are not comparable to those of U.S. issuers; and the establishment of exchange
controls, interest limitations or other foreign governmental restrictions which
affect adversely the payment of principal and interest on these securities. In
addition, there may be less public information available about foreign issuers.
Norwest considers these factors when making investments in foreign instruments.
The Portfolios have no limit on the amount of their foreign assets which may be
invested in any one type of foreign instrument or in any foreign country;
however, to the extent a Portfolio concentrates its assets in a foreign country,
these risks will be increased.

U.S. GOVERNMENT FUND

U.S. Government Fund invests primarily in obligations issued or guaranteed as to
principal and interest by the United States Government or by any of its agencies
and instrumentalities ("U.S. Government Securities"). The Fund may also invest
in repurchase agreements and certain zero-coupon securities

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secured by U.S. Government Securities. Under normal circumstances, however, the
Fund will invest at least 65% of its total assets in U.S. Government Securities.

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

U.S. GOVERNMENT AND OTHER RELATED ZERO-COUPON SECURITIES. The Fund may invest in
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury under the Treasury's Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. In addition,
the Fund may invest in other types of related zero-coupon securities. For
instance, a number of banks and brokerage firms separate the principal and
interest portions of U.S. Treasury securities and sell them separately in the
form of receipts or certificates representing undivided interests in these
instruments. These instruments are generally held by a bank in a custodial or
trust account on behalf of the owners of the securities and are known by various
names, including Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs") and Certificates of Accrual on Treasury Securities ("CATS"). The Fund
will not invest more than 35% of its total assets in zero-coupon securities
other than those issued through the STRIPS program.

TREASURY FUND

Treasury Fund invests solely in obligations that are issued or guaranteed by the
U.S. Treasury, such as U.S. Treasury bills, bonds and notes ("U.S. Treasury
Securities"). This may include separately traded principal and interest
components of securities issued or guaranteed by the U.S. Treasury. See
"Investment Objectives and Policies - Investment Policies - U.S. Government
Fund."

MUNICIPAL MONEY MARKET FUND

Municipal Money Market Fund attempts to invest 100% of its assets in the
obligations of the states, territories and possessions of the United States and
of their subdivisions, authorities and corporations, the interest on which is
exempt from Federal income tax ("municipal securities").The Fund reserves

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the right, however, to invest up to 20% of its assets in securities the interest
income on which is subject to federal income. The municipal securities in which
the Fund may invest include short-term municipal bonds and municipal notes and
leases. These municipal securities may have fixed, variable or floating rates of
interest and may be zero-coupon securities.

When the assets and revenues of an issuing agency, authority, instrumentality or
other political subdivision are separate from those of the government creating
the issuing entity and a security is backed only by the assets and revenues of
the entity, the entity will be deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds, that is backed only by the assets and revenues of the
non-governmental user, the non-governmental user will be deemed to be the sole
issuer of the security.

The Fund may invest more than 25% of its assets in industrial development bonds
and in participation interests therein issued by banks. The Fund may from time
to time invest more than 25% of its assets in obligations of issuers located in
one state but, under normal circumstances, will not invest more than 35% of its
assets in obligations of issuers located in one state. If the Fund concentrates
its investments in this manner, it will be more susceptible to factors adversely
affecting issuers of those municipal securities than would be a more
geographically diverse municipal securities portfolio. These risks arise from
the financial condition of the particular state and its political subdivisions.

MUNICIPAL BONDS. Municipal bonds can be classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by a
municipality's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are usually payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other tax, but not from general
tax revenues. Municipal bonds include industrial development bonds. Municipal
bonds may also be "moral obligation" bonds, which are normally issued by special
purpose public authorities. If the issuer is unable to meet its obligations
under the bonds from current revenues, it may draw on a reserve fund that is
backed by the moral commitment (but not the legal obligation) of the state or
municipality that created the issuer.

The Fund may invest in tax-exempt industrial development bonds, which in most
cases are revenue bonds and generally do not have the pledge of the credit of
the municipality. The payment of the principal and interest on these bonds is
dependent solely on the ability of an initial or subsequent user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment. The Fund will acquire private activity securities only if the interest
payments on the security are exempt from federal income taxation (other than the
Alternative Minimum Tax (AMT)).

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MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities, are intended to fulfill short-term capital needs and
generally have original maturities not exceeding one year. They include tax
anticipation notes, revenue anticipation notes (which generally are issued in
anticipation of various seasonal revenues), bond anticipation notes,
construction loan notes and tax-exempt commercial paper. Tax-exempt commercial
paper generally is issued with maturities of 270 days or less at fixed rates of
interest.

MUNICIPAL LEASES. Municipal Leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Lease and
installment purchase or conditional sale contracts (which normally provide for
title to the leased assets to pass eventually to the government issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations of many state constitutions and statutes
are deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease or contract
unless money is appropriated for such purpose by the appropriate legislative
body on a yearly or other periodic basis. Generally, the Fund will invest in
municipal lease obligations through certificates of participation.

PARTICIPATION INTERESTS. The Fund may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution. Prior to purchasing any
participation interest, the Fund will obtain appropriate assurances that the
interest earned by the Fund from the obligations in which it holds participation
interests is exempt from federal income tax.

THE SHORT-TERM MUNICIPAL SECURITIES MARKET. Yields on municipal securities are
dependent on a variety of factors, including the general conditions of the
municipal security markets and the fixed income markets in general, the size of
a particular offering, the maturity of the obligation and the rating of the
issue. The achievement of the Fund's investment objective is dependent in part
on the continuing ability of the issuers of municipal securities in which the
Fund invests to meet their obligations for the payment of principal and interest
when due. Under current federal tax law, interest on certain municipal
securities issued after August 7, 1986 to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such

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interest will continue to be fully tax-exempt for regular federal income tax
purposes. The Fund may purchase private activity securities, the interest on
which may constitute a "tax preference item" for purposes of the AMT.

Although the Fund invests primarily in municipal securities, it is anticipated
that a substantial amount of the securities held by the Fund will be supported
by credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features, of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Fund will be dependent in part upon the
credit quality of the banks supporting the Fund's investments. This will result
in exposure to risks pertaining to the banking industry, including the foreign
banking industry. See "Investment Objectives and Policies - Investment Policies
- - Cash Investment Fund and Ready Cash Investment Fund - Obligations of Financial
Institutions" above. Brokerage firms and insurance companies also provide
certain liquidity and credit support. The Fund's policy is to purchase municipal
securities with third party credit or liquidity support only after Norwest has
considered the creditworthiness of the financial institution providing the
support and believes that the security presents minimal credit risk.

The Fund may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate. Tender option bonds are generally held pursuant to a
custodial arrangement.

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liquidity, shorten the maturity of the related municipal security or permit the
Fund to invest its funds at more favorable rates. Generally, the Fund will buy a
municipal security that is accompanied by a put only if the put is available at
no extra cost. In some cases, however, the Fund may pay an extra amount to
acquire a put, either in connection with the purchase of the related municipal
security or separately from the purchase of the security.

The Fund may purchase municipal securities together with the right to resell
them to the seller or a third party at an agreed-upon price or yield within
specified periods prior to their maturity dates. Such a right to resell is
commonly known as a "stand-by commitment," and the aggregate price which the
Fund pays for securities with a stand-by commitment may be higher than the price
which otherwise would be paid. The primary purpose of this practice is to permit
the Fund to be as fully invested as practicable in municipal securities while
preserving the necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, the Fund acquires stand-by commitments solely to
facilitate portfolio liquidity and does not exercise its rights thereunder for
trading purposes. Stand-by commitments involve certain expenses and risks,
including the inability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, non-marketability of the
commitment, and differences between the maturity of the underlying security and
the maturity of the commitment.

TAXABLE INVESTMENTS. Although the Fund will attempt to invest 100% of its assets
in municipal securities, the Fund may invest up to 20% of the value of its net
assets in cash and cash equivalents the interest income on which is subject to
federal taxation. In addition, when business or financial conditions warrant or
when an adequate supply of appropriate municipal securities is not available,
the Fund may assume a temporary defensive position and invest without limit in
cash or cash equivalents the interest income on which is subject to federal
income taxation, which include: (i) short-term U.S. Government Securities; (ii)
certificates of deposit, Bankers' acceptances and interest-bearing savings
deposits; (iii) commercial paper; (iv) repurchase agreements covering any of the
preceding securities; and (v) to the extent permitted by the Investment Company
Act of 1940, money market mutual funds. For a description of the securities
listed in items (i) through (iii), see "Investment Objectives and Policies -
Investment Policies - Cash Investment Fund and Ready Cash Investment Fund."

ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS

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more than 50% of the outstanding shares. Except as otherwise indicated,
investment policies of the Funds (and Core Portfolios) are not deemed to be
fundamental and may be changed by the Board of Trustees of the Trust (the
"Board") or the board of trustees of Core Trust (the "Core Board"), as
applicable, without shareholder approval.

Unless otherwise indicated, the discussion below of the investment policies of
the Funds refers, in the case of Cash Investment Fund and Ready Cash Investment
Fund, to the investment policies of their respective Core Portfolios.A further
description of the Funds' investment policies, including additional fundamental
policies, is contained in the SAI.

Each Fund may enter into repurchase agreements (except Treasury Fund), may enter
into reverse repurchase agreements (which are considered borrowings), may lend
their securities and may purchase securities on a forward commitment basis as
described below. As a fundamental policy, each Fund may borrow money for
temporary or emergency purposes (including the meeting of redemption requests),
but not in excess of 33 1/3% of the value of the Fund's total assets. Borrowing
for other than meeting redemption requests will not exceed 5% of the value of a
Fund's net assets. Each Fund is permitted to invest in other investment
companies which intend to comply with Rule 2a-7 and have substantially similar
investment objectives and policies. Each Fund has reserved the right to invest
all or a portion of its assets in one or more other investment companies.

The Funds' use of repurchase agreements, reverse repurchase agreements,
securities lending and forward commitments entails certain risks not associated
with direct investments in securities. For instance, in the event that
bankruptcy or similar proceedings were commenced against a counterparty in these
transactions or a counterparty defaulted on its obligations, a Fund might suffer
a loss. Failure by the other party to deliver a security purchased by a Fund may
result in a missed opportunity to make an alternative investment. Norwest
monitors the creditworthiness of counterparties to these transactions and
intends to enter into these transactions only when it believes the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.

As part of its regular banking operations, Norwest Bank may make loans to public
companies. Thus, it may be possible, from time to time, for a Fund to hold or
acquire the securities of issuers which are also lending clients of Norwest. A
lending relationship will not be a factor in the selection of portfolio
securities for a Fund.

GENERAL MONEY MARKET FUND GUIDELINES. Each Fund invests only in high quality,
short-term money market instruments that are determined by Norwest, pursuant to
procedures adopted by the Board or Core Board, as applicable, to be eligible for
purchase and to present minimal credit risks. Each Fund will invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act")) and will maintain

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a dollar-weighted average portfolio maturity of 90 days or less. Securities with
ultimate maturities of greater than 397 days may be purchased in accordance with
Rule 2a-7. Under that Rule, only those long-term instruments that have demand
features which comply with certain requirements and certain variable rate U.S.
Government Securities, as described below, may be purchased. The securities in
which the Funds may invest may have fixed, variable or floating rates of
interest.

Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Fund will not invest more than 5% of its total
assets in the securities of any one issuer. Also, a Fund may not purchase a
security if the value of all securities held by the Fund and issued or
guaranteed by the same issuer (including letters of credit in support of a
security) would exceed 10% of the Fund's total assets. Those requirements apply
with respect to only 75% of the total assets of Municipal Money Market Fund. In
addition, to ensure adequate liquidity, no Fund may invest more than 10% of its
net assets in illiquid securities, including repurchase agreements maturing in
more than seven days. Under the supervision of the Board or Core Board, the
Norwest determines and monitors the liquidity of portfolio securities.

As used herein, high quality instruments include those that: (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO; or (ii) are otherwise unrated and determined by
Norwest, pursuant to guidelines adopted by the Board and Core Board, to be of
comparable quality. Except for Municipal Money Market Fund, each Fund will
invest at least 95% of its total assets in securities in the highest rating
category as determined pursuant to Rule 2a-7. A description of the rating
categories of Standard & Poor's, Moody's Investors Service and certain other
NRSROs is contained in the SAI.

The market value of the interest-bearing debt securities held by the Funds,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
i.e., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also affect the market
value of the debt securities of that issuer. Obligations of issuers of debt
securities, including municipal securities, are also subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. The possibility exists, therefore, that, as a result of bankruptcy,
litigation or other conditions, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may be materially affected.

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Although each Fund only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the Fund's
portfolio are paid in full at maturity. All money market instruments, including
U.S. Government Securities, can change in value as a result of changes in
interest rates and/or the issuer's actual or perceived creditworthiness.

REPURCHASE AGREEMENTS. Except for Treasury Fund, each Fund may enter into
repurchase agreements, which are transactions in which a Fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed-upon price on an agreed-upon future date, normally one to seven days
later. The resale price reflects a market rate of interest that is not related
to the coupon rate or maturity of the purchased security. The Trust's custodian
maintains possession of the underlying collateral, which is maintained at not
less than 100% of the repurchase price.

LENDING OF PORTFOLIO SECURITIES. Each Fund may lend securities from their
portfolios to brokers, dealers and other financial institutions. Securities
loans must be continuously secured by cash or U.S. Government Securities with a
market value, determined daily, at least equal to the value of the Fund's
securities loaned, including accrued interest. A Fund receives interest in
respect of securities loans from the borrower or from investing cash collateral.
The Funds may pay fees to arrange the loans. No Fund may lend portfolio
securities in excess of 33 1/3% of the value of the Fund's total assets.
Generally, the lending of portfolio securities involves risks similar to, but
slightly greater than, those involved in entering into repurchase agreements.

FORWARD COMMITMENTS. Each Fund may purchase securities on a when-issued or
delayed delivery basis (forward commitments). Securities so purchased are
subject to market price fluctuation from the time of purchase but no interest on
the securities accrues to a Fund until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Forward commitments will be entered into only when
a Fund has the intention of actually acquiring the securities, but a Fund may
sell the securities before the settlement date if deemed advisable. In addition,
forward commitments will not be entered into if the aggregate of the commitments
exceeds 15% of the value of the Fund's total assets.

REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements, which are transactions in which a Fund sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no specified repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate. The Funds will
use the proceeds of reverse repurchase agreements only to fund redemptions or to
make investments which generally either mature or have a demand feature to
resell to the issuer on a date not later than the expiration of

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the agreement. Interest costs on the money received in a reverse repurchase
agreement may exceed the return received on the investments made by a Fund with
those monies.

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Funds invest
may have variable or floating rates of interest. These securities pay interest
at rates that are adjusted periodically according to a specified formula,
usually with reference to some interest rate index or market interest rate. The
interest paid on these securities is a function primarily of the indexes or
market rates upon which the interest rate adjustments are based. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness. The rate of interest on securities purchased by a
Fund may be tied to Treasury or other government securities or indices on those
securities as well as any other rate of interest or index.

There may not be an active secondary market for any particular floating or
variable rate instrument which could make it difficult for a Fund to dispose of
the instrument if the issuer defaulted on its repayment obligation during
periods that the Fund is not entitled to exercise any demand rights it may have.
A Fund could, for this or other reasons, suffer a loss with respect to an
instrument. Norwest monitors the liquidity of each Fund's investment in variable
and floating rate instruments, but there can be no guarantee that an active
secondary market will exist.

Cash Investment Fund and Ready Cash Investment Fund also may purchase variable
and floating rate demand notes of corporations, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangement with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
their outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.

MORTGAGE- AND ASSET-BACKED SECURITIES. Each Fund (other than Treasury Fund) may
purchase fixed or adjustable rate mortgage or other asset-backed securities,
including securities backed by automobile loans, equipment leases or credit card
receivables. These securities may be U.S. Government Securities or, in the case
of Cash Investment Fund, Ready Cash Investment Fund or Municipal Money Market
Fund, privately issued and directly or indirectly represent a participation in,
or are secured by and payable from, fixed or adjustable rate mortgage or other
loans which may be secured by real estate or other assets. Unlike traditional
debt instruments, payments on these securities may include both interest and a
partial payment of principal. Prepayments of the principal of underlying loans
may shorten the effective

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maturities of these securities. Some adjustable rate securities (or the
underlying loans) are subject to caps or floors that limit the maximum change in
interest rate during a specified period or over the life of the security. In the
case of Municipal Money Market Fund, these securities will be municipal
securities.

ZERO-COUPON SECURITIES. Each Fund may invest in zero-coupon securities (such as
Treasury bills), which are securities that are sold at original issue discount
and pay no interest to holders prior to maturity, but a Fund must include a
portion of the original issue discount of the security as income. Because each
Fund distributes substantially all of its net investment income, a Fund may have
to sell portfolio securities to distribute imputed income, which may occur at a
time when Norwest would not have chosen to sell such securities and which may
result in a taxable gain or loss. Zero-coupon securities may be subject to
greater fluctuation of market value than the other securities in which the Fund
may invest.

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4. MANAGEMENT

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

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest Investment Management, Inc. makes investment decisions for the Funds and
continuously reviews, supervises and administers each Fund's investment program.
Norwest provides its investment advisory services directly to U.S. Government
Fund, Treasury Fund and Municipal Money Market Fund and indirectly to Cash
Investment Fund and Ready Cash Investment Fund through its investment advisory
services to the Core Portfolios. Norwest, which is located at Norwest Center,
Sixth Street and Marquette, Minneapolis, Minnesota 55479, is an indirect
subsidiary of Norwest Corporation, a multi-bank holding company that was
incorporated under the laws of Delaware in 1929. As of March 31, 1997, Norwest
Corporation had assets of $83.6 billion which made it the 11th largest bank
holding company in the United States. As of December 31, 1996, Norwest and its
affiliates managed assets with a value of approximately billion.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest contribute to
the investment services provided to the Funds and the Core Portfolios. The
following persons, however, are primarily responsible for day-to-day management
and, unless otherwise noted, have been since the inception of the Fund or
Portfolio. For periods prior to June 1, 1997, all persons associated with
Norwest served in their current positions with Norwest Bank. Prior to that date
Norwest Bank was each Fund's investment adviser. In addition to their
responsibilities as listed below, each of the portfolio managers may perform
portfolio management and other duties for Norwest Bank.

David D. Sylvester (all Funds) and Laurie R. White (all Funds except Municipal
Money Market Fund). Mr. Sylvester has been associated with Norwest for 16 years,
the last 8 years as a Vice President and Senior Portfolio Manager. He has over
20 years' experience in managing securities portfolios. Ms. White has been a
Vice President and Senior Portfolio Manager of Norwest since 1991; from 1989 to
1991, she was a Portfolio Manager at Richfield Bank and Trust. Ms. White began
serving as a portfolio manager in 1991.

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ADVISORY FEES. For its services, Norwest receives investment advisory fees from
the Funds (or to the extent a Fund invests in a Core Portfolio, from that Core
Portfolio) at the following annual rates of the Fund's or Portfolio's average
daily net assets.

FUND INVESTMENT ADVISORY FEE
- -----------------------------------------------------------------------------
<S> <C>
Cash Investment Fund
(Money Market Portfolio).............. 0.20% (first $300 million of assets)
0.16% (next $400 million of assets)
0.12% (remaining assets)
(Prime Money Market Portfolio)........ 0.40% (first $300 million of assets)
0.36% (next $400 million of assets)
0.32% (remaining assets)
Ready Cash Investment Fund
(Prime Money Market Portfolio)........ 0.40% (first $300 million of assets)
0.36% (next $400 million of assets)
0.32% (remaining assets)
U.S. Government Fund and Treasury
Fund.................................. 0.20% (first $300 million of assets)
0.16% (next $400 million of assets)
0.12% (remaining assets)
Municipal Money Market Fund............. 0.35% (first $500 million of assets)
0.325% (next $500 million of assets)
0.30% (remaining assets)
</TABLE>

Each of Cash Investment Fund and Ready Cash Investment Fund may withdraw its
assets from its corresponding Core Portfolio(s) at any time if the Board
determines that it is in the best interests of the Fund to do so. See "Other
Information - Core and Gateway Structure." Accordingly, each of these Funds has
retained Norwest as its investment adviser. Under these "dormant" investment
advisory agreements, Norwest does not receive any investment advisory fees with
respect to a Fund as long as the Fund remains completely invested in its
respective Core Portfolio(s). In the event that Cash Investment Fund were to
withdraw its assets from its respective Core Portfolios, Norwest would receive
an investment advisory fee at an annual rate of 0.20% of the first $300 million
of the Fund's average daily net assets, 0.16% of the next $400 million of the
Fund's average daily net assets and 0.12% of the Fund's remaining average daily
net assets. In the event that Ready Cash Investment Fund were to withdraw its
assets from Prime Money Market Portfolio, Norwest would receive an investment
advisory fee at an annual rate of 0.40% of the first $300 million of the Fund's
average daily net assets, 0.36% of the next $400 million of the Fund's average
daily net assets and 0.32% of the Fund's remaining average daily net assets.

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MANAGEMENT, ADMINISTRATION AND
DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others, including the Funds'
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to each Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring the
sale of shares and ensuring that such shares are properly and duly registered
with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of dividends and
distributions to shareholders.

As of June 1, 1997, Forum and FAS provided management and administrative
services to registered investment companies and collective investment funds with
assets of approximately $19 billion. Forum is a member of the National
Association of Securities Dealers, Inc. For their services Forum and FAS each
receives a fee with respect to each Fund at an annual rate of 0.05% of the first
$300 million of the Fund's average daily net assets, 0.0375% of the next $400
million of the Fund's average daily net assets and 0.025% of the Fund's
remaining average daily net assets. FAS also serves as an administrator of each
Core Portfolio and provides services to the Core Portfolios that are similar to
those provided to the Funds by Forum and FAS. For its services FAS receives a
fee with respect to each Core Portfolio at an annual rate of 0.10% of the
Portfolio's average daily net assets.

Pursuant to a separate Distribution Services Agreement, Forum is the exclusive
representative of the Trust to act as principal underwriter and distributor of
the Funds, except under circumstances specified in that agreement. Forum
receives no payments for its services as distributor with respect to the Shares.
In addition, none of the Funds has adopted a Rule 12b-1 Plan applicable to the
Shares and, accordingly, no Fund incurs any distribution expenses with

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respect to the Shares. From its own resources, Forum may pay a fee to broker-
dealers or other persons for distribution or other services related to the
Funds.

SHAREHOLDER SERVICING AND
CUSTODY

Norwest Bank 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
functions and acts as dividend disbursing agent for the Trust. The Transfer
Agent is permitted to subcontract any or all of its functions with respect to
all or any portion of the Trust's shareholders to one or more qualified
sub-transfer agents or processing agents, which may be affiliates of the
Transfer Agent. Sub-transfer agents and processing agents may be "Processing
Organizations" as described under "How To Buy Shares - Purchase Procedures." The
Transfer Agent is permitted to compensate those agents for their services;
however, that compensation may not increase the aggregate amount of payments by
a Fund to the Transfer Agent. For its services, the Transfer Agent receives a
fee with respect to each Fund at an annual rate of 0.25% of each Fund's (0.20%
in the case of Cash Investment Fund) average daily net assets attributable to
each class of the Fund (other than Institutional Shares of Municipal Money
Market Fund). For its services, the Transfer Agent receives from Municipal Money
Market Fund a fee at an annual rate of 0.10% of the average daily net assets
attributable to Institutional Shares of that Fund and is reimbursed for certain
expenses.

Norwest Bank also serves as each Fund's and each Core Portfolio's custodian. For
its custodial services, Norwest Bank receives a fee with respect to each Fund
and each Core Portfolio at an annual rate of 0.02% of the first $100 million of
the Fund's or Core Portfolio's average daily net assets, 0.01% of the next $200
million of the Fund's or Core Portfolio's average daily net assets and 0.005% of
the Fund's or Core Portfolio's remaining average daily net assets. No fee is
payable by a Fund to the extent the Fund is invested in a Core Portfolio.

EXPENSES OF THE FUNDS

Subject to the obligation of Norwest to reimburse the Trust for certain expenses
of the Funds, the Trust has confirmed its obligation to pay all the Trust's
expenses. The Funds' expenses include Trust expenses attributable to the Funds,
which are allocated to each Fund, and expenses not specifically attributable to
the Funds, which are allocated among the Funds and all other funds of the Trust
in proportion to their average net assets. Each service provider to a Fund may
elect to waive (or continue to waive) all or a portion of their fees, which are
accrued daily and paid monthly. Any such waivers

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will have the effect of increasing a Fund's performance for the period during
which the waiver is in effect. Fee waivers are voluntary and may be reduced or
eliminated at any time.

Norwest has agreed to waive its investment advisory fee for Money Market
Portfolio through May 31, 1999 to the extent that the fee exceeds the annual
rate of 0.10% of the Portfolio's average daily net assets. In addition, Norwest
and Forum have agreed to waive their respective fees or reimburse expenses in
order to maintain Cash Investment Fund's total combined operating expenses
through May 31, 1999 at the same level as the Fund's total operating expenses
prior to May 31, 1997 (0.48%). Any increase in expenses would require Board
approval (and notice to shareholders), which would be given only if the Board
determined that the amount of the fees to be paid to Norwest or Forum after the
reduction or elimination would be fair and reasonable.

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Ready Cash Investment Fund's total combined
operating expenses through May 31, 1998, at the same level as the Fund's total
operating expenses prior to May 31, 1997 (0.82%). After May 31, 1998, any
proposed reduction in the amount of those waivers and reimbursements would be
reviewed by the Board.

The expenses of each of Cash Investment Fund and Ready Cash Investment Fund
include the Fund's pro rata share of the expenses of the Core Portfolios in
which the Fund invests, which are borne indirectly by the Fund's shareholders.

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5.HOW TO BUY SHARES

MINIMUM INVESTMENT

For initial purchases of Cash Investment Fund, U.S. Government Fund, Treasury
Fund, and Institutional Shares of Municipal Money Market Fund, there is a
$100,000 minimum; there is no minimum for subsequent purchases. For initial
purchases of Investor Shares of Municipal Money Market Fund and Ready Cash
Investment Fund, there is a $1,000 minimum; there is a $100 minimum for
subsequent purchases. A Fund may in its discretion waive the investment minimum.
Shareholders of Investor Shares of Municipal Money Market Fund and Ready Cash
Investment Fund who elect electronic share purchase privileges such as the
Automatic Investment Plan or the Directed Dividend Option are not subject to the
initial investment minimums. See "Other Shareholder Services - Automatic
Investment Plan" and "Dividends and Tax Matters."

An investor's order will not be accepted or invested by a Fund during the period
before the Fund's receipt of immediately available funds. Purchase orders will
be accepted on Fund Business Days only until the times indicated below.

ORDER MUST
BE PAYMENT MUST
RECEIVED BE
FUND BY RECEIVED BY
- ------------------------------------------------------------
<S> <C> <C>
Cash Investment Fund.............. 3:00 P.M. 4:00 P.M.
U.S. Government Fund.............. 2:00 P.M. 4:00 P.M.
Treasury Fund..................... 1:00 P.M. 4:00 P.M.
Municipal Money Market Fund....... 12:00 NOON 4:00 P.M.
Ready Cash Investment Fund........ 3:00 P.M. 4:00 P.M.
</TABLE>

All times referenced in the above table are Eastern Time. The Trust reserves the
right to close early and advance the time by which the Funds must receive
purchase orders and payments on days that the New York Stock Exchange or
Minneapolis Federal Reserve Bank closes early, the Public Securities Association
recommends that the government securities markets close early or due to other
circumstances which may effect a Fund's trading hours.

Fund shares become entitled to receive dividends and distributions on the Fund
Business Day the order is accepted.

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

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PURCHASE PROCEDURES

INITIAL PURCHASES
THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

1. BY MAIL. Investors may send a check or money order along with a completed
account application form to the Trust at the address listed under "Account
Application." Checks or money orders are accepted at full value subject to
collection. Payment by a check drawn on any member of the Federal Reserve System
can normally be converted into federal funds within two business days after
receipt of the check. Checks drawn on some non-member banks may take longer.

NORWEST BANK MINNESOTA, N.A.
ABA 091 000 019
FOR CREDIT TO: NORWEST FUNDS

0844-131
RE: [NAME OF FUND]
[DESIGNATE INVESTOR SHARES OR
INSTITUTIONAL SHARES, IF APPLICABLE]
ACCOUNT NO.:
ACCOUNT NAME:

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financial institutions, including Processing Organizations, may charge their
customers a fee for their services and are responsible for promptly transmitting
purchase, redemption and other requests to the Funds.

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

ACCOUNT APPLICATION

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

NORWEST FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040

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GENERAL INFORMATION

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

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6.HOW TO SELL SHARES

GENERAL INFORMATION

Fund Shares may be sold (redeemed) at their net asset value on any Fund Business
Day. 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 a 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).

Redemption orders will be accepted on Fund Business Days only until the times
indicated below.

ORDER MUST
BE
RECEIVED
FUND BY
- ------------------------------------------------------------
<S> <C>
Cash Investment Fund............................ 3:00 P.M.
U.S. Government Fund............................ 2:00 P.M.
Treasury Fund................................... 1:00 P.M.
Municipal Money Market Fund..................... 12:00 NOON
Ready Cash Investment Fund...................... 3:00 P.M.
</TABLE>

All times referenced in the above table are Eastern Time. The Trust reserves the
right to close early and advance the time by which the Funds must receive
redemption orders on days that the New York Stock Exchange or Minneapolis
Federal Reserve Bank closes early, the Public Securities Association recommends
that the government securities markets close early or due to other circumstances
which may affect a Fund's trading hours.

Redeemed shares are not entitled to receive dividends declared on or after the
day the redemption becomes effective.

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

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REDEMPTION PROCEDURES

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

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

2. BY TELEPHONE. A shareholder who has elected telephone redemption privileges
may make a telephone redemption request by calling the Transfer Agent at (800)
338-1348 or (612) 667-8833 and providing the shareholder's account number, the
exact name in which 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 "How to Sell Shares - Other Redemption Matters."

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

OTHER REDEMPTION MATTERS

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in which the account address has changed within the last 30 days; (x) redemption
when the proceeds are deposited in a Norwest Funds account under a different
account registration; and (xi) the remitting of redemption proceeds to any
address, person or account for which there are not established standing
instructions on the account.

Shareholders who want telephone redemption or exchange privileges 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 and Transfer Agent did not employ such procedures,
they 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: (i) shares in
any Cash Investment Fund, U.S. Government Fund, Treasury Fund or Institutional
Shares of Municipal Money Market Fund account whose aggregate net asset value is
less than $10,000 immediately following any redemption or; (ii) Investor Shares
in any Municipal Money Market Fund or Ready Cash Investment Fund account whose
aggregate net asset value is less than $1,000 immediately following any
redemption.

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7. OTHER SHAREHOLDER SERVICES

EXCHANGES

Holders of Investor Shares of a Fund may exchange their Shares for Investor
Shares of the other Fund and A class shares of certain other funds of the Trust.
Shareholders of Cash Investment Fund, U.S. Government Fund and Treasury Fund and
holders of Institutional Shares of Municipal Money Market Fund may exchange
their Shares among those Funds and that class. The Trust may in the future
create additional funds or classes of funds the shares of which will be
exchangeable with the Shares of the Funds. A current list of the funds of the
Trust that offer shares exchangeable with the Shares of the Funds can be
obtained through Forum by contacting the Transfer Agent.
The Funds do not charge for exchanges, and there is currently no limit on the
number of exchanges a shareholder may make. The Funds reserve the right,
however, to limit excessive exchanges by any shareholder. Exchanges are subject
to the fees charged by, and the limitations (including minimum investment
restrictions) of, the fund into which a shareholder is exchanging. If an
exchange of Investor Shares is made into a fund that imposes an initial sales
charge, the shareholder is required to pay that Fund's initial sales charge on
the number of shares being acquired in the exchange.

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

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AUTOMATIC INVESTMENT PLAN

Under Municipal Money Market Fund's and Ready Cash Investment Fund's Automatic
Investment Plan, holders of Investor Shares 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 reaches $1,000, the Trust reserves the right to close
the account in accordance with the procedures described under "How to Sell
Shares - Other Redemption Matters."

INDIVIDUAL RETIREMENT ACCOUNTS

The Funds (other than Shares of Municipal Money Market 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. Generally, all contributions and
investment earnings in an IRA will be tax-deferred until withdrawn. 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 of Cash Investment Fund, U.S. Government Fund, Treasury Fund or
Institutional Shares of Municipal Money Market Fund whose shares in a single
account total $10,000 or more, or a shareholder of Investor Shares

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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 Trust or 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 $10,000 with respect to Cash Investment Fund,
U.S. Government Fund or Institutional Shares of Municipal Money Market Fund or
$1,000 with respect to Investor Shares at any time.

CHECKWRITING

Shareholders wishing to establish checkwriting privileges may do so by
completing an application, which may be obtained by writing or calling the Funds
or the Transfer Agent. After the application is properly completed and returned
to a Fund, the shareholder will be supplied with checks which may be made
payable to any person in any amount of $500.00 or more. When a check is
presented for payment, the number of full and fractional shares required to
cover the amount of the check will be redeemed from the shareholder's account by
the Transfer Agent as agent for the shareholder. Any shares for which
certificates have been issued may not be redeemed by check. If the amount of a
check is greater than the value of the uncertificated shares held in the
shareholder's account, the check will not be honored. Fund shares may not be
redeemed until the check used to purchase the shares has cleared (which may take
15 or more days). A shareholder may not liquidate the shareholder's entire
account by means of a check. Shareholders will be subject to the rules and
regulations of the Transfer Agent pertaining to the checkwriting privilege as
amended from time to time. Checkwriting procedures may be changed, modified or
terminated at any time by the Trust or the Transfer Agent upon written
notification to the shareholder.

REOPENING ACCOUNTS

45
<PAGE>
- ----
- ----

8.DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of each Funds' net investment income are declared daily and paid
monthly. Distributions of net capital gain, if any, realized by a Fund are
distributed annually. Dividends and distributions paid by a Fund with respect to
each class of shares are calculated in the same manner and at the same time. The
per share dividends on a class of shares will vary inversely with the class of
shares' operating expenses.

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

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

TAX MATTERS

46
<PAGE>
- ----
- ----

MUNICIPAL MONEY MARKET FUND. Dividends paid by Municipal Money Market Fund out
of tax-exempt interest income earned by the Fund ("exempt-interest dividends")
generally will not be subject to federal income tax in the hands of the Fund's
shareholders. Persons who are "substantial users" or "related persons" thereof
of facilities financed by private activity securities held by the Fund, however,
may be subject to federal income tax on their pro rata share of the interest
income from those securities and should consult their tax advisers before
purchasing Shares. Interest on certain private activity securities issued after
August 7, 1986 is treated as an item of tax preference for purposes of the AMT
imposed on individuals and corporations. In addition, exempt-interest dividends
are included in the "adjusted current earnings" of corporations for AMT
purposes.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, Shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the Shares.

Substantially all of the dividends paid by the Fund are anticipated to be exempt
from federal income taxes. Shortly after the close of each calendar year, a
statement is sent to each shareholder advising the shareholder of the portion of
the Fund's dividends that is derived from obligations of issuers in the various
states and the portion of the Fund's dividends that is exempt from federal
income taxes. These portions are determined for the Fund's entire year and,
thus, are annual averages, rather than day-by-day determinations for each
shareholder.

The exemption for federal income tax purposes of dividends derived from interest
on municipal securities does not necessarily result in an exemption under the
income or other tax laws of any state or local taxing authority.

47
<PAGE>
- ----
- ----

Shareholders of a Fund may be exempt from state and local taxes on distributions
of tax-exempt interest income derived from obligations of the state and/ or
municipalities of the state in which they reside but may be subject to tax on
income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.

48
<PAGE>
- ----
- ----

9. OTHER INFORMATION

BANKING LAW MATTERS

Federal banking rules generally permit a bank or bank affiliate to act as
investment adviser, transfer agent, and custodian to an investment company and
to purchase shares of the investment company as agent for and upon the order of
a customer and, in connection therewith, to retain a sales charge or similar
payment. Forum believes that Norwest and any bank or other bank affiliate also
may perform Processing Organization or similar services for the Trust and its
shareholders without violating applicable federal banking rules. If a bank or
bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the 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 net asset value per share of each class of Cash Investment Fund, Ready Cash
Investment Fund, U.S. Government Fund, Treasury Fund and Municipal Money Market
Fund is determined as of 3:00 p.m., 3:00 p.m., 2:00 p.m., 1:00 p.m. and 12:00
noon, Eastern Time, respectively, 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. The Funds do not determine net asset value on the
following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veteran's Day, Thanksgiving and Christmas.

In order to maintain a stable net asset value per share of $1.00, the portfolio
securities of each Fund and Core Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If the market value of a Fund's portfolio deviates more than 1/2 of 1%
from the value determined on the basis of amortized cost, the Board will
consider whether any action should be initiated to prevent any material effect
on shareholders.

PERFORMANCE INFORMATION

A Fund's performance may be quoted terms of yield. All performance information
is based on historical results and is not intended to indicate future
performance. A Fund's yield is a way of showing the rate of income the Fund
earns on its investments as a percentage of the Fund's share price. To calculate
standardized yield, a Fund takes the income it earned from its investments for a
7-day period (net of expenses), divides it by the average number of shares

49
<PAGE>
- ----
- ----

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 7-day period.
Municipal Money Market Fund may also quote tax-equivalent yields, which show the
taxable yields a shareholder would have to earn to equal the Fund's tax-free
yield, after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate.

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

THE TRUST AND ITS SHARES

OTHER CLASSES OF SHARES. Cash Investment Fund, U.S. Government Fund and Treasury
Fund currently issue one class of shares. Municipal Money Market Fund currently
issues two classes of shares - Institutional Shares and Investor Shares. Ready
Cash Investment Fund currently issues two classes of shares - Investor Shares
and Exchange Shares. Exchange Shares may be purchased only in exchange for B
class shares of certain funds of the Trust. Each class of a Fund will have a
different expense ratio and may have different sales charges (including
distribution fees). Each class' performance is affected by its expenses and
sales charges. For more information on any other class of shares of the Funds
investors may contact the Transfer Agent at (612) 667-8833 or (800) 338-1348 or
the Funds' distributor. Investors may also contact their Norwest sales
representative to obtain information about the other classes. Sales personnel of
broker-dealers and other financial institutions selling the Funds' shares may
receive differing compensation for selling Institutional, Investor and Exchange
Shares of the Funds.

50
<PAGE>
- ----
- ----

Generally, shares will be voted in the aggregate without reference to a
particular series or class, except if the matter affects only one series or
class or voting by series or class is required by law, in which case shares will
be voted separately by series 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 (and Trustees) 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 series is entitled to the shareholder's pro rata share of all dividends and
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.

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

CORE AND GATEWAY STRUCTURE

Cash Investment Fund and Ready Cash Investment Fund each seek to achieve its
investment objective by investing all of its investable assets in its
corresponding Core Portfolio(s), that have the same investment objective and
substantially identical investment policies as the Funds. Accordingly, each Core
Portfolio directly acquires portfolio securities and a Fund acquires an indirect
interest in those securities. Each Core Portfolio is a separate series of Core
Trust, a business trust organized under the laws of the State of Delaware in
1994. Core Trust is registered under the 1940 Act as an open-end, management,
investment company. The assets of each Core Portfolio belong only to, and the
liabilities of each Core Portfolio are borne solely by, that Core Portfolio and
no other portfolio of Core Trust.

THE CORE PORTFOLIOS. A Fund's investment in a Core Portfolio is in the form of a
non-transferable beneficial interest. All investors in a Core Portfolio will
invest on the same terms and conditions and will pay a proportionate share of
the Core Portfolio's expenses. As of June 1, 1997, one other fund of the Trust
invested a portion of its assets in each Core Portfolio.

51
<PAGE>
- ----
- ----

required to sell its shares at the same public offering price as any Fund, and
could have different advisory and other fees and expenses than a Fund.
Therefore, Fund shareholders may have different returns than shareholders in
another investment company that invests in a Core Portfolio. Information
regarding any such funds is available from Core Trust by calling Forum at (207)
879-1900.

CERTAIN RISKS OF INVESTING IN CORE PORTFOLIOS. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in that Core
Portfolio. For example, if Money Market Portfolio had a large investor other
than Cash Investment Fund that redeemed its interest, Money Market Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses, thereby producing lower returns. As there may be
other investors in a Core Portfolio, there can be no assurance that any issue
that receives a majority of the votes cast by a Fund's shareholders will receive
a majority of votes cast by all investors in a Core Portfolio; indeed, other
investors holding a majority interest in a Core Portfolio could have voting
control of the Core Portfolio.

Each Fund may withdraw its entire investment from a Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in a Core Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective or policies of
the Core 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 Core 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 would incur brokerage fees or other transaction costs. If
the Fund withdrew its investment from a Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets
directly by Norwest or the investment of the Fund's assets in another pooled
investment entity. The inability of the Fund to find a suitable replacement
investment, in the event the Board decided not to permit Norwest to manage the
Fund's assets directly, could have a significant impact on shareholders of the
Fund.

52
<PAGE>

------------------------------------------------------------
---------------
[LOGO] BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3489
MINNEAPOLIS, MN
---------------

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

[LOGO]

SHAREHOLDER INFORMATION:

Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 (MINNEAPOLIS/ST. PAUL)
800-338-1348 (ELSEWHERE)

-COPYRIGHT- 1997 NORWEST ADVANTAGE FUNDS
MFBPM001 6/97

<PAGE>

INCOME FUNDS
- --------------------------------------------------------------------------------

PROSPECTUS

JUNE 1, 1997

STABLE INCOME FUND
---------------
INTERMEDIATE GOVERNMENT INCOME FUND
---------------
INCOME FUND
---------------
TOTAL RETURN BOND FUND

[LOGO]

NOT FDIC INSURED
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<C> <S> <C> <C>
TABLE OF CONTENTS

1. PROSPECTUS SUMMARY......................... 2
2
Highlights of the Funds....................
6
Expense Information........................

2. FINANCIAL HIGHLIGHTS....................... 10

3. INVESTMENT OBJECTIVES AND POLICIES......... 18
18
Stable Income Fund.........................
19
Intermediate Government Income Fund........
20
Income Fund................................
22
Total Return Bond Fund.....................
23
Additional Investment Policies and Risk
Considerations.............................

4. MANAGEMENT................................. 41
41
Investment Advisory Services...............
43
Management, Administration and Distribution
Services...................................
44
Shareholder Servicing and Custody..........
45
Expenses of the Funds......................

5. CHOOSING A SHARE CLASS..................... 46
47
A Shares...................................
50
B Shares...................................

6. HOW TO BUY SHARES.......................... 55
55
Minimum Investment.........................
55
Purchase Procedures........................
57
Account Application........................
57
General Information........................

7. HOW TO SELL SHARES......................... 58
58
General Information........................
58
Redemption Procedures......................
59
Other Redemption Matters...................

8. OTHER SHAREHOLDER SERVICES................. 61
61
Exchanges..................................
62
Automatic Investment Plan..................
63
Individual Retirement Accounts.............
63
Automatic Withdrawal Plan..................
63
Reopening Accounts.........................

9. DIVIDENDS AND TAX MATTERS.................. 64
64
Dividends..................................
64
Tax Matters................................

10. OTHER INFORMATION.......................... 66
66
Banking Law Matters........................
66
Determination of Net Asset Value...........
66
Performance Information....................
67
The Trust and Its Shares...................
68
Core and Gateway Structure.................
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

JUNE 1, 1997

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

STABLE INCOME FUND and TOTAL RETURN BOND FUND each seeks to achieve its
investment objective by investing all of its investable assets in a separate
portfolio of another registered, open-end, management investment company with
the same investment objective. See "Prospectus Summary" and "Other Information -
Core and Gateway-Registered Trademark- Structure."

INTERMEDIATE GOVERNMENT INCOME FUND and INCOME FUND each seeks to achieve its
investment objective by investing directly in portfolio securities.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission (the "SEC") a Statement of
Additional Information ("SAI") dated June 1, 1997, as may be amended from time
to time, which is available for reference on the SEC's Web Site
(http.//www.sec.gov) and which contains more detailed information about the
Trust and each of the Funds and is incorporated into this Prospectus by
reference. An investor may obtain a copy of the SAI without charge by contacting
the Trust's distributor, Forum Financial Services, Inc., at Two Portland Square,
Portland, Maine 04101 or by calling (207) 879-0001. Investors should read this
Prospectus and retain it for future reference.

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

1
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS.

INVESTMENT OBJECTIVES AND POLICIES

STABLE INCOME FUND seeks to maintain safety of principal while providing low-
volatility total return. This objective is pursued by investing primarily in
short and intermediate maturity, investment grade fixed income securities.

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

INCOME FUND seeks to provide total return consistent with current income. This
objective is pursued by investing in a portfolio of fixed income securities
issued by domestic and foreign issuers.

TOTAL RETURN BOND FUND seeks total return. This objective is pursued by
investing in a portfolio of U.S. Government and investment grade corporate fixed
income securities.

FUND STRUCTURES

STABLE INCOME FUND and TOTAL RETURN BOND FUND each seeks to achieve its
investment objective by investing all of its investable assets in a separate
portfolio (each a "Core Portfolio") of Core Trust (Delaware) ("Core Trust"), a
registered, open-end, management investment company, that has the same
investment objective and substantially similar investment policies as the Fund.
Accordingly, the investment experience of each of these Funds will correspond
directly with the investment experience of its respective Core Portfolio. See
"Other Information - Core and Gateway Structure." The Funds and the Core
Portfolio in which they invest are:

FUND CORE PORTFOLIO
---- --------------
Stable Income Fund Stable Income Portfolio
Total Return Bond Fund Total Return Bond Portfolio

INTERMEDIATE GOVERNMENT INCOME FUND and INCOME FUND each seek to achieve its
investment objective by investing directly in portfolio securities.

INVESTMENT ADVISERS

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is the Funds' investment adviser. Norwest
also is the investment adviser of each Core Portfolio. Norwest provides
investment advice to various institutions, pension plans and other accounts
and, with its affiliates, as of December 31, 1996, managed over $42.6 billion
in assets. See "Management - Investment Advisory Services."

<PAGE>

Norwest Bank serves as transfer agent, dividend disbursing agent and
custodian of the Trust and serves as the custodian of each Core Portfolio.
See "Management - Shareholder Servicing and Custody" and "-- Management,
Administration and Distribution Services."

Stable Income Fund and Total Return Bond Fund each incur investment advisory
fees indirectly through the investment advisory fees paid by their respective
Core Portfolios; Norwest is paid an investment advisory fee directly by each of
Intermediate Government Income Fund and Income Fund.

GALLIARD CAPITAL MANAGEMENT, INC. ("Galliard"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Stable Income Fund
and Stable Income Portfolio. Galliard provides investment advice regarding
advisory services to bank and thrift institutions, pension and profit sharing
plans, trusts and charitable organizations and corporate and other business
entities. See "Management - Investment Advisory Services."

UNITED CAPITAL MANAGEMENT, INC. ("UCM"), a part of Norwest Bank Colorado, N.A.
is the investment subadviser of Total Return Bond Fund and of Total Return Bond
Portfolio. UCM provides specialized investment advisory services to various
institutional clients. See "Management - Investment Advisory Services."

Norwest, Galliard and UCM (or Norwest and a particular investment subadvisor)
are sometimes referred to collectively as the "Advisers."

FUND MANAGEMENT AND ADMINISTRATION

SHARES OF THE FUNDS

EACH FUND CURRENTLY OFFERS THREE SEPARATE CLASSES OF SHARES: A class ("A
Shares"), B class ("B Shares") and I class ("I Shares"). A Shares and B Shares
are sold through this Prospectus and are collectively referred to as the
"Shares."

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

B SHARES. B Shares are offered at a price equal to their net asset value
plus a contingent deferred sales charge imposed on most redemptions made
within four years (two years in the case of Stable Income Fund) 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

<PAGE>

of the same Fund six years (four years in the case of Stable Income
Fund) 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. See "Choosing a Share Class."

HOW TO BUY AND SELL SHARES

Shares may be purchased or redeemed by mail, by bank wire and through an
investor's broker-dealer or other financial institution. The minimum initial
investment in Shares is $1,000 ($5,000 in the case of Stable Income Fund). The
minimum subsequent investment is $100. See "How to Buy Shares" and "How to Sell
Shares."

EXCHANGES

SHAREHOLDER FEATURES

DIVIDENDS AND DISTRIBUTIONS

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

<PAGE>

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

There can be no assurance that any Fund will achieve its investment objective,
and a Fund's net asset value and total return will fluctuate based upon changes
in the value of its portfolio securities. Upon redemption, an investment in a
Fund may be worth more or less than its original value. The Funds' investments
are subject to "credit risk" relating to the financial condition of the issuers
of the securities that each Fund holds. Each Fund, however, invests only in
investment grade securities (those rated in the top four grades by a nationally
recognized statistical rating organization ("NRSRO") such as Standard & Poor's).

All investments made by the Funds entail some risk. Certain investments and
investment techniques, however, entail additional risks, such as the potential
use of leverage by certain Funds through borrowings, securities lending, swap
transactions and other investment techniques. See "Investment Objectives and
Policies - Additional Investment Policies and Risk Considerations." Similarly, a
Fund's use of mortgage- and asset-backed securities entails certain risks. See
"Investment Objectives and Policies - Additional Investment Policies and Risk
Considerations - Mortgage-Backed Securities" and "- Asset-Backed Securities." As
noted under "Financial Highlights," the portfolio turnover rate for certain
Funds may from time to time be high, resulting in increased short-term capital
gains or losses. See "Additional Investment Policies and Risk Considerations -
Portfolio Transactions."

By pooling their assets in a Core Portfolio with other institutional investors,
STABLE INCOME FUND and TOTAL RETURN BOND FUND each may be able to achieve
certain efficiencies, economies of scale and enhanced portfolio diversification.
Nonetheless, these investments could have adverse effects on the Funds which
investors should consider. Investment decisions are made by the portfolio
managers of each Core Portfolio independently. Therefore the portfolio manager
of one Core Portfolio in which a Fund invests may purchase shares of the same
issuer whose shares are being sold by the portfolio manager of another Core
Portfolio in which the Fund invests. This could result in an indirect expense
to the Fund without accomplishing any investment purpose. See "Other
Information - Core and Gateway Structure -- Certain Risks of Investing in Core
Portfolios."

<PAGE>

EXPENSE INFORMATION

SHAREHOLDER TRANSACTION EXPENSES
(APPLICABLE TO EACH FUND)

<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT INCOME FUND,
STABLE INCOME FUND AND
INCOME FUND TOTAL RETURN BOND FUND
--------------------------- ---------------------------
A SHARES B SHARES A SHARES B SHARES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of public offering price) . . . . . . . . . . . 1.5%(1) Zero 3.75%(1) Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase
price or redemption proceeds). . . . . . . . . . . . . . . . . . Zero(2) 1.5%(1)(3) Zero (2) 3.0% (1)(3)
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . Zero Zero Zero Zero
</TABLE>

ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER APPLICABLE
FEE WAIVERS AND EXPENSE REIMBURSEMENTS)

<TABLE>
<CAPTION>
INTERMEDIATE
STABLE GOVERNMENT INCOME TOTAL RETURN
INCOME FUND INCOME FUND FUND BOND FUND(7)
----------------- ----------------- ----------------- -----------------
A B A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees
(after fee waivers)(5). . . . . . . . . N/A N/A 0.33% 0.33% 0.40% 0.40% N/A N/A
Rule 12b-1 Fees
(after fee waivers)(6). . . . . . . . . None 0.75% None 0.75% None 0.55% None 0.75%
Other Expenses (after reimbursements). . . 0.29% 0.29% 0.35% 0.35% 0.35% 0.55% 0.36% 0.36%
Investment Advisory Fees -- Core
Portfolio (after reimbursements)(5) . . 0.30% 0.30% N/A N/A N/A N/A 0.35% 0.35%
Other Expenses -- Core Portfolio
(after reimbursements). . . . . . . . . 0.06% 0.06% N/A N/A N/A N/A 0.04% 0.04%
----------------- ----------------- ----------------- -----------------
Total Operating Expenses(8). . . . . . . . 0.65% 1.40% 0.68% 1.43% 0.75% 1.50% 0.75% 1.50%
</TABLE>

(1) Sales charge waivers and reduced sales charge plans are available for A and
B Shares. See "Choosing a Share Class."

(2) If A Shares of a Fund (other than Stable Income Fund) purchased without an
initial sales charge (purchases of $1,000,000 or more) are redeemed
within two years after purchase, a deferred sales charge of up to 0.75%
will be applied to the redemption. If A Shares of Stable Income Fund
purchased without an initial sales charge (purchases of $1,000,000 or
more) are redeemed within two years after purchase, a deferred sales
charge of up to 0.50% will be applied to the redemption.

(3) The maximum 3.0% deferred sales charge on B Shares of a Fund (other than
Stable Income Fund) applies to redemptions during the first year after
purchase; the charge declines thereafter, and is 2.0% during the second
and third years, 1.0% during the fourth year and zero the following
year. The maximum 1.5% deferred sales charge on B Shares of Stable
Income Fund applies to redemptions during the first year after purchase;
the charge declines thereafter, and is 0.75% during the second year and
zero the following year. Sales charge waivers are available for B
Shares.

(5) For Stable Income Fund and Total Return Bond Fund, "Investment Advisory
Fees -- Core Portfolio" reflects the investment advisory fees incurred
by the Core Portfolio in which the Fund invests. Absent estimated
waivers, the "Investment Advisory Fee" for Income Fund would be 0.50%.

(6) Absent fee waivers, "Rule 12b-1 Fees" would be 1.00% for B Shares of each
Fund. Long-term shareholders of B Shares may pay Rule 12b-1 Fees and
contingent deferred sales charges totaling in the aggregate more than
the economic equivalent of the maximum front-end sales charges permitted
by the rules of the National Association of Securities Dealers, Inc.

6 7

<PAGE>

(7) Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Total Return Bond Fund's total combined
operating expenses through May 31, 1998 at or below 0.75% for A Shares
and 1.50% for B Shares. See "Management -- Expenses of the Funds".

(8) Absent estimated expense reimbursements and fee waivers, the expenses of A
Shares of Stable Income Fund, Intermediate Government Income Fund,
Income Fund and Total Return Bond Fund would be: "Other Expenses,"
0.95%, 1.26%, 0.67% and 0.71%, respectively; "Other Expenses -- Core
Portfolio," 0.16%, N/A, N/A and 0.14%, respectively; and "Total
Operating Expenses," 1.42%, 1.59%,1.17% and 1.19%, respectively. Absent
expense reimbursements and fee waivers, the expenses of B Shares of
Stable Income Fund, Intermediate Government Income Fund, Income Fund and
Total Return Bond Fund would be: "Other Expenses," 2.22%, 1.97%, 0.78%
and 1.03%, respectively; "Other Expenses -- Core Portfolio," 0.16%, N/A,
N/A and 0.14%, respectively; and "Total Operating Expenses," 3.68%,
3.30%, 2.28% and 2.52%, respectively. "Other Expenses" includes
transfer agency fees payable to Norwest of 0.25% for A Shares and B
Shares. Except as otherwise noted, expense reimbursements and fee
waivers are voluntary and may be reduced or eliminated at any time.

EXAMPLE

The following Hypothetical Expense Example indicates the dollar amount of
expenses that an investor would pay, assuming a $1,000 investment in a Fund's
Shares, the expenses listed in the "Annual Fund Operating Expenses" table, a
5% annual return and reinvestment of all dividends and distributions. The
example also assumes deduction of the maximum initial sales charge for A
Shares, deduction of the contingent deferred sales charge for B Shares
applicable to a redemption at the end of the period and the conversion of B
Shares to A Shares at the end of six years (four years in the case of Stable
Income Fund). 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. The 5% annual return is not predictive of and does not
represent the Funds' projected returns; rather, it is required by government
regulation.

<PAGE>

HYPOTHETICAL EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------
<S> <C> <C> <C> <C>
STABLE INCOME FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 22 35 51 95
B Shares
Assuming redemption at the end of the period . . . 29 44 77 168
Assuming no redemption . . . . . . . . . . . . . . 14 44 77 168
----------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 44 58 74 119
B Shares
Assuming redemption at the end of the period . . . 45 65 78 171
Assuming no redemption . . . . . . . . . . . . . . 15 45 78 171
----------------------------------------------------
INCOME FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 45 61 78 127
B Shares
Assuming redemption at the end of the period . . . 45 67 82 179
Assuming no redemption . . . . . . . . . . . . . . 15 47 82 179
----------------------------------------------------
TOTAL RETURN BOND FUND
A Shares. . . . . . . . . . . . . . . . . . . . . . . 45 61 78 127
B Shares
Assuming redemption at the end of the period . . . 46 67 82 179
Assuming no redemption . . . . . . . . . . . . . . 15 47 82 179
</TABLE>

<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for each Fund. This
information represents selected data for a single outstanding A Share and B
Share of each Fund for the periods shown. Information for the period ended
November 30, 1996 is unaudited and information for the period ended May 31,
1996, was audited by KPMG Peat Marwick LLP, independent auditors. Information
for prior periods was audited by other independent auditors. Each Fund's
financial statements for the period ended November 30, 1996 are contained in the
Fund's Semi-Annual Report. Each Fund's financial statements for the fiscal year
ended May 31, 1996, and independent auditors' report thereon are contained in
the Fund's Annual Report. These financial statements are incorporated by
reference into the SAI. Further information about each Fund's performance is
contained in the Semi-Annual and Annual Reports, which may be obtained from the
Trust without charge.

STABLE INCOME FUND
<TABLE>
<CAPTION>
A SHARES B SHARES
--------------------------------- ---------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
---------------- --------------- ---------------- ---------------
1996* 1996(a) 1996* 1996(a)
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value
per Share . . . . . . . . . . . . . . . . . . . . . . . $10.20 $10.22 $10.20 $10.23
Net Investment Income. . . . . . . . . . . . . . . . . . . 0.28 0.02 0.26 0.02
Net Realized and Unrealized
Gain (Loss) on Investments. . . . . . . . . . . . . . . 0.08 -- 0.06 (0.01)
Dividends from Net
Investment Income . . . . . . . . . . . . . . . . . . . (0.29) (0.04) (0.18) (0.04)
Distributions from Net
Realized Gain . . . . . . . . . . . . . . . . . . . . . -- -- -- --
---------------- --------------- ---------------- ---------------
Ending Net Asset Value per Share . . . . . . . . . . . . . $10.27 $10.20 $10.27 $10.20
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . . . . . . . . . 0.64%(c) 0.70%(c) 1.39%(c) 1.42%(c)
Net Investment Income . . . . . . . . . . . . . . . . . 5.67%(c) 5.77%(c) 4.92%(c) 5.02%(c)
Total Return . . . . . . . . . . . . . . . . . . . . . . . 7.16%(c) 0.23% 6.31%(c) 0.12%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 34.60% 109.95% 34.60% 109.95%
Net Assets at the End of
Period (000's omitted). . . . . . . . . . . . . . . . . $12,480 $16,256 $575 $867

- ---------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced the offering of A Shares on May 2, 1996 and B Shares on May 17, 1996.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses: . . . . . . . . . . . . . . . . . . . . . . 0.77%(c) 2.22%(c) 2.26%(c) 3.07%(c)
(c) Annualized.

</TABLE>

10 11

<PAGE>

INTERMEDIATE GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
A SHARES B SHARES
--------------------------------- ---------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30,(a) MAY 31,
---------------- --------------- ---------------- ---------------
1996* 1996(a) 1996* 1996(a)
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . . . . . . . . . $10.89 $10.89 $10.89 $10.97
Net Investment Income. . . . . . . . . . . . . . . . . . . 0.37 0.03 0.32 0.03
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . . . . 0.28 -- 0.28 (0.08)
Dividends from Net
Investment Income . . . . . . . . . . . . . . . . . . . (0.37) (0.03) (0.33) (0.03)
Distributions from Net Realized Gain . . . . . . . . . . . -- -- -- --
---------------- --------------- ---------------- ---------------
Ending Net Asset Value per Share . . . . . . . . . . . . . $11.17 $10.89 $11.16 $10.89
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . . . . . . . . . 0.68%(c) 0.75%(c) 1.42%(c) 1.35%(c)
Net Investment Income . . . . . . . . . . . . . . . . . 6.70%(c) 7.32%(c) 5.90%(c) 5.56%(c)
Total Return . . . . . . . . . . . . . . . . . . . . . . . 12.41%(c) 0.26% 11.45%(c) 0.49%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 99.57% 74.64% 99.57% 74.64%
Net Assets at the End of Period
(000's omitted) . . . . . . . . . . . . . . . . . . . . $14,573 $16,562 $9,683 $10,682

- ---------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced the offering of A Shares on May 2, 1996 and B Shares on May 17, 1996.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and
reimbursements not occurred, the ratio of expenses to average net assets would have been:
Expenses:. . . . . . . . . . . . . . . . . . . . . 0.78%(c) 1.74%(c) 1.66%(c) 2.65%(c)
(c) Annualized.

</TABLE>

12 13

<PAGE>

INCOME FUND
<TABLE>
<CAPTION>
A SHARES
------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
------------ ----------------------------------------------------------
1996* 1996 1995 1994 1993 1992 1991
------------ ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . . . . . . . . . $9.27 $9.63 $9.52 $10.61 $10.52 $10.23 $9.94
Net Investment Income. . . . . . . . . . . . . . . . . . . 0.31 0.61 0.65 0.70 0.77 0.82 0.89
Net Realized and Unrealized Gain (Loss) on Investments . . 0.32 (0.36) 0.11 (0.83) 0.39 0.53 0.29
Dividends from Net Investment Income . . . . . . . . . . . (0.31) (0.61) (0.65) (0.70) (0.77) (0.82) (0.89)
Distributions from Net Realized Gains. . . . . . . . . . . -- -- -- (0.26) (0.30) (0.24) --
------------ ----------------------------------------------------------
Ending Net Asset Value per Share . . . . . . . . . . . . . $9.59 $9.27 $9.63 $9.52 $10.61 $10.52 $10.23
------------ ----------------------------------------------------------
------------ ----------------------------------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . . . . . . . . . 0.75%(c) 0.75% 0.75% 0.60% 0.60% 0.31% 0.16%
Net Investment Income . . . . . . . . . . . . . . . . . 6.65%(c) 6.33% 7.02% 6.72% 7.18% 7.80% 8.82%
Total Return . . . . . . . . . . . . . . . . . . . . . . . 14.24%(c) 2.58% 8.49% (1.58%) 11.46% 13.58% 12.38%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 111.50% 270.17% 98.83% 26.67% 87.98% 84.24% 61.33%
Net Assets at the End of Period (000's omitted). . . . . . $5,418 $5,521 $6,231 $6,177 $85,252 $63,973 $50,138

- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on June 9, 1987. The Funds' original class of shares subsequently became A Shares. The Fund
commenced the offering of B Shares on August 5, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses. . . . . . . . . . . . . . . . . . . . . . . 1.06%(c) 1.16% 1.24% 1.16% 1.10% 1.08% 1.11%
(c) Annualized.

<CAPTION>
A SHARES B SHARES
---------------------------------- -------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED
MAY 31, NOVEMBER 30, MAY 31,
1990 1989 1988(a) 1996* 1996 1995 1994(a)
---------------------------------- ------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset Value per Share. . . . $10.00 $9.95 $10.00 $9.26 $9.61 $9.51 $10.67
Net Investment Income. . . . . . . . . . . 0.90 0.79 0.66 0.28 0.54 0.58 0.50
Net Realized and Unrealized Gain (Loss)
on Investments. . . . . . . . . . . . . (0.06) 0.05 0.05 0.31 (0.35) 0.10 (0.90)
Dividends from Net Investment Income . . . (0.90) (0.79) (0.66) (0.28) (0.54) (0.58) (0.50)
Distributions from Net Realized Gain . . . -- -- -- -- -- -- (0.26)
---------------------------------- ------------ ------------------------------------
Ending Net Asset Value per Share . . . . . $9.94 $10.00 $ 9.95 $9.57 $ 9.26 $ 9.61 $9.51
---------------------------------- ------------ ------------------------------------
---------------------------------- ------------ ------------------------------------
Ratios to Average Net Assets:
Expenses(b) . . . . . . . . . . . . . . 0.19% 0.07% 0.70%(c) 1.50%(c) 1.50% 1.50% 1.33%(c)
Net Investment Income . . . . . . . . . 8.98% 8.62% 6.92%(c) 5.95%(c) 5.57% 6.24% 5.82%(c)
Total Return . . . . . . . . . . . . . . . 8.71% 8.78% 6.45%(c) 13.24%(c) 1.92% 7.57% (4.82%)(c)
Portfolio Turnover Rate. . . . . . . . . . 43.81% 48.08% 0.00% 111.50% 270.17% 98.83% 26.67%
Net Assets at the End of Period
(000's omitted) . . . . . . . . . . . . $37,932 $27,939 $2,279 $3,452 $3,292 $3,296 $2,605

- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced operations on June 9, 1987. The Funds' original class of shares subsequently became A Shares. The Fund
commenced the offering of B Shares on August 5, 1993.
(b) During the periods, various fees and expenses were waived and reimbursed, respectively. Had these waivers and reimbursements
not occurred, the ratio of expenses to average net assets would have been:
Expenses. . . . . . . . . . . . . . . 1.13% 1.10% 2.28%(c) 2.43%(c) 2.27% 2.21% 2.08%(c)
(c) Annualized.

</TABLE>

14 15

<PAGE>

TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>

A SHARES B SHARES
------------------------------------------------- ------------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
------------ ----------------------------------- ------------ -----------------------------------
1996* 1996 1995 1994(a) 1996* 1996 1995 1994(a)
------------ ----------------------------------- ------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Net Asset
Value per Share . . . . . . . $9.40 $9.73 $9.54 $10.00 $9.40 $9.73 $9.54 $10.00
Net Investment Income. . . . . . 0.30 0.64 0.67 0.27 0.27 0.57 0.59 0.24
Net Realized and
Unrealized Gain (Loss)
on Investments. . . . . . . . 0.26 (0.31) 0.19 (0.46) 0.28 (0.31) 0.19 (0.46)
Dividends from Net
Investment Income . . . . . . (0.30) (0.64) (0.67) (0.27) (0.27) (0.57) (0.59) (0.24)
Distributions from
Net Realized Gain . . . . . . -- (0.02) -- -- -- (0.02) -- --
------------ ----------------------------------- ------------ -----------------------------------
Ending Net Asset Value
per Share . . . . . . . . . . $9.66 $9.40 $9.73 $9.54 $9.68 $9.40 $9.73 $9.54
------------ ----------------------------------- ------------ -----------------------------------
------------ ----------------------------------- ------------ -----------------------------------
Ratios to Average
Net Assets:
Expenses(b). . . . . . . . 0.75%(c) 0.76% 0.64% 0.37%(c) 1.49%(c) 1.51% 1.41% 1.11%(c)
Net Investment Income. . . 6.35%(c) 6.48% 6.94% 6.04%(c) 5.58%(c) 5.75% 6.17% 5.40%(c)
Total Return . . . . . . . . . . 12.39%(c) 3.41% 9.42% (4.64%)(c) 12.02%(c) 2.63% 8.59% (5.23%)(c)
Portfolio Turnover Rate. . . . . 22.25% 77.49% 35.19% 37.50% 22.25% 77.49% 35.19% 37.50%
Net Assets at the End of
Period (000's omitted). . . . $2,681 $2,010 $599 $150 $2,264 $2,098 $919 $186

- ------------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) The Fund commenced the offering of A and B 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 ratio of expenses to average net assets would have been:
Expenses. . . . . . . . . . 1.25%(c) 1.57% 2.38% 13.29%(c) 2.53%(c) 2.48% 3.09% 8.29%(c)
(c) Annualized.

</TABLE>

16 17
<PAGE>
- ----
- ----

3.INVESTMENT OBJECTIVES AND POLICIES

STABLE INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to maintain safety
of principal while providing low-volatility total return. The Fund currently
pursues its investment objective by investing all of its investable assets in
Stable Income Portfolio, which has the same investment objective and
substantially similar investment policies as the Fund. Therefore, although the
following discusses the investment policies of that Portfolio, it applies
equally to the Fund. There can be no assurance that the Fund or Stable Income
Portfolio will achieve its investment objective.

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

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

The Portfolio only purchases those securities that are rated, at the time of
purchase, within the three highest long-term or two highest short-term rating
categories assigned by an NRSRO, such as Moody's Investors Service, Standard &
Poor's or Fitch Investors Services, L.P., or which are unrated and determined by
Norwest to be of comparable quality. See "Additional Investment Policies and
Risk Considerations - Rating Matters" below.

18
<PAGE>
- ----
- ----

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

INTERMEDIATE GOVERNMENT
INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide income
and safety of principal by investing primarily in U.S. Government Securities.
There can be no assurance that the Fund will achieve its investment objective.

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

The Fund invests in mortgage-backed and other asset-backed securities, although
the Fund limits these investments to not more than 50 percent and 25 percent,
respectively, of its total assets. As part of its mortgage-backed securities
investments, the Fund may enter into "dollar roll" transactions. Certain fixed
income securities are zero-coupon securities and the Fund will limit its
investment in these securities, except those issued through the U.S. Treasury's
STRIPS program, to not more than 10 percent of the Fund's total assets. The Fund
may also invest in securities that are restricted as to disposition under the
federal securities laws (sometimes referred to as "private placements" or
"restricted securities"). In addition, the Fund may not invest more than 25
percent of its total assets in securities issued or guaranteed by any single
agency or instrumentality of the U.S. Government, except the U.S.

19
<PAGE>
- ----
- ----
Treasury. The Fund may make short sales and may purchase securities on margin
(borrow money in order to purchase securities), which are considered speculative
investment techniques.

The Fund will only purchase securities that are rated, at the time of purchase,
within the two highest rating categories assigned by an NRSRO, such as Moody's
Investors Service, Standard & Poor's or Fitch Investors Services, L.P., or which
are unrated and determined by Norwest to be of comparable quality. See
"Additional Investment Policies and Risk Considerations - Rating Matters" below.

The Fund primarily will invest in debt obligations with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from short-
term (including overnight) to 15 years. Under normal circumstances, the Fund's
portfolio of securities will have an average dollar-weighted maturity of between
3 and 10 years. Under normal circumstances, the Fund's portfolio of securities
will have a duration of between 70 percent and 130 percent of the duration of a
5-year Treasury Note, which is used as the Fund's benchmark index as described
under "Other Information - Performance Information." Duration is a measure of a
debt security's average life that reflects the present value of the security's
cash flow and, accordingly, is a measure of price sensitivity to interest rate
changes ("duration risk"). Because earlier payments on a debt security have a
higher present value, duration of a security, except a zero-coupon security,
will be less than the security's stated maturity.

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

INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide total
return consistent with current income. The Fund pursues this objective by
investing in a portfolio of fixed income securities issued by domestic and
foreign issuers. There can be no assurance that the Fund will achieve its
investment objective.

20
<PAGE>
- ----
- ----

INVESTMENT POLICIES. The Fund seeks to attain its investment objective by
investing in a diversified portfolio of fixed and variable rate U.S. dollar
denominated fixed income securities. These securities cover a broad spectrum of
United States issuers, including U.S. Government Securities, mortgage- and
asset-backed securities and the debt securities of financial institutions,
corporations, and others. Norwest attempts to increase the Fund's performance by
applying various fixed income management techniques combined with fundamental
economic, credit and market analysis while at the same time controlling total
return volatility by targeting the Fund's duration within a narrow band around
the Lehman Brothers Aggregate Index, an unmanaged index of fixed income
securities.

The Fund may invest any amount of its assets, and normally will invest at least
30% of its total assets, in U.S. Government Securities. The fixed income
securities in which the Fund invests also include mortgage-backed and other
asset-backed securities, although the Fund limits these investments to not more
than 50% and 25%, respectively, of its total assets. The Fund may invest up to
50% of its total assets in corporate securities, such as bonds, debentures and
notes and fixed income securities that can be converted into or exchanged for
common stocks ("convertible securities") and may invest in guaranteed investment
contracts. The Fund may invest in securities that are restricted as to
disposition under the federal securities laws (sometimes referred to as "private
placements" or "restricted securities").

To limit credit risk, the Fund will only purchase securities that are rated, at
the time of purchase, within the four highest rating categories assigned by an
NRSRO, such as Moody's Investors Service ("Moody's"), Standard & Poor's or Fitch
Investors Services, L.P., or which are unrated and determined by Norwest to be
of comparable quality. Securities rated in these categories are generally
considered to be investment grade securities, although Moody's indicates that
securities rated Baa (the fourth highest category) have speculative
characteristics. A description of the rating categories of various NRSROs is
contained in the SAI of the Fund.

The Fund will invest primarily in securities with maturities (or average life in
the case of mortgage-backed and similar securities) ranging from short-term
(including overnight) to 30 years, and it is anticipated that the Fund's
portfolio of securities will have an average dollar-weighted maturity of between
3 and 15 years. The Fund's portfolio of securities will normally have a duration
of between 70% and 130% of the duration of the Lipper Corporate A-Rated Debt
Average. Duration is a measure of a debt security's average life that reflects
the present value of the security's cash flow and, accordingly, is a measure of
price sensitivity to interest rate changes ("duration risk"). Because earlier
payments on a debt security have a higher present value, duration of a security,
except a zero-coupon security, will be less than the security's stated maturity.

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purchases of debt securities to issues denominated and payable in United States
dollars. For a description of the risks involved in investments in foreign
securities, see "Investment Objectives and Policies - Foreign Securities." The
Fund may invest in guaranteed investment contracts ("GICs"). A GIC is an
arrangement with an insurance company under which the Fund contributes cash to
the insurance company's general account and the insurance company credits the
contribution with interest on a monthly basis. The interest rate is tied to a
specified market index and is guaranteed by the insurance company not to be less
than a certain minimum rate. The Fund will purchase a GIC only when Norwest has
determined that the GIC presents minimal credit risks to the Fund and is of
comparable quality to instruments that the Fund may purchase.

TOTAL RETURN BOND FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek total
return. The Fund currently pursues its investment objective by investing all of
its investable assets in Total Return Bond Portfolio, which has the same
investment objective and substantially identical investment policies as the
Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund. There can be no assurance that
the Fund will achieve its investment objective.

INVESTMENT POLICIES. The Portfolio invests primarily in U.S. Government
Securities, including mortgage-backed securities and investment grade corporate
fixed income securities. Norwest's investment decisions are based on its
analysis of major changes in the direction of interest rates rather than an
attempt by Norwest to predict short-term interest rate fluctuations. Norwest
also applies a contrarian perspective by looking for undervalued segments of the
fixed income market which Norwest believes offer opportunities for increased
returns.

In making its investment decisions for the Portfolio, Norwest focuses on the
maturity structure and quality structure of the Portfolio's portfolio. When
Norwest's outlook is for rising interest rates and falling bond values, the
majority of the Portfolio's investment portfolio will be invested in securities
with short-term maturities in an effort to ride interest rates up while
minimizing the negative effect of falling bond prices. When Norwest anticipates
interest rates to fall and bond prices increase, the Portfolio generally will be
invested in securities with long-term maturities in an attempt to lock in high
interest rates and capitalize on bond price appreciation. Accordingly, the
average maturity of the Portfolio's portfolio will vary from 1 to 30 years.

The Portfolio may invest an unlimited amount of its assets in either corporate
securities, including corporate bonds, debentures and notes, or U.S. Government
Securities. The Portfolio will be invested to a greater degree in corporate
securities, however, as the spread between corporate and U.S. Government issues
offers potential for incremental returns. The Portfolio limits its investments
in variable or floating rate securities to 5 percent of its

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net assets. The Portfolio does not currently invest in mortgage-backed
securities or enter "dollar roll" transactions, but reserves the right to do so
in the future.

The Portfolio may also invest in preferred stocks and securities convertible
into common stock, but may not own the common stock into which a convertible
security converts. The Portfolio will only purchase securities (including
convertible securities) that are rated, at the time of purchase, within the four
highest rating categories assigned by an NRSRO, such as Moody's Investors
Service ("Moody's"), Standard & Poor's or Fitch Investors Services, L.P., or
which are unrated and determined by Norwest to be of comparable quality.
Securities rated in these categories are generally considered to be investment
grade securities, although Moody's indicates that securities rated Baa (the
fourth highest category) have speculative characteristics. A description of the
rating categories of various NRSROs is contained in the SAI of the Portfolio.

The Fund reserves the right, upon notice to shareholders, to invest all or a
portion of its assets in shares of another diversified, open-end management
investment company that has an investment objective and investment policies
substantially similar to its own.

ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS

Each Fund's (and each Core Portfolio's) investment objective and all investment
policies of the Funds (and Core Portfolios) 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 Core Portfolio). A majority of
outstanding voting securities means the lesser of 67% of the shares present or
represented at a shareholders' meeting at which the holders of more than 50% of
the outstanding shares are present or represented, or more than 50% of the
outstanding shares. Except as otherwise indicated, investment policies of the
Funds are not fundamental and may be changed by the Board of Trustees of the
Trust (the "Board") without shareholder approval. Likewise, nonfundamental
investment policies of a Core Portfolio may be changed by that investment
company's board of trustees ("Core Board") without shareholder approval.

Unless otherwise indicated, the discussion below of the investment policies of
the Funds refers, in the case of Stable Income Fund and Total Return Bond Fund,
to the investment policies of their respective Core Portfolios. For more
information concerning shareholder voting, See "Other Information - The Trust
and Its Shares - Shareholder Voting and Other Rights" and "Other Information -
Core and Gateway Structure." A further description of the Funds' investment
policies, including additional fundamental policies, is contained in the SAI.

Each investment adviser monitors the creditworthiness of counterparties to the
Funds' transactions and intends to enter into a transaction only when it

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

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

DIVERSIFICATION AND CONCENTRATION. Each Fund is diversified as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"). As a fundamental
policy, with respect to 75% of its assets, no Fund may purchase a security
(other than a U.S. Government Security or shares of investment companies) if, as
a result: (i) more than 5% of the Fund's total assets would be invested in the
securities of a single issuer; or (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer. Each Fund is prohibited from
concentrating its assets in the securities of issuers in any industry. As a
fundamental policy, each Fund may not purchase securities if, immediately after
the purchase, more than 25% of the value of the Fund's total assets would be
invested in the securities of issuers conducting their principal business
activities in the same industry. This limit does not apply to investments in
U.S. Government Securities, foreign government securities or repurchase
agreements covering U.S. Government Securities.

Each Fund reserves the right to invest up to 100% of its investable assets in
one or more other investment companies such as the Core Portfolios and each Fund
reserves the right, upon notification to shareholders to make such investments.

FIXED INCOME SECURITIES AND THEIR CHARACTERISTICS. Although each Fund only
invests in investment grade fixed income securities, including money market
instruments, an investment in a Fund is subject to risk even if all fixed

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income securities in the Fund's portfolio are paid in full at maturity. All
fixed income securities, including U.S. Government Securities, can change in
value when there is a change in interest rates or the issuer's actual or
perceived creditworthiness or ability to meet its obligations.

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

RATING MATTERS. The Funds' investments are subject to "credit risk" relating to
the financial condition of the issuers of the securities that each Fund holds.
To limit credit risk, each Fund will generally buy securities that are rated in
the top four long-term rating categories by an NRSRO or in the top two
short-term rating categories by an NRSRO, although certain Funds have greater
restrictions. Accordingly, the lowest permissible long-term investment grades
for corporate bonds, including convertible bonds, are Baa in the case of Moody's
Investors Service ("Moody's") and BBB in the case of Standard & Poor's ("S&P")
and Fitch Investors Service, L.P. ("Fitch"); the lowest permissible long-term
investment grades for preferred stock are Baa in the case of Moody's and BBB in
the case of S&P and Fitch; and the lowest permissible short-term investment
grades for short-term debt, including commercial paper, are Prime-2 (P-2) in the
case of Moody's, A-2 in the case of S&P and F-2 in the case of Fitch.

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

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Funds invest
(including mortgage-backed securities) may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate (the "underlying index"). The interest paid on
these securities is a function primarily of the underlying index upon

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which the interest rate adjustments are based. Such adjustments minimize changes
in the market value of the obligation and, accordingly, enhance the ability of
the Fund to maintain a stable net asset value. Similar to fixed rate debt
instruments, variable and floating rate instruments are subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. The rate of interest on securities purchased by a Fund may be
tied to various rates of interest or indices. Certain variable rate securities
(including mortgage-related securities) pay interest at a rate that varies
inversely to prevailing short-term interest rates (sometimes referred to as
inverse floaters). For instance, upon reset the interest rate payable on a
security may go down when the underlying index has risen. During times when
short-term interest rates are relatively low as compared to long-term interest
rates a Fund may attempt to enhance its yield by purchasing inverse floaters.
Certain inverse floaters may have an interest rate reset mechanism that
multiplies the effects of changes in the underlying index. This form of leverage
may have the effect of increasing the volatility of the security's market value
while increasing the security's, and thus the Fund's, yield. Total Return Bond
Fund limits its investment in variable and floating rate securities to 5% of its
assets.

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

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

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

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

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

GUARANTEED INVESTMENT CONTRACTS. Income Fund may invest in guaranteed investment
contracts ("GICs"). A GIC is an arrangement with an insurance company under
which the Fund contributes cash to the insurance company's general account and
the insurance company credits the contribution with interest on a monthly basis.
The interest rate is tied to a specified market index and is guaranteed by the
insurance company not to be less than a

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certain minimum rate. The Fund will purchase a GIC only when Norwest has
determined that the GIC presents minimal credit risks to the Fund and is of
comparable quality to instruments that the Fund may purchase.

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

PORTFOLIO TRANSACTIONS. The Advisers place orders for the purchase and sale of
assets they manage with brokers and dealers selected by and in the discretion of
the respective Adviser. The Advisers seek "best execution" for all portfolio
transactions, but a Fund or Core Portfolio 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 and research services provided by the broker
effecting the transaction.

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

Subject to the policy of obtaining "best execution" each Adviser may employ
broker-dealer affiliates (collectively "Affiliated Brokers") to effect brokerage
transactions. Payment of commissions to Affiliated Brokers is subject to
procedures adopted by the Board and, with respect to a Core Portfolio, that
investment company'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 brokerage transactions will be directed to
Affiliated Brokers and in no event will a broker affiliated with the Adviser
directing the transaction receive brokerage transactions in recognition of
research services provided to the Adviser.

The frequency of portfolio transactions of a Fund or Core Portfolio (the
portfolio turnover rate) will vary from year to year depending on many factors.
From time to time a Fund or Core Portfolio may engage in active short-term
trading to take advantage of price movements affecting individual issues, groups
of issues or markets. Portfolio turnover is reported under "Financial
Highlights." An annual portfolio turnover rate of 100% would

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occur if all of the securities in a fund were replaced once in a period of one
year. Higher portfolio turnover rates may result in increased brokerage costs
and a possible increase in short-term capital gains or losses. Tax rules
applicable to short-term trading may affect the timing of a portfolio
transactions or the ability to realize short-term trading profits or establish
short-term positions.

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

Preferred stock is a class of stock having priority over common stock as to
dividends or the recovery of investment or both. The owner of preferred stock is
a shareholder in a business and not, like a bondholder, a creditor. Dividends
paid to preferred stockholders are distributions of earnings of a business in
contrast to interest payments to bondholders which are expenses of a business.

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security it receives interest from the borrower or from investing cash
collateral. The Trust maintains possession of the purchased securities and any
underlying collateral in these transactions, the total market value of which on
a continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. The Funds may pay fees to arrange
securities loans and each Fund will, as a fundamental policy, limit securities
lending to not more than 33 1/3% of the value of its total assets.

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

During the period between a commitment and settlement, no payment is made for
the securities purchased and, thus, no interest accrues to the Fund. At the time
a Fund makes a commitment to purchase securities in this manner, however, the
Fund immediately assumes the risk of ownership, including price fluctuation.
Failure by the other party to deliver or pay for a security purchased or sold by
the Fund may result in a loss or a missed opportunity to make an alternative
investment. Any significant commitment of a Fund's assets committed to the
purchase of securities on a when-issued or forward commitment basis may increase
the volatility of its net asset value. Except for dollar roll transactions,
which are described below, each of Stable Income Fund and Intermediate
Government Income Fund limits its investments in when-issued and forward
commitment securities to 15% of the value of the Fund's total assets. Total
Return Bond Fund limits its investments in when-issued and forward commitment
securities to 35% of the value of the Fund's total assets.

DOLLAR ROLL TRANSACTIONS. A Fund may enter into dollar roll transactions wherein
the Fund sells fixed income securities, typically mortgage-backed securities,
and makes a commitment to purchase similar, but not identical, securities at a
later date from the same party. Like a forward commitment, during the roll
period no payment is made for the securities purchased and no interest or
principal payments on the security accrue to the purchaser, but the

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Fund assumes the risk of ownership. A Fund is compensated for entering into
dollar roll transactions by the difference between the current sales price and
the forward price for the future purchase, as well as by the interest earned on
the cash proceeds of the initial sale. Like other when-issued securities or firm
commitment agreements, dollar roll transactions involve the risk that the market
value of the securities sold by the Fund may decline below the price at which a
Fund is committed to purchase similar securities. In the event the buyer of
securities under a dollar roll transaction becomes insolvent, the Fund's use of
the proceeds of the transaction may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. The Funds will engage in roll
transactions for the purpose of acquiring securities for its portfolio and not
for investment leverage. Each of Stable Income Fund and Intermediate Government
Income Fund will limit its obligations on dollar roll transactions to 35% of the
Fund's net assets.

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

Swap agreements may involve leverage and may be highly volatile; depending on
how they are used, they may have a considerable impact on the Fund's
performance. Swap agreements involve risks depending upon the counterparty's
creditworthiness and ability to perform as well as the Fund's ability to
terminate its swap agreements or reduce its exposure through offsetting
transactions.

SHORT SALES. Intermediate Government Income Fund may make short sales of
securities it owns or has the right to acquire at no added cost through
conversion or exchange of other securities it owns (referred to as short sales
"against the box") and to make short sales of securities which it does not own
or have the right to acquire. A short sale that is not made "against the box" is
a transaction in which a Fund sells a security it does not own in anticipation
of a decline in the market price for the security. When the Fund makes a short
sale, the proceeds it receives are retained by the broker until the Fund
replaces the borrowed security. In order to deliver the security to the buyer,
the Fund

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must arrange through a broker to borrow the security and, in so doing, the Fund
becomes obligated to replace the security borrowed at its market price at the
time of replacement, whatever that price may be.

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

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

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

TECHNIQUES INVOLVING LEVERAGE. Utilization of leveraging involves special risks
and may involve speculative investment techniques. The Funds may borrow for
other than temporary or emergency purposes, lend their securities, enter reverse
repurchase agreements, and purchase securities on a when

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issued or forward commitment basis. In addition, certain funds may engage in
dollar roll transactions and Intermediate Government Income Fund may purchase
securities on margin and sell securities short (other than against the box).
Each of these transactions involves the use of "leverage" when cash made
available to the Fund through the investment technique is used to make
additional portfolio investments. In addition, the use of swap and related
agreements may involve leverage. The Funds use these investment techniques only
when the Adviser to a Fund believes that the leveraging and the returns
available to the Fund from investing the cash will provide shareholders with a
potentially higher return.

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

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

SEGREGATED ACCOUNT. In order to limit the risks involved in various transactions
involving leverage, the Trust's custodian will set aside and maintain in a
segregated account cash, U.S. Government Securities and other liquid, debt
securities in accordance with SEC guidelines. The accounts value, which is
marked to market daily, will be at least equal to the Fund's commitments under
these transactions. The Fund's commitments may include: (i) the Fund's
obligations to repurchase securities under a reverse repurchase agreement,
settle when-issued and forward commitment transactions and make

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payments under a cap or floor (see "Swap Agreements" above); and (ii) the
greater of the market value of securities sold short or the value of the
securities at the time of the short sale (reduced by any margin deposit). The
net amount of the excess, if any, of a Fund's obligations over its entitlements
with respect to each interest rate swap will be calculated on a daily basis and
an amount at least equal to the accrued excess will be maintained in the
segregated account. If the Fund enters into an interest rate swap on other than
a net basis, the Fund will maintain the full amount accrued on a daily basis of
the Fund's obligations with respect to the swap in their segregated account. The
use of a segregated account in connection with leveraged transactions may result
in a Fund's portfolio being 100% leveraged.

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

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

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

LIQUIDITY AND MARKETABILITY. Generally, government and government-related
pass-through pools are highly liquid. While private conventional pools of
mortgages (pooled by non-government-related entities) have also

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achieved broad market acceptance and an active secondary market has emerged, the
market for conventional pools is smaller and less liquid than the market for
government and government-related mortgage pools.

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

YIELD CALCULATIONS. Yields on pass-through securities are typically quoted based
on the maturity of the underlying instruments and the associated average life
assumption. In periods of falling interest rates the rate of prepayment tends to
increase, thereby shortening the actual average life of a pool of mortgages.
Conversely, in periods of rising rates the rate of prepayment tends to decrease,
thereby lengthening the actual average life of the pool. Actual prepayment
experience may cause the yield to differ from the assumed average life yield.
Reinvestment of prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the Fund.
GOVERNMENT AND GOVERNMENT-RELATED GUARANTORS. The principal government guarantor
of mortgage-backed securities is Ginnie Mae, a wholly-owned United States
Government corporation within the Department of Housing and Urban Development.
Mortgage-backed securities are also issued by Fannie Mae, a government-sponsored
corporation owned entirely by private stockholders that is subject to general
regulation by the Secretary of Housing and Urban Development, and Freddie Mac, a
corporate instrumentality of the United States Government. While Fannie Mae and
Freddie Mac each guarantee the payment of principal and interest on the
securities they issue, unlike Ginnie Mae securities, their securities are not
backed by the full faith and credit of the United States Government.

PRIVATELY ISSUED MORTGAGE-BACKED SECURITIES. Mortgage-backed securities offered
by private issuers include pass-through securities comprised of pools of
conventional mortgage loans; mortgage-backed bonds (which are considered to be
debt obligations of the institution issuing the bonds and which are
collateralized by mortgage loans); and collateralized mortgage obligations
("CMOs"), which are described below. Mortgage-backed securities issued by
non-governmental issuers may offer a higher rate of interest than securities
issued by government issuers because of the absence of direct or indirect

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government guarantees of payment. Many non-governmental issuers or servicers of
mortgage-backed securities, however, guarantee timely payment of interest and
principal on these securities. Timely payment of interest and principal also may
be supported by various forms of insurance, including individual loan, title,
pool and hazard policies.

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

COLLATERALIZED MORTGAGE OBLIGATIONS. CMOs are debt obligations collateralized by
mortgages or mortgage pass-through securities issued by Ginnie Mae, Freddie Mac
or Fannie Mae or by pools of conventional mortgages ("Mortgage Assets"). CMOs
may be privately issued or U.S. Government Securities. Payments of principal and
interest on the Mortgage Assets are passed through to the holders of the CMOs on
the same schedule as they are received, although, certain classes (often
referred to as tranches) of CMOs have priority over other classes with respect
to the receipt of payments. Multi-class mortgage pass-through securities are
interests in trusts that hold Mortgage Assets and that have multiple classes
similar to those of CMOs. Unless the context indicates otherwise, references to
CMOs include multi-class mortgage pass-through securities. Payments of principal
of and interest on the underlying Mortgage Assets (and in the case of CMOs, any
reinvestment income thereon) provide funds to pay debt service on the CMOs or to
make scheduled distributions on the multi-class mortgage pass-through
securities. Parallel pay CMOs are structured to provide payments of principal on

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each payment date to more than one class. These simultaneous payments are taken
into account in calculating the stated maturity date or final distribution date
of each class, which, as with other CMO structures, must be retired by its
stated maturity date or final distribution date but may be retired earlier.
Planned amortization class mortgage-based securities ("PAC Bonds") are a form of
parallel pay CMO. PAC Bonds are designed to provide relatively predictable
payments of principal provided that, among other things, the actual prepayment
experience on the underlying mortgage loans falls within a contemplated range.
If the actual prepayment experience on the underlying mortgage loans is at a
rate faster or slower than the contemplated range, or if deviations from other
assumptions occur, principal payments on a PAC Bond may be greater or smaller
than predicted. The magnitude of the contemplated range varies from one PAC Bond
to another; a narrower range increases the risk that prepayments will be greater
or smaller than contemplated. CMOs may have complicated structures and generally
involve more risks than simpler forms of mortgage-related securities.

ASSET-BACKED SECURITIES. Asset-backed securities represent direct or indirect
participations in, or are secured by and payable from, assets other than
mortgage-related assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements. No Fund
may invest more than 15% (10% in the case of Income Fund and Total Return Bond
Fund) of its net assets in asset-backed securities that are backed by a
particular type of credit, for instance, credit card receivables. Asset-backed
securities, including adjustable rate asset-backed securities, have yield
characteristics similar to those of mortgage-related securities and,
accordingly, are subject to many of the same risks.
Assets are securitized through the use of trusts and special purpose
corporations that issue securities that are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of
principal and interest may be guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution.
Asset-backed securities do not always have the benefit of a security interest in
collateral comparable to the security interests associated with mortgage-related
securities. As a result, the risk that recovery on repossessed collateral might
be unavailable or inadequate to support payments on asset-backed securities is
greater for asset-backed securities than for mortgage-related securities. In
addition, because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of an interest rate or economic cycle has not been
tested.

FOREIGN SECURITIES. Stable Income Fund and Income Fund may invest in debt
securities registered and sold in the United States by foreign issuers (Yankee
Bonds) and debt securities sold outside the United States by foreign or U.S.
issuers (Euro-bonds). Each Fund intends to restrict its purchases of debt
securities to issues denominated and payable in United States dollars.
Investments in foreign companies involve certain risks, such as exchange rate
fluctuations, political or economic instability of the issuer or the country of

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issue and the possible imposition of exchange controls, withholding taxes on
interest payments, confiscatory taxes or expropriation. Foreign securities also
may be subject to greater fluctuations in price than securities of domestic
corporations denominated in U.S. dollars. Foreign securities and their markets
may not be as liquid as domestic securities and their markets, and foreign
brokerage commissions and custody fees are generally higher than those in the
United States. In addition, less information may be publicly available about a
foreign company than about a domestic company, and foreign companies may not be
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies.

FUTURES CONTRACTS AND OPTIONS. Each of Stable Income Fund and Intermediate
Government Income Fund may (and the other Funds may in the future) seek to
enhance its return through the writing (selling) and purchasing exchange-traded
and over-the-counter options on fixed income securities or indices. These Funds
also may attempt to hedge against a decline in the value of securities owned by
it or an increase in the price of securities which it plans to purchase through
the use of those options and the purchase and sale of interest rate futures
contracts and options on those futures contracts. These instruments are often
referred to as "derivatives," which may be defined as financial instruments
whose performance is derived at least in part, from the performance of another
asset (such as a security, currency or an index of securities). The Funds only
may write options that are covered. An option is covered if, so long as the Fund
is obligated under the option, it owns an offsetting position in the underlying
security or futures contract or maintains cash, U.S. Government Securities or
other liquid debt securities in a segregated account with a value at all times
sufficient to cover the Fund's obligation under the option. A Fund may enter
into these futures contracts only if the aggregate of initial deposits for open
futures contract positions does not exceed 5% of the Fund's total assets.

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

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

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

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

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

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

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

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

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4. MANAGEMENT

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

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest makes investment decisions for the Funds and continuously reviews,
supervises and administers each Fund's investment program or oversees the
investment decisions of the investment subadvisers, as applicable. Norwest
provides its investment advisory services directly to Intermediate Government
Income Fund and Income Fund and indirectly to Stable Income Fund and Total
Return Bond Fund through its investment advisory services to the Core
Portfolios. Norwest, which is located at Norwest Center, Sixth Street and
Marquette, Minneapolis, Minnesota 55479, is an indirect subsidiary of Norwest
Corporation, a multi-bank holding company that was incorporated under the laws
of Delaware in 1929. As of March 31, 1997, Norwest Corporation had assets of
$83.6 billion, which made it the 11th largest bank holding company in the United
States. As of December 31, 1996, Norwest and its affiliates managed assets with
a value of approximately $42.6 billion.

INVESTMENT SUBADVISERS. To assist Norwest in carrying out its obligations,
certain of the Core Portfolios and Norwest have retained the services of various
investment subadvisers as follows:

<TABLE>
<CAPTION>
INVESTMENT
SUBADVISER
OF CORE
FUND CORE PORTFOLIO(S) PORTFOLIO
- -----------------------------------------------------
<S> <C> <C>
Stable Income Fund Stable Income Galliard
Portfolio
Total Return Bond Total Return Bond UCM
Fund Portfolio
</TABLE>

Galliard and UCM make investment decisions for the Core Portfolios to which they
act as investment subadviser and continuously review, supervise and administer
the Core Portfolio's investment programs with respect to that portion, if any,
of the Portfolios' assets that Norwest believes should be managed by Galliard or
UCM. Currently, Galliard and UCM manage all of the assets of the Core Portfolios
for which they subadvise. Norwest supervises the performance of Galliard and
UCM, including their adherence to the Portfolios' investment objectives and
policies.

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advisory services to bank and thrift institutions, pension and profit sharing
plans, trusts and charitable organizations and corporate and other business
entities. As of March 31, 1997 Galliard managed over $2.95 billion in assets.

UNITED CAPITAL MANAGEMENT. UCM, which is located at 1700 Lincoln Street, Suite
3301, Denver, Colorado 80274, is a division of Norwest Bank Colorado, N.A., a
subsidiary of Norwest Corporation. UCM provides specialized investment advisory
services to various institutional pension accounts. As of March 31, 1997 UCM
managed over $2.05 billion in assets.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest, Galliard and
UCM contribute to the investment services provided to the Funds and the Core
Portfolios. The following persons, however, are primarily responsible for
day-to-day management and, unless otherwise noted, have been since the inception
of the Fund or Portfolio. For periods prior to June 1, 1997, all persons
associated with Norwest served in their current positions with Norwest Bank.
Prior to that date Norwest Bank was each Fund's investment adviser. In addition
to their responsibilities as listed below, each of the portfolio managers may
perform portfolio management and other duties for Norwest Bank.

STABLE INCOME FUND/STABLE INCOME PORTFOLIO - Karl P. Tourville. Mr.
Tourville has been a principal of Galliard since 1995. He has been
associated with Norwest and its affiliates since 1986, most recently as
Vice President and Senior Portfolio Manager.

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

TOTAL RETURN BOND FUND/TOTAL RETURN BOND PORTFOLIO - David B. Kinney. Mr.
Kinney is a Vice President of UCM. He has been associated with Norwest and
its affiliates since 1981.

INVESTMENT ADVISORY
FUND FEE
- -----------------------------------------------------------------
<S> <C>
Stable Income Fund (Stable Income
Portfolio)................................ 0.30%
Intermediate Government Income Fund......... 0.33%
Income Fund................................. 0.50%
Total Return Bond Fund (Total Return Bond
Portfolio)................................ 0.50%
</TABLE>

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Norwest (and not the Core Portfolios) pays Galliard and UCM a fee for their
investment subadvisory services. This compensation does not increase the amount
paid by the Core Portfolio to Norwest for investment advisory services.

Stable Income Fund and Total Return Bond Fund may withdraw their investments
from their respective Core Portfolio at any time if the Board determines that it
is in the best interests of the Fund to do so. See "Other Information - Core and
Gateway Structure." Accordingly, Stable Income Fund and Total Return Bond Fund
have retained Norwest as their investment adviser. Similarly, in the event that
a Fund withdraws its investment from its respective Core Portfolio: (i) Stable
Income Fund has retained Galliard as its investment subadviser; and (ii) Total
Return Bond Fund has retained UCM as its investment subadviser. Under these
"dormant" investment advisory arrangements, none of Norwest, Galliard or UCM
receives any advisory fees with respect to a Fund as long as the Fund remains
completely invested in its respective Core Portfolio or any other investment
companies. In the event that Stable Income Fund or Total Return Bond Fund were
to withdraw there assets from their respective Core Portfolios, Norwest would
receive an investment advisory fee at the same rate as it does for the Core
Portfolio. Pursuant to the Funds' dormant investment subadvisory agreements,
Norwest (and not the Funds) would pay Galliard and UCM, as applicable, a fee for
their investment subadvisory services.

MANAGEMENT, ADMINISTRATION AND
DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others, including the Funds'
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to each Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring the
sales of shares and ensuring that such shares are properly and duly registered
with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of dividends and
distributions to shareholders.

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FAS each receives a fee with respect to each Fund at an annual rate of 0.05% of
the first $300 million of the Fund's average daily net assets, 0.0375% of the
next $400 million of the Fund's average daily net assets and 0.025% of the
Fund's remaining average daily net assets.

FAS also serves as an administrator of each Core Portfolio and provides services
to the Core Portfolios that are similar to those provided to the Funds by Forum
and FAS. For its services FAS receives a fee with respect to each Core Portfolio
at an annual rate of 0.10% of the Portfolio's average daily net assets.

SHAREHOLDER SERVICING AND
CUSTODY

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Norwest Bank also serves as each Fund's and each Core Portfolio's custodian and
may appoint subcustodians for the foreign securities and other assets held in
foreign countries. For its custodial services, Norwest Bank receives a fee with
respect to each Fund and each Core Portfolio at an annual rate of 0.02% of the
first $100 million of the Fund's or Core Portfolio's average daily net assets,
0.01% of the next $200 million of the Fund's or Core Portfolio's average daily
net assets and 0.005% of the Fund's or Core Portfolio's remaining average daily
net assets. No fee is payable by the Fund to the extent the Fund is invested in
a Core Portfolio.

EXPENSES OF THE FUNDS

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Total Return Bond Fund's total combined operating
expenses through May 31, 1998 at the same levels as the Fund's total operating
expenses prior to May 31, 1997 (0.75% for A Shares and 1.50% for B Shares).
After May 31, 1988, any proposed reduction in the amount of those waivers and
reimbursements would be reviewed by the Board.

The expenses of Stable Income Fund and Total Return Bond Fund include the Fund's
pro rata share of the operating expenses of the Core Portfolios in which the
Fund invests, which are borne indirectly by the Fund's shareholders.

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5.CHOOSING A SHARE CLASS

Investors should compare sales charges and fees before selecting a particular
class of shares. Investors should consider whether, during the anticipated life
of their investment in a Fund, the accumulated distribution services fee and
maintenance fee and contingent deferred sales charges on B Shares prior to
conversion would be less than the initial sales charge on A Shares purchased at
the same time and whether that differential would be offset by the higher yield
of A Shares. A summary of the charges applicable to shares of each Fund is
listed under "Prospectus Summary - Expense Information." Sales personnel of
broker-dealers and other financial institutions selling a Fund's shares may
receive differing compensation for selling A Shares and B Shares.
Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge were
not deducted and, accordingly, do not have the entire purchase price invested.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
whether, in light of the initial sales charge and its effect on the amount of
the purchase price invested, purchases of A Shares are more or less advantageous
than purchases of B Shares with their associated accumulated continuing
distribution and maintenance charges. For example, based on estimated current
fees and expenses, an investor in each Fund other than Stable Income Fund
subject to the 3.75% initial sales charge who elects to reinvest all dividends
and distributions would have to hold the shareholder's investment approximately
five years for the B Shares' distribution services fee and maintenance fee to
exceed the initial sales charge. An investor in Stable Income Fund subject to
the 1.50% initial sales charge who elects to reinvest all dividends and
distributions would have to hold the shareholder's investment approximately two
years for the B Shares' distribution services fee and maintenance fee to exceed
the initial sales charge. The foregoing examples does not take into account the
time value of money, fluctuations in net asset value or the effects of different
performance assumptions.

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A SHARES

BROKER-
DEALERS'
SALES CHARGE REALLOWANCE AS
AS A PERCENTAGE OF A PERCENTAGE
................................ OF OFFERING
AMOUNT OF PURCHASE OFFERING PRICE NET ASSET VALUE* PRICE

- -------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000...... 1.50% 1.52% 1.35%
$50,000 to $99,999..... 1.00% 1.01% 0.90%
$100,000 to $499,000... 0.75% 0.76% 0.70%
$500,000 to $999,000... 0.50% 0.50% 0.45%
$1,000,000 and over.... None None None

* Rounded to the nearest one-hundredth percent
</TABLE>

INTERMEDIATE GOVERNMENT INCOME FUND,
INCOME FUND AND TOTAL RETURN BOND FUND

BROKER-
DEALERS'
SALES CHARGE REALLOWANCE AS
AS A PERCENTAGE OF A PERCENTAGE
................................ OF OFFERING
AMOUNT OF PURCHASE OFFERING PRICE NET ASSET VALUE* PRICE

* Rounded to the nearest one-hundredth percent
</TABLE>

Forum may pay a broker-dealers' reallowance to selected broker-dealers
purchasing shares as principal or agent, which may include banks, bank
affiliates and Processing Organizations. Normally, Forum will reallow discounts
to selected broker-dealers in the amounts indicated in the table above. In
addition, Forum may elect to reallow the entire sales charge to selected
broker-dealers for all sales with respect to which orders are placed with Forum.
The broker-dealers' reallowance may be changed from time to time. Forum may make
additional payments (out of its own resources) to selected broker-dealers of up
to 0.75% (0.50% in the case of Stable Income Fund) of the value of Fund shares
purchased at net asset value.

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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.

SELF-DIRECTED 401(K) PROGRAMS. Purchases of A Shares of a Fund through
self-directed 401(k) programs and other qualified retirement plans offered by

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Norwest, Forum or their affiliates in accumulated amounts of less than $100,000
are subject to a reduced sales charge applicable to a single purchase of
$100,000.

CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An investor's purchase of
additional A Shares of a Fund may qualify for rights of accumulation ("ROA")
under which the applicable sales charge will be based on the total of the
investor's current purchase and the net asset value (at the end of the previous
Fund Business Day) of all A Shares of that Fund held by the investor. For
example, if an investor in Intermediate Government Income Fund, Income Fund or
Total Return Bond Fund owned A Shares of the Fund worth $500,000 at the then
current net asset value and purchased A Shares of that Fund worth an additional
$50,000, the sales charge for the $50,000 purchase would be at the 1.75% rate
applicable to a $550,000 purchase, rather than at the 3.25% rate applicable to a
$50,000 purchase.

STATEMENT OF INTENTION. Investors in A Shares 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 a Fund within a period of 13 months. Each purchase of shares under a
Statement of Intention will be made at net asset value plus the sales charge
applicable at the time of the purchase to a single transaction of the dollar
amount indicated in the Statement.

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STABLE INCOME FUND

CONTINGENT DEFERRED
SALES CHARGE AS A % OF
PERIOD SHARES DOLLAR AMOUNT SUBJECT
AMOUNT OF PURCHASE HELD TO CHARGE
- -----------------------------------------------------------------
<S> <C> <C>
$1,000,000 to Less than one
$4,999,999......... year 0.50%
One to two years 0.25%
Less than one
Over $5,000,000...... year 0.25%
</TABLE>

INTERMEDIATE GOVERNMENT INCOME FUND,
INCOME FUND AND TOTAL RETURN BOND FUND

CONTINGENT DEFERRED
SALES CHARGE AS A % OF
PERIOD SHARES DOLLAR AMOUNT SUBJECT
AMOUNT OF PURCHASE HELD TO CHARGE
- -----------------------------------------------------------------
<S> <C> <C>
$1,000,000 to Less than one
$2,499,999......... year 0.75%
One to two years 0.50%
$2,500,000 to Less than one
$4,999,999......... year 0.50%
Less than one
Over $5,000,000...... year 0.25%
</TABLE>

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

B SHARES

DISTRIBUTION PLAN. B Shares are sold at their net asset value per share without
the imposition of a sales charge at the time of purchase. With respect to B
Shares, each Fund has adopted a distribution plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan") providing for distribution payments, at an annual rate
of up to 0.75% of the average daily net assets of the Fund attributable to B
Shares (the "distribution services fee"), by each Fund to Forum, to compensate
Forum for its distribution activities. The distribution payments due to Forum
from each Fund comprise: (i) sales commissions at levels set from time to time
by the Board ("sales commissions"); and (ii) an interest fee calculated by
applying the rate of 1% over the prime rate to the outstanding balance of
uncovered distribution charges (as described below). The current sales
commission rate is 3% (1.5% in the case of Stable Income Fund) and Forum
currently expects to pay sales commissions to each broker-

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dealer at the time of sale of up to 3% (1.5% in the case of Stable Income Fund)
of the purchase price of B Shares of each Fund sold by the broker-dealer.

Under the Plan, a Fund will make distribution services fee payments to Forum
only for periods during which there are outstanding uncovered distribution
charges attributable to that Fund. Uncovered distribution charges are equivalent
to all sales commissions previously due (plus interest), less amounts received
pursuant to the Plan and all contingent deferred sales charges previously paid
to Forum. At May 31, 1996, Stable Income Fund, Intermediate Government Income
Fund, Income Fund and Total Return Bond Fund had uncovered distribution expenses
of $17,409; $230,269; $86,309; and $52,580, respectively, or approximately
2.01%, 2.16%, 2.67% and 2.51%, of each respective Fund's net assets attributable
to B Shares as of the same date.

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

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CONTINGENT DEFERRED SALES CHARGE. B Shares of a Fund that are redeemed within
four years of purchase (two years of purchase in the case of the Stable Income
Fund) will be subject to contingent deferred sales charges equal to the
percentages set forth below of the dollar amount subject to the charge. The
amount of the contingent deferred sales charge, if any, will vary depending on
the number of years between the payment for the purchase of B Shares of a Fund
and their redemption.

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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 AMOUNT SUBJECT TO CHARGE
..........................................
INTERMEDIATE
GOVERNMENT
INCOME FUND, INCOME
FUND AND TOTAL RETURN
YEAR SINCE PURCHASE STABLE INCOME FUND BOND FUND

- ----------------------------------------------------------------------
<S> <C> <C>
First..................... 1.5% 3.0%
Second.................... 0.75% 2.0%
Third..................... None 2.0%
Fourth.................... None 1.0 %
Fifth..................... None None
Sixth..................... None None
</TABLE>

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

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

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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 a Fund's B
Shares to A Shares may be suspended if such an opinion is no longer available at
the time the conversion is to occur. In that event, no further conversions of
the Fund's B Shares would occur, and shares might continue to be subject to a
distribution services and maintenance fee for an indefinite period.

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6. HOW TO BUY SHARES

MINIMUM INVESTMENT

There is a $1,000 minimum for initial purchases ($5,000 in the case of Stable
Income Fund) and a $100 minimum for subsequent purchases of Shares of the Funds.
A Fund may in its discretion waive the investment minimums. Shareholders who
elect electronic share purchase privileges such as the Automatic Investment Plan
or the Directed Dividend Option are not subject to the initial investment
minimum. See "Other Shareholder Services - Automatic Investment Plan" and
"Dividends and Tax Matters."

PURCHASE PROCEDURES

INITIAL PURCHASES
THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

NORWEST BANK MINNESOTA, N.A.
ABA 091 000 019
FOR CREDIT TO: NORWEST FUNDS
0844-131
RE: [NAME OF FUND]
[DESIGNATE A SHARES OR B SHARES]
ACCOUNT NO.:
ACCOUNT NAME:

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

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<PAGE>
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ACCOUNT APPLICATION

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

NORWEST FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040

GENERAL INFORMATION

Fund shares become entitled to receive dividends and distributions on the next
Fund Business Day after a purchase order is accepted.

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

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7.HOW TO SELL SHARES

GENERAL INFORMATION

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

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 suspended nor the payment dates postponed for more than
seven days after the tender of the shares to a Fund, except when the New York
Stock Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings, for any period during
which an emergency exists as a result of which disposal by the Fund of its
portfolio securities or determination by the Fund of the value of its net assets
is not reasonably practicable and for such other periods as the SEC may permit.

REDEMPTION PROCEDURES

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<PAGE>
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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."

OTHER REDEMPTION MATTERS

To protect shareholders and the Funds against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (i) any
endorsement on a share certificate; (ii) instruction to change a shareholder's
record name; (iii) modification of a designated bank account for wire
redemptions; (iv) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (v) dividend and distribution election; (vi)
telephone redemption; (vii) exchange option election or any other option
election in connection with the shareholder's account; (viii) written
instruction to redeem Shares whose value exceeds $50,000; (ix) redemption in an
account in which the account address has changed within the last 30 days; (x)
redemption when the proceeds are deposited in a Norwest Funds account under a
different account registration; and (xi) the remitting of redemption proceeds to
any address, person or account for which there are not established standing
instructions on the account.

Shareholders who want to telephone redemption or exchange privileges must elect
those privileges. The Trust and Transfer Agent will employ reasonable procedures
in order to verify that telephone requests are genuine, including recording
telephone instructions and causing written confirmations of the

59
<PAGE>
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resulting transactions to be sent to shareholders. If the Trust and Transfer
Agent did not employ such procedures, they could be liable for losses due to
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.

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8. 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 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, Small Cap Opportunities 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
Funds, can be obtained through Forum by contacting the Transfer Agent.

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

SALES CHARGES. The exchange of A Shares may result in additional sales charges.
If an exchange of A Shares is made into a fund that imposes an initial sales
charge, the shareholder is required to pay an amount equal to any excess of that
fund's initial sales charge attributable to the number of shares being acquired
in the exchange over any initial sales charge paid by the shareholder for the
shares being exchanged. For example, if a shareholder paid a 2% initial sales
charge in connection with a purchase of shares and then

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exchanged those shares into A Shares of another fund with a 3% initial sales
charge, the shareholder would pay an additional 1% sales charge on the exchange.
A Shares acquired through the reinvestment of dividends or distributions are
deemed to have been acquired with a sales charge rate equal to that applicable
to the shares on which the dividends or distributions were paid.

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."

AUTOMATIC INVESTMENT PLAN

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INDIVIDUAL RETIREMENT ACCOUNTS

REOPENING ACCOUNTS

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9.DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of Stable Income Fund's and Intermediate Government Income Fund's net
investment income are declared and paid monthly. Dividends of Income Fund's and
Total Return Bond Fund's net investment income are declared daily and paid
monthly. Distributions of net capital gain, if any, realized by a Fund are
distributed annually. Dividends and distributions paid by a Fund with respect to
each class of shares are calculated in the same manner and at the same time. The
per share dividends on a Fund's B Shares will be lower than the per share
dividends on A Shares as a result of the distribution services fees and
maintenance fees applicable to B Shares.
Shareholders may choose to have dividends and distributions of a Fund reinvested
in shares of that Fund (the "Reinvestment Option"), to receive dividends and
distributions in cash (the "Cash Option") or to direct dividends and
distributions to be reinvested in shares of another fund of the Trust (the
"Directed Dividend Option"). All dividends and distributions are treated in the
same manner for federal income tax purposes whether received in cash or
reinvested in shares of a fund.

TAX MATTERS

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time the shareholder may have held Shares in the Fund at the time of
distribution. If a shareholder holds Shares for six months or less and during
that period receives a long-term capital gain distribution, any loss realized on
the sale of the Shares during that six-month period will be a long-term capital
loss to the extent of the distribution. Dividends from Stable Income Fund and
Intermediate Government Income Fund and distributions reduce the net asset value
of the Fund paying the dividend or distribution by the amount of the dividend or
distribution. Furthermore, these dividends or a distribution made shortly after
the purchase of Shares by a shareholder, although in affect a return of capital
to that particular shareholder, will be taxable to the shareholder as described
above.

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10.OTHER INFORMATION

BANKING LAW MATTERS

DETERMINATION OF NET ASSET VALUE

PERFORMANCE INFORMATION

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not the same as actual year-by-year results. Published yield quotations are, and
total return figures may be, based on amounts invested in a Fund net of sales
charges that may be paid by an investor. A computation of yield or total return
that does not take into account sales charges paid by an investor will be higher
than a similar computation that takes into account payment of sales charges.

THE TRUST AND ITS SHARES

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 a Fund) and may
divide portfolios or series into classes of shares (such as A Shares); the costs
of doing so will be borne by the Trust. Currently the authorized shares of the
Trust are divided into thirty-three separate series.
OTHER CLASSES OF SHARES. The Funds currently issue 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. Each class of a Fund will have a different
expense ratio and may have different sales charges (including distribution
fees). Each class' performance is affected by its expenses and sales charges.
For more information on any other class of shares of the Funds investors may
contact the Transfer Agent at (612) 667-8833 or (800) 338-1348 or the Funds'
distributor. Investors may also contact their Norwest sales representative to
obtain information about the other classes.

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voting by series or class is required by law, in which case shares will be voted
separately by series 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 (and Trustees) 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 series is entitled to
the shareholder's pro rata share of all dividends and distributions arising from
that series' assets and, upon redeeming shares, will receive the portion of the
series' net assets represented by the redeemed shares.

As of May 1, 1997, Seret & Co., a nominee of Norwest Bank Colorado, N.A. through
which some of its customers own shares of the Funds, may be deemed to have
controlled Total Return Bond Fund. As of the same date, BHC Securities, Inc., a
nominee of Norwest Bank, through which some of its customers own shares of the
Funds, owned of record more than 25% of the outstanding A Shares of Income Fund.
From time to time, these shareholders or other shareholders may own a large
percentage of the Shares of a Fund and, accordingly, may be able to greatly
affect (if not determine) the outcome of a shareholder vote.

CORE AND GATEWAY STRUCTURE

Stable Income Fund and Total Return Bond Fund each seek to achieve its
investment objective by investing all of its investable assets in its
corresponding Core Portfolio, that has the same investment objective and
substantially identical investment policies as the Fund. Accordingly, each Core
Portfolio directly acquires portfolio securities and a Fund investing in the
Core Portfolio acquires an indirect interest in those securities. Each Core
Portfolio is a separate series of Core Trust, a business trust organized under
the laws of the State of Delaware in 1994. Core Trust is registered under the
,1940 Act as an open-end, management, investment company. The assets of each
Core Portfolio belong only to, and the liabilities of each Core Portfolio are
borne solely by, that Core Portfolio and no other portfolio of Core Trust.

THE CORE PORTFOLIO. A Fund's investment in a Core Portfolio is in the form of a
non-transferable beneficial interest. All investors in a Core Portfolio will
invest on the same terms and conditions and will pay a proportionate share of

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the Core Portfolio's expenses. As of June 1, 1997, several other funds of the
Trust invested a portion of their assets in Stable Income Portfolio and Total
Return Bond Portfolio.

CERTAIN RISKS OF INVESTING IN CORE PORTFOLIOS. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in that Core
Portfolio. For example, if Total Return Bond Portfolio had a large investor
other than Total Return Bond Fund that redeemed its interest, Total Return Bond
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
As there may be other investors in a Core Portfolio, there can be no assurance
that any issue that receives a majority of the votes cast by a Fund's
shareholders will receive a majority of votes cast by all investors in a Core
Portfolio; indeed, other investors holding a majority interest in a Core
Portfolio could have voting control of the Core Portfolio.

Each Fund may withdraw its entire investment from a Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in a Core Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective or policies of
the Core 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 Core 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 would incur brokerage fees or other transaction costs. If
the Fund withdrew its investment from a Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets
directly by the Adviser or the investment of the Fund's assets in another pooled
investment entity. The inability of the Fund to find a suitable replacement
investment, in the event the Board decided not to permit the Advisers to manage
the Fund's assets directly, could have a significant impact on shareholders of
the Fund.

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are being sold by the portfolio manager of another Core Portfolio in which the
Fund invests. This could result in an indirect expense to the Fund without
accomplishing any investment purpose.

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------------------------------------------------------------
---------------
[LOGO] BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3489
MINNEAPOLIS, MN
---------------

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

[LOGO]

SHAREHOLDER INFORMATION:

Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Minneapolis, Minnesota 55479-0040
612-667-8833 (MINNEAPOLIS/ST. PAUL)
800-338-1348 (ELSEWHERE)

-COPYRIGHT- 1997 NORWEST ADVANTAGE FUNDS
MFBPB002 6/97

<PAGE>
P R O S P E C T U S

JUNE 1, 1997

MONEY MARKET FUNDS

CASH INVESTMENT FUND
READY CASH INVESTMENT FUND
U.S. GOVERNMENT FUND
TREASURY FUND
MUNICIPAL MONEY MARKET FUND

...........................................

FIXED INCOME FUNDS

STABLE INCOME FUND
INTERMEDIATE GOVERNMENT INCOME FUND
DIVERSIFIED BOND FUND
INCOME FUND
TOTAL RETURN BOND FUND

...........................................

TAX-FREE FIXED INCOME FUNDS

LIMITED TERM TAX-FREE FUND
TAX-FREE INCOME FUND
COLORADO TAX-FREE FUND
MINNESOTA TAX-FREE FUND

...........................................

BALANCED FUNDS

CONSERVATIVE BALANCED FUND
MODERATE BALANCED FUND
GROWTH BALANCED FUND

...........................................

EQUITY FUNDS

INDEX FUND
INCOME EQUITY FUND
VALUGROWTHSM STOCK FUND
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
LARGE COMPANY GROWTH FUND
SMALL COMPANY STOCK FUND
SMALL COMPANY GROWTH FUND
SMALL CAP OPPORTUNITIES FUND
CONTRARIAN STOCK FUND
INTERNATIONAL FUND

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PROSPECTUS

JUNE 1, 1997

This Prospectus offers shares of twenty-eight separate portfolios (each a "Fund"
and collectively the "Funds") of Norwest Funds (the "Trust"), which is a
registered, open-end, management investment company, as follows: (i) five MONEY
MARKET FUNDS - Shares of Cash Investment Fund, Institutional and Investor Shares
of Ready Cash Investment Fund, Shares of U.S. Government Fund and Treasury Fund
and Institutional and Investor Shares of Municipal Money Market Fund (the "Money
Market Funds"); (ii) I Shares of five FIXED INCOME FUNDS - Stable Income Fund,
Intermediate Government Income Fund, Diversified Bond Fund, Income Fund and
Total Return Bond Fund (the "Fixed Income Funds"); (iii) I Shares of four
TAX-FREE FIXED INCOME FUNDS - Limited Term Tax-Free Fund, Tax-Free Income Fund,
Colorado Tax-Free Fund and Minnesota Tax-Free Fund (the "Tax-Free Fixed Income
Funds"); (iv) I Shares of three BALANCED FUNDS - Conservative Balanced Fund,
Moderate Balanced Fund and Growth Balanced Fund (the "Balanced Funds"); and (v)
I Shares of eleven EQUITY FUNDS - Index Fund, Income Equity Fund, ValuGrowthSM
Stock Fund, Diversified Equity Fund, Growth Equity Fund, Large Company Growth
Fund, Small Company Stock Fund, Small Company Growth Fund, Small Cap
Opportunities Fund, Contrarian Stock Fund and International Fund (the "Equity
Funds"). The Institutional Shares, Investor Shares, shares of Cash Investment
Fund, U.S. Government Fund and Treasury Fund (which offer a single class of
shares) and I Shares offered in this Prospectus are collectively referred to as
"Shares."

CASH INVESTMENT FUND, DIVERSIFIED BOND FUND, CONSERVATIVE BALANCED FUND,
MODERATE BALANCED FUND, GROWTH BALANCED FUND, DIVERSIFIED EQUITY FUND and GROWTH
EQUITY FUND each seeks to achieve its investment objective by investing in
various portfolios of another registered open-end, management investment
company, each of which invests using a different investment style. See "Summary"
and "Other Information - Core and Gateway Structure."

Each other Fund seeks to achieve its investment objective by investing directly
in portfolio securities.

Shares of Colorado Tax-Free Fund and Minnesota Tax-Free Fund are offered solely
to residents of Colorado and Minnesota, respectively.

AN INVESTMENT IN SHARES OF ANY MUTUAL FUND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT ANY OF
THE MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.

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PAGE
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1. SUMMARY...................................................................... 3

2. FINANCIAL HIGHLIGHTS......................................................... 14

3. INVESTMENT OBJECTIVES AND POLICIES........................................... 22
Money Market Funds........................................................... 22
Fixed Income Funds........................................................... 26
Tax-Free Income Funds........................................................ 30
Balanced Funds............................................................... 35
Equity Funds................................................................. 39
Core Portfolio Descriptions.................................................. 49

4. ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS....................... 51
General Information.......................................................... 51
Common Policies of the Funds................................................. 53

5. MANAGEMENT OF THE FUNDS...................................................... 57
Investment Advisory Services................................................. 58
Management, Administration and Distribution Services......................... 65
Shareholder Servicing and Custody............................................ 66
Expenses of the Funds........................................................ 66

6. PURCHASES AND REDEMPTIONS OF SHARES.......................................... 67
General Purchase Information................................................. 67
Purchase Procedures.......................................................... 68
General Redemption Information............................................... 70
Redemption Procedures........................................................ 71
Exchanges.................................................................... 71
Shareholder Services......................................................... 72

7. DIVIDENDS AND TAX MATTERS.................................................... 74
Dividends.................................................................... 74
Tax Matters.................................................................. 74

8. OTHER INFORMATION............................................................ 76
Banking Law Matters.......................................................... 76
Determination of Net Asset Value............................................. 77
Performance Information...................................................... 77
The Trust and Its Shares..................................................... 78
Core and Gateway Structure................................................... 79
APPENDIX A................................................................... 81
Investments, Investment Strategies and Risk Considerations
</TABLE>

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1. SUMMARY

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

WHO SHOULD INVEST

I Shares are offered to fiduciary, agency and custodial clients of bank trust
departments, trust companies and their affiliates. Institutional Shares and the
single class of shares offered by each of Cash Investment Fund, U.S. Government
Fund and Treasury Fund are designed primarily for institutional clients.
Investor Shares are designed for retail investors and incur more expenses than
Institutional Shares. While no single Fund is intended to provide a complete or
balanced investment program, each can serve as a component of an investor's
investment program.

THE FUNDS

Shares of twenty-eight Funds are offered by this Prospectus: (i) five MONEY
MARKET FUNDS - shares of Cash Investment Fund, Institutional and Investor Shares
of Ready Cash Investment Fund, Shares of U.S. Government Fund and Treasury Fund
and Institutional and Investor Shares of Municipal Money Market Fund; (ii) I
Shares of five FIXED INCOME FUNDS - Stable Income Fund, Intermediate Government
Income Fund, Diversified Bond Fund, Income Fund and Total Return Bond Fund;
(iii) I Shares of four TAX-FREE FIXED INCOME FUNDS - Limited Term Tax-Free Fund,
Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota Tax-Free Fund; (iv) I
Shares of three BALANCED FUNDS - Conservative Balanced Fund, Moderate Balanced
Fund and Growth Balanced Fund; and (v) I Shares eleven EQUITY FUNDS -
Diversified Equity Fund, Growth Equity Fund, Index Fund, Income Equity Fund,
Large Company Growth Fund, ValuGrowth Stock Fund, Small Company Stock Fund,
Small Company Growth Fund, Small Cap Opportunities Fund, Contrarian Stock Fund
and International Fund. Only the Shares indicated are offered by this
Prospectus. Other classes of shares of a Fund that currently offers other
classes of shares, are offered by separate prospectuses that may be obtained by
contacting the Trust. Shares of each class of each 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."

MONEY MARKET FUNDS

Each of the Money Market Funds (except Municipal Money Market Fund) seeks to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. Municipal Money Market Fund seeks to
provide high current income which is exempt from federal income tax to the
extent consistent with the preservation of capital and the maintenance of
liquidity. CASH INVESTMENT FUND and READY CASH INVESTMENT FUND each pursue their
investment objectives by investing in a broad spectrum of high quality money
market instruments of United States and foreign issuers. U.S. GOVERNMENT FUND
pursues its investment objective by investing primarily in securities that are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities.
TREASURY FUND pursues its investment objective by investing solely in
obligations that are issued or guaranteed by the United States Treasury.
MUNICIPAL MONEY MARKET FUND pursues its investment objective by investing
primarily in tax-exempt municipal securities.

FIXED INCOME FUNDS

STABLE INCOME FUND seeks to maintain safety of principal and provide low
volatility total return by investing primarily in investment grade short-term
obligations. INTERMEDIATE GOVERNMENT INCOME FUND seeks income and safety of
principal by investing primarily in U.S. Government Securities. The Fund seeks
to moderate its volatility by using a conservative approach in structuring the
maturities of its investment portfolio. DIVERSIFIED BOND FUND seeks to provide
total return by diversifying its investments among different fixed-income
investment styles. This objective is pursued through investments in several
fixed income styles. INCOME FUND

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seeks to provide total return consistent with current income. This objective is
pursued by investing in a portfolio of fixed income securities issued by
domestic and foreign issuers. TOTAL RETURN BOND FUND seeks total return. This
objective is pursued by investing in a portfolio of U.S. Government and
investment-grade corporate fixed income securities.

TAX-FREE FIXED INCOME FUNDS

LIMITED TERM TAX-FREE FUND seeks to produce current income exempt from Federal
income taxes. The Fund pursues this objective by investing primarily in a
portfolio of investment grade fixed income securities the interest on which is
free from federal income tax, and maintains an average dollar weighted portfolio
maturity of between 1 and 5 years. TAX-FREE INCOME FUND seeks to produce current
income exempt from federal income taxes. The Fund pursues this objective by
investing primarily in a portfolio of investment grade fixed income securities
the interest on which is free from federal income tax. COLORADO TAX-FREE FUND
seeks to provide shareholders with a high level of current income exempt from
both federal and Colorado state income taxes (including the alternative minimum
tax) consistent with preservation of capital. This objective is pursued by
investing primarily in a portfolio of investment grade municipal securities of
Colorado issuers. MINNESOTA TAX-FREE FUND seeks to provide shareholders with a
high level of current income exempt from both federal and Minnesota state income
taxes (including the alternative minimum tax) without assuming undue risk. This
objective is pursued by investing primarily in a portfolio of investment grade
municipal securities of Minnesota issuers.

BALANCED FUNDS

CONSERVATIVE BALANCED FUND seeks a combination of current income and capital
appreciation by diversifying investment of the Fund's assets among stocks, bonds
and other fixed income instruments through investment in several equity and
fixed income investment styles. Of the Balanced Funds, Conservative Balanced
Fund most emphasizes safety of principal through limited exposure to equity
securities. MODERATE BALANCED FUND seeks a combination of current income and
capital appreciation by diversifying investment of the Fund's assets among
stocks, bonds and other fixed income investments through investment in several
equity and fixed income investment styles. Moderate Balanced Fund is more evenly
balanced between fixed income and equity securities than the other Balanced
Funds. GROWTH BALANCED FUND seeks a combination of current income and capital
appreciation by diversifying investment of the Fund's assets between stocks and
bonds through investment in several equity and fixed income investment styles.
Growth Balanced Fund has the largest equity component of the Balanced Funds.

EQUITY FUNDS

INDEX FUND seeks to duplicate the return of the Standard & Poor's 500 Composite
Stock Price Index. INCOME EQUITY FUND seeks to provide long-term capital
appreciation consistent with above-average dividend income. VALUGROWTH STOCK
FUND seeks to provide long-term capital appreciation. The Fund invests primarily
in medium and large capitalization companies that, in the view of the Fund's
investment adviser, possess above average growth prospects and appear to be
undervalued. DIVERSIFIED EQUITY FUND seeks long-term capital appreciation while
moderating annual return volatility by diversifying its investments among five
different equity investment styles. GROWTH EQUITY FUND seeks a high level of
long-term capital appreciation while moderating annual return volatility by
diversifying its investments among three different equity investment styles.
Growth Equity Fund assumes a higher level of risk than Diversified Equity Fund
in order to seek increased returns. LARGE COMPANY GROWTH FUND seeks long-term
capital appreciation by investing in large, high-quality domestic companies that
the investment adviser believes have superior growth potential. SMALL COMPANY
STOCK FUND seeks long-term capital appreciation. This objective is pursued by
investing primarily in the common stock of small and medium size domestic
companies that have a market capitalization well below that of the average
company in the Standard & Poor's 500 Composite Stock Price Index. SMALL COMPANY
GROWTH FUND seeks to provide long-term capital appreciation by investing in
smaller domestic companies. This objective is pursued by investing primarily in
the common stock of small and

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medium size domestic companies that are either growing rapidly or completing a
period of significant change. THIS FUND CURRENTLY IS NOT OPEN TO NEW INVESTORS.
SMALL CAP OPPORTUNITIES FUND seeks capital appreciation. Current income will be
incidental to the objective of capital appreciation. CONTRARIAN STOCK FUND seeks
capital appreciation. This objective is pursued by investing primarily in common
stocks for which the Fund's investment adviser believes there is significant
potential for price appreciation. INTERNATIONAL FUND seeks long-term capital
appreciation. This objective is pursued by investing, directly or indirectly, in
high quality companies based outside the United States.

FUND STRUCTURES

READY CASH INVESTMENT FUND, STABLE INCOME FUND, TOTAL RETURN BOND FUND, INDEX
FUND, INCOME EQUITY FUND, LARGE COMPANY GROWTH FUND, SMALL COMPANY STOCK FUND,
SMALL COMPANY GROWTH FUND, SMALL CAP OPPORTUNITIES FUND and INTERNATIONAL FUND
each seek to achieve its investment objective by investing all of its investable
assets in a separate portfolio (each a "Core Portfolio") of a registered,
open-end, management investment company (each a "Core Trust") that has the same
investment objective and substantially similar investment policies. Accordingly,
the investment experience of each of these Funds will correspond directly with
the investment experience of its respective Core Portfolio. See "Other
Information - Core and Gateway Structure." The Funds and the Core Portfolios in
which they invest are:

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FUND CORE PORTFOLIO
- ---------------------------------- ------------------------------------------------
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Ready Cash Investment Fund Prime Money Market Portfolio
Stable Income Fund Stable Income Portfolio
Total Return Bond Fund Total Return Bond Portfolio
Index Fund Index Fund Portfolio
Income Equity Fund Income Equity Portfolio
Large Company Growth Fund Large Company Growth Portfolio
Small Company Stock Fund Small Company Stock Portfolio
Small Company Growth Fund Small Company Growth Portfolio
Small Cap Opportunities Fund Schroder U.S. Smaller Companies Portfolio
International Fund International Portfolio
</TABLE>

CASH INVESTMENT FUND, DIVERSIFIED BOND FUND, CONSERVATIVE BALANCED FUND,
MODERATE BALANCED FUND, GROWTH BALANCED FUND, DIVERSIFIED EQUITY FUND and GROWTH
EQUITY FUND each seeks to achieve its investment objective by investing all of
its investable assets in various portfolios (each a "Core Portfolio") of two
registered, open-end, management investment companies (each a "Core Trust").
Each Core Portfolio invests using a different investment style. See "Other
Information - Core and Gateway Structure." The Funds and the Core Portfolios in
which they currently invest are:

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FUND CORE PORTFOLIOS
- ---------------------------------- ------------------------------------------------
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Cash Investment Fund Money Market Portfolio
Prime Money Market Portfolio
Diversified Bond Fund Positive Return Portfolio
Total Return Bond Portfolio
Managed Fixed Income Portfolio
Conservative Balanced Fund Money Market Portfolio
Stable Income Portfolio
Positive Return Portfolio
Total Return Bond Portfolio
Managed Fixed Income Portfolio
Each of the seven Core Portfolios in which
Diversified Equity Fund invests
</TABLE>

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FUND CORE PORTFOLIOS
- ---------------------------------- ------------------------------------------------
Moderate Balanced Fund Stable Income Portfolio
Positive Return Portfolio
Total Return Bond Portfolio
Managed Fixed Income Portfolio
Each of the seven Core Portfolios in which
Diversified Equity Fund invests
<S> <C>
Growth Balanced Fund Positive Return Portfolio
Total Return Bond Portfolio
Managed Fixed Income Portfolio
Each of the seven Core Portfolios in which
Diversified Equity Fund Invests
Diversified Equity Fund Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Index Portfolio
Income Equity Portfolio
Large Company Growth Portfolio
International Portfolio
Growth Equity Fund Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
International Portfolio
</TABLE>

The percentage of each of these Fund's (except Cash Investment Fund's) assets
invested in each Core Portfolio may be changed at any time in response to market
or other conditions. Allocations are made within specified ranges as described
under "Investment Objectives and Policies" for each Fund. Upon approval by the
Board of Trustees of the Trust and notification of shareholders, each Fund may
invest in additional or fewer Core Portfolios or invest directly in portfolio
securities.

U.S. GOVERNMENT FUND, TREASURY FUND, MUNICIPAL MONEY MARKET FUND, INTERMEDIATE
GOVERNMENT INCOME FUND, INCOME FUND, LIMITED TERM TAX-FREE FUND, TAX-FREE INCOME
FUND, COLORADO TAX-FREE FUND, MINNESOTA TAX-FREE FUND, VALUGROWTH STOCK FUND and
CONTRARIAN STOCK FUND each seeks to achieve its investment objective by
investing directly in portfolio securities.

MANAGEMENT OF THE FUNDS

ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is the Funds' investment adviser. Norwest also
is the investment adviser of each Core Portfolio other than Schroder U.S.
Smaller Companies Portfolio and International Portfolio. Norwest provides
investment advice to various institutions, pension plans and other accounts and,
as of December 31, 1996, with its affiliates, managed over $42.6 billion in
assets. See "Management of the Funds - Investment Advisory Services." Norwest
Bank serves as transfer agent, dividend disbursing agent and custodian of the
Trust, serves as the custodian of each Core Portfolio other than Schroder U.S.
Smaller Companies Portfolio and provides administrative services to Small Cap
Opportunities Fund and International Fund. See "Management of the Funds -
Shareholder Servicing and Custody" and "- Management, Administration and
Distribution Services."

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Each Fund that invests in one or more Core Portfolios incurs investment advisory
fees indirectly through the investment advisory fees paid by the Core
Portfolios; Norwest is paid an investment advisory fee directly by the other
Funds. In addition, Diversified Bond Fund, Conservative Balanced Fund, Moderate
Balanced Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity
Fund each pay Norwest an asset allocation fee for Norwest's services with
respect to the allocation of the Fund's assets to and among the various Core
Portfolios ("Asset Allocation Services"). Cash Investment Fund does not vary the
percentages of its assets invested in the Core Portfolios in which it invests
and, accordingly, pays no asset allocation Fee.

UNITED CAPITAL MANAGEMENT ("UCM"), a part of Norwest Bank Colorado, N.A., is the
investment subadviser of Total Return Bond Fund/Total Return Bond Portfolio and
Contrarian Stock Fund. It is also an investment subadviser of Diversified Bond
Fund, Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced
Fund. UCM provides specialized investment advisory services to various
institutional pension accounts. See "Management - Investment Advisory Services."

GALLIARD CAPITAL MANAGEMENT, INC. ("Galliard"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Stable Income
Fund/Stable Income Portfolio, and Managed Fixed Income Portfolio. It is also an
investment subadviser of Diversified Bond Fund, Conservative Balanced Fund,
Moderate Balanced Fund and Growth Balanced Fund. Galliard provides investment
advisory services to bank and thrift institutions, pension and profit sharing
plans, trusts and charitable organizations and corporate and other business
entities. See "Management - Investment Advisory Services."

CRESTONE CAPITAL MANAGEMENT, INC. ("Crestone"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Small Company Stock
Fund/Small Company Stock Portfolio. It is also an investment subadviser of
Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Diversified Equity Fund and Growth Equity Fund. Crestone provides investment
advice regarding companies with small capitalization to various clients,
including institutional investors. See "Management - Investment Advisory
Services."

PEREGRINE CAPITAL MANAGEMENT, INC. ("Peregrine"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Small Company Growth
Fund/Small Company Growth Portfolio, Positive Return Bond Portfolio, Large
Company Growth Fund/Large Company Growth Portfolio and Small Company Value
Portfolio. It is also an investment subadviser of Diversified Bond Fund,
Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Diversified Equity Fund and Growth Equity Fund. Peregrine provides investment
advisory services to corporate and public pension plans, profit sharing plans,
savings-investment plans and 401(k) plans. See "Management - Investment Advisory
Services."

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. ("Schroder") is the investment
adviser of Schroder U.S. Smaller Companies Portfolio and International
Portfolio. It is also an investment subadviser of Conservative Balanced Fund,
Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity Fund, Growth
Equity Fund, Small Cap Opportunities Fund and International Fund. Schroder
specializes in providing international investment advice to various clients. See
"Management - Investment Advisory Services."

Norwest, UCM, Galliard, Crestone, Peregrine and Schroder (or Norwest and a
particular investment subadviser) are sometimes referred to collectively as the
"Advisers."

FUND MANAGEMENT AND ADMINISTRATION

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PURCHASE AND REDEMPTION OF SHARES

Shares may be purchased or redeemed without a sales or other charge. The minimum
initial investment for Institutional Shares and the shares of Cash Investment
Fund, U.S. Government Fund and Treasury Fund is $100,000. There is no minimum
subsequent investment for those Shares. The minimum initial investment for
Investor Shares and I Shares is $1,000. The minimum subsequent investment for
Investor Shares and I Shares is $100. See "Purchases and Redemptions of Shares."

EXCHANGES

Holders of Institutional Shares, I Shares and Shares of Cash Investment Fund,
U.S. Government Fund and Treasury Fund may exchange their Shares among those
Funds and those classes. Holders of Investor Shares of a Fund may exchange their
Shares for Investor Shares of the other Fund and A class shares of certain other
Funds of the Trust. "See Purchases and Redemptions of Shares - Exchanges."

DIVIDENDS AND DISTRIBUTIONS

Dividends of net investment income currently are declared and paid at least
annually by each Fund. Dividends of net investment income of each Money Market
Fund, Income Fund, Total Return Bond Fund, and each Tax Exempt Fixed Income Fund
currently are declared daily and paid monthly. Dividends are declared and paid
monthly in the case of Stable Income Fund, Intermediate Government Income Fund
and Diversified Bond Fund. In the case of Income Equity Fund, ValuGrowth Stock
Fund, Small Company Stock Fund and Contrarian Stock Fund dividends are declared
and paid quarterly, and dividends are declared annually in the case of all other
Funds. Each Fund's net capital gain, if any, is distributed at least annually.
See "Dividends and Tax Matters."

CERTAIN RISK FACTORS

There can be no assurance that any Fund will achieve its investment objective,
and each Fund's net asset value and total return will fluctuate based upon
changes in the value of its portfolio securities. Upon redemption, an investment
in a Fund may be worth more or less than its original value. All of the equity
funds invest primarily in equity securities and are subject to the general risks
of investing in the stock market.

An investment in any Fund involves certain risks, depending on the types of
investments made and the types of investment techniques employed. All
investments made by the Funds entail some risk. There can be no assurance that
any money market fund or Core Portfolio will maintain a stable net asset value
of $1.00 per share and the amount of income earned by each Fund will tend to
vary with changes in prevailing interest rates. Certain investments and
investment techniques, however, entail additional risks, such as the potential
use of leverage by certain Funds through borrowings, securities lending,
investments in foreign issuers and other investment techniques. See "Appendix A
- - Investments, Investment Strategies and Risk Considerations." As noted under
"Financial Highlights," the portfolio turnover rate for certain Funds may from
time to time be high, resulting in increased brokerage costs or short-term
capital gains or losses. See "Additional Investment Policies and Risk
Considerations - Common Policies of the Funds - Portfolio Transactions."

Normally, the values of the FIXED INCOME FUNDS' and the TAX-EXEMPT FIXED INCOME
FUNDS' investments vary inversely with changes in interest rates. The securities
in which the Fixed Income Funds and Tax-Exempt Fixed Income Funds invest are
subject to "credit risk" relating to the financial condition of the issuers of
the securities. Each Fund (other than Minnesota Tax-Free Fund), however, invests
only in investment grade securities (those rated in the top four grades by a
nationally recognized statistical rating organization ("NRSRO") such as Standard
& Poor's). MINNESOTA TAX-FREE FUND may invest in non-investment grade municipal
securities, which may entail additional risks. See "Investment Objectives and
Policies - Tax-Free Fixed Income Funds - Minnesota Tax-Free Fund -
Non-Investment Grade Securities." In addition, with respect to the Fixed Income
Funds, the potential for appreciation in the event of a decline in

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interest rates may be limited or negated by increased principal repayments on
certain mortgage- and asset-backed securities held by a Fund. The Fixed Income
Funds' use of these securities entails certain risks. See "Appendix A:
Investments, Investment Strategies and Risk Considerations - Mortgage-Backed
Securities" and "- Asset-Backed Securities."

Each of COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE FUND invests principally
in securities issued by the government of and municipalities in the State of
Colorado or Minnesota, respectively, and is therefore more susceptible to
factors adversely affecting issuers of those states than would be a more
geographically diverse municipal securities portfolio. Each of these Funds is
non-diversified, which means that they have greater latitude than a diversified
Fund to invest in fewer issuers and to invest more of their assets in any one
issuer. Non-diversified funds may present greater risks than diversified funds.
See "Investment Objectives and Policies - Tax-Free Fixed Income Funds -
Investment Considerations and Risk Factors."

The policy of investing in securities of smaller companies employed by SMALL
COMPANY STOCK FUND, SMALL COMPANY GROWTH FUND and SMALL CAP OPPORTUNITIES FUND
and by CONSERVATIVE BALANCED FUND, MODERATE BALANCED FUND, GROWTH BALANCED FUND,
DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND, which invest a portion of their
assets in these securities, entails certain risks in addition to those normally
associated with investments in equity securities. These risks include lower
trading volumes and, therefore, the potential for greater stock price
volatility. See "Investment Objectives and Policies - Equity Funds - Small
Company Stock Fund (or Small Company Growth Fund or Small Cap Opportunities
Fund) - Additional Investment Considerations and Risk Factors." SMALL COMPANY
STOCK FUND, SMALL COMPANY GROWTH FUND and SMALL CAP OPPORTUNITIES FUND are
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.

The policy of investing in foreign issuers employed by INTERNATIONAL FUND and by
CONSERVATIVE BALANCED FUND, MODERATE BALANCED FUND, GROWTH BALANCED FUND,
DIVERSIFIED EQUITY FUND and GROWTH EQUITY FUND, which invest a portion of their
assets in these securities, entails certain risks in addition to those normally
associated with investments in equity securities. These risks include the risks
of foreign political and economic instability, adverse movements in foreign
exchange rates, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, and changes in foreign
governmental attitudes towards private investment, possibly leading to
nationalization, increased taxation or confiscation of foreign investors'
assets. See "Investment Objectives and Policies - Equity Funds - International
Fund - Foreign Investment Considerations and Risk Factors." INTERNATIONAL 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 foreign
companies.

By pooling their assets in one or more Core Portfolios with other institutional
investors, CASH INVESTMENT FUND, READY CASH INVESTMENT FUND, STABLE INCOME FUND,
DIVERSIFIED BOND FUND, TOTAL RETURN BOND FUND, CONSERVATIVE BALANCED FUND,
MODERATE BALANCED FUND, GROWTH BALANCED FUND, INDEX FUND, INCOME EQUITY FUND,
DIVERSIFIED EQUITY FUND, GROWTH EQUITY FUND, LARGE COMPANY GROWTH FUND, SMALL
COMPANY STOCK FUND, SMALL COMPANY STOCK FUND, SMALL CAP OPPORTUNITIES FUND and
INTERNATIONAL FUND each may be able to achieve certain efficiencies and
economies of scale that they could not achieve by investing directly in
securities. Nonetheless, these investments could have adverse effects on the
Funds which investors should consider. See "Other Information - Core and Gateway
Structure - Certain Risks of Investing in Core Portfolios." Investment decisions
are made by the portfolio managers of each Core Portfolio independently.
Therefore the portfolio manager of one Core Portfolio in which a Fund invests
may purchase shares of the same issuer whose shares are being sold by the
portfolio manager of another Core Portfolio in which the Fund invests. This
could result in an indirect expense to the Fund without accomplishing any
investment purpose. See "Other Information - Core and Gateway Structure -
Certain Risks of Investing in Core Portfolios."

9
<PAGE>
EXPENSES OF INVESTING IN THE FUNDS

The purpose of the following table 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 or
exchanges of the Shares. No Fund has adopted a Rule 12b-1 plan with respect to
the Shares and, accordingly, no Fund incurs distribution expenses with respect
to the Shares.

ANNUAL FUND OPERATING EXPENSES(1)

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

<TABLE>
<CAPTION>
Core Portfolios
---------------------------
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees(2) Expenses Expenses(4)
------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
MONEY MARKET FUNDS
Cash Investment Fund(3) N/A 0.24% 0.22% 0.02% 0.48%
Ready Cash Investment Fund(3)
Institutional Shares N/A 0.24% 0.22% 0.02% 0.48%
Investor Shares N/A 0.46% 0.34% 0.02% 0.82%
U.S. Government Fund 0.15% 0.35% N/A N/A 0.50%
Treasury Fund 0.17% 0.29% N/A N/A 0.46%
Municipal Money Market Fund
Institutional Shares 0.29% 0.16% N/A N/A 0.45%
Investor Shares 0.29% 0.36% N/A N/A 0.65%

FIXED INCOME FUNDS (I SHARES)
Stable Income Fund N/A 0.29% 0.30% 0.06% 0.65%
Intermediate Government Income
Fund 0.33% 0.35% N/A N/A 0.68%
Diversified Bond Fund(3) 0.00% 0.30% 0.35% 0.05% 0.70%
Income Fund 0.40% 0.35% N/A N/A 0.75%
Total Return Bond Fund(3) N/A 0.36% 0.35% 0.04% 0.75%

TAX-FREE FIXED INCOME FUNDS (I
SHARES)
Limited Term Tax-Free Fund 0.50% 0.15% N/A N/A 0.65%
Tax-Free Income Fund 0.30% 0.30% N/A N/A 0.60%
Colorado Tax-Free Fund 0.30% 0.30% N/A N/A 0.60%
Minnesota Tax-Free Fund 0.30% 0.30% N/A N/A 0.60%

BALANCED FUNDS (I SHARES)
Conservative Balanced Fund(3) 0.10% 0.30% 0.35% 0.05% 0.80%
Moderate Balanced Fund(3) 0.13% 0.30% 0.40% 0.05% 0.88%
Growth Balanced Fund(3) 0.14% 0.30% 0.44% 0.05% 0.93%

EQUITY FUNDS (I SHARES)
Index Fund N/A 0.09% 0.15% 0.01% 0.25%
Income Equity Fund N/A 0.34% 0.50% 0.01% 0.85%
ValuGrowth Stock Fund 0.79% 0.41% N/A N/A 1.20%
Diversified Equity Fund(3) 0.17% 0.32% 0.48% 0.03% 1.00%
Growth Equity Fund(3) 0.22% 0.29% 0.68% 0.06% 1.25%
Large Company Growth Fund N/A 0.34% 0.65% 0.01% 1.00%
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
Core Portfolios
---------------------------
Investment Investment Total
Advisory Other Advisory Other Operating
EQUITY FUNDS (I SHARES) (CONTINUED) Fees(2) Expenses Fees(2) Expenses Expenses(4)
------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Small Company Stock Fund(3) N/A 0.26% 0.90% 0.04% 1.20%
Small Company Growth Fund N/A 0.33% 0.90% 0.02% 1.25%
Small Cap Opportunities Fund N/A 0.40% 0.53% 0.32% 1.25%
Contrarian Stock Fund 0.64% 0.56% N/A N/A 1.20%
International Fund N/A 0.95% 0.45% 0.10% 1.50%
</TABLE>

(1) For a further description of the various expenses associated with investing
in the Funds, see "Management." Expenses associated with other classes of a
Fund differ from those listed in the table. The table is based on amounts
incurred during the Funds' most recent fiscal year ended May 31, 1996,
except that the expenses for Limited Term Tax-Free Fund and Small Cap
Opportunities Fund are based on estimated expenses for those Funds' first
fiscal year of operations ended May 31, 1997. Expenses are restated to
reflect current fees. To the extent a Fund invests all or a portion of its
assets in various Core Portfolios (each of which bears expenses as noted
under "Core Portfolios - Investment Advisory Fees" and "Core Portfolios -
Other Expenses"), the Fund indirectly bears its pro rata portion of the
expenses of each Core Portfolio in which it invests.

(2) For Diversified Bond Fund, Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity Fund,
"Investment Advisory Fees" reflects the Asset Allocation Fee. For all Funds
that invest in a Core Portfolio, "Core Portfolios - Investment Advisory
Fees" reflects the investment advisory fees incurred by the Core
Portfolio(s) in which the Fund invests. Absent estimated waivers, the
"Investment Advisory Fee" for Municipal Money Market Fund - Institutional
Shares, Municipal Money Market Fund - Investor Shares, Income Fund, Tax-Free
Income Fund, Colorado Tax-Free Fund, Minnesota Tax-Free Fund and ValuGrowth
Stock Fund would be 0.35%, 0.35%, 0.50%, 0.50%, 0.50%, 0.50% and 0.80%, and
for Diversified Bond Fund, Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity Fund
would be 0.25%. The "Core Portfolios - Investment Advisory Fees" paid by
each of Diversified Bond Fund, Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity Fund
will vary based on the percentage of the Fund's assets invested in each Core
Portfolio.

(3) Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Cash Investment Fund's total combined
operating expenses through May 31, 1999 at 0.48%, which is the same level as
the Fund's total operating expenses prior to May 31, 1997. Norwest and Forum
have agreed to waive their respective fees or reimburse expenses in order to
maintain Ready Cash Investment Fund's, Total Return Bond Fund's and Small
Company Stock Fund's total combined operating expenses through May 31, 1998
at or below the following amounts: Ready Cash Investment Fund -
Institutional Shares, 0.48%, and Investor Shares, 0.82%; Total Return Bond
Fund I Shares, 0.75% and Small Company Stock Fund I Shares, 1.20%. Norwest
and Forum have agreed to waive their respective fees through May 31, 1999 in
order to ensure that the fees borne by each of Diversified Bond Fund,
Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Diversified Equity Fund and Growth Equity Fund for investment advisory,
administrative and management services would not exceed, in the aggregate,
0.45%, 0.55%, 0.63%, 0.68%, 0.75% and 1.00%, respectively. See "Management -
Expenses of the Funds."

(4) Absent estimated expense reimbursements and fee waivers, the expenses of
Cash Investment Fund, Ready Cash Investment Fund - Institutional Shares and
Investor Shares, U.S. Government Fund, Treasury Fund, Municipal Money Market
Fund - Institutional Shares, Municipal Money Market Fund -

11
<PAGE>

Investor Shares, Stable Income Fund, Intermediate Government Income Fund,
Diversified Bond Fund, Income Fund, Total Return Bond Fund, Limited Term
Tax-Free Fund, Tax-Free Income Fund, Colorado Tax-Free Fund, Minnesota
Tax-Free Fund, Conservative Balanced Fund, Moderate Balanced Fund, Growth
Balanced Fund, Index Fund, Income Equity Fund, ValuGrowth Stock Fund,
Diversified Equity Fund, Growth Equity Fund, Large Company Growth Fund,
Small Company Stock Fund, Small Company Growth Fund, Small Cap Opportunities
Fund, Contrarian Stock Fund and International Fund would be: "Other
Expenses," 0.27%, 0.27%, 0.48%, 0.36%, 0.39%, 0.38%, 0.54%, 0.46%, 0.83%,
0.39%, 0.56%, 0.51%, 0.65%, 0.56%, 0.63%, 0.81%, 0.39%, 0.37%, 0.37%, 0.31%,
0.52%, 0.53%, 0.37%, 0.37%, 0.38%, 0.50%, 0.29%, 0.98%, 0.66% and 0.89%,
respectively; and "Total Operating Expenses," 0.63%, 0.63%, 0.93%, 0.51%,
0.56%, 0.73%, 0.88%, 0.93%, 1.16%, 1.14%, 1.06%, 0.99%, 1.15%, 1.06%, 1.13%,
1.31%, 1.15%, 1.17%, 1.20%, 0.58%, 1.13%, 1.33%, 1.24%, 1.45%, 1.14%, 1.54%,
1.31%, 2.29%, 1.46% and 1.54%, respectively. Absent estimated expense
reimbursements and fee waivers, "Core Portfolios - Other Expenses" of Cash
Investment Fund, Ready Cash Investment Fund Institutional and Investor
Shares, Stable Income Fund, Diversified Bond Fund, Total Return Bond Fund,
Conservative Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Index Fund, Income Equity Fund, Diversified Equity Fund, Growth Equity Fund,
Large Company Growth Fund, Small Company Stock Fund, Small Company Growth
Fund, Small Cap Opportunities Fund and International Fund would be 0.12%,
0.12%, 0.12%, 0.16%, 0.15%, 0.14%, 0.16%, 0.15%, 0.15%, 0.12%, 0.12%, 0.13%,
0.16%, 0.11%, 0.14%, 0.12%, 0.71% and 0.20%, respectively. "Other Expenses"
include transfer agency fees payable to Norwest of 0.25% (0.10% plus
expenses in the case of Municipal Money Market Fund - Institutional Shares
and 0.20% plus expenses in the case of Cash Investment Fund). Except as
otherwise noted, expense reimbursements and 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 a Fund's
Shares, the expenses listed in the "Annual Fund Operating Expenses" table, a 5%
annual return and reinvestment of all dividends and distributions. 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. The 5% annual
return is not predictive of and does not represent the Funds' projected returns;
rather, it is required by government regulation.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
MONEY MARKET FUNDS
Cash Investment Fund 5 15 27 60
Ready Cash Investment Fund
Institutional Shares 5 15 26 60
Investor Shares 8 26 46 101
U.S. Government Fund 5 16 28 63
Treasury Fund 5 15 26 58
Municipal Money Market Fund
Institutional Shares 5 14 25 57
Investor Shares 7 21 36 81
FIXED INCOME FUNDS (I SHARES)
Stable Income Fund 7 21 36 81
Intermediate Government Income Fund 7 22 38 85
Diversified Bond Fund 7 22 39 87
Income Fund 8 24 42 93
Total Return Bond Fund 8 24 42 93
</TABLE>

12
<PAGE>

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
TAX-FREE FIXED INCOME FUNDS (I SHARES)
Limited Term Tax-Free Fund 7 21 36 81
Tax-Free Income Fund 6 19 33 75
Colorado Tax-Free Fund 6 19 33 75
Minnesota Tax-Free Fund 6 19 33 75
BALANCED FUNDS (I SHARES)
Conservative Balanced Fund 8 26 44 99
Moderate Balanced Fund 9 28 49 108
Growth Balanced Fund 9 30 51 114
EQUITY FUNDS (I SHARES)
Index Fund 3 8 14 32
Income Equity Fund 9 27 47 105
ValuGrowth Stock Fund 12 38 66 145
Diversified Equity Fund 10 32 55 122
Growth Equity Fund 13 40 69 151
Large Company Growth Fund 10 32 55 122
Small Company Stock Fund 12 38 66 145
Small Company Growth Fund 13 40 69 151
Small Cap Opportunities Fund 13 40 69 151
Contrarian Stock Fund 12 38 66 145
International Fund 15 47 82 179
</TABLE>

13
<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for the Funds. This
information represents selected data for a single outstanding Share of each Fund
for the periods shown. Information for the period ended November 30, 1996 is
unaudited and information for the periods ended May 31, 1994, 1995 and 1996 and
for the period ended October 31, 1995 have been audited by KPMG Peat Marwick
LLP, independent auditors. Information for prior periods was audited by other
independent auditors. Each Fund's financial statements

<TABLE>
<CAPTION>
Beginning Net Net Realized Dividends
Net Asset Investment and Unrealized from Net Distributions
Value Per Income Gain (Loss) on Investment from Net Capital
MONEY MARKET FUNDS Share (Loss) Investments Income Realized Gain Contribution
--------- ---------- -------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
CASH INVESTMENT FUND
- ------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $1.00 $0.025 -- $(0.025) -- --
June 1, 1995 to May 31, 1996 1.00 0.054 -- (0.054) -- --
June 1, 1994 to May 31, 1995 1.00 0.049 -- (0.049) -- --
June 1, 1993 to May 31, 1994 1.00 0.031 -- (0.031) -- --
June 1, 1992 to May 31, 1993 1.00 0.033 -- (0.033) -- --
December 1, 1991 to May 31, 1992 1.00 0.021 -- (0.021) -- --
December 1, 1990 to November 30,
1991 1.00 0.061 -- (0.061) -- --
December 1, 1989 to November 30,
1990 1.00 0.079 -- (0.079) -- --
December 1, 1988 to November 30,
1989 1.00 0.088 -- (0.088) -- --
December 1, 1987 to November 30,
1988 1.00 0.071 -- (0.071) -- --
October 14, 1987 to November 30,
1987 1.00 0.009 -- (0.009) -- --
U.S. GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 1.00 0.024 -- (0.024) -- --
June 1, 1995 to May 31, 1996 1.00 0.052 -- (0.052) -- --
June 1, 1994 to May 31, 1995 1.00 0.047 -- (0.047) -- --
June 1, 1993 to May 31, 1994 1.00 0.030 -- (0.030) -- --
June 1, 1992 to May 31, 1993 1.00 0.030 -- (0.030) -- --
December 1, 1991 to May 31, 1992 1.00 0.020 -- (0.020) -- --
December 1, 1990 to November 30,
1991 1.00 0.058 -- (0.058) -- --
December 1, 1989 to November 30,
1990 1.00 0.077 -- (0.077) -- --
December 1, 1988 to November 30,
1989 1.00 0.085 -- (0.085) -- --
December 1, 1987 to November 30,
1988 1.00 0.069 -- (0.069) -- --
November 16, 1987 to November 30,
1987 1.00 0.003 -- (0.003) -- --
TREASURY FUND
- ------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 1.00 0.024 -- (0.024) -- --
June 1, 1995 to May 31, 1996 1.00 0.050 -- (0.050) -- --
June 1, 1994 to May 31, 1995 1.00 0.046 -- (0.046) -- --
June 1, 1993 to May 31, 1994 1.00 0.028 -- (0.028) -- --
June 1, 1992 to May 31, 1993 1.00 0.029 -- (0.029) -- --
December 1, 1991 to May 31, 1992 1.00 0.020 -- (0.020) -- --
December 3, 1990 to November 30,
1991 1.00 0.058 -- (0.058) -- --
MUNICIPAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
June 1, 1996 to November 30, 1996* 1.00 0.016 -- (0.016) -- --
June 1, 1995 to May 31, 1996 1.00 0.035 -- (0.035) -- --
June 1, 1994 to May 31, 1995 1.00 0.033 $(0.004) (0.033) -- $0.004
August 3, 1993 to May 31, 1994 1.00 0.019 -- (0.019) -- --
INVESTOR SHARES
June 1, 1996 to November 30, 1996* 1.00 0.015 -- (0.015) -- --
June 1, 1995 to May 31, 1996 1.00 0.033 -- (0.033) -- --
June 1, 1994 to May 31, 1995 1.00 0.031 (0.004) (0.031) -- 0.004
June 1, 1993 to May 31, 1994 1.00 0.021 -- (0.021) -- --
June 1, 1992 to May 31, 1993 1.00 0.021 -- (0.021) -- --
December 1, 1991 to May 31, 1992 1.00 0.014 -- (0.014) -- --
December 1, 1990 to November 30,
1991 1.00 0.042 -- (0.042) -- --
December 1, 1989 to November 30,
1990 1.00 0.053 -- (0.053) -- --
December 1, 1988 to November 30,
1989 1.00 0.058 -- (0.058) -- --
January 7, 1988 to November 30,
1988 1.00 0.042 -- (0.042) -- --
READY CASH INVESTMENT FUND
- ------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
June 1, 1996 to November 30, 1996* 1.00 0.025 -- (0.025) -- --
June 1, 1995 to May 31, 1996 1.00 0.054 -- (0.054) -- --
June 1, 1994 to May 31, 1995 1.00 0.049 -- (0.049) -- --
January 4, 1994 to May 31, 1994 1.00 0.013 -- (0.013) -- --
INVESTOR SHARES
June 1, 1996 to November 30, 1996* 1.00 0.024 -- (0.024) -- --
June 1, 1995 to May 31, 1996 1.00 0.051 -- (0.051) -- --
June 1, 1994 to May 31, 1995 1.00 0.045 -- (0.045) -- --
June 1, 1993 to May 31, 1994 1.00 0.027 -- (0.027) -- --
June 1, 1992 to May 31, 1993 1.00 0.030 -- (0.030) -- --
December 1, 1991 to May 31, 1992 1.00 0.020 -- (0.020) -- --
December 1, 1990 to November 30,
1991 1.00 0.058 -- (0.058) -- --
December 1, 1989 to November 30,
1990 1.00 0.076 -- (0.076) -- --
December 1, 1988 to November 30,
1989 1.00 0.085 -- (0.085) -- --
January 20, 1988 to November 30,
1988 1.00 0.059 -- (0.059) -- --
</TABLE>

* Unaudited.
(a) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the absence of any waivers and reimbursements.
(b) Annualized.
(c) Total return for 1995 includes the effect of a capital contribution from
Norwest Bank. Without the capital contribution, total return would have been
2.59% for Investor shares and 2.79% for Institutional shares.

<PAGE>

for the period ended November 30, 1996 are contained in the Fund's Semi-Annual
Report. Each Fund's financial statements for the fiscal year ended May 31, 1996
and independent auditors' report thereon are contained in the Annual Report.
These financial statements are incorporated by reference into the SAIs. Further
information about each Fund's performance is contained in the Semi- Annual and
Annual Reports which may be obtained from the Trust without charge.

<TABLE>
<CAPTION>
Ratio to Average Net Assets Net Assets
Ending ------------------------------------- at End of
Net Asset Net Period
Value Per Investment Net Gross Total (000's
Share Income Expenses Expenses(a) Return Omitted)
--------- ----------- --------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
CASH INVESTMENT FUND
- --------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $1.00 5.03%(b) 0.48%(b) 0.48%(b) 5.18%(b) $ 2,042,475
June 1, 1995 to May 31, 1996 1.00 5.36% 0.48% 0.49% 5.50% 1,739,549
June 1, 1994 to May 31, 1995 1.00 4.87% 0.48% 0.50% 4.96% 1,464,304
June 1, 1993 to May 31, 1994 1.00 3.11% 0.49% 0.49% 3.16% 1,381,402
June 1, 1992 to May 31, 1993 1.00 3.29% 0.50% 0.51% 3.36% 1,944,948
December 1, 1991 to May 31, 1992 1.00 4.23%(b) 0.50%(b) 0.56%(b) 4.29%(b) 1,292,196
December 1, 1990 to November 30,
1991 1.00 6.11% 0.51% 0.54% 6.31% 1,004,979
December 1, 1989 to November 30,
1990 1.00 7.92% 0.45% 0.57% 8.22% 747,744
December 1, 1988 to November 30,
1989 1.00 8.81% 0.45% 0.64% 9.22% 662,698
December 1, 1987 to November 30,
1988 1.00 7.00% 0.43% 0.74% 7.32% 316,349
October 14, 1987 to November 30,
1987 1.00 7.16%(b) 0.45%(b) 1.09%(b) 7.40%(b) 53,951
U.S. GOVERNMENT FUND
- --------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 1.00 4.87%(b) 0.50%(b) 0.50%(b) 5.01%(b) 1,751,441
June 1, 1995 to May 31, 1996 1.00 5.13% 0.50% 0.51% 5.27% 1,649,721
June 1, 1994 to May 31, 1995 1.00 4.68% 0.50% 0.52% 4.81% 1,159,421
June 1, 1993 to May 31, 1994 1.00 3.02% 0.47% 0.53% 3.07% 1,091,141
June 1, 1992 to May 31, 1993 1.00 3.00% 0.45% 0.57% 3.06% 903,274
December 1, 1991 to May 31, 1992 1.00 3.99%(b) 0.45%(b) 0.61%(b) 4.07%(b) 623,685
December 1, 1990 to November 30,
1991 1.00 5.84% 0.45% 0.60% 6.00% 469,487
December 1, 1989 to November 30,
1990 1.00 7.66% 0.45% 0.61% 7.94% 500,794
December 1, 1988 to November 30,
1989 1.00 8.51% 0.45% 0.65% 8.87% 394,137
December 1, 1987 to November 30,
1988 1.00 6.87% 0.42% 0.73% 7.13% 254,104
November 16, 1987 to November 30,
1987 1.00 6.89%(b) 0.00%(b) 2.94%(b) 7.35%(b) 4,343
TREASURY FUND
- --------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 1.00 4.73%(b) 0.46%(b) 0.53%(b) 4.86%(b) 957,449
June 1, 1995 to May 31, 1996 1.00 4.91% 0.46% 0.56% 5.04% 802,270
June 1, 1994 to May 31, 1995 1.00 4.62% 0.46% 0.57% 4.65% 661,098
June 1, 1993 to May 31, 1994 1.00 2.81% 0.46% 0.58% 2.83% 526,483
June 1, 1992 to May 31, 1993 1.00 2.93% 0.47% 0.58% 2.98% 384,751
December 1, 1991 to May 31, 1992 1.00 4.01%(b) 0.47%(b) 0.59%(b) 4.07%(b) 374,492
December 3, 1990 to November 30,
1991 1.00 5.62%(b) 0.31%(b) 0.66%(b) 6.02%(b) 354,200
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
June 1, 1996 to November 30, 1996* 1.00 3.17%(b) 0.45%(b) 0.69%(b) 3.24%(b) 641,652
June 1, 1995 to May 31, 1996 1.00 3.41% 0.45% 0.72% 3.52% 592,436
June 1, 1994 to May 31, 1995 1.00 3.37% 0.45% 0.74% 3.33%(c) 278,953
August 3, 1993 to May 31, 1994 1.00 2.33%(b) 0.45%(b) 0.77%(b) 2.34%(b) 190,356
INVESTOR SHARES
June 1, 1996 to November 30, 1996* 1.00 2.97%(b) 0.65%(b) 0.88%(b) 3.03%(b) 61,454
June 1, 1995 to May 31, 1996 1.00 3.25% 0.65% 0.88% 3.31% 57,021
June 1, 1994 to May 31, 1995 1.00 3.10% 0.65% 0.93% 3.13%(c) 47,424
June 1, 1993 to May 31, 1994 1.00 2.03% 0.65% 0.99% 2.09% 33,554
June 1, 1992 to May 31, 1993 1.00 2.13% 0.65% 0.97% 2.18% 75,521
December 1, 1991 to May 31, 1992 1.00 2.81%(b) 0.63%(b) 0.96%(b) 2.89%(b) 82,678
December 1, 1990 to November 30,
1991 1.00 4.10% 0.64% 1.08% 4.26% 66,327
December 1, 1989 to November 30,
1990 1.00 5.34% 0.64% 1.16% 5.48% 29,801
December 1, 1988 to November 30,
1989 1.00 5.78% 0.62% 1.15% 5.94% 18,639
January 7, 1988 to November 30,
1988 1.00 4.64%(b) 0.60%(b) 1.20%(b) 4.76%(b) 8,963
READY CASH INVESTMENT FUND
- --------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
June 1, 1996 to November 30, 1996* 1.00 5.05%(b) 0.48%(b) 0.67%(b) 5.20%(b) 1,194,433
June 1, 1995 to May 31, 1996 1.00 5.59% 0.48% 0.72% 5.53% 1,080,255
June 1, 1994 to May 31, 1995 1.00 4.97% 0.48% 0.73% 4.98% 506,243
January 4, 1994 to May 31, 1994 1.00 3.12%(b) 0.43%(b) 0.81%(b) 3.17%(b) 333,464
INVESTOR SHARES
June 1, 1996 to November 30, 1996* 1.00 4.73%(b) 0.82%(b) 0.83%(b) 4.85%(b) 546,335
June 1, 1995 to May 31, 1996 1.00 5.02% 0.82% 0.87% 5.17% 473,879
June 1, 1994 to May 31, 1995 1.00 4.64% 0.82% 0.91% 4.62% 268,603
June 1, 1993 to May 31, 1994 1.00 2.70% 0.82% 0.92% 2.74% 164,138
June 1, 1992 to May 31, 1993 1.00 3.04% 0.82% 0.94% 3.08% 162,585
December 1, 1991 to May 31, 1992 1.00 4.01%(b) 0.82%(b) 0.93%(b) 4.05%(b) 176,378
December 1, 1990 to November 30,
1991 1.00 5.81% 0.82% 0.96% 5.98% 183,775
December 1, 1989 to November 30,
1990 1.00 7.56% 0.82% 0.97% 7.83% 166,911
December 1, 1988 to November 30,
1989 1.00 8.51% 0.81% 0.99% 8.86% 144,117
January 20, 1988 to November 30,
1988 1.00 7.11%(b) 0.77%(b) 1.13%(b) 6.97%(b) 46,736
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
Beginning Net Net Realized Dividends Ending
Net Asset Investment and Unrealized from Net Distributions Net Asset
Value Per Income Gain (Loss) on Investment from Net Value Per
FIXED INCOME FUNDS Share (Loss) Investments Income Realized Gain Share
--------- ---------- -------------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
STABLE INCOME FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $10.20 $0.29 $ 0.07 $(0.29) -- $10.27
November 1, 1995 to May 31, 1996 10.72 0.28 0.03 (0.77) (0.06) 10.20
November 11, 1994 to October 31,
1995 10.00 0.50 0.22 -- -- 10.72
INTERMEDIATE GOVERNMENT INCOME
FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 10.89 0.31 0.28 (0.31) -- 11.17
November 1, 1995 to May 31,
1996(d) 12.40 0.40 0.53 (1.32) (1.12) 10.89
November 11, 1994 to October 31,
1995 11.11 0.93 0.36 -- -- 12.40
DIVERSIFIED BOND FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 26.03 0.75 0.79 -- -- 27.57
November 1, 1995 to May 31, 1996 27.92 1.07 (0.99) (1.67) (0.30) 26.03
November 11, 1994 to October 31,
1995 25.08 1.65 1.19 -- -- 27.92
INCOME FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 9.26 0.31 0.32 (0.31) -- 9.58
June 1, 1995 to May 31, 1996 9.62 0.61 (0.36) (0.61) -- 9.26
June 1, 1994 to May 31, 1995 9.51 0.65 0.11 (0.65) -- 9.62
August 2, 1993 to May 31, 1994 10.68 0.58 (0.91) (0.58) (0.26) 9.51
TOTAL RETURN BOND FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 9.40 0.30 0.27 (0.30) -- 9.67
June 1, 1995 to May 31, 1996 9.73 0.64 (0.31) (0.64) (0.02) 9.40
June 1, 1994 to May 31, 1995 9.54 0.67 0.19 (0.67) -- 9.73
December 31, 1993 to May 31, 1994 10.00 0.27 (0.46) (0.27) -- 9.54

TAX-FREE FIXED INCOME FUNDS

LIMITED TAX-FREE FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
October 1, 1996 to November 30,
1996* $10.00 $0.08 $ 0.46 $(0.08) -- $10.46
TAX-FREE INCOME FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 9.78 0.27 0.35 (0.27) -- 10.13
June 1, 1995 to May 31, 1996 9.82 0.55 (0.04) (0.55) -- 9.78
June 1, 1994 to May 31, 1995 9.60 0.55 0.22 (0.55) -- 9.82
August 2, 1993 to May 31, 1994 10.14 0.47 (0.47) (0.47) (0.07) 9.60
COLORADO TAX-FREE FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 9.89 0.28 0.36 (0.28) -- 10.25
June 1, 1995 to May 31, 1996 9.90 0.53 (0.01) (0.53) -- 9.89
June 1, 1994 to May 31, 1995 9.69 0.48 0.21 (0.48) -- 9.90
August 23, 1993 to May 31, 1994 10.22 0.39 (0.52) (0.39) (0.01) 9.69
MINNESOTA FAX-FREE FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 10.30 0.27 0.39 (0.27) -- 10.69
June 1, 1995 to May 31, 1996 10.45 0.56 (0.15) (0.56) -- 10.30
June 1, 1994 to May 31, 1995 10.16 0.53 0.29 (0.53) -- 10.45
August 2, 1993 to May 31, 1994 10.74 0.43 (0.39) (0.43) (0.19) 10.16
</TABLE>

* Unaudited.
(a) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the abosence of any waivers and reimbursements.
(b) Amount represents the average commission per share paid to brokers on the
purchase or sale of portfolio securities.
(c) Annualized.
(d) Intermediate Government Income Fund declared a stock split as of the close
of business on March 22, 1996 to the record holders of shares of beneficial
interest of the Fund as of the close of business on March 22, 1996. Each
shareholder of the Fund received four additional shares of beneficial
interest of the Fund for each outstanding share of beneficial interest of
the Fund held by the shareholder on that date.

<PAGE>

<TABLE>
<CAPTION>
Ratio to Average Net Assets
-------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income Expenses Expenses(a) Return Rate Rate(b) (000's Omitted)
----------- --------- ----------- ------ -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
STABLE INCOME FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 5.74%(c) 0.65%(c) 0.77%(c) 7.16%(c) 34.60% N/A $ 97,790
November 1, 1995 to May 31, 1996 5.74%(c) 0.65%(c) 0.92%(c) 2.97% 109.95% N/A 83,404
November 11, 1994 to October 31,
1995 5.91%(c) 0.65%(c) 0.98%(c) 7.20% 115.85% N/A 48,087
INTERMEDIATE GOVERNMENT INCOME FUND
- I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 6.70%(c) 0.68%(c) 0.72%(c) 12.41%(c) 99.57% N/A 395,969
November 1, 1995 to May 31, 1996(d) 6.71%(c) 0.71%(c) 1.17%(c) 0.60% 74.64% N/A 399,324
November 11, 1994 to October 31,
1995 7.79%(c) 0.68%(c) 0.93%(c) 11.58% 240.90% N/A 50,213
DIVERSIFIED BOND FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 5.96%(c) 0.70%(c) 0.76%(c) 12.08%(c) 15.12% N/A 183,302
November 1, 1995 to May 31, 1996 6.78%(c) 0.70%(c) 0.77%(c) 0.22% 118.92% N/A 167,159
November 11, 1994 to October 31,
1995 5.87%(c) 0.67%(c) 0.82%(c) 11.32% 58.90% N/A 171,453
INCOME FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 6.64%(c) 0.75%(c) 1.02%(c) 14.24%(c) 111.50% N/A 277,941
June 1, 1995 to May 31, 1996 6.30% 0.75% 1.06% 2.58% 270.17% N/A 271,157
June 1, 1994 to May 31, 1995 7.02% 0.75% 1.06% 8.49% 98.83% N/A 109,994
August 2, 1993 to May 31, 1994 6.75%(c) 0.61%(c) 1.09%(c) (4.04%)(c) 26.67% N/A 93,665
TOTAL RETURN BOND FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 6.33%(c) 0.75%(c) 1.05%(c) 12.62%(c) 22.25% N/A 129,784
June 1, 1995 to May 31, 1996 6.57% 0.75% 1.07% 3.41% 77.49% N/A 120,767
June 1, 1994 to May 31, 1995 7.04% 0.71% 1.17% 9.43% 35.19% N/A 96,199
December 31, 1993 to May 31, 1994 6.81%(c) 0.46%(c) 2.10%(c) (4.62)%(c) 37.50% N/A 11,694

TAX-FREE FIXED INCOME FUNDS

LIMITED TAX-FREE FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
October 1, 1996 to November 30,
1996* 4.50%(c) 0.67%(c) 1.29%(c) 0.00% 0.00% N/A $ 21,862
TAX-FREE INCOME FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 5.44%(c) 0.41%(c) 1.02%(c) 13.22%(c) 69.47% N/A 279,562
June 1, 1995 to May 31, 1996 5.57% 0.32% 1.06% 5.29% 126.20% N/A 276,159
June 1, 1994 to May 31, 1995 5.84% 0.60% 1.05% 8.42% 130.90% N/A 94,454
August 2, 1993 to May 31, 1994 5.71%(c) 0.60%(c) 1.10%(c) (0.21%)(c) 116.54% N/A 102,084
COLORADO TAX-FREE FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 5.50%(c) 0.32%(c) 1.13%(c) 13.35%(c) 46.98% N/A 26,331
June 1, 1995 to May 31, 1996 5.30% 0.30% 1.13% 5.35% 171.41% N/A 24,074
June 1, 1994 to May 31, 1995 5.08% 0.30% 1.16% 7.47% 47.88% N/A 24,539
August 23, 1993 to May 31, 1994 5.03%(c) 0.11%(c) 1.21%(c) 0.90%(c) 40.92% N/A 15,153
MINNESOTA FAX-FREE FUND - I SHARES
- -----------------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 5.10%(c) 0.60%(c) 1.19%(c) 13.23%(c) 54.16% N/A 5,896
June 1, 1995 to May 31, 1996 5.24% 0.51% 1.30% 3.97% 77.10% N/A 3,988
June 1, 1994 to May 31, 1995 5.29% 0.48% 1.58% 8.44% 139.33% N/A 1,799
August 2, 1993 to May 31, 1994 4.90%(c) 0.61%(c) 1.54%(c) 0.29%(c) 84.23% N/A 872
</TABLE>

17
<PAGE>

* Unaudited.
(a) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the absence of any waivers and reimbursements and, in the case of
Conservative Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund,
the absence of waivers and reimbursements from the Core Portfolios in which
the Fund invests.
(b) Amount represents the average commission per share paid to brokers on the
purchase or sale of portfolio securities. Prior to 1996, this data was not
reported in mutual fund financial statements.
(c) Annualized.
(d) Includes expenses allocated from the Core Portfolios in which the Fund
invests - Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware) and Schroder U.S. Companies Portfolio
of Schroder Capital Funds.

<PAGE>

<TABLE>
<CAPTION>
Ratio to Average Net Assets
------------------------------------------
Net Portfolio Average
Investment Gross Total Turnover Commission
Income Net Expenses Expenses(a) Return Rate Rate(b)
----------- ------------ ------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
CONSERVATIVE BALANCED FUND - I
SHARES
- -------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 4.20%(c) 0.82%(c) 0.97%(c) 11.71%(c) 31.39% $0.0724
November 1, 1995 to May 31, 1996 4.65%(c) 0.82%(c)(d) 0.97%(c)(d) 5.14% 56.47% 0.0648
November 11, 1994 to October 31,
1995 4.67%(c) 0.82%(c)(d) 1.03%(c)(d) 12.48% 65.53% N/A
MODERATE BALANCED FUND - I SHARES
- -------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 3.57%(c) 0.89%(c) 1.04%(c) 13.23%(c) 22.58% 0.0609
November 1, 1995 to May 31, 1996 3.95%(c) 0.90%(c)(d) 1.04%(c)(d) 7.03% 52.71% 0.0658
November 11, 1994 to October 31,
1995 3.76%(c) 0.92%(c)(d) 1.11%(c)(d) 15.01% 62.08% N/A
GROWTH BALANCED FUND - I SHARES
- -------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 2.47%(c) 0.96%(c) 1.15%(c) 15.78%(c) 14.78% 0.0735
November 1, 1995 to May 31, 1996 2.66%(c) 0.98%(c)(d) 1.16%(c)(d) 10.87% 38.78% 0.0696
November 11, 1994 to October 31,
1995 2.63%(c) 0.99%(c)(d) 1.23%(c)(d) 18.38% 41.04% N/A

Net Assets at
End of Period
(000's Omitted)
---------------
<S> <C>
CONSERVATIVE BALANCED FUND - I
SHARES
- --------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $123,491
November 1, 1995 to May 31, 1996 146,950
November 11, 1994 to October 31,
1995 136,710
MODERATE BALANCED FUND - I SHARES
- ------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 429,953
November 1, 1995 to May 31, 1996 398,005
November 11, 1994 to October 31,
1995 373,998
GROWTH BALANCED FUND - I SHARES
- ----------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 460,053
November 1, 1995 to May 31, 1996 484,641
November 11, 1994 to October 31,
1995 374,892
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
Beginning Net Net Realized Dividends Distributions Ending
Net Asset Investment and Unrealized from Net from Net Net Asset
Value Per Income Gain (Loss) on Investment Investment Value Per
EQUITY FUNDS Share (Loss) Investments Income Gain Share
--------- ---------- -------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME EQUITY FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $27.56 $ 0.28 $ 3.01 $(0.24) -- $30.61
November 1, 1995 to May 31, 1996 24.02 0.29 4.02 (0.69) $(0.08) 27.56
November 11, 1994 to October 31,
1995 18.90 0.46 4.66 -- -- 24.02
VALUGROWTH-SM- STOCK FUND - I
SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 22.61 0.09 2.68 (0.05) -- 25.33
June 1, 1995 to May 31, 1996 18.80 0.14 3.91 (0.12) (0.12) 22.61
June 1, 1994 to May 31, 1995 17.16 0.18 1.64 (0.18) -- 18.80
August 2, 1993 to May 31, 1994 16.91 0.13 0.46 (0.12) (0.22) 17.16
INDEX FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 31.49 0.27 4.20 -- -- 35.96
November 1, 1995 to May 31, 1996 27.67 0.36 4.08 (0.43) (0.19) 31.49
November 11, 1994 to October 31,
1995 21.80 0.45 5.42 -- -- 27.67
DIVERSIFIED EQUITY FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 30.55 (0.01) 2.78 -- -- 33.32
November 1, 1995 to May 31, 1996 27.53 0.16 4.25 (0.42) (0.97) 30.55
November 11, 1994 to October 31,
1995 22.21 0.22 5.10 -- -- 27.53
GROWTH EQUITY FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 29.08 (0.03) 1.27 -- -- 30.32
November 1, 1995 to May 31, 1996 26.97 -- 4.09 (0.12) (1.86) 29.08
November 11, 1994 to October 31,
1995 22.28 (0.02) 4.71 -- -- 26.97
LARGE COMPANY GROWTH FUND - I
SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 26.97 (0.03) 2.35 -- -- 29.29
November 1, 1995 to May 31, 1996 23.59 (0.04) 3.64 -- (0.22) 26.97
November 11, 1994 to October 31,
1995 18.50 (0.05) 5.14 -- -- 23.59
SMALL COMPANY STOCK FUND - I
SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 13.96 (0.03) (0.05) -- -- 13.88
June 1, 1995 to May 31, 1996 10.59 0.01 3.93 (0.03) (0.54) 13.96
June 1, 1994 to May 31, 1995 9.80 0.12 0.87 (0.12) (0.08) 10.59
December 31, 1993 to May 31, 1994 10.00 0.08 (0.20) (0.08) -- 9.80
SMALL COMPANY GROWTH FUND - I
SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 33.00 (0.11) 0.01 -- -- 32.90
November 1, 1995 to May 31, 1996 29.99 (0.07) 5.94 -- (2.86) 33.00
November 11, 1994 to October 31,
1995 21.88 (0.11) 8.22 -- -- 29.99
SMALL CAP OPPORTUNITIES FUND - I
SHARES
- ----------------------------------------------------------------------------------------------------------------------
August 15, 1996 to November 30,
1996* 16.26 -- 1.55 -- -- 17.81
CONTRARIAN STOCK FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 10.82 0.06 (0.39) (0.03) -- 10.46
June 1, 1995 to May 31, 1996 10.90 0.10 1.01 (0.10) (1.09) 10.82
June 31, 1994 to May 31, 1995 9.71 0.11 1.19 (0.11) (0.003) 10.90
December 31, 1993 to May 31, 1994 10.00 0.07 (0.29) (0.07) -- 9.71
INTERNATIONAL FUND - I SHARES
- ----------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 19.84 0.01 0.33 -- -- 20.18
November 1, 1995 to May 31, 1996 17.99 0.14 2.04 (0.33) -- 19.84
November 11, 1994 to October 31,
1995 17.28 0.09 0.62 -- -- 17.99
</TABLE>

* Unaudited.
(a) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the absence of any waivers and reimbursements and, in the case of
Diversified Equity Fund, Growth Equity Fund, Small Cap Opportunities Fund
and International Fund, the absence of waivers and reimbursements from the
Core Portfolios in which the Fund invests.
(b) Amount represents the average commission per share paid to brokers on the
purchase or sale of portfolio securities. Prior to 1996, this data was not
reported in mutual fund financial statements.
(c) Annualized.
(d) Includes expenses allocated from the Core Portfolios in which the Fund
invests - Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware) and Schroder U.S. Companies Portfolio
of Schroder Capital Funds.

<PAGE>

<TABLE>
<CAPTION>
Ratio to Average Net Assets
-------------------------------------------
Net
Investment Portfolio Average
Income Gross Total Turnover Commission
(Loss) Net Expenses Expenses(a) Return Rate Rate(b)
------------ ------------ ------------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME EQUITY FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 2.10%(c) 0.85%(c) 0.89%(c) 25.27%(c) 0.61% $0.0909
November 1, 1995 to May 31, 1996 2.72%(c) 0.86%(c) 1.13%(c) 18.14% 0.69% 0.0942
November 11, 1994 to October 31,
1995 2.51%(c) 0.85%(c) 1.12%(c) 27.09% 7.03% N/A
VALUGROWTH-SM- STOCK FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 0.74%(c) 1.03%(c) 1.33%(c) 25.83%(c) 36.07% 0.0817
June 1, 1995 to May 31, 1996 0.62% 1.20% 1.32% 21.72% 105.43% 0.0603
June 1, 1994 to May 31, 1995 1.02% 1.20% 1.33% 10.67% 63.82% N/A
August 2, 1993 to May 31, 1994 0.92%(c) 1.20%(c) 1.39%(c) 2.99%(c) 86.07% N/A
INDEX FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 2.15%(c) 0.25%(c) 0.55%(c) 30.12%(c) 0.92% 0.0477
November 1, 1995 to May 31, 1996 2.25%(c) 0.31%(c) 0.57%(c) 16.27% 9.12% 0.0517
November 11, 1994 to October 31,
1995 2.12%(c) 0.50%(c) 0.64%(c) 26.93% 14.48% N/A
DIVERSIFIED EQUITY FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 0.80%(c) 1.05%(c) 1.30%(c) 18.79%(c) 3.31% 0.0683
November 1, 1995 to May 31, 1996 1.00%(c) 1.06%(c)(d) 1.30%(c)(d) 16.38% 5.76% 0.0671
November 11, 1994 to October 31,
1995 1.01%(c) 1.09%(c)(d) 1.37%(c)(d) 23.95% 10.33% N/A
GROWTH EQUITY FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* (0.15%)(c) 1.33%(c) 1.83%(c) 8.61%(c) 8.12% 0.0564
November 1, 1995 to May 31, 1996 0.01%(c) 1.35%(c)(d) 1.85%(c)(d) 15.83% 7.39% 0.0617
November 11, 1994 to October 31,
1995 (0.11%)(c) 1.38%(c)(d) 1.92%(c)(d) 21.10% 8.90% N/A
LARGE COMPANY GROWTH FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* (0.28%)(c) 0.99%(c) 1.09%(c) 17.79%(c) 7.88% 0.0560
November 1, 1995 to May 31, 1996 (0.30%)(c) 1.00%(c) 1.13%(c) 15.40% 16.93% 0.0616
November 11, 1994 to October 31,
1995 (0.23%)(c) 1.00%(c) 1.20%(c) 27.51% 31.60% N/A
SMALL COMPANY STOCK FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* (0.45%)(c) 1.19%(c) 1.55%(c) (1.13%)(c) 97.01% 0.0848
June 1, 1995 to May 31, 1996 0.05% 1.21% 1.60% 38.30% 134.53% 0.0555
June 1, 1994 to May 31, 1995 1.14% 0.52% 1.82% 10.13% 68.09% N/A
December 31, 1993 to May 31, 1994 2.03%(c) 0.20%(c) 4.33%(c) (2.93%)(c) 14.98% N/A
SMALL COMPANY GROWTH FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* (0.70%)(c) 1.24%(c) 1.28%(c) (0.60%)(c) 64.90% 0.0553
November 1, 1995 to May 31, 1996 (0.41%)(c) 1.25%(c) 1.29%(c) 21.43% 62.06% 0.0583
November 11, 1994 to October 31,
1995 (0.47%)(c) 1.25%(c) 1.35%(c) 37.07% 106.55% N/A
SMALL CAP OPPORTUNITIES FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------
August 15, 1996 to November 30,
1996* (0.06%)(c) 1.27%(c) 2.57%(c) (0.11%)(c) 0.00% N/A
CONTRARIAN STOCK FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 0.89%(c) 1.19%(c) 1.58%(c) (5.88%)(c) 5.09% 0.0454
June 1, 1995 to May 31, 1996 0.87% 1.20% 1.45% 10.90% 28.21% 0.0467
June 31, 1994 to May 31, 1995 0.91% 1.12% 1.57% 13.52% 30.32% N/A
December 31, 1993 to May 31, 1994 1.82%(c) 0.62%(c) 3.52%(c) (5.35%)(c) 2.67% N/A
INTERNATIONAL FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 0.23%(c) 1.42%(c) 1.45%(c) 3.43%(c) 2.45% N/A
November 1, 1995 to May 31, 1996 0.60%(c) 1.50%(c)(d) 1.52%(c)(d) 12.31% N/A N/A
November 11, 1994 to October 31,
1995 0.54%(c) 1.50%(c)(d) 1.66%(c)(d) 4.11% N/A N/A

Net Assets at
End of Period
(000's Omitted)
---------------
<S> <C>
INCOME EQUITY FUND - I SHARES
- --------------------------------------------------------------------
June 1, 1996 to November 30, 1996* $ 331,581
November 1, 1995 to May 31, 1996 230,831
November 11, 1994 to October 31,
1995 49,000
VALUGROWTH-SM- STOCK FUND - I
SHARES
- ------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 171,442
June 1, 1995 to May 31, 1996 156,553
June 1, 1994 to May 31, 1995 136,589
August 2, 1993 to May 31, 1994 113,061
INDEX FUND - I SHARES
- ----------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 334,903
November 1, 1995 to May 31, 1996 249,644
November 11, 1994 to October 31,
1995 186,197
DIVERSIFIED EQUITY FUND - I SHARES
- --------------------------------------------------------------------------------------------------------------------
June 1, 1996 to November 30, 1996* 1,057,402
November 1, 1995 to May 31, 1996 907,223
November 11, 1994 to October 31,
1995 711,111
GROWTH EQUITY FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 818,642
November 1, 1995 to May 31, 1996 735,728
November 11, 1994 to October 31,
1995 564,004
LARGE COMPANY GROWTH FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 100,209
November 1, 1995 to May 31, 1996 82,114
November 11, 1994 to October 31,
1995 63,567
SMALL COMPANY STOCK FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 148,297
June 1, 1995 to May 31, 1996 125,986
June 1, 1994 to May 31, 1995 54,240
December 31, 1993 to May 31, 1994 9,251
SMALL COMPANY GROWTH FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 383,792
November 1, 1995 to May 31, 1996 378,546
November 11, 1994 to October 31,
1995 278,058
SMALL CAP OPPORTUNITIES FUND - I
SHARES
- ---------------------------------------------------------------------------------------------------------------------

August 15, 1996 to November 30,
1996* 20,492
CONTRARIAN STOCK FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 16,150
June 1, 1995 to May 31, 1996 36,020
June 31, 1994 to May 31, 1995 45,832
December 31, 1993 to May 31, 1994 4,548
INTERNATIONAL FUND - I SHARES
- ---------------------------------------------------------------------------------------------------------------------

June 1, 1996 to November 30, 1996* 176,601
November 1, 1995 to May 31, 1996 143,643
November 11, 1994 to October 31,
1995 91,401
</TABLE>

21
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES

The twenty-eight Funds offered through this Prospectus each have distinct
investment objectives and policies. There can be no assurance that any Fund or
Core Portfolio will achieve its investment objective or that any Money Market
Fund will maintain a stable net asset value.

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

MONEY MARKET FUNDS

For a general description of the limits imposed on the investments of the Money
Market Funds, see "Additional Investment Policies and Risk Considerations -
General Information - General Money Market Fund Guidelines."

CASH INVESTMENT FUND AND READY CASH INVESTMENT FUND

INVESTMENT OBJECTIVES. The investment objective of each of Cash Investment Fund
and Ready Cash Investment Fund is to provide high current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.

CASH INVESTMENT FUND currently pursues its investment objective by investing
equally in two Core Portfolios - Money Market Portfolio and Prime Money Market
Portfolio. READY CASH INVESTMENT FUND currently pursues its investment objective
by investing all of its investable assets in Prime Money Market Portfolio. Cash
Investment Fund, Ready Cash Investment Fund, Money Market Portfolio and Prime
Money Market Portfolio each have the same investment objective and investment
policies, except that Ready Cash Investment Fund and Prime Money Market
Portfolio seek to maintain a rating from at least one NRSRO. Accordingly, Prime
Money Market Portfolio is limited in the type and amount of permissible
securities (as described below) which it may purchase. Each Core Portfolio
invests in a broad spectrum of high quality money market instruments of United
States and foreign issuers.

INVESTMENT POLICIES. The Portfolios may invest in obligations of financial
institutions. These include negotiable certificates of deposit, bank notes,
bankers' acceptances and time deposits of U.S. banks (including savings banks
and savings associations), foreign branches of U.S. banks, foreign banks and
their non-U.S. branches (Eurodollars), U.S. branches and agencies of foreign
banks (Yankee dollars), and wholly owned banking-related subsidiaries of foreign
banks. The Portfolios limit their investments in obligations of financial
institutions (including their branches, agencies and subsidiaries) to
institutions which at the time of investment have total assets in excess of one
billion dollars, or the equivalent in other currencies.

Although the Portfolios invest in dollar-denominated obligations, the foreign
securities in which the Portfolios invest also involve certain risks. See
"Investment Policies - Equity Funds - International Fund - Foreign

22
<PAGE>
Investment Considerations and Risk Factors." The Portfolios may invest without
limit in the types of securities eligible for purchase by U.S. Government Fund,
as well as in the types of securities eligible for purchase by Municipal Money
Market Fund. See "Investment Objectives and Policies - Money Market Funds - U.S.
Government Fund" and "- Municipal Money Market Fund." The Portfolios may invest
in corporate debt securities, including commercial paper and privately issued
instruments, see "Appendix A - Corporate Debt Securities and Commercial Paper,"
and may invest in participation interests, see "Appendix A - Participation
Interests." A Portfolio will not invest more than 10% of its total assets in
participation interests in which the Portfolio does not have demand rights.

U.S. GOVERNMENT FUND

INVESTMENT OBJECTIVE. The investment objective of U.S. Government Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

INVESTMENT POLICIES. U.S. Government Fund invests primarily in obligations
issued or guaranteed as to principal and interest by the United States
Government or by any of its agencies and instrumentalities ("U.S. Government
Securities"). The Fund may also invest in repurchase agreements and certain
zero-coupon securities secured by U.S. Government Securities. Under normal
circumstances, however, the Fund will invest at least 65% of its total assets in
U.S. Government Securities.

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

The Fund may invest in separately traded principal and interest components of
securities issued or guaranteed by the U.S. Treasury under the Treasury's
Separate Trading of Registered Interest and Principal of Securities ("STRIPS")
program. In addition, the Fund may invest in other types of related zero-coupon
securities. For instance, a number of banks and brokerage firms separate the
principal and interest portions of U.S. Treasury securities and sell them
separately in the form of receipts or certificates representing undivided
interests in these instruments. These instruments are generally held by a bank
in a custodial or trust account on behalf of the owners of the securities and
are known by various names, including Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). The Fund will not invest more than 35% of its total assets
in zero-coupon securities other than those issued through the STRIPS program.
See "Appendix A - U.S. Government Securities - Zero Coupon Securities."

TREASURY FUND

INVESTMENT OBJECTIVE. The investment objective of Treasury Fund is to provide
high current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.

INVESTMENT POLICIES. Treasury Fund invests solely in obligations that are issued
or guaranteed by the U.S. Treasury, such as U.S. Treasury bills, bonds and notes
("U.S. Treasury Securities"). This may include separately traded principal and
interest components of securities issued or guaranteed by the U.S. Treasury.
"Appendix A - U.S. Government Securities."

23
<PAGE>
MUNICIPAL MONEY MARKET FUND

INVESTMENT OBJECTIVE. The investment objective of Municipal Money Market Fund is
to provide high current income exempt from federal income taxes to the extent
consistent with the preservation of capital and the maintenance of liquidity. As
part of its objective, during periods of normal market conditions, the Fund will
have at least 80% of its net assets invested in federally tax-exempt instruments
the income from which may be subject to the federal alternative minimum tax
("AMT"). See "Dividends and Tax Matters - Tax Matters."

INVESTMENT POLICIES. Municipal Money Market Fund attempts to invest 100% of its
assets in the obligations of the states, territories and possessions of the
United States and of their subdivisions, authorities and corporations, the
interest on which is exempt from federal income tax ("municipal securities").
The Fund reserves the right, however, to invest up to 20% of its assets in
securities the interest income on which is subject to federal income taxation.
The municipal securities in which the Fund may invest include short-term
municipal bonds and municipal notes and leases. These municipal securities may
have fixed, variable or floating rates of interest and may be zero-coupon
securities.

When the assets and revenues of an issuing agency, authority, instrumentality or
other political subdivision are separate from those of the government creating
the issuing entity and a security is backed only by the assets and revenues of
the entity, the entity will be deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds, that is backed only by the assets and revenues of the non-
governmental user, the non-governmental user will be deemed to be the sole
issuer of the security.

For a description of particular types of municipal securities, such municipal
bonds, notes and leases and participation interests, in which the Fund invests,
see "Appendix A - Municipal Securities."

24
<PAGE>

Investment Fund" above. Brokerage firms and insurance companies also provide
certain liquidity and credit support. The Fund's policy is to purchase municipal
securities with third party credit or liquidity support only after Norwest has
considered the creditworthiness of the financial institution providing the
support and believes that the security presents minimal credit risk.

The Fund also may acquire "puts" on municipal securities it purchases. A put
gives the Fund the right to sell the municipal security at a specified price at
any time before a specified date. The Fund will acquire puts only to enhance
liquidity, shorten the maturity of the related municipal security or permit the
Fund to invest its funds at more favorable rates. Generally, the Fund will buy a
municipal security that is accompanied by a put only if the put is available at
no extra cost. In some cases, however, the Fund may pay an extra amount to
acquire a put, either in connection with the purchase of the related municipal
security or separately from the purchase of the security.

25
<PAGE>
FIXED INCOME FUNDS

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

STABLE INCOME FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to maintain safety
of principal while providing low-volatility total return. The Fund currently
pursues its investment objective by investing all of its investable assets in
Stable Income Portfolio, which has the same investment objective and
substantially identical investment policies as the Fund. Therefore, although the
following discusses the investment policies of that Portfolio, it applies
equally to the Fund.

26
<PAGE>

long as the Portfolio is obligated under the option, it owns an offsetting
position in the underlying security or futures contract or maintains a
segregated account of liquid debt instruments with a value at all times
sufficient to cover the Portfolio's obligations under the option.

INTERMEDIATE GOVERNMENT INCOME FUND

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

The Fund primarily will invest in debt obligations with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from
short-term (including overnight) to 15 years. Under normal circumstances, the
Fund's portfolio of securities will have an average dollar-weighted maturity of
between 3 and 10 years. Under normal circumstances, the Fund's portfolio of
securities will have a duration of between 70 percent and 130 percent of the
duration of a 5-year Treasury Note. Duration is a measure of a debt security's
average life that reflects the present value of the security's cash flow and,
accordingly, is a measure of price sensitivity to interest rate changes
("duration risk"). Because earlier payments on a debt security have a higher
present value, duration of a security, except a zero-coupon security, will be
less than the security's stated maturity.

27
<PAGE>

options on those futures contracts. An option is covered if, so long as the Fund
is obligated under the option, it owns an offsetting position in the underlying
security or futures contract or maintains a segregated account of liquid debt
instruments with a value at all times sufficient to cover the Fund's obligations
under the option.

DIVERSIFIED BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is to provide total return
by diversifying its investments among different fixed-income investment styles.
The Fund invests in various Core Portfolios, each of which invests using a
different investment style.

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
reduce the price and return volatility of the Fund and to provide more
consistent returns. The Fund's portfolio combines three different fixed income
investment styles: (i) Total Return Bond style; (ii) Managed Fixed Income style;
and (iii) Positive Return style.

DIVERSIFIED BOND FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

<TABLE>
<CAPTION>
CURRENT RANGE OF
ALLOCATION INVESTMENT
----------- --------------
<S> <C> <C>
Total Return Bond Portfolio 33 1/3% 30% - 37%
Managed Fixed Income Portfolio 33 1/3% 30% - 37%
Positive Return Portfolio 33 1/3% 30% - 37%
-----------
TOTAL FUND ASSETS 100%
</TABLE>

As market values of the Fund's assets change, the percentage of Fund assets
invested in each Core Portfolio may temporarily deviate from the current
allocations. In response thereto, Norwest periodically effects transactions for
the Fund to reestablish its allocations.

Consistent with the Fund's investment objective and policies and under the
general supervision of the Trust's Board of Trustees, Norwest may make changes
in the foregoing percentage allocations at any time Norwest deems appropriate,
including in response to market and other conditions. In addition, upon approval
of the Trust's Board of Trustees and notification of shareholders, the Fund may
invest in additional or fewer Core Portfolios or invest directly in portfolio
securities. When Norwest believes that a change in the current allocation
percentages is desirable, it will sell and purchase securities to effect the
change.

INCOME FUND

28
<PAGE>

The Fund may invest in debt securities registered and sold in the United States
by foreign issuers (Yankee Bonds) and debt securities sold outside the United
States by foreign or U.S. issuers (Euro-bonds). The Fund intends to restrict its
purchases of debt securities to issues denominated and payable in United States
dollars. For a description of the risks involved in investments in foreign
securities, see "Investment Objectives and Policies - Equity Funds -
International Fund - Investment Policies - Foreign Investment Considerations and
Risk Factors." The Fund may invest in guaranteed investment contracts ("GICs").
A GIC is an arrangement with an insurance company under which the Fund
contributes cash to the insurance company's general account and the insurance
company credits the contribution with interest on a monthly basis. The interest
rate is tied to a specified market index and is guaranteed by the insurance
company not to be less than a certain minimum rate. The Fund will purchase a GIC
only when Norwest has determined that the GIC presents minimal credit risks to
the Fund and is of comparable quality to instruments that the Fund may purchase.

TOTAL RETURN BOND FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek total
return. The Fund pursues this objective by investing primarily in U.S.
Government Securities, including mortgage-backed securities and investment grade
corporate fixed income securities. The Fund currently pursues its investment
objective by investing all of its investable assets in Total Return Bond
Portfolio, which has the same investment objective and substantially identical
investment policies as the Fund. Therefore, although the following discusses the
investment policies of that Portfolio, it applies equally to the Fund.

29
<PAGE>

Norwest to predict short-term interest rate fluctuations. Norwest also applies a
contrarian perspective by looking for undervalued segments of the fixed income
market which Norwest believes offer opportunities for increased returns.

TAX-FREE FIXED INCOME FUNDS

For a detailed description of fixed income investments, including municipal
securities and related investments in which the Tax-Free Fixed Income Funds
invest, see "Appendix A" and "Additional Investment Policies and Risk
Considerations - Common Policies of the Funds - Fixed Income Investments and
Their Characteristics." Under certain circumstances the Tax-Free Fixed Income
Funds may invest in taxable investments. See "Taxable Investments" below.

LIMITED TERM TAX-FREE FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to produce current
income exempt from federal income taxes. The Fund pursues this objective by
investing primarily in a portfolio of investment grade fixed income securities
the interest on which is free from federal income tax and maintains an average
dollar weighted portfolio maturity of between 1 and 5 years.

INVESTMENT POLICIES. Substantially all of the Fund's assets normally will be
invested in municipal securities, which are debt obligations issued by or on
behalf of the states, territories or possessions of the United States, the
District of Columbia and their subdivisions, authorities, instrumentalities and
corporations the interest on which is exempt from federal income tax and not
treated as a preference item for individuals for purposes of the federal
alternative minimum tax ("municipal securities"). As a fundamental investment
policy, except during periods when the Fund assumes a temporary defensive
position, the Fund will invest at least 80% of its total assets in securities
exempt from federal income taxes (including the federal alternative minimum
tax). In order to respond to business and financial conditions, the Fund may
invest up to 20% of its total

30
<PAGE>

assets in instruments on which the interest is subject to federal taxation. See
"Taxable Investments" below, and "Additional Investment Policies - Common
Policies of the Funds - Temporary Defensive Position" and "Dividends,
Distributions and Tax Matters".

The average dollar-weighted maturity of the Fund's assets normally will be
between 1 and 5 years. In general, the longer the maturity of a municipal
security, the higher the rate of interest it pays. However, a shorter maturity
is generally associated with a lower level of volatility in the market value of
a security. Because the Fund's objective is to provide current income, the Fund
will invest in municipal securities with an emphasis on income. The average
maturity of the Fund's portfolio will vary depending on anticipated market
conditions.

TAX-FREE INCOME FUND

31
<PAGE>
COLORADO TAX-FREE FUND

INVESTMENT POLICIES. Substantially all the Fund's assets normally will be
invested in investment grade municipal securities, which are debt obligations
issued by the state of Colorado and its political subdivisions, various
authorities, instrumentalities, public corporations and special districts
("municipal securities"). Municipal securities also include the securities
issued by the various territories and possessions of the United States, such as
Puerto Rico. As a fundamental policy, except during periods when the Fund
assumes a temporary defensive position, the Fund will invest at least 80% of its
total assets in securities exempt from both federal and Colorado state income
taxes (including the alternative minimum tax). In order to respond to business
and financial conditions, the Fund may invest up to 20% of its assets in
instruments on which the interest is subject to taxation. See "Taxable
Investments" below, "Additional Investment Policies and Risk Considerations -
Common Policies of the Funds - Temporary Defensive Position" and "Dividends,
Distributions and Tax Matters."

MINNESOTA TAX-FREE FUND

INVESTMENT POLICIES. Substantially all of the Fund's assets normally will be
invested in investment grade municipal securities, which are debt obligations
issued by the state of Minnesota and its political subdivisions, duly
constituted authorities and corporations ("municipal securities"). Municipal
securities also include the securities issued by the various territories and
possessions of the United States, such as Puerto Rico. As a fundamental policy,
except during periods when the Fund assumes a temporary defensive

32
<PAGE>

position, the Fund will invest at least 80% of its total assets in securities
exempt from both federal and Minnesota state income taxes (including the
alternative minimum tax). In order to respond to business and financial
conditions, the Fund may invest up to 20% of its assets in instruments on which
the interest is subject to taxation. See "Taxable Investments" below,
"Additional Investment Policies - Common Policies of the Funds - Temporary
Defensive Position" and "Dividends, Distributions and Tax Matters."

The yields of Minnesota municipal securities depend on, among other things,
conditions in the Minnesota municipal bond market and fixed income markets
generally, the maturity of the obligation, the rating of the issue and the size
of a particular offering. In some cases, Minnesota issues may have yields that
are slightly less than the yields of municipal obligations of issuers located in
other states because of the favorable Minnesota state tax exemption on Minnesota
issues. See "Dividends, Distributions and Tax Matters - Tax-Exempt Distributions
- - Minnesota Tax-Free Fund" for a description of certain tax matters that may
effect the Fund and its shareholders.

NON-INVESTMENT GRADE SECURITIES. The Fund may invest up to 25% of its total
assets in municipal bonds rated in the fifth highest rating category by an NRSRO
(Ba by Moody's or BB by S&P or Fitch), or which are unrated and judged by
Norwest to be of comparable quality to securities rated in the fifth highest
category. Such securities (commonly referred to as "junk bonds") are not
considered to be investment grade and have speculative or predominantly
speculative characteristics. Non-investment grade, high risk securities provide
poor protection for payment of principal and interest but may have greater
potential for capital appreciation than do higher quality securities. These
lower rated securities involve greater risk of default or price changes due to
changes in the issuers' creditworthiness than do higher quality securities. The
market for these securities may be thinner and less active than that for higher
quality securities, which may affect the price at which the lower rated
securities can be sold. In addition, the market prices of lower rated securities
may fluctuate more than the market prices of higher quality securities and may
decline significantly in periods of general economic difficulty or rising
interest rates.

During its most recent fiscal year ended May 31, 1996, the Fund had 93.0% of its
average annual assets in municipal securities rated by Moody's or S&P and 7.0%
of its average annual assets in unrated investments, including cash and
short-term cash equivalents which are typically unrated. During that year, the
Fund had the following percentages of its average annual net assets invested in
rated securities: Aaa/AAA-52.0%, Aa/ AA-24.0%, A/A-14.0%, Baa/BBB-3.0% and Ba/BB
and below-0.0%. For this purpose, securities with different NRSRO ratings were
assigned the higher rating. This information reflects the average composition of
the Fund's assets for the Fund's last fiscal year and is not necessarily
representative of the Fund as of the current fiscal year or any other time.

33
<PAGE>
TAXABLE INVESTMENTS

Apart from temporary defensive purposes, each Fund may invest up to 20% of the
value of its total assets in cash equivalents the interest on which is not
exempt from federal income tax or is treated as a preference item for purposes
of the federal alternative minimum tax. For more information regarding the
alternative minimum tax, see "Dividends, Distributions and Tax Matters." In
addition, the Funds may hold a portion of their assets in cash and
cash-equivalents pending investment in municipal securities, to meet requests
for redemptions or to assume a temporary defensive position. With respect to
Limited Term Tax-Free Fund and Tax-Free Income Fund, these securities include
debt securities of corporate issuers meeting the Funds' investment quality
standards described above and bonds or notes issued by or on behalf of a
municipality, the interest on which is an item of tax preference for purposes of
the federal alternative minimum tax on individuals.

INVESTMENT CONSIDERATIONS AND RISK FACTORS

GEOGRAPHIC CONCENTRATION. Because COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE
FUND invest principally in municipal securities issued by issuers within a
particular state and the state's political subdivisions, those Funds are more
susceptible to factors adversely affecting issuers of those municipal securities
than would be a more geographically diverse municipal securities portfolio. In
addition, to the extent they may concentrate their investments in a particular
jurisdiction, LIMITED TERM TAX-FREE FUND and TAX-FREE INCOME FUND will be
subject to similar risks. These risks arise from the financial condition of the
state and its political subdivisions. To the extent state or local governmental
entities are unable to meet their financial obligations, the income derived by a
Fund, its ability to preserve or realize appreciation of its portfolio assets or
its liquidity could be impaired.

To the extent a Fund's investments are primarily concentrated in issuers located
in a particular state, the value of the Fund's shares may be especially affected
by factors pertaining to that state's economy and other factors specifically
affecting the ability of issuers of that state to meet their obligations. As a
result, the value of the Fund's assets may fluctuate more widely than the value
of shares of a portfolio investing in securities relating to a number of
different states. The ability of state, county or local governments and quasi-
government agencies to meet their obligations will depend primarily on the
availability of tax and other revenues to those governments and on their fiscal
conditions generally. The amounts of tax and other revenues available to
governmental issuers may be affected from time to time by economic, political
and demographic conditions within their state. In addition, constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. The availability of federal, state and local aid to governmental
issuers may also affect their ability to meet obligations. Payments of principal
of and interest on private activity securities will depend on the economic
condition of the facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by economic, political or
demographic conditions in the state.

In 1992, the Colorado constitution was amended to restrict the ability of the
state and local governments to increase taxes, revenues, debt and spending. In
particular, prior voter approval is now required to impose any new tax or tax
rate increase or to issue any multiple-fiscal year debt and revenues collected
in excess of certain limits must be refunded unless voters authorize their
retention. The future impact on the financial operations and obligations of the
state and local governments cannot be determined at this time. Norwest will
continue to monitor the situation closely and will, if necessary, seek the
advice of counsel concerning its effect on instruments being considered for
purchase by the Colorado Tax-Free Fund. A further discussion of potential risks
of investment in Colorado municipal securities is contained in the SAI of the
Fund.

34
<PAGE>
invest more than 25% of its total assets in a single type of revenue bond (e.g.,
electric revenue, housing revenue, etc.). Similarly, under normal circumstances,
Limited Term Tax-Free Fund and Tax-Free Income Fund will not invest more than
25% of their total assets in issuers located in the same state.

DIVERSIFICATION MATTERS. Each of COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE
FUND is non-diversified, which means that they each have greater latitude than a
diversified fund with respect to the investment of their assets in the
securities of relatively few municipal issuers. As non-diversified portfolios,
these Funds may present greater risks than a diversified fund. However, each
Fund intends to comply with applicable diversification requirements of the
Internal Revenue Code. These requirements provide that, as of the last day of
each fiscal quarter, with respect to 50% of its assets, a Fund may not: (i) own
the securities of a single issuer, other than a U.S. Government security, with a
value of more than 5% of the Fund's total assets; or (ii) own more than 10% of
the outstanding voting securities of a single issuer.

TAX-FREE INCOME FUND and LIMITED TERM TAX-FREE FUND are diversified and,
therefore, as a fundamental policy, with respect to 75% of their assets, may not
purchase a security (other than a U.S. Government Security) if, as a result,
more than 5% of the Fund's total assets would be invested in the securities of a
single issuer. When the assets and revenues of an issuing agency, authority,
instrumentality or other political subdivision are separate from those of the
government creating the issuing entity and a security is backed only by the
assets and revenues of the entity, the entity will be deemed to be the sole
issuer of the security. Similarly, in the case of a security issued by or on
behalf of public authorities to finance various privately operated facilities,
such as an industrial development bond, that is backed only by the assets and
revenues of the non-governmental user, the non-governmental user will be viewed
as the sole issuer of the bond. For more information concerning diversification
matters see "Additional Investment Policies and Risk Considerations - Common
Policies of the Funds - Diversification and Concentration."

BALANCED FUNDS

Each of the Balanced Funds invests in a balanced portfolio of fixed income and
equity securities. Conservative Balanced Fund has the smallest equity securities
component of the three Funds and is the most conservative of the Balanced Funds.
Growth Balanced Fund has the largest equity securities component of the three
Funds and is the most aggressive of the Balanced Funds.

The equity portion of each Balanced Fund's portfolio uses the seven different
equity investment styles of Diversified Equity Fund. The blending of multiple
equity investment styles is intended to reduce the risk associated with the use
of a single style, which may move in and out of favor during the course of a
market cycle. The fixed income portion of each Balanced Fund's portfolio uses
from three to five different fixed income investment styles. The blending of
multiple fixed income investment styles is intended to reduce the price and
return volatility of, and provide more consistent returns within, the fixed
income portion of the Funds.

As the securities markets change, Norwest may attempt to enhance the returns of
a Balanced Fund by changing the percentage of Fund assets invested in fixed
income and equity securities. Absent unstable market conditions, Norwest does
not anticipate making a substantial number of percentage changes. When Norwest
believes that a change in the current allocation percentages is desirable, it
will sell and purchase securities to effect the change. When Norwest believes
that a change will be temporary (generally, 3 years or less), it may choose to
effect the change by using futures contract strategies as described below under
"Temporary Allocations."

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<PAGE>
CONSERVATIVE BALANCED FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide a
combination of current income and capital appreciation by diversifying
investment of its assets among stocks, bonds and other fixed income investments.
The Fund emphasizes safety of principal through limited exposure to equity
securities and has the smallest equity securities position of the three Balanced
Funds. The Fund invests in various Core Portfolios, each of which invests using
a different investment style.

INVESTMENT POLICIES. The Fund is designed for investors seeking to invest in
fixed income securities with limited exposure to equity securities. The fixed
income portion of the Fund's portfolio uses Total Return Bond style, Managed
Fixed Income style, Positive Return style, Stable Income style and Money Market
style, in order to reduce the risk of relying on a single fixed income
investment style. The equity portion of the Fund's portfolio uses the investment
style of Diversified Equity Fund, which is based on a multi-style approach
designed to minimize the volatility and risk of investing in equity securities.

CONSERVATIVE BALANCED FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

<TABLE>
<CAPTION>
CURRENT
INVESTMENT STYLE ALLOCATION RANGE OF INVESTMENT
- ------------------------------------------------- --------------------- -------------------
<S> <C> <C> <C>
Diversified Equity Fund style 25%
Index Portfolio 6.25% 3% - 10.5%
Income Equity Portfolio 6.25% 3% - 10.5%
Large Company Growth Portfolio 6.25% 3% - 10.5%
Small Company style 2.5% 0.75% - 5.25%
(1/3 in each of Small Company Stock
Portfolio, Small Company Growth
Portfolio and Small Company
Value Portfolio)
International Portfolio 3.75% 1.75% - 7%

Total Return Bond Portfolio 16 2/3% 13.33% - 20%
Managed Fixed Income Portfolio 16 2/3% 13.33% - 20%
Positive Return Portfolio 16 2/3% 13.33% - 20%
Stable Income Portfolio 15% 15%
Money Market Portfolio 10% 10%
----------
TOTAL FUND ASSETS 100%
</TABLE>

UNTIL JUNE 30, 1997, THE FUND MAY INVEST IN CASH INVESTMENT FUND RATHER THAN
MONEY MARKET PORTFOLIO.

36
<PAGE>

Investors should refer to "Investment Objectives and Policies - Equity Funds -
Diversified Equity Fund" and the descriptions below under "Investment Objectives
and Policies - Core Portfolio Descriptions" for a discussion of the investment
objectives, policies and risks involved in the investments and investment
techniques of each investment style.

MODERATE BALANCED FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide a
combination of current income and capital appreciation by diversifying
investment of the Fund's assets among stocks, bonds and other fixed income
investments. The Fund provides a portfolio more evenly-balanced between fixed
income and equity securities than the other Balanced Funds. The Fund invests in
various Core Portfolios, each of which invests using a different investment
style.

INVESTMENT POLICIES. The Fund is designed for investors seeking roughly
equivalent exposures to fixed income securities and equity securities. The fixed
income portion of the Fund's portfolio uses Total Return Bond style, Managed
Fixed Income style, Positive Return style and Stable Income style in order to
reduce the risk of relying on a single fixed income investment style. The equity
portion of the Fund's portfolio uses the investment style of Diversified Equity
Fund, which is based on a multi-style approach designed to minimize the
volatility and risk of investing in equity securities.

MODERATE BALANCED FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

Index Portfolio 10% 5% - 16.5%
Income Equity Portfolio 10% 5% - 16.5%
Large Company Growth Portfolio 10% 5% - 16.5%
Small Company style 4% 1.25% - 8.25%
(1/3 in each of Small Company Stock
Portfolio, Small Company Growth
Portfolio and Small Company
Value Portfolio)
International Portfolio 6% 2.5% - 11%
Total Return Bond Portfolio 15% 10% - 20%
Managed Fixed Income Portfolio 15% 10% - 20%
Positive Return Portfolio 15% 10% - 20%
Stable Income Portfolio 15% 15%
---------
TOTAL FUND ASSETS 100%
</TABLE>

37
<PAGE>

GROWTH BALANCED FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide a
combination of current income and capital appreciation by diversifying
investment of the Fund's assets between stocks and bonds. The Fund has the
largest equity securities position of the Balanced Funds. The Fund invests in
various Core Portfolios, each of which invests using a different investment
style.

INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund. The
fixed income portion of the Fund's portfolio uses Total Return Bond style,
Managed Fixed Income style and Positive Return style, in order to reduce the
risk of relying on a single fixed income investment style. The equity portion of
the Fund's portfolio uses the investment style of Diversified Equity Fund, which
is based on a multi-style approach designed to minimize the volatility and risk
of investing in equity securities.

GROWTH BALANCED FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

Index Portfolio 16.25% 9% - 25%
Income Equity Portfolio 16.25% 9% - 25%
Large Company Growth Portfolio 16.25% 9% - 25%
Small Company style 6.5% 2.25% - 12.75%
(1/3 in each of Small Company Stock
Portfolio, Small Company Growth
Portfolio and Small Company
Value Portfolio)
International Portfolio 9.75% 4.5% - 17%

Total Return Bond Portfolio 11 2/3% 5% - 18.33%
Managed Fixed Income Portfolio 11 2/3% 5% - 18.33%
Positive Return Portfolio 11 2/3% 5% - 18.33%
----------
TOTAL FUND ASSETS 100%
</TABLE>

38
<PAGE>

TEMPORARY ALLOCATIONS

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

EQUITY FUNDS

To achieve their investment objectives, the Equity Funds invest primarily in
common stocks and other equity securities. The domestic securities in which an
Equity Fund invests are generally listed on a securities exchange or included in
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System but may be traded in the over-the-counter securities
market. Each Equity Fund, other than Index Fund and Small Cap Opportunities
Fund, may invest in foreign issuers. These investments may involve certain
risks. See "Investment Objectives and Policies - Equity Funds - International
Fund - Foreign Investment Considerations and Risk Factors." Under normal
circumstances, each of the Equity Funds will invest substantially all of its
assets, but not less than 65 percent of its total assets, in equity securities.

INDEX FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to duplicate the
return of the Standard & Poor's 500 Composite Stock Price Index. The Fund
currently pursues its investment objective by investing all of its investable
assets in Index Portfolio, which has the same investment objective and
substantially identical investment policies as the Fund. Therefore, although the
following discusses the investment policies of that Portfolio, it applies
equally to the Fund.

INVESTMENT POLICIES. The Portfolio is designed to duplicate the return of the
Standard & Poor's 500 Composite Stock Index (the "Index") with minimum tracking
error, while also minimizing transaction costs. Under normal circumstances, the
Portfolio will hold stocks representing 100 percent or more of the
capitalization-weighted market values of the Index. Portfolio transactions for
the Portfolio generally are executed only to duplicate the composition of the
Index, to invest cash received from portfolio security dividends or investments
in the Portfolio, and to raise cash to fund redemptions. The Portfolio may hold
cash or cash equivalents for the purpose of facilitating payment of the
Portfolio's expenses or redemptions. For these and other reasons, the
Portfolio's performance can be expected to approximate but not be equal to that
of the Index.

The Portfolio may utilize index futures contracts to a limited extent. Index
futures contracts are bilateral agreements pursuant to which two parties agree
to take or make delivery of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading of the
contract and the price at which the futures contract is originally struck. As no
physical delivery of securities comprising the Index is made, a purchaser of
index futures contracts may participate in the performance of the securities
contained in the index without the required capital commitment. Index futures
contracts may be used for several reasons: to simulate full investment in the
underlying index while retaining a cash

39
<PAGE>

balance for fund management purposes, to facilitate trading or to reduce
transaction costs. The Portfolio does not invest in futures contracts for
speculative reasons or to leverage the Fund. For a description of futures
contracts and their risks, see "Appendix A - Futures Contracts and Options."

The Index tracks the total return performance of 500 common stocks which are
chosen for inclusion in the Index by Standard & Poor's ("S&P") on a statistical
basis. The inclusion of a stock in the Index in no way implies that S&P believes
the stock to be an attractive investment. The 500 securities, most of which
trade on the New York Stock Exchange, represent approximately 70 percent of the
total market value of all U.S. common stocks. Each stock in the Index is
weighted by its market value. Because of the market-value weighting, the 50
largest companies in the Index currently account for approximately 47 percent of
its value. The Index emphasizes large capitalizations and, typically, companies
included in the Index are the largest and most dominant firms in their
respective industries.

Neither the Fund nor the Portfolio is not sponsored, endorsed, sold or promoted
by S&P, nor does S&P make any representation or warranty, implied or express, to
the purchasers of the Portfolio or the Fund or any member of the public
regarding the advisability of investing in index funds or the ability of the
Index to track general stock market performance. S&P does not guarantee the
accuracy and/or the completeness of the Index or any data included therein.

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

INCOME EQUITY FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation consistent with above-average dividend income.
The Fund currently pursues its investment objective by investing all of its
investable assets in Income Equity Portfolio, which has the same investment
objective and substantially identical investment policies as the Fund.
Therefore, although the following discusses the investment policies of that
Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. Income Equity Portfolio expects to invest primarily in the
common stock of large, high-quality domestic companies that have above-average
return potential based on current market valuations. Primary emphasis is placed
on investing in securities of companies with above-average dividend income. In
selecting securities for the Portfolio, Norwest uses various valuation measures,
including above-average dividend yields and below industry average price to
earnings, price to book and price to sales ratios. The Portfolio considers large
companies to be those whose market capitalization is at least $600 million at
the time of purchase. The Portfolio also may invest in preferred stock and
securities convertible into common stock and may purchase American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers. Under normal circumstances, Income Equity Portfolio will not invest
more than 10% of its total assets in the securities of a single issuer.

VALUGROWTH STOCK FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation.

INVESTMENT POLICIES. The Fund invests primarily in medium- and
large-capitalization companies (companies with a market capitalization of
greater than $500 million) that, in the view of Norwest, possess above average
growth characteristics and appear to be undervalued.

40
<PAGE>

Norwest relies primarily on a company by company analysis (rather than on a
broader analysis of industry or economic sector trends) and considers such
matters as the quality of a company's management, the existence of a leading or
dominant position in a major product line or market, the soundness of the
company's financial position, and the maintenance of a relatively high rate of
return on invested capital and shareholder's equity. Once companies are
identified as possible investments, Norwest applies a number of valuation
measures to determine the relative attractiveness of each company and selects
those companies whose shares are most attractively priced.

DIVERSIFIED EQUITY FUND

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
minimize the volatility and risk of investing in equity securities. The Fund's
portfolio combines five different equity investment styles: (i) an index style;
(ii) an income equity style; (iii) a large company growth style; (iv) small
company styles; and (v) an international style. In addition, the Fund allocates
the assets dedicated to small company investments to three distinct small
company investment styles. The Fund utilizes different equity investment styles
in order to reduce the risk of price and return volatility associated with
reliance on a single investment style. Because Diversified Equity Fund blends
five equity investment styles, it is anticipated that its price and return
volatility will be less than that of Growth Equity Fund, which blends three
equity investment styles.

DIVERSIFIED EQUITY FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

<TABLE>
<CAPTION>
CURRENT RANGE OF
ALLOCATION INVESTMENT
------------------------ -----------------
<S> <C> <C> <C>
Index Portfolio 25% 23% - 27%
Income Equity Portfolio 25% 23% - 27%
Large Company Growth Portfolio 25% 23% - 27%
Small Company style 10% 8% - 12%
Small Company Stock Portfolio 3 1/3%
Small Company Growth Portfolio 3 1/3%
Small Company Value Portfolio 3 1/3%
International Portfolio 15% 13% - 17%
---
TOTAL FUND ASSETS 100%
</TABLE>

As market values of the Fund's assets change, the percentage of Fund assets
invested in each Core Portfolio may temporarily deviate from the current
allocations. In response thereto, Norwest daily effects transactions for the
Fund to reestablish its allocations.

41
<PAGE>

Consistent with the Fund's investment objective and policies and under the
general supervision of the Trust's Board of Trustees, Norwest may make changes
in the foregoing percentage allocations at any time Norwest deems appropriate,
including in response to market and other conditions. In addition, upon approval
of the Trust's Board of Trustees and notification of shareholders, the Fund may
invest in additional or fewer Core Portfolios or invest directly in portfolio
securities. When Norwest believes that a change in the allocation percentages is
desirable, it will sell and purchase securities to effect the change.

GROWTH EQUITY FUND

INVESTMENT OBJECTIVE. Growth Equity Fund's investment objective is to provide a
high level of long-term capital appreciation while moderating annual return
volatility by diversifying its investments in accordance with different equity
investment styles. The Fund currently invests in various Core Portfolios, each
of which invests using a different investment style.

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
reduce the volatility and risk of investing in equity securities. The Fund's
portfolio combines three different equity investment styles: (i) a large company
growth style; (ii) small company styles; and (iii) an international style. In
addition, the Fund allocates the assets dedicated to small company investments
to three distinct small company investment styles. The Fund utilizes different
equity investment styles in order to reduce the risk of price and return
volatility associated with reliance on a single investment style. It is
anticipated that the Fund's price and return volatility will be somewhat greater
than those of Diversified Equity Fund, which blends five equity investment
styles.

GROWTH EQUITY FUND ALLOCATION

Set forth below are the ranges of investments by the Fund in each Core
Portfolio and current allocation of the Fund's assets among the Core
Portfolios.

<TABLE>
<CAPTION>
CURRENT RANGE OF
ALLOCATION INVESTMENT
------------------------ -----------------
<S> <C> <C> <C>
Large Company Growth Portfolio 35% 32% - 38%
Small Company style 35% 32% - 38%
Small Company Stock Portfolio 11 2/3%
Small Company Growth Portfolio 11 2/3%
Small Company Value Portfolio 11 2/3%
International Portfolio 30% 27% - 33%
---
TOTAL FUND ASSETS 100%
</TABLE>

As market values of the Fund's assets change, the percentage of Fund assets
invested in each Core Portfolio may temporarily deviate from the current
allocations. In response thereto, Norwest daily effects transactions for the
Fund to reestablish its allocations.

Consistent with the Fund's investment objective and policies and under the
general supervision of the Trust's Board of Trustees, Norwest may make changes
in the foregoing percentage allocations at any time Norwest deems appropriate,
including in response to market and other conditions. In addition, upon approval
of the Trust's Board of Trustees and notification of shareholders, the Fund may
invest in additional or fewer Core Portfolios or invest directly in portfolio
securities. When Norwest believes that a change in the allocation percentages is
desirable, it will sell and purchase securities to effect the change.

42
<PAGE>
Investors should refer to the descriptions below under "Investment Objectives
and Policies - Core Portfolio Descriptions" for a discussion of the investment
objectives, policies and risks involved in the investments and investment
techniques of each investment style.

LARGE COMPANY GROWTH FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation by investing primarily in large, high-quality
domestic companies that the investment adviser believes have superior growth
potential. The Fund currently pursues its investment objective by investing all
of its investable assets in Large Company Growth Portfolio, which has the same
investment objective and substantially identical investment policies as the
Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund.

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

SMALL COMPANY STOCK FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation. The Fund currently pursues its investment objective by investing
all of its investable assets in Small Company Stock Portfolio, which has the
same investment objective and substantially identical investment policies as the
Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. Small Company Stock Portfolio invests primarily in the
common stock of small- and medium-size domestic companies that have a market
capitalization well below that of the average company in the Standard & Poor's
500 Composite Stock Price Index. Small and medium companies are those whose
market capitalization is less than $1 billion at the time of purchase, although
it is anticipated that investments primarily will be in companies with
capitalization of less than $750 million.

In selecting securities for the Portfolio, Norwest seek securities with
significant price appreciation potential, and attempts to identify companies
that show above-average growth, as compared to long-term overall market growth.
The companies in which the Portfolio invests may be in a relatively early stage
of development or may produce goods and services that have favorable prospects
for growth due to increasing demand or developing markets. Frequently, such
companies have a small management group and single product or product line
expertise, which, in the view of Norwest, may result in an enhanced
entrepreneurial spirit and greater focus, thereby allowing such companies to be
successful. The Advisers believe that such companies may develop into
significant business enterprises and that an investment in such companies offers
a greater opportunity for capital appreciation than an investment in larger,
more established entities.

43
<PAGE>

Securities owned by the Portfolio that are traded in the over-the-counter market
or on a regional securities exchange may not be traded every day or in the
volume typical of securities trading on a national securities exchange. As a
result, disposition by the Portfolio of a portfolio security, to meet redemption
requests by shareholders 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.

Small Company Stock Portfolio also may invest up to 20% of its assets in
American Depository Receipts, European Depository Receipts and other similar
securities of foreign issuers. See "Investment Objectives and Policies - Equity
Funds - International Fund - Foreign Investment Considerations and Risk
Factors."

SMALL COMPANY GROWTH FUND

INVESTMENT OBJECTIVES. The Fund's investment objective is to provide long-term
capital appreciation by investing in smaller domestic companies. This objective
is pursued by investing primarily in small and medium-sized domestic companies
that are either growing rapidly or completing a period of significant change.
The Fund currently pursues its investment objective by investing all of its
investable assets in Small Company Growth Portfolio, which has the same
investment objective and substantially identical investment policies as the
Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. Small Company Growth Portfolio invests primarily in the
common stock of smaller domestic companies that have market capitalizations well
below that of the average company in the Standard & Poor's 500 Composite Stock
Price Index. The Portfolio considers smaller companies to be those with market
capitalizations less than $1 billion at the time of the Portfolio's purchase.

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

44
<PAGE>

SMALL CAP OPPORTUNITIES FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is capital
appreciation. Current income will be incidental to the objective of capital
appreciation. The Fund currently pursues its investment objective by investing
all of its investable assets in Schroder U.S. Smaller Companies Portfolio, which
has the same investment objective and substantially identical investment
policies as the Fund. Therefore, although the following discusses the investment
policies of that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. Schroder U.S. Smaller Companies Portfolio seeks to achieve
its investment objective by investing primarily 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.

In its investment approach, Schroder attempts 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.

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.

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 the fourth highest rating category. These securities are commonly
known as "high yield/high risk" securities or "junk bonds." The Portfolio 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. The Portfolio is not obligated to
dispose of securities due to changes by the rating agencies. See "Additional
Investment Policies and Risk Considerations - Debt Securities." See the SAI for
information about the risks associated with investing in junk bonds.

45
<PAGE>

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: (i) 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 (ii) 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: (i) 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; (ii) potentially
unlimited loss associated with futures transactions and the possible lack of a
liquid secondary market for closing out a futures position; and (iii) 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 in the SAI.

CONTRARIAN STOCK FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek capital
appreciation by investing primarily in common stocks for which Norwest believes
there is significant potential for price appreciation.

INVESTMENT POLICIES. The basic premise of Norwest's "contrarian" investment
approach is to purchase stocks whose prices are temporarily depressed, either
because they are out-of-favor with, or simply ignored by, the investment
community. Norwest believes that security prices change more than fundamental
investment values, as consensus thinking often results in severe undervaluation
of securities whose immediate problems are obvious and whose longer term
prospects are, therefore, viewed too negatively. This consensus pessimism can
create investment opportunity.

The basis of Norwest's contrarian investment approach is the comparison of the
value and the price of a security. Norwest generally analyzes a security's value
in terms of recovery earnings and potential share price over a three-year
investment time horizon. Typically, stocks that Norwest considers for purchase
will tend to have significantly depressed prices and relatively low price/book
value ratios.

The Fund may invest up to 20% of its assets in securities of foreign issuers and
in sponsored and unsponsored American Depository Receipts. For a description of
the investment considerations and risk

46
<PAGE>
factors of investing in foreign securities, see "Investment Objectives and
Policies - Equity Funds - International Fund - Foreign Investment Considerations
and Risk Factors" below. The Fund may also invest in convertible securities,
including convertible debt and convertible preferred stock, that may be rated in
any category by an NRSRO or may be unrated.

The Fund also may invest in corporate debt obligations and U.S. Government
Securities. These instruments may have fixed, floating or variable rates of
interest. These debt securities must be rated in one of the three highest rating
categories by an NRSRO or, if unrated by any NRSRO, judged by Norwest to be of
comparable quality. See "Additional Investment Policies and Risk Considerations
- - Fixed Income Investments and Their Characteristics."

ADDITIONAL INVESTMENT CONSIDERATIONS AND RISK FACTORS. The Fund's policy of
investing in securities that may be temporarily out of favor differs from the
investment approach followed by many other mutual funds with a similar
investment objective. Such mutual funds typically do not invest in securities
that have declined sharply in price, are not widely followed, or are issued by
companies that may have reported poor earnings or that may have suffered a
cyclical downturn in business. Norwest believes, however, that purchasing
securities depressed by temporary factors may provide investment returns
superior to those obtained when premium prices are paid for issues currently in
favor.

INTERNATIONAL FUND

The Fund is designed for investors who desire to achieve international
diversification of their investments by participating in foreign securities
markets. Because international investments generally involve risks in addition
to those risks associated with investments in the United States, the Fund should
be considered only as a vehicle for international diversification and not as a
complete investment program.

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation by investing directly or indirectly in high
quality companies based outside the United States. The Fund currently pursues
its investment objective by investing all of its investable assets in
International Portfolio, which has the same investment objective and
substantially identical investment policies as the Fund. Therefore, although the
following discusses the investment policies of that Portfolio, it applies
equally to the Fund.

47
<PAGE>
FOREIGN EXCHANGE CONTRACTS. Changes in foreign currency exchange rates will
affect the U.S. dollar values of securities denominated in currencies other than
the U.S. dollar. The rate of exchange between the U.S. dollar and other
currencies fluctuates in response to forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. When investing in foreign securities,
International Portfolio usually effects currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign exchange market.
International Portfolio incurs foreign exchange expenses in converting assets
from one currency to another.

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

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

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

Income from foreign securities will be received and realized in foreign
currencies, and International Portfolio is required to compute and distribute
income in U.S. dollars. Accordingly, a decline in the value of a particular
foreign currency against the U.S. dollar occurring after International
Portfolio's income has been

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earned and computed in U.S. dollars may require International Portfolio to
liquidate portfolio securities to acquire sufficient U.S. dollars to make a
distribution. Similarly, if the exchange rate declines between the time
International Portfolio incurs expenses in U.S. dollars and the time such
expenses are paid, International Portfolio may be required to liquidate
additional foreign securities to purchase the U.S. dollars required to meet such
expenses.

CORE PORTFOLIO DESCRIPTIONS

MONEY MARKET PORTFOLIO. See "Investment Objectives and Policies - Money Market
Funds - Cash Investment Fund and Ready Cash Investment Fund."

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

Under normal circumstances, at least 50 percent of the net assets of the
Portfolio will be invested in U.S. Government Securities, including Treasury
securities. All securities will be, at the time of purchase: (i) rated in one of
the two highest long-term rating categories assigned by a NRSRO such as Moody's
Investors Service, Standard & Poor's and Fitch Investors Services, L.P.; or (ii)
unrated and determined by the Advisers to be of comparable quality. No more than
25 percent of those securities may be in the second highest rating category.
Investments may include zero-coupon securities, securities with variable or
floating rates of interest and asset-backed securities, but only 25 percent of
the net assets allocated to this investment style may be invested in each of
these types of securities. The Portfolio may not invest in convertible
securities, mortgage pass-through securities or private placement securities.
Within these constraints, the Advisers purchase securities that they believe
have above-average yields.

STABLE INCOME PORTFOLIO. See "Investment Objectives and Policies - Fixed Income
Funds - Stable Income Fund."

MANAGED FIXED INCOME PORTFOLIO. Managed Fixed Income Portfolio seeks consistent
fixed income returns by investing primarily in investment grade
intermediate-term obligations. The Portfolio invests in a diversified portfolio
of fixed and variable rate U.S. dollar denominated, fixed income securities of a
broad spectrum of United States and foreign issuers, including U.S. Government
Securities and the debt securities of financial institutions, corporations, and
others. The Advisers emphasize the use of intermediate maturity securities to
lessen duration risk (as described below), while employing low risk yield
enhancement techniques to enhance return over a complete economic or interest
rate cycle. Intermediate-term obligations comprise securities with maturities of
between 2 and 20 years.

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

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

The Portfolio only purchases securities that are rated, at the time of purchase,
within the four highest long-term or two highest short-term rating categories
assigned by an NRSRO, such as Moody's Investors Service, Standard & Poor's or
Fitch Investors Services, L.P., or which are unrated and determined by Norwest
to be of comparable quality. See "Additional Investment Policies and Risk
Considerations - Rating Matters" below.

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

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

TOTAL RETURN BOND PORTFOLIO. See "Investment Objectives and Policies - Fixed
Income Funds - Total Return Bond Fund."

INDEX PORTFOLIO. See "Investment Objectives and Policies - Equity Funds - Index
Fund."

INCOME EQUITY PORTFOLIO. See "Investment Objectives and Policies - Equity Funds
- - Income Equity Fund."

LARGE COMPANY GROWTH PORTFOLIO. See "Investment Objectives and Policies - Equity
Funds - Large Company Growth Fund."

SMALL COMPANY STOCK PORTFOLIO. See "Investment Objectives and Policies - Equity
Funds - Small Company Stock Fund."

SMALL COMPANY GROWTH PORTFOLIO. See "Investment Objectives and Policies - Equity
Funds - Small Company Growth Fund."

SMALL COMPANY VALUE PORTFOLIO. Small Company Value Portfolio seeks to provide
long-term capital appreciation by investing primarily in smaller companies. The
Portfolio invests primarily in the common stock of companies that have a market
capitalization well below that of the average company in the Standard & Poor's
500 Composite Stock Price Index. Smaller companies are those whose market
capitalization is less than $1 billion at the time of purchase.

The Advisers focus on securities that are conservatively valued in the
marketplace relative to their underlying fundamentals. Value investing provides
investors with a less aggressive way to take advantage of growth

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opportunities of small companies. The Advisers seek to invest in stocks priced
low relative to the stock of comparable companies, determined by price/earnings
ratios, cash flows or other measures. Value investing therefore may reduce
downside risk while offering potential for capital appreciation as a stock gains
favor among other investors and its stock price rises. Investing in the
securities of small companies entails certain risks. See "Investment Objectives
and Policies - Equity Funds - Small Company Stock Fund - Additional Investment
Considerations and Risk Factors."

ADDITIONAL INVESTMENT CONSIDERATIONS AND RISK FACTORS.The investments of Small
Company Value Portfolio are subject to the risks of investing in smaller
capitalization companies. See "Investment Objectives and Policies - Equity Funds
- - Small Company Stock Fund" and " - Small Company Growth Fund." While all
investments have risks, investments in smaller capitalization companies carry
greater risk than investments in larger capitalization companies. Smaller
capitalization companies generally experience higher growth rates and higher
failure rates than do larger capitalization companies; and the trading volume of
smaller capitalization companies' securities is normally lower than that of
larger capitalization companies and, consequently, generally has a
disproportionate effect on market price (tending to make prices rise more in
response to buying demand and fall more in response to selling pressure).
Investments in small, unseasoned issuers generally carry greater risk than is
customarily associated with larger, more seasoned companies. Such issuers often
have products and management personnel that have not been 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 can adversely affect their sale by the Portfolio and can
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.

INTERNATIONAL PORTFOLIO. See "Investment Objectives and Policies - Equity Funds
- - International Fund."

4. ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS

GENERAL INFORMATION

Each Fund's (and each Core Portfolios') investment objective and all investment
policies of the Funds (and the Core Portfolios) 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). A majority of
outstanding voting securities means the lesser of 67% of the shares present or
represented at a shareholders meeting at which the holders of more than 50% of
the outstanding shares are present or represented, or more than 50% of the
outstanding shares. Except as otherwise indicated, investment policies of the
Funds are not deemed to be fundamental and may be changed by the Trust's Board
of Trustees (the "Board") without shareholder approval. Likewise,
non-fundamental investment policies of the Core Portfolios may be changed by the
respective Core Trust's board of trustees ("Core Board") without shareholder
approval.

Unless otherwise indicated below, the discussion below of the investment
policies of a Fund investing in a single Core Portfolio also refers to the
investment policies of that Core Portfolio. A further description of the Funds'
investment policies, including additional fundamental policies, is contained in
the SAIs.

Each investment adviser monitors the creditworthiness of counterparties to the
Funds' transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal credit risks and the benefits
from the transaction justify the attendant risks. As used herein, the term U.S.
Government Securities means obligations issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities. These
policies relate to each Fund and, unless otherwise noted, not to a portion of a
Fund invested in a particular investment style.

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GENERAL MONEY MARKET FUND GUIDELINES

Each Money Market Fund (which for purposes of this section, also includes Money
Market Portfolio and Prime Money Market Portfolio) invests only in high quality,
short-term money market instruments that are determined by Norwest, pursuant to
procedures adopted by the Board, to be eligible for purchase and to present
minimal credit risks. Each Fund will invest only in U.S. dollar-denominated
instruments that have a remaining maturity of 397 days or less (as calculated
pursuant to Rule 2a-7 under the Investment Company Act of 1940 ("1940 Act")) and
will maintain a dollar-weighted average portfolio maturity of 90 days or less.
Securities with ultimate maturities of greater than 397 days may be purchased in
accordance with Rule 2a-7. Under that Rule, only those long-term instruments
that have demand features which comply with certain requirements and certain
variable rate U.S. Government Securities, as described below, may be purchased.
The securities in which the Funds may invest may have fixed, variable or
floating rates of interest.

As used herein, high quality instruments include those that: (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO; or (ii) are otherwise unrated and determined by
Norwest, pursuant to guidelines adopted by the Board, to be of comparable
quality. Except for Municipal Money Market Fund, each Fund will invest at least
95% of its total assets in securities in the highest rating category as
determined pursuant to Rule 2a-7. A description of the rating categories of
Standard & Poor's, Moody's Investors Service and certain other NRSROs is
contained in the SAI.

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Although each Fund only invests in high quality money market instruments, an
investment in the Fund is subject to risk even if all securities in the Fund's
portfolio are paid in full at maturity. All money market instruments, including
U.S. Government Securities, can change in value as a result of changes interest
rates and/or the issuer's actual or perceived creditworthiness.

COMMON POLICIES OF THE FUNDS

BORROWING

As a fundamental policy, each Money Market Fund, Income Fund, Total Return Bond
Fund, each Tax-Free Fixed Income Fund, ValuGrowth Stock Fund, Small Company
Stock Fund, Small Cap Opportunities Fund and Contrarian Stock Fund may borrow
money from banks or by entering into reverse repurchase agreements and will
limit borrowings to amounts not in excess of 33 1/3% of the value of the Fund's
total assets. As a fundamental policy, Stable Income Fund, Intermediate
Government Income Fund, Diversified Bond Fund, the Balanced Funds, Index Fund,
Income Equity Fund, Diversified Equity Fund, Growth Equity Fund, Large Company
Growth Fund, Small Company Growth Fund and International Fund may borrow money
for temporary or emergency purposes, including the meeting of redemption
requests, but not in excess of 33 1/3% of the value of a Fund's net assets. For
each Fund and the Core Portfolios, borrowing for other than temporary or
emergency purposes or meeting redemption requests may not exceed 5% of the value
of each Fund's assets except in the case of Intermediate Government Income Fund,
Diversified Bond Fund and, with respect to their assets invested in Managed
Fixed Income Portfolio, the Balanced Funds. Each Fund may enter into reverse
repurchase agreements. When a Fund establishes a segregated account to limit the
amount of leveraging of the Fund with respect to certain investment techniques,
such as reverse repurchase agreements, the Fund does not treat those techniques
as involving borrowings (although they may have characteristics and risks
similar to borrowings and result in the Fund's assets being leveraged). See
"Appendix A - Borrowing and Techniques Involving Leverage."

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES

Each Fund (except for Treasury Fund) may enter into repurchase agreements and
may lend securities from its portfolio to brokers, dealers and other financial
institutions. These investments may entail certain risks not associated with
direct investments in securities. For instance, in the event that bankruptcy or
similar proceedings were commenced against a counterparty in these transactions
or a counterparty defaulted on its obligations, a Fund may have difficulties in
exercising its rights to the underlying securities, may incur costs and
experience time delays in disposing of them and may suffer a loss.

Repurchase agreements are transactions in which a Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed-upon
price on an agreed-upon future date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. When a Fund lends a security
it receives interest from the borrower or from investing cash collateral. The
Trust maintains possession of the purchased securities and any underlying
collateral in these transactions, the total market value of which on a
continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. The Funds may pay fees to arrange
securities loans and each Fund will limit securities lending to not more than 33
1/3% (25% in the case of Small Cap Opportunities Fund) of the value of its total
assets.

INDEX FUTURES CONTRACTS

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

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

MARGIN AND SHORT SALES

Except for Intermediate Government Income Fund, no Fund may purchase securities
on margin or make short sales of securities, except short sales against the box.
A short sale is "against the box" to the extent that the Fund contemporaneously
owns or has the right to obtain at no added cost securities identical to those
sold short. For federal income tax purposes, short sales against-the-box may be
made to defer recognition of gain or loss on the sale of securities until the
short position is closed out. These prohibitions do not restrict the Fund's
ability to use short-term credits necessary for the clearance of portfolio
transactions and to make margin deposits in connection with permitted
transactions in options and futures contracts.

DIVERSIFICATION AND CONCENTRATION

Each Fund (other than Colorado Tax-Free Fund and Minnesota Tax-Free Fund) is
diversified as that term is defined in the Investment Company Act of 1940 (the
"1940 Act"). As a fundamental policy, with respect to 75% of its assets, a
diversified may not purchase a security (other than a U.S. Government Security
or shares of investment companies) if, as a result: (i) more than 5% of the
Fund's total assets would be invested in the securities of a single issuer; or
(ii) the Fund would own more than 10% of the outstanding voting securities of
any single issuer. Except for Cash investment Fund and Ready Cash Investment
Fund, each Fund is prohibited from concentrating its assets in the securities of
issuers in any industry. As a fundamental policy, no Fund (other than Cash
investment Fund and Ready Cash Investment Fund) may purchase securities if,
immediately after the purchase, more than 25% of the value of the Fund's total
assets would be invested in the securities of issuers conducting their principal
business activities in the same industry. This limit does not apply to
investments in U.S. Government Securities, foreign government securities or
repurchase agreements covering U.S. Government Securities. Each Fund reserves
the right to invest up to 100% of its investable assets in one or more
investment companies such as the Core Portfolios.

ILLIQUID SECURITIES

Each of the Funds limits its purchase of illiquid securities. No Fund may
knowingly acquire securities or invest in repurchase agreements with respect to
any securities if, as a result, more than 15 percent (10 percent in the case of
the Money Market Funds) of the Fund's net assets taken at current value would be
invested in securities which are not readily marketable. Illiquid securities are
securities that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount at which the Fund has valued the
securities and include, among other things, repurchase agreements not entitling
the holder to payment within seven days and restricted securities (other than
those determined to be liquid pursuant to guidelines established by the Board or
Core Board). Under the supervision of the Board or Core Board, the Advisers
determine and monitor the liquidity of the portfolio securities.

FIXED INCOME INVESTMENTS AND THEIR CHARACTERISTICS

Although each Fund (other than Minnesota Tax-Free Fund and Small Cap
Opportunities Fund) only invests in investment grade fixed income securities,
including money market instruments, an investment in a Fund is subject to risk
even if all fixed income securities in the Fund's portfolio are paid in full at
maturity. The Fixed Income Funds and, with respect to their assets invested in
fixed income investment styles, the

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Balanced Funds, will invest in securities rated in the categories specified by
their investment policies. All fixed income securities, including U.S.
Government Securities, can change in value when there is a change in interest
rates or the issuers actual or perceived creditworthiness or ability to meet its
obligations.

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

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

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Funds invest
(including mortgage-related securities) may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate (the "underlying index"). The interest paid on
these securities is a function primarily of the underlying index upon which the
interest rate adjustments are based. Such adjustments minimize changes in the
market value of the obligation and, accordingly, enhance the ability of the Fund
to maintain a stable net asset value. Similar to fixed rate debt instruments,
variable and floating rate instruments are subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
The rate of interest on securities purchased by a Fund may be tied to Treasury
or other government securities or indices on those securities as well as any
other rate of interest or index. Certain variable rate securities (including
mortgage- related securities) pay interest at a rate that varies inversely to
prevailing short-term interest rates (sometimes referred to as "inverse
floaters"). For instance, upon reset the interest rate payable on a security may
go down when the underlying index has risen. During times when short-term
interest rates are relatively low as compared to long-term interest rates a Fund
may attempt to enhance its yield by purchasing inverse floaters. Certain inverse
floaters may have an interest rate reset mechanism that multiplies the effects
of changes in the underlying index. This form of leverage may have the effect of
increasing the volatility of the security's market value while increasing the
security's, and thus the Fund's, yield. Total Return Bond Fund limits its
investment in variable and floating rate securities to 5% of its assets.

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

The Funds, except U.S. Government Fund and Treasury Fund, also may purchase
variable and floating rate demand notes of corporations, which are unsecured
obligations redeemable upon not more than 30 days'

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notice. These obligations include master demand notes that permit investment of
fluctuating amounts at varying rates of interest pursuant to direct arrangement
with the issuer of the instrument. The issuer of these obligations often has the
right, after a given period, to prepay their outstanding principal amount of the
obligations upon a specified number of days' notice. These obligations generally
are not traded, nor generally is there an established secondary market for these
obligations. To the extent a demand note does not have a seven day or shorter
demand feature and there is no readily available market for the obligation, it
is treated as an illiquid security.

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

RATING MATTERS

The Funds' investments are subject to credit risk relating to the financial
condition of the issuers of the securities that each Fund holds. To limit credit
risk, each Fund (other than Minnesota Tax-Free Fund and Small Cap Opportunities
Fund) will generally buy debt securities that are rated in the top four
long-term rating categories by an NRSRO or in the top two short-term rating
categories by an NRSRO, although certain Funds have greater restrictions.
Accordingly, the lowest permissible long-term investment grades for corporate
bonds, including convertible bonds, are Baa in the case of Moody's Investor
Service ("Moody's") and BBB in the case of Standard & Poor's ("S&P") and Fitch
Investors Services, L.P. ("Fitch"); the lowest permissible long-term investment
grades for preferred stock are Baa in the case of Moody's and BBB in the case of
S&P and Fitch; and the lowest permissible short-term investment grades for
short-term debt, including commercial paper, are Prime-2 (P-2) in the case of
Moody's, A-2 in the case of S&P and F-2 in the case of Fitch.

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

TEMPORARY DEFENSIVE POSITION

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

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<PAGE>

periods when the Fund assumes a temporary defensive position, each Equity Fund
will have at least 65% of its total assets invested in common stock.
International Portfolio and may hold cash and bank instruments denominated in
any major foreign currency.

When a Tax-Exempt Fixed Income Fund assumes a temporary defensive position, it
is likely that its shareholders will be subject to federal and applicable state
income taxes on a greater portion of their income dividends received from the
Fund.

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 investment advisers seek "best execution" for all portfolio transactions,
but a Fund may pay higher than the lowest available commission rates when an
investment adviser believes it is reasonable to do so in light of the value of
the brokerage and research services provided by the broker effecting the
transaction.

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

Subject to the Funds' policy of obtaining the best price consistent with quality
of execution of transactions, each investment adviser may employ broker-dealer
affiliates of the investment adviser (collectively "Affiliated Brokers") to
effect brokerage transactions for the Funds. The Fund's payment of commissions
to Affiliated Brokers is subject to procedures adopted by the Board or the Core
Boards, to provide that the commissions will not exceed the usual and customary
broker's commissions charged by unaffiliated brokers. No specific portion of a
Fund's brokerage will be directed to Affiliated Brokers and in no event will a
broker affiliated with the investment adviser directing the transaction receive
brokerage transactions in recognition of research services provided to the
adviser. The investment advisers may effect transactions for the Funds (or the
Portfolios) through brokers who sell Fund shares. The Funds have no obligation
to deal with any specific broker or dealer in the execution of portfolio
transactions.

The frequency of portfolio transactions of a Fund (the portfolio turnover rate)
will vary from year to year depending on many factors. From time to time a Fixed
Income Fund or Tax-Exempt Fixed Income Fund may engage in active short-term
trading to take advantage of price movements affecting individual issues, groups
of issues or markets. The Funds' portfolio turnover is reported under "Financial
Highlights." Schroder anticipates that the annual portfolio turnover rate of
U.S. Small Companies Portfolio, and Norwest anticipates that the annual
portfolio turnover rate of Limited Term Tax-Free Fund, will be less than 100% in
their first year of operations. An annual portfolio turnover rate of 100% would
occur if all of the securities in a Fund were replaced once in a period of one
year. Higher portfolio turnover rates may result in increased brokerage costs to
a Fund or a Portfolio and a possible increase in short-term capital gains or
losses. Tax rules applicable to short-term trading may effect the timing of
portfolio transactions or the ability to realize short-term trading profits or
establish short-term positions.

5. MANAGEMENT OF THE FUNDS

The business of the Trust is managed under the direction of the Board of
Trustees, and the business of each Core Portfolio is managed under the direction
of that investment company's Core Board. The Board formulates the general
policies of the Funds and meets periodically to review the results of the Funds,
monitor investment activities and practices and discuss other matters affecting
the Funds and the Trust. The Board consists of eight persons.

57
<PAGE>
INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest Investment Management, Inc. makes investment decisions for the Funds
(except Small Cap Opportunities Fund and International Fund) and continuously
reviews, supervises and administers each Fund's investment program or oversees
the investment decisions of the investment subadvisers, as applicable. Norwest
provides its investment advisory services indirectly to each Fund that operates
in a Core and Gateway Structure (other than Schroder U.S. Smaller Companies
Portfolio and International Portfolio) through its investment advisory services
to the Core Portfolios. Norwest provides its investment advisory services
directly to the other Funds. In addition, subject to the general supervision of
the Board, Norwest continuously reviews and determines the allocation of the
assets of Diversified Bond Fund, Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund, Diversified Equity Fund, and Growth Equity Fund
among the various investment styles and Core Portfolios in which those Funds
invest. Norwest, which is located at Norwest Center, Sixth Street and Marquette,
Minneapolis, Minnesota 55479, is an indirect subsidiary of Norwest Corporation,
a multi-bank holding company that was incorporated under the laws of Delaware in
1929. As of March 31, 1997, Norwest Corporation had assets of $83.6 billion,
which made it the 11th largest bank holding company in the United States. As of
December 31, 1996, Norwest and its affiliates managed assets with a value of
approximately $42.6 billion.

INVESTMENT SUBADVISERS. To assist Norwest in carrying out its obligations,
certain of the Core Portfolios and Norwest, and Contrarian Stock Fund at Norwest
have retained the services of the Subadvisers as follows:

<TABLE>
<CAPTION>
INVESTMENT
SUBADVISER
FUND CORE PORTFOLIO(S) OF CORE PORTFOLIO
- --------------------------------------------- --------------------------------------------- --------------------
<S> <C> <C>
Stable Income Fund Stable Income Portfolio Galliard
Diversified Bond Fund Positive Return Bond Portfolio Peregrine
Managed Fixed Income Portfolio Galliard
Total Return Bond Portfolio UCM
Total Return Bond Fund Total Return Bond Portfolio UCM
Conservative Balanced Fund Stable Income Portfolio Galliard
Positive Return Portfolio Peregrine
Managed Fixed Income Portfolio Galliard
Total Return Bond Portfolio UCM
Large Company Growth Portfolio Peregrine
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
Moderate Balanced Fund Stable Income Portfolio Galliard
Positive Return Portfolio Peregrine
Managed Fixed Income Portfolio Galliard
Total Return Bond Portfolio UCM
Large Company Growth Portfolio Peregrine
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
</TABLE>

58
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT
SUBADVISER
FUND CORE PORTFOLIO(S) OF CORE PORTFOLIO
- --------------------------------------------- --------------------------------------------- --------------------
Growth Balanced Fund Positive Return Portfolio Peregrine
<S> <C> <C>
Managed Fixed Income Portfolio Galliard
Total Return Bond Portfolio UCM
Large Company Growth Portfolio Peregrine
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
Diversified Equity Fund Large Company Growth Portfolio Peregrine
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
Growth Equity Fund Large Company Growth Portfolio Peregrine
Small Company Stock Portfolio Crestone
Small Company Growth Portfolio Peregrine
Small Company Value Portfolio Peregrine
Large Company Growth Fund Large Company Growth Portfolio Peregrine
Small Company Stock Fund Small Company Stock Portfolio Crestone
Small Company Growth Fund Small Company Growth Portfolio Peregrine
<CAPTION>

INVESTMENT
FUND CORE SUBADVISER
- --------------------------------------------- --------------------------------------------- --------------------
<S> <C> <C>
Contrarian Stock Fund N/A UCM
</TABLE>

Galliard, UCM, Peregrine and Crestone make investment decisions for the Fund or
Core Portfolios to which they act as investment subadviser and continuously
review, supervise and administer those Funds' or Core Portfolios' investment
programs with respect to that portion, if any, of the Fund's or Portfolios
assets that Norwest believes should be managed by the Subadviser. Currently,
each Subadviser manages all of the assets of each Fund and Core Portfolio that
they subadvise. Norwest supervises the performance of each Subadviser, including
their adherence to the Funds' and Portfolios' investment objectives and
policies.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. 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 eighteen countries worldwide. The Schroder
Group specializes in providing investment management services and has assets
under management in excess of $150 billion.

GALLIARD CAPITAL MANAGEMENT, INC. Galliard, which is located at 800 LaSalle
Avenue, Suite 2060, Minneapolis, Minnesota 55479, is an investment advisory
subsidiary of Norwest Bank. Galliard provides investment advisory services to
bank and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations and corporate and other business entities. As of March
31, 1997 Galliard managed over $2.95 billion in assets.

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<PAGE>

PEREGRINE CAPITAL MANAGEMENT, INC. Peregrine, which is located at LaSalle Plaza,
800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402, is an investment
adviser subsidiary of Norwest Bank. Peregrine provides investment advisory
services to corporate and public pension plans, profit sharing plans, savings-
investment plans and 401(k) plans. As of March 31, 1997 Peregrine managed over
$4.25 billion in assets.

CRESTONE CAPITAL MANAGEMENT, INC. Crestone, which is located at 7720 East
Belleview Avenue, Suite 220, Englewood Colorado 80111, is an investment adviser
subsidiary of Norwest Bank. Crestone provides investment advice regarding
companies with small market capitalization to various clients, including
institutional investors. As of December 31, 1996, Crestone managed assets with a
value of approximately $465 million.

PORTFOLIO MANAGERS. Many persons on the advisory staffs of Norwest, Schroder and
each Subadviser contribute to the investment services provided to the Funds and
the Core Portfolios. The following persons, however, are primarily responsible
for day-to-day management and, unless otherwise noted, have been since the
inception of the Fund or Portfolio. For periods prior to June 1, 1997, all
persons associated with Norwest served in their current positions with Norwest
Bank. Prior to that date, Norwest Bank was each Fund's investment adviser. In
addition to their responsibilities as listed below, each of the portfolio
managers associated with Norwest may perform portfolio management and other
duties for Norwest Bank.

CASH INVESTMENT FUND/READY CASH INVESTMENT FUND/MONEY MARKET PORTFOLIO/RATED
MONEY MARKET PORTFOLIO - David D. Sylvester and Laurie R. White. Mr.
Sylvester has been associated with Norwest for 16 years, the last 8 years as
a Vice President and Senior Portfolio Manager. He has over 20 years'
experience in managing securities portfolios. Ms. White has been a Vice
President and Senior Portfolio Manager of Norwest since 1991; from 1989 to
1991, she was a Portfolio Manager at Richfield Bank and Trust. Ms. White
began serving as a portfolio manager of Cash Investment Fund and Ready Cash
Investment Fund in 1991.

U.S. GOVERNMENT FUND - David D. Sylvester and Laurie R. White. For a
description of Mr. Sylvester and Ms. White see "Cash Investment Fund/Ready
Cash Investment Fund" above. Ms. White began serving as a portfolio manager
of the Fund in 1991.

TREASURY FUND - David D. Sylvester and Laurie R. White. For a description of
Mr. Sylvester and Ms. White see "Cash Investment Fund/Ready Cash Investment
Fund" above. Ms. White began serving as a portfolio manager of the Fund in
1991.

MUNICIPAL MONEY MARKET FUND - David D. Sylvester. For a description of Mr.
Sylvester see "Cash Investment Fund/Ready Cash Investment Fund" above.

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

DIVERSIFIED BOND FUND - The day-to-day management of this Fund, with respect
to the portion of the Fund's assets that is invested in a particular Core
Portfolio, is performed by the portfolio managers listed for each of the
Core Portfolios in which the Fund invests. Mr. Giese, portfolio manager of
Positive Return Portfolio, has served as a portfolio manager of the Fund
since 1995. Mr. Merriam,

60
<PAGE>

portfolio manager of Managed Fixed Income Portfolio, has served as a
portfolio manager of the Fund since 1995. Mr. Kinney, portfolio manager of
Total Return Bond Portfolio, has served as a portfolio manager of the Fund
since 1995.

INCOME FUND - Ms. Marjorie H. Grace, CFA. For a description of Ms. Grace,
see "Intermediate Government Income Fund" above. Ms. Grace has served as a
portfolio manager for the Fund since May 1995.

TOTAL RETURN BOND FUND/TOTAL RETURN BOND PORTFOLIO - Mr. David B. Kinney.
Mr. Kinney is a Vice President of UCM. He has been associated with Norwest
and its affiliates since 1981.

LIMITED TERM TAX-FREE FUND - Mr. William T. Jackson. Mr. Jackson has been a
Vice President of Norwest since 1993. Prior thereto, Mr. Jackson was a
Senior Vice President and Institutional Sales Manager with Norwest
Investment Services from 1992-1993; a Vice President and Municipal Bond
Trading Manager from 1991-1992; and a Vice President and Municipal Bond
Trader with Kemper Securities, Inc., from 1984-1991.

TAX-FREE INCOME FUND - Mr. William T. Jackson. For a description of Mr.
Jackson, see "Limited Term Tax-Free Fund" above. Mr. Jackson, has served as
portfolio manager of the Fund since 1993.

COLORADO TAX-FREE FUND - Mr. William T. Jackson. For a description of Mr.
Jackson, see "Limited Tax-Free Income Fund" above. Mr. Jackson has served as
portfolio manager of the Fund since July 1995.

MINNESOTA TAX-FREE FUND - Ms. Patricia D. Hovanetz, CFA. Ms. Hovanetz, a
Vice President of Norwest, has been associated with Norwest for more than 25
years in various capacities related to municipal bond investments. Ms.
Hovanetz has been a municipal bond fund portfolio manager since 1988 and has
served as portfolio manager of the Fund since 1991.

CONSERVATIVE BALANCED FUND, MODERATE BALANCED FUND AND GROWTH BALANCED FUND
- The day-to-day management of each Fund, with respect to the portion of the
Fund's assets that is invested in a particular Core Portfolio, is performed
by the portfolio managers listed for the Core Portfolio. For example, there
are twelve portfolio managers of Growth Balanced Fund - the portfolio
managers of Index Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Small Company Stock Portfolio, Small Company Growth Portfolio,
Small Company Value Portfolio, International Portfolio, Total Return Bond
Portfolio, Managed Fixed Income Portfolio and Positive Return Portfolio.

INDEX FUND/INDEX PORTFOLIO - David D. Sylvester and Laurie R. White. Mr.
Sylvester and Ms. White began serving as portfolio managers of Index
Portfolio on January 1, 1996. For a description of Mr. Sylvester and Ms.
White see "Cash Investment Fund/Ready Cash Investment Fund" above.

INCOME EQUITY FUND/INCOME EQUITY PORTFOLIO - David L. Roberts. Mr. Roberts
has been a Senior Vice President of Norwest since 1991. Mr. Roberts has been
associated with Norwest and its affiliates for over 20 years in various
investment related capacities.

VALUGROWTH STOCK FUND - Mr. David S. Lunt, CFA. Mr. Lunt is a Vice President
of Norwest and has been associated with Norwest and its affiliates since
1992. Prior thereto he was a portfolio manager for FirsTier Bank and a
securities analyst for Woodmen Accident and Life Company. Mr. Lunt received
an MBA from the University of Nebraska at Omaha.

DIVERSIFIED EQUITY FUND AND GROWTH EQUITY FUND - The day-to-day management
of each Fund, with respect to the portion of the Fund's assets that is
invested in a particular Core Portfolio, is performed by the portfolio
managers listed for the Core Portfolio. For example, there are six portfolio
managers

61
<PAGE>

of Growth Equity Fund - the portfolio managers of Large Company Growth
Portfolio, Small Company Stock Portfolio, Small Company Growth Portfolio,
Small Company Value Portfolio and International Portfolio.

LARGE COMPANY GROWTH FUND/LARGE COMPANY GROWTH PORTFOLIO - John S. Dale. Mr.
Dale is a Senior Vice President of Peregrine. Mr. Dale has held various
investment management positions with Norwest, Peregrine and their affiliates
since 1968.

SMALL COMPANY STOCK FUND/SMALL COMPANY STOCK PORTFOLIO - Kirk McCown, CFA.
Mr. McCown is founder, President and a Director of Crestone, which was
incorporated in 1990.

SMALL COMPANY GROWTH FUND/SMALL COMPANY GROWTH PORTFOLIO - Robert B. Mersky.
Mr. Mersky is the President of Peregrine Capital Management, Inc. Mr. Mersky
has held various investment management positions with Norwest, Peregrine and
their affiliates since 1977. From 1980 to 1984 he was head of investments
for Norwest Bank.

SMALL CAP OPPORTUNITIES FUND/SCHRODER U.S. SMALLER COMPANIES PORTFOLIO - Ms.
Fariba Talebi. Ms. Talebi is a Group Vice President of Schroder, leads an
investment committee, and is primarily responsible for the day-to-day
management of the Portfolio's investments. Ms. Talebi has been employed by
Schroder in the investment research and portfolio management areas since
1987.

CONTRARIAN STOCK FUND - Mr. W. Lon Schreur, CFA. Mr. Schreur is the
President of UCM, a position he has held for sixteen years.

INTERNATIONAL FUND/INTERNATIONAL PORTFOLIO - Mark J. Smith, a Director and
First Vice President of Schroder along with Michael Perelstein, a Senior
Vice President of Schroder, with the assistance of an SCMI investment
committee. Mr. Smith has been a First Vice President of SCMI since April
1990 and a Director thereof since April 1993. He has been employed by
various Schroder Group companies in the investment research and portfolio
management areas since 1983. Mr. Perelstein has been a Senior Vice President
of SCMI since January 2, 1997. Prior thereto, Mr. Perelstein was a Managing
Director at MacKay Shields. Mr. Perelstein has more than twelve years of
international and global investment experience. Since January 1997, Messrs.
Smith and Perelstein have served as portfolio managers of International
Portfolio.

POSITIVE RETURN PORTFOLIO - William D. Giese. Mr. Giese is a Senior Vice
President of Peregrine. Mr. Giese has been a portfolio manager of Peregrine
for over ten years and has over 20 years experience in fixed income
securities management.

MANAGED FIXED INCOME PORTFOLIO - Richard Merriam. Mr. Merriam has been a
principal of Galliard since 1995. Prior thereto, he was the Chief Investment
Officer of Insight Investment Management and prior thereto was associated
with Washington Square Capital.

SMALL COMPANY VALUE PORTFOLIO - Tasso H. Coin, Jr. Mr. Coin has been a
Senior Vice President of Peregrine since 1995. From 1992 to 1995 he was a
research officer at Lord Asset Management, an investment adviser and prior
thereto was associated with Morgan Stanley Asset Management.

ADVISORY FEES. For their services, Norwest and Schroder receive investment
advisory fees from the Funds (or to the extent a Fund invests in a single Core
Portfolio, from that Core Portfolio) at the following annual rates of the Fund's
or Portfolio's average daily net assets.

62
<PAGE>

<TABLE>
<CAPTION>
FUND INVESTMENT ADVISORY FEE
- ---------------------------------------------------------------------- ------------------------------------------
<S> <C>
Cash Investment Fund
(Prime Money Market Portfolio) 0.40% (first $300 million of assets)
0.36% (next $400 million of assets)
0.32% (remaining assets)
(Money Market Portfolio) 0.20% (first $300 million of assets)
0.16% (next $400 million of assets)
0.12% (next $300 million of assets)

Ready Cash Investment Fund
(Prime Money Market Portfolio) 0.40% (first $300 million of assets)
0.36% (next $400 million of assets)
0.32% (remaining assets)

U.S. Government Fund and Treasury Fund 0.20% (first $300 million of assets)
0.16% (next $400 million of assets)
0.12% (remaining assets)

Municipal Money Market Fund 0.35% (first $500 million of assets)
0.325% (next $500 million of assets)
0.30% (remaining assets)
Stable Income Fund (Stable Income Portfolio) 0.30%
Intermediate Government Income Fund 0.33%
Income Fund 0.50%
Total Return Bond Fund (Total Return Bond Portfolio) 0.35%
Limited Term Tax-Free Fund 0.50%
Tax-Free Income Fund 0.50%
Colorado Tax-Free Fund and Minnesota Tax-Free Fund 0.50% (first $300 million of assets)
0.46% (next $400 million of assets)
0.42% (remaining assets)
Index Fund (Index Portfolio) 0.15%
Income Equity Fund (Income Equity Portfolio) 0.50%
ValuGrowth Stock Fund 0.80% (first $300 million of assets)
0.76% (next $400 million of assets
0.72% (remaining assets)

Large Company Growth Fund
(Large Company Growth Portfolio) 0.65%
Small Company Stock Fund
(Small Company Stock Portfolio) 0.90%
Small Company Growth Fund
(Small Company Growth Portfolio) 0.90%
Small Cap Opportunities Fund
(Schroder U.S. Smaller Companies Portfolio) 0.60%
</TABLE>

63
<PAGE>

<TABLE>
<CAPTION>
FUND INVESTMENT ADVISORY FEE
- ---------------------------------------------------------------------- ------------------------------------------
Contrarian Stock Fund 0.80% (first $300 million of assets)
0.76% (next $400 million of assets)
0.72% (remaining assets)
<S> <C>
International Fund
(International Portfolio) 0.45%
</TABLE>

With respect to Diversified Bond Fund, Conservative Balanced Fund, Moderate
Balanced Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity
Fund, Norwest receives investment advisory fees for its Asset Allocation
Services and Norwest and Schroder receive investment advisory fees from the Core
Portfolios in which the Funds invest at the following annual rates of the Fund's
or Portfolios' average daily net assets. The total fee payable by a Fund through
its investments in Core Portfolios will vary based on the percentage of its
assets invested in each Core Portfolio.

<TABLE>
<CAPTION>
FUND OR CORE PORTFOLIO INVESTMENT ADVISORY FEE
- ------------------------------------------------------------------------ ----------------------------------------
<S> <C>
Diversified Bond Fund (for Asset Allocation Services) 0.25%
Conservative Balanced Fund (for Asset Allocation Services) 0.25%
Moderate Balanced Fund (for Asset Allocation Services) 0.25%
Growth Balanced Fund (for Asset Allocation Services) 0.25%
Diversified Equity Fund (for Asset Allocation Services) 0.25%
Growth Equity Fund (for Asset Allocation Services) 0.25%

Money Market Portfolio 0.20% (first $300 million of assets)
0.16% (next $400 million of assets)
0.12% (remaining assets)
Stable Income Portfolio 0.30%
Total Return Bond Portfolio 0.35%
Managed Fixed Income Portfolio 0.35%
Positive Return Portfolio 0.35%
Index Portfolio 0.15%
Income Equity Portfolio 0.50%
Large Company Growth Portfolio 0.65%
Small Company Stock Portfolio 0.90%
Small Company Growth Portfolio 0.90%
Small Company Value Portfolio 0.90%
International Portfolio 0.45%
</TABLE>

Norwest (and not the Funds or Core Portfolios) pays each Subadviser a fee for
their investment subadvisory services. This compensation does not increase the
amount paid by the Funds or Core Portfolios to Norwest for investment advisory
services.

Each Fund investing its assets in one or more Core Portfolio may withdraw its
investments from its corresponding Core Portfolio(s) at any time if the Board
determines that it is in the best interests of the Fund to do so. See "Other
Information - Core and Gateway Structure." Accordingly, each of these Funds has
retained Norwest as its investment adviser. Similarly, in the event that a Fund
withdraws its investment from a Core Portfolio, to the extent the Fund invested
in a Core Portfolio advised by Schroder or a Subadviser, the Fund has retained
Schroder and that Subadviser as an investment subadviser. Under these "dormant"
investment advisory arrangements, none of Norwest, Schroder or any Subadviser
receives any advisory fees with respect to a Fund as long as the Fund remains
completely invested in its respective Core Portfolio(s) or any other investment
companies. In the event that Stable Income Fund, Total Return Bond Fund, Index
Fund, Income Equity Fund, Large Company Growth Fund, Small Company Stock Fund,
Small Company

64
<PAGE>

Growth Fund, Small Cap Opportunities Fund or International Fund were to withdraw
there assets from their respective Core Portfolio, Norwest would receive an
investment advisory fee at an annual rate of 0.35%, 0.35%, 0.15%, 0.50%, 0.65%,
0.90%, 0.90%, 0.925% and 0.85% of the Funds' average daily net assets,
respectively. Similarly, to the extent Diversified Bond Fund, Conservative
Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity
Fund or Growth Equity Fund were to withdraw any or all of their assets from
their respective Core Portfolios, Norwest would receive an investment advisory
fee on the withdrawn assets at an annual rate of 0.35%, 0.48%, 0.53%, 0.58%,
0.65% and 0.90% of the Funds' average daily net assets, respectively. To the
extent Cash Investment Fund was to withdraw any or all of its assets from its
respective Core Portfolios, Norwest would receive an investment advisory fee at
an annual rate equal to that paid by Money Market Portfolio. Pursuant to the
Funds' dormant investment subadvisory agreement, Norwest (and not the Funds)
would pay Schroder and each Subadviser, as applicable, a fee for its investment
subadvisory services.

MANAGEMENT, ADMINISTRATION AND DISTRIBUTION SERVICES

As manager Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others, including the Funds'
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to each Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring the
sale of shares and ensuring that such shares are properly and duly registered
with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of dividends and
distributions to shareholders.

FAS also serves as an administrator of each Core Portfolio (except Schroder U.S.
Smaller Companies Portfolio) and provides services to the Core Portfolios that
are similar to those provided to the Funds by Forum and FAS. For its services
FAS receives a fee with respect to each Core Portfolio (other than Schroder U.S.
Smaller Companies Portfolio) at an annual rate of 0.10% of the Portfolio's
average daily net assets. Schroder Advisors Inc. ("Schroder Advisors") serves as
the administrator of Schroder U.S. Smaller Companies Portfolio and Forum serves
as the subadministrator of that Portfolio. 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. For their services, Schroder Advisors. Inc. receives no fee from the
Portfolio and Forum receives a fee at an annual rate of 0.075% of the
Portfolio's average daily net assets.

65
<PAGE>
for certain excess expenses. No fees are payable under this agreement if the
Fund is not completely invested in a Core Portfolio. Small Cap Opportunities
Fund and International Fund incur total management and administrative fees at a
higher rate than many other mutual funds, including other funds of the Trust.

Forum also acts as the distributor of the Shares but receives no fees for these
services. From its own resources, Forum may pay fees to broker-dealers or other
persons for distribution or other services related to the Funds. None of the
Funds has adopted a plan of distribution applicable to the Shares.

SHAREHOLDER SERVICING AND CUSTODY

Norwest Bank also serves as each Fund's and each Core Portfolio's (other than
Schroder U.S. Smaller Companies Portfolio) custodian and may appoint
subcustodians for the foreign securities and other assets held in foreign
countries. For its custodial services, Norwest Bank receives a fee with respect
to each Fund and each Core Portfolio at an annual rate of 0.02% of the first
$100 million of the Fund's or Core Portfolio's average daily net assets, 0.01%
of the next $200 million of the Fund's or Core Portfolio's average daily net
assets and 0.005% of the Fund's or Core Portfolio's remaining average daily net
assets. No fee is payable by a Fund to the extent the Fund is invested in a Core
Portfolio. With respect to International Portfolio, Norwest receives a fee at an
annual rate of 0.075% of the Portfolio's average daily net assets. The Chase
Manhattan Bank, N.A. serves as custodian of Schroder U.S. Smaller Companies
Portfolio and is paid a fee for its services.

EXPENSES OF THE FUNDS

Norwest has agreed to waive its investment advisory fee for Money Market
Portfolio through May 31, 1999 to the extent that the fee exceeds an annual rate
of 0.10% of the Portfolio's average daily net assets. In addition, Norwest and
Forum have agreed to waive their respective fees or reimburse expenses in order
to

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<PAGE>

maintain Cash Investment Fund's total combined operating expenses through May
31, 1999 at the same level as the Fund's total operating expenses prior to May
31, 1997 (0.48%). Any reduction or elimination of the Waiver, however, would
require Board approval (and notice to shareholders), which would be given only
if the Board determined that the amount of the fees to be paid to Norwest or
Forum after the reduction or elimination would be fair and reasonable.

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain each of Ready Cash Investment Fund's, Total Return
Bond Fund's and Small Company Stock Fund's total combined operating expenses
through May 31, 1998 at the same levels as the respective Fund's total operating
expenses prior to May 31, 1997 (0.48% and 0.82% in the case of Ready Cash
Investment Fund Institutional Shares and Investor Shares, 0.75% in the case of
Total Return Bond Fund and 1.20% in the case of Small Company Stock Fund). After
May 31, 1998, any proposed reduction in the amount of those waivers and
reimbursements would be reviewed by the Board.

Norwest and Forum have agreed to waive their respective fees through May 31,
1999 in order to ensure that the fees borne by each of Diversified Bond Fund,
Conservative Bond Fund, Moderate Bond Fund, Growth Bond Fund, Diversified Equity
Fund and Growth Equity Fund for investment advisory, administrative and
management services would not exceed in the aggregate 0.45%, 0.55%, 0.63%,
0.68%, 0.75% and 1.00%, respectively (the "Waiver"). After May 31, 1999, each
fund's aggregate payment for those services could increase if the Waiver was
reduced or eliminated. Any reduction or elimination of the Waiver, however,
would require Board approval (and notice to shareholders), which would be given
only if the Board determined that the amount of the fees to be paid to Norwest
or Forum after the reduction or elimination would be fair and reasonable.

The expenses of each Fund that invest in one or more Core Portfolios include the
Fund's pro rata share of the expenses of the Core Portfolios in which the Fund
invests, which are borne indirectly by the Fund's shareholders.

6. PURCHASES AND REDEMPTIONS OF SHARES

I Shares are offered to fiduciary, agency and custodial clients of bank trust
departments, trust companies and their affiliates. Institutional Shares and the
single class of shares offered by each of Cash Investment Fund, U.S. Government
Fund and Treasury Fund are designed primarily for institutional clients.
Investor Shares are offered to retail customers. Shares are continuously sold
and redeemed at a price equal to their net asset value next-determined after
acceptance of an order on every weekday except customary national holidays and
Good Friday ("Fund Business Day").

GENERAL PURCHASE INFORMATION

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

You must pay for your shares in U.S. dollars by check or money order (drawn on a
U.S. bank), by bank or federal funds wire transfer, or by electronic bank
transfer; cash cannot be accepted.

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When you sign your application for a new Fund account, you are certifying that
your Social Security or other taxpayer ID number is correct and that you are not
subject to backup withholding. If you violate certain federal income tax
provisions, the Internal Revenue Service can require the Funds to withhold 31%
of your distributions and redemptions.

Shares of each Fund are offered without a sales charge and may be redeemed
without charge. The minimum investment in Investor Shares and I Shares is
$1,000; the minimum subsequent investment in Investor Shares and I Shares is
$100. The minimum investment amount in Institutional Shares and for Shares of
Cash Investment Fund, U.S. Government Fund and Treasury Fund is $100,000 and
there is no minimum subsequent investment for those shares. Shareholders who
elect to purchase Investor Shares or 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 - Shareholder Services - Automatic Investment Plan" and
"Dividends, Distributions and Tax Matters."

Shares of the Funds become entitled to receive dividends on the next Fund
Business Day after a purchase or order for the Shares is accepted, except that
Shares of the Money Market Funds become entitled to receive dividends on the
Fund Business Day that a purchase order is accepted. With respect to the Money
Market Funds, an investor's order will not be accepted or invested by a Fund
during the period before the Fund's receipt of immediately available funds. For
the Money Market Funds, purchase and redemption orders will be accepted on Fund
Business Days only until the times indicated below.

<TABLE>
<CAPTION>
Order Must Be Payment Must Be
Money Market Fund Received By Received By
- ---------------------------------------------------------- -------------- ----------------
<S> <C> <C>
Cash Investment Fund 3:00 p.m. 4:00 p.m.
Ready Cash Investment Fund 3:00 p.m. 4:00 p.m.
U.S. Government Fund 2:00 p.m. 4:00 p.m.
Treasury Fund 1:00 p.m. 4:00 p.m.
Municipal Money Market Fund 12:00 p.m. 4:00 p.m.
</TABLE>

All times referenced in the above table are Eastern Time. The Trust reserves the
right to close early and advance the time by which the Money Market Funds must
receive purchase or redemption orders and payments on days that the New York
Stock Exchange or Minneapolis Federal Reserve Bank closes early, the Public
Securities Association recommends that the government securities markets close
early or due to other circumstances which may affect a Fund's trading hours.

PURCHASE PROCEDURES

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

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

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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 or money order (cash cannot be accepted)
along with a completed account application form to the Trust at the address
listed above. Checks and money orders are accepted at full value subject to
collection. Payment by a check drawn on any member of the Federal Reserve System
can normally be converted into federal funds within two business days after
receipt of the check. Checks drawn on some non-member banks may take longer. If
a check does not clear, the purchase order will be canceled and the investor
will be liable for any losses or fees incurred by the Trust, the Transfer Agent
or FFSI.

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

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

THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Processing
Organizations"). The Transfer Agent, FFSI or their affiliates may be Processing
Organizations. Financial institutions, including Processing Organizations, may
charge their customers a fee for their services and are responsible for promptly
transmitting purchase, redemption and other requests to the Funds.

Investors who purchase shares through a Processing Organization will be subject
to the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Customers who purchase a Fund's
shares through a Processing Organization may or may not be the shareholder of
record and, subject to their institution's and the 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
Processing Organizations may also enter purchase orders with payment to follow.

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<PAGE>

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.

SUBSEQUENT PURCHASES OF SHARES

GENERAL REDEMPTION INFORMATION

Fund shares may be redeemed at their net asset value on any Fund Business Day.
There is no minimum period of investment and no restriction on the frequency of
redemptions.

Fund shares are redeemed as of the next determination of the Fund's net asset
value following acceptance by the Transfer Agent of the redemption order in
proper form (and any supporting documentation which the Transfer Agent may
require). Redeemed shares are not entitled to receive dividends after the day on
which the redemption is effective, except that Shares of the Money Market Funds
are not entitled to receive dividends on the day on with the redemption is
effective. For the Money Market Funds, redemption orders are accepted up to the
times indicated under "Purchases and Redemptions of Shares - General Purchase
Information." The Trust reserves the right to close early and to advance the
times by which the Money Market Funds must receive purchase or redemption
orders. See "Purchase and Redemption of Shares - General Purchase Information."

Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check to purchase
the shares being redeemed has been cleared by the shareholder's bank, which may
take up to 15 days. This delay may be avoided by paying for shares through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to 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.

To protect shareholders and the Funds against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (i)
endorsement on a share certificate; (ii) instruction to change a shareholder's
record name; (iii) modification of a designated bank account for wire
redemptions; (iv) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (v) dividend and distribution election; (vi)
telephone redemption; (vii) exchange option election or any other option
election in connection with the shareholder's account; (viii) written
instruction to redeem Shares whose value exceeds $50,000; (ix) redemption in an
account in which the account address has changed within the last 30 days; (x)
redemption when the proceeds are deposited in a Norwest Funds account under a
different account registration; and (xi) the remitting of redemption proceeds to
any address, person or account for which there are not established standing
instructions on the account.

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REDEMPTION PROCEDURES

Shareholders who have invested directly in a Fund may redeem their shares as
described below. Shareholders who have invested through a Processing
Organization may redeem their shares through the Processing Organization as
described under "Purchases and Redemptions of Shares - Purchase Procedures -
Through Financial Institutions." 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
Redemption 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 Redemption
Information."

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

EXCHANGES

Shareholders of I Shares and Institutional Shares and shareholders of U.S.
Government Fund and Treasury Fund may exchange their Shares for I Shares, for
Institutional and for Shares of U.S. Government Fund and Treasury Fund.
Shareholders of Investor Shares may exchange their Shares for Investor Shares of
the other Fund and A class shares of certain other funds of the Trust. The Trust
may in the future create additional classes of funds the shares of which will be
exchangeable with the Shares of the Funds. A current list of the funds of the
Trust that offer shares exchangeable with the Shares of the Funds can be
obtained through Forum by contacting the Transfer Agent.

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

Exchanges may only be made between identically registered accounts or to open a
new account. A new account application is required to open a new account through
an exchange if the new account will not have an identical registration and the
same shareholder privileges as the account from which the exchange is being
made. Shareholders may only exchange into a Fund if that Fund's shares may
legally be sold in the shareholder's state of residence.

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

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 Redemption Information."

SHAREHOLDER SERVICES

AUTOMATIC INVESTMENT PLAN

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

INDIVIDUAL RETIREMENT ACCOUNTS

Except for Municipal Money Market Fund and the Tax-Exempt Fixed Income Funds,
the Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). An IRA account application form
may be obtained by contacting the Trust at (800) 338-1348 or (612) 667-8833.
Generally, all contributions and investment earnings in an IRA will be
tax-deferred until withdrawn. 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.

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<PAGE>

AUTOMATIC WITHDRAWAL PLAN

A shareholder of a Fund, other than a shareholder of Cash Investment Fund, U.S.
Government Fund, Treasury Fund and Institutional Shares of Municipal Money
Market 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. A shareholder of Cash Investment Fund, U.S. Government Fund,
Treasury Fund or Institutional Shares of Municipal Money Market Fund whose
shares in a single account total $10,000 or more may establish a withdrawal plan
to provide for the preauthorized payment from the shareholder's account of $250
or more on a monthly, quarterly, semi-annual or annual basis. Under the
withdrawal plan, sufficient shares in the shareholder's account are redeemed to
provide the amount of the periodic payment and any taxable gain or loss is
recognized by the shareholder upon redemption of the shares. Shareholders
wishing to utilize the withdrawal plan may do so by completing an application
which may be obtained by writing or calling the Transfer Agent. The Trust may
suspend a shareholder's withdrawal plan without notice if the account contains
insufficient funds to effect a withdrawal or if the account balance is less than
the required minimum amounts at any time.

CHECKWRITING

Shareholders of the Money Market Funds wishing to establish checkwriting
privileges may do so by completing an application, which may be obtained by
writing or calling the Funds or the Transfer Agent. After the application is
properly completed and returned to a Fund, the shareholder will be supplied with
checks which may be made payable to any person in any amount of $500.00 or more.
When a check is presented for payment, the number of full and fractional shares
required to cover the amount of the check will be redeemed from the
shareholder's account by the Transfer Agent as agent for the shareholder. Any
shares for which certificates have been issued may not be redeemed by check. If
the amount of a check is greater than the value of the uncertificated shares
held in the shareholder's account, the check will not be honored. Fund shares
may not be redeemed until the check used to purchase the shares has cleared
(which may take 15 or more days). A shareholder may not liquidate the
shareholder's entire account by means of a check. Shareholders will be subject
to the rules and regulations of the Transfer Agent pertaining to the
checkwriting privilege as amended from time to time. Checkwriting procedures may
be changed, modified or terminated at any time by the Trust or the Transfer
Agent upon written notification to the shareholder.

REOPENING ACCOUNTS

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7. DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of net investment income of each Money Market Fund, each Fixed Income
Fund (other than Stable Income Fund, Diversified Bond Fund and Intermediate
Government Income Fund) and each Tax Exempt Fixed Income Fund are declared daily
and paid monthly. Dividends of Stable Income Fund's, Diversified Bond Fund's and
Intermediate Government Income Fund's net investment income are declared and
paid monthly. Dividends of Income Equity Fund's, ValuGrowth Stock Fund's, Small
Company Stock Fund's and Contrarian Stock Fund's net investment income are
declared and paid quarterly. Dividends of each other Fund's net investment
income are declared and paid at least annually. Distributions of net capital
gain, if any, realized by a Fund are distributed annually.

TAX MATTERS

Dividends paid by a Fund out of its net investment income (including net
short-term capital gain) are taxable to shareholders of the Fund as ordinary
income. Distributions of net long-term capital gain by a Fund are taxable to
shareholders of the Fund as long-term capital gain regardless of the length of
time the shareholder may have held Shares in the Fund at the time of
distribution. If a shareholder holds Shares for six months or less and during
that period receives a long-term capital gain distribution, 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.

Dividends (other than those of Funds that declare dividends daily) and
distributions reduce the net asset value of the Fund paying the dividend or
distribution by the amount of the dividend or distribution. Furthermore, these
dividends or a distribution made shortly after the purchase of Shares by a
shareholder, although in effect a return of capital to that particular
shareholder, will be taxable to the shareholder as described above.

It is expected that a portion of the dividends of each Equity Fund, except
International Fund, and each Balanced Fund will qualify for the dividends
received deduction for corporations. The amount of such

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dividends eligible for the dividends received deduction is limited to the amount
of dividends from domestic corporations received during a Fund's fiscal year. To
the extent International Fund invests in the securities of domestic issuers, the
dividends of the Fund may qualify for the dividends received deduction for
corporations.

CORE PORTFOLIOS

Each Core Portfolio is not required to pay federal income taxes on its net
investment income and capital gain, as it is treated as partnerships for federal
income tax purposes. All interest, dividends and gains and losses of a Core
Portfolio are deemed to have been "passed through" to the Funds investing in the
Core Portfolio in proportion to the Funds' holdings of the Core Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio or losses have been realized by the Core Portfolio.

FUNDS INVESTING IN FOREIGN SECURITIES

Investment income received by a Fund from sources within foreign countries may
be subject to foreign income or other taxes. International Fund intends to
elect, if eligible to do so, to permit its shareholders to take a credit (or a
deduction) for foreign income and other taxes paid by International Portfolio.
Shareholders of that Fund will be notified of their share of those foreign taxes
and will be required to treat the amount of such foreign taxes as additional
income. In that event, the shareholder may be entitled to claim a credit or
deduction for those taxes.

TAX EXEMPT DISTRIBUTIONS

Dividends paid by Municipal Money Market Fund or by a Tax-Exempt Fixed Income
Fund out of tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Persons who are substantial users or related persons
thereof of facilities financed by private activity securities held by a Fund,
however, may be subject to federal income tax on their pro rata share of the
interest income from those securities and should consult their tax advisers
before purchasing Shares. Interest on certain private activity securities issued
after August 7, 1986 is treated as an item of tax preference for purposes of the
AMT imposed on individuals and corporations. In addition, exempt-interest
dividends are included in the "adjusted current earnings" of corporations for
AMT purposes.

Shortly after the close of each calendar year, a statement is sent to each
shareholder of Municipal Money Market Fund and Tax-Exempt Fixed Income Fund
advising the shareholder of the portion of the Fund's dividends that is derived
from obligations of issuers in the various states and the portion of the Fund's
dividends that is exempt from federal income taxes. These portions are
determined for a Fund's entire year and, thus, are annual averages, rather than
day-by-day determinations for each shareholder.

MUNICIPAL MONEY MARKET FUND, LIMITED TAX-FREE FUND AND TAX-FREE INCOME FUND. The
exemption for federal income tax purposes of dividends derived from interest on
municipal securities does not necessarily result in an exemption under the
income or other tax laws of any state or local taxing authority. Shareholders of
a Fund may be exempt from state and local taxes on distributions of tax-exempt
interest income derived from obligations of the state and/or municipalities of
the state in which they reside but may be subject to tax on income derived from
the municipal securities of other jurisdictions. Shareholders are advised to
consult with their tax advisers concerning the application of state and local
taxes to investments in a Fund which may differ from the federal income tax
consequences described above.

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Under Minnesota law, if the difference in state income tax treatment between
Minnesota municipal securities and the municipal securities of issuers in other
states should be judicially determined to discriminate against interstate
commerce, the Minnesota legislature has expressed its intention that the
discrimination be remedied by adding interest on Minnesota municipal securities
to the taxable income of Minnesota residents. Such treatment would begin with
the taxable years that begin during the calendar year in which the court's
decision is final. If the interest on Minnesota municipal securities is
determined in general to be taxable income for Minnesota income tax, the Fund
will consider what actions are to be taken, in light of its current investment
objectives and investment policies.

The Minnesota alternative minimum tax on resident individuals is based in part
on their federal alternative minimum taxable income. Accordingly, individual
shareholders of the Fund may be subject to the Minnesota alternative minimum tax
on exempt-interest dividends paid by the Fund which are attributable to interest
received by the Fund on certain private activity securities issued after August
7, 1986, even though those dividends are exempt from the regular Minnesota
personal income tax.

MISCELLANEOUS

8. OTHER INFORMATION

BANKING LAW MATTERS

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Forum believes that Norwest and any bank or other bank affiliate also may
perform Processing Organization or similar services for the Trust and its
shareholders without violating applicable federal banking rules. If a bank or
bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the 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 net asset value per share of each class of each Fund, except the Money
Market Funds, is determined 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. The net asset value per share
of each class of Cash Investment Fund, U.S. Government Fund, Treasury Fund and
Municipal Money Market Fund is determined as of 3:00 p.m., 2:00 p.m., 1:00 p.m.
and 12:00 p.m. Eastern Time, respectively, in the same manner as indicated
above. Securities owned by a Fund or Portfolio (other than a Money Market Fund
or Portfolio in which a Money Market Fund invests) 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 Board or pursuant to
procedures approved by the Board or the Core Board, as applicable. The Funds do
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.

In order to maintain a stable net asset value per share of $1.00, the portfolio
securities of each Money Market Fund and Core Portfolio in which a Money Market
Fund invests are valued at their amortized cost. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If the market value of a
Fund's portfolio deviates more than 1/2 of 1% from the value determined on the
basis of amortized cost, the Board will consider whether any action should be
initiated to prevent any material effect on shareholders.

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

PERFORMANCE INFORMATION

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period. With respect to each of the other Funds, to calculate standardized
yield, a Fund takes the 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. Municipal Money
Market Fund and the Tax-Exempt Fixed Income Funds may also quote tax-equivalent
yields, which show the taxable yields a shareholder would have to earn to equal
the Fund's tax-free yield, after taxes. A tax equivalent yield is calculated by
dividing the Fund's tax-free yield by one minus a stated federal, state or
combined federal and state tax rate.

A Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and distributions are
reinvested. A cumulative total return reflects a Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same cumulative total
return if the Fund's performance had been constant over the entire period.
Because average annual returns tend to smooth out variations in the Fund's
returns, shareholders should recognize that they are not the same as actual
year-by-year results. Published yield quotations are, and total return figures
may be, based on amounts invested in a Fund net of sales charges that may be
paid by an investor. A computation of yield or total return that does not take
into account sales charges paid by an investor will be higher than a similar
computation that takes into account payment of sales charges.

THE TRUST AND ITS SHARES

OTHER CLASSES OF SHARES

Cash Investment Fund, U.S. Government Fund and Treasury Fund currently issue one
class of shares. Ready Cash Investment Fund currently issues two classes of
shares - Investor Shares and Exchange Shares. Municipal Money Market Fund
currently issues two classes of shares - Institutional Shares and Investor
Shares. The other Funds issue three classes of shares, I Shares, A Shares and B
Shares. A Shares and B Shares are offered to retail investors. A Shares charge a
front-end sales charge and B Shares (and Exchange Shares) charge a contingent
deferred sales charge. Each class of a Fund will have a different expense ratio
and may have different sales charges (including distribution fees). Each class'
performance is affected by its expenses and sales charges. For more information
on any other class of shares of the Funds investors may contact the Transfer
Agent at (612) 667-8833 or (800) 338-1348 or the Funds' distributor. Investors
may also contact their Norwest sales representative to obtain information on the
other classes.

SHAREHOLDER VOTING AND OTHER RIGHTS

Each share of each series 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

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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
distribution 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 series or
class, except if the matter affects only one series or class or voting by series
or class is required by law, in which case shares will be voted separately by
series 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 series is entitled to the shareholder's pro
rata share of all dividends and distributions arising from that series' assets
and, upon redeeming shares, will receive the portion of the series' net assets
represented by the redeemed shares.

Each Core Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in a Core Portfolio will be entitled to
vote in proportion to its relative beneficial interest in the respective Core
Portfolio. When required by the 1940 Act and other applicable law, a Fund will
solicit proxies from its shareholders and will vote its interest in a Core
Portfolio in proportion to the votes cast by its shareholders.

As of May 1, 1997, Dentru & Co., a nominee of Norwest Bank Colorado, N.A.
through which some of that Bank's customers own shares of the Funds: (i) may be
deemed to have controlled Colorado Tax-Free Fund; (ii) owned of record more than
25% of the outstanding I Shares of Colorado Tax-Free Fund; and (iii) owned of
record more than 25% of the outstanding I Shares of Contrarian Stock Fund. As of
the same date, Norwest Limited Term Tax-Exempt Bond Fund and Norwest Tax-Exempt
Bond Fund, each a Norwest Bank-sponsored collective trust fund that comprises
assets of customers of Norwest Bank, may be deemed to have controlled Limited
Term Tax-Free Fund and Tax-Free Income Fund, respectively. As of the same date
Seret & Co., a nominee of Norwest Bank Colorado, N.A. through which some of that
Bank's customers own shares of the Funds: (i) may be deemed to have controlled
Total Return Bond Fund; and (ii) owned of record more than 25% of the
outstanding I Shares of Contrarian Stock Fund. From time to time, these
shareholders or other shareholders may own a large percentage of the Shares of a
Fund and, accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.

CORE AND GATEWAY STRUCTURE

Stable Income Fund, Total Return Bond Fund, Index Fund, Income Equity Fund,
Large Company Growth Fund, Small Company Stock Fund, Small Company Growth Fund,
Small Cap Opportunities Fund and International Fund each seek to achieve its
investment objective by investing all of its investable assets in its
corresponding Core Portfolio, that has the same investment objective and
substantially identical investment policies as the Fund. Cash Investment Fund,
Diversified Bond Fund, Conservative Balanced Fund, Moderate Balanced Fund,
Growth Balanced Fund, Diversified Equity Fund and Growth Equity Fund each seek
to achieve its investment objective by investing all or a part of its assets in
two or more Core Portfolios. Accordingly, each Core Portfolio directly acquires
portfolio securities and a Fund investing in the Core Portfolio acquires an
indirect interest in those securities. Schroder U.S. Smaller Companies Portfolio
is a separate series of Schroder Capital Funds, a business trust organized under
the laws of the State of Delaware in 1995. Each other Core Portfolio is a
separate series of Core Trust (Delaware), a business trust organized under the
laws of the State of Delaware in 1994. Each Core Trust is registered under the
1940 Act as an open-end, management, investment company. The assets of each Core
Portfolio belong only to, and the liabilities of each Core Portfolio are borne
solely by, that Core Portfolio and no other portfolio of a Core Trust.

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THE CORE PORTFOLIOS. A Fund's investment in a Core Portfolio is in the form of a
non-transferable beneficial interest. All investors in a Core Portfolio will
invest on the same terms and conditions and will pay a proportionate share of
the Core Portfolio's expenses. As of June 1, 1997, two or more funds of the
Trust invested in each Core Portfolio (except Schroder U.S. Smaller Companies
Portfolio). As of that date, one other mutual fund invested in Schroder U.S.
Smaller Companies Portfolio.

CERTAIN RISKS OF INVESTING IN CORE PORTFOLIOS. A Funds' investment in a Core
Portfolio may be affected by the actions of other large investors in that Core
Portfolio. For example, if International Portfolio had a large investor other
than International Fund that redeemed its interest International Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses, thereby producing lower returns. As there may be
other investors in a Core Portfolio, there can be no assurance that any issue
that receives a majority of the votes cast by a Fund's shareholders will receive
a majority of votes cast by all investors in a Core Portfolio; indeed, other
investors hold a majority interest in a Core Portfolio, could have voting
control of the Core Portfolio.

Each Fund may withdraw its entire investment from a Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were other
investors in a Core Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective or policies of
the Core 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 Core 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 would incur brokerage fees or other transaction costs. If
the Fund withdrew its investment from a Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets
directly by the Advisers or the investment of the Fund's assets in another
pooled investment entity. The inability of the Fund to find a suitable
replacement investment, in the event the Board decided not to permit the
Advisers to manage the Fund's assets directly could have a significant impact on
shareholders of the Fund.

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APPENDIX A
INVESTMENTS, INVESTMENT STRATEGIES AND RISK CONSIDERATIONS

COMMON STOCKS, WARRANTS AND PREFERRED STOCK

COMMON STOCKS AND WARRANTS - BALANCED FUNDS, EQUITY FUNDS. PREFERRED STOCK -
BALANCED FUNDS, EQUITY FUNDS, TOTAL RETURN BOND FUND. 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 a Fund
may be traded on a securities exchange or in the over-the-counter market and may
not be traded every day or in the volume typical of securities traded on a major
national securities exchange. As a result, disposition by a Fund of a portfolio
security to meet redemptions by shareholders or otherwise may require the Fund
to sell these securities at a discount from market prices, to sell during
periods when disposition is not desirable, or to make many small sales over an
extended period of time. The market value of all securities, including equity
securities, is based upon the market's perception of value and not necessarily
the book value of an issuer or other objective measure of a company's worth. A
Fund may invest in warrants, which are options to purchase an equity security at
a specified price (usually representing a premium over the applicable market
value of the underlying equity security at the time of the warrant's issuance)
and usually during a specified period of time. Unlike convertible securities and
preferred stocks, warrants do not pay a fixed dividend. Investments in warrants
involve certain risks, including the possible lack of a liquid market for the
resale of the warrants, potential price fluctuations as a result of speculation
or other factors and failure of the price of the underlying security to reach a
level at which the warrant can be prudently exercised (in which case the warrant
may expire without being exercised, resulting in the loss of the Fund's entire
investment therein).

CONVERTIBLE SECURITIES

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

A Fund may invest in equity-linked securities, including Preferred Equity
Redemption Cumulative Stock ("PERCS"), Equity-Linked Securities ("ELKS"), and
Liquid Yield Option Notes ("LYONS"). Equity-Linked Securities are securities
that are convertible into or based upon the value of, equity securities upon
certain

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terms and conditions. The amount received by an investor at maturity of these
securities is not fixed but is based on the price of the underlying common
stock, which may rise or fall. In addition, it is not possible to predict how
equity-linked securities will trade in the secondary market or whether the
market for them will be liquid or illiquid.

ADRS AND EDRS

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

U.S. GOVERNMENT SECURITIES

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

ZERO-COUPON SECURITIES

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

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investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when an investment adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.

CORPORATE DEBT SECURITIES AND COMMERCIAL PAPER

CORPORATE DEBT SECURITIES - CASH INVESTMENT FUND, READY CASH INVESTMENT FUND,
FIXED INCOME FUNDS, BALANCED FUNDS, SMALL COMPANY STOCK FUND, CONTRARIAN STOCK
FUND. COMMERCIAL PAPER - ALL FUNDS. The corporate debt securities in which the
Funds may invest include corporate bonds and notes and short-term investments
such as commercial paper and variable rate demand notes. Commercial paper
(short-term promissory notes) is issued by companies to finance their or their
affiliate's current obligations and is frequently unsecured. Variable and
floating rate demand notes are unsecured obligations redeemable upon not more
than 30 days' notice. These obligations include master demand notes that permit
investment of fluctuating amounts at varying rates of interest pursuant to a
direct arrangement with the issuer of the instrument. The issuer of these
obligations often has the right, after a given period, to prepay the outstanding
principal amount of the obligations upon a specified number of days' notice.
These obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent a demand note
does not have a 7 day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.

FINANCIAL INSTITUTION OBLIGATIONS

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

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

PARTICIPATION INTERESTS

CASH INVESTMENT FUND, READY CASH INVESTMENT FUND, DIVERSIFIED BOND FUND,
BALANCED FUNDS. A Fund may purchase participation interests in loans or
securities in which the Fund may invest directly that are owned by banks or
other financial institutions. A participation interest gives the Fund an
undivided interest in a loan or security in the proportion that the Fund's
interest bears to the total principal amount of the security. Participation
interests, which may have fixed, floating or variable rates, may carry a demand
feature backed by a letter of credit or guarantee of the bank or institution
permitting the holder to tender them back to the bank or other institution. For
certain participation interests the Fund will have the right to demand payment,
on not more than 7 days notice, for all or a part of the Fund's participation
interest. A Fund will

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only purchase participation interests from banks or other financial institutions
that Norwest deems to be creditworthy. A Fund will not invest more than 10
percent of its total assets in participation interests in which the Fund does
not have demand rights.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES

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

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

BORROWING

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

PURCHASING SECURITIES ON MARGIN

INTERMEDIATE GOVERNMENT INCOME FUND. When the Fund purchases securities on
margin, it only pays part of the purchase price and borrows the remainder. As a
borrowing, a Fund's purchase of securities on margin is

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subject to the limitations and risks described in Borrowing above. In addition,
if the value of the securities purchased on margin decreases such that the
Fund's borrowing with respect to the security exceeds the maximum permissible
borrowing amount, the Fund will be required to make margin payments (additional
payments to the broker to maintain the level of borrowing at permissible
levels). A Fund's obligation to satisfy margin calls may require the Fund to
sell securities at an inappropriate time.

TECHNIQUES INVOLVING LEVERAGE

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

SEGREGATED ACCOUNT. In order to limit the risks involved in various transactions
involving leverage, the Trust's custodian will set aside and maintain in a
segregated account cash and securities in accordance with SEC guidelines. The
account's value, which is marked to market daily, will be at least equal to the
Fund's commitments under these transactions. The Fund's commitments may include:
(i) the Fund's obligations to repurchase securities under a reverse repurchase
agreement, settle when-issued and forward commitment transactions and make
payments under a cap or floor (see "Appendix A - Swap Agreements"); and (ii) the
greater of the market value of securities sold short or the value of the
securities at the time of the short sale (reduced by any margin deposit). The
net amount of the excess, if any, of a Fund's obligations over its entitlements
with respect to each interest rate swap will be calculated on a daily basis and
an amount at least equal to the accrued excess will be maintained in the
segregated account. If the Fund enters into an interest

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rate swap on other than a net basis, the Fund will maintain the full amount
accrued on a daily basis of the Fund's obligations with respect to the swap in
their segregated account. The use of a segregated account in connection with
leveraged transactions may result in a Fund's portfolio being 100 percent
leveraged.

REPURCHASE AGREEMENTS, SECURITIES LENDING, REVERSE REPURCHASE AGREEMENTS,
WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DOLLAR ROLL TRANSACTIONS

A Fund's use of repurchase agreements, securities lending, reverse repurchase
agreements and forward commitments (including "dollar roll" transactions)
entails certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty while these transactions remained open or a counterparty
defaulted on its obligations, the Fund might suffer a loss. Failure by the other
party to deliver a security purchased by the Fund may result in a missed
opportunity to make an alternative investment. The Advisers monitor the
creditworthiness of counterparties to these transactions and intend to enter
into these transactions only when they believe the counterparties present
minimal credit risks and the income to be earned from the transaction justifies
the attendant risks. Counterparty insolvency risk with respect to repurchase
agreements is reduced by favorable insolvency laws that allow the Fund, among
other things, to liquidate the collateral held in the event of the bankruptcy of
the counterparty. Those laws do not apply to securities lending and,
accordingly, securities lending involves more risk than does the use of
repurchase agreements. As a result of entering forward commitments and reverse
repurchase agreements, as well as lending its securities, a Fund may be exposed
to greater potential fluctuations in the value of its assets and net asset value
per share. See "Appendix A - Techniques Involving Leverage."

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

SECURITIES LENDING - ALL FUNDS. A Fund may lend securities from its portfolios
to brokers, dealers and other financial institutions. Securities loans must be
continuously secured by cash or U.S. Government Securities with a market value,
determined daily, at least equal to the value of the Fund's securities loaned,
including accrued interest. A Fund receives interest in respect of securities
loans from the borrower or from investing cash collateral. A Fund may pay fees
to arrange the loans. Schroder U.S. Smaller Companies Portfolio will not lend
portfolio securities in excess of 25% of the value of the Portfolio's total
assets. No other Fund will lend portfolio securities in excess of 33 1/3 percent
of the value of the Fund's total assets.

REVERSE REPURCHASE AGREEMENTS - ALL FUNDS. A Fund may enter into reverse
repurchase agreements, transactions in which the Fund sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no agreed upon repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate. Because
certain of the incidents of ownership of the security are retained by the Fund,
reverse repurchase agreements may be viewed as a form of borrowing by the Fund
from the buyer, collateralized by the security sold by the Fund. A Fund will use
the proceeds of reverse repurchase agreements to fund redemptions or to make
investments. In most cases these investments either mature or have a demand
feature to resell to the issuer on a date not later than

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the expiration of the agreement. Interest costs on the money received in a
reverse repurchase agreement may exceed the return received on the investments
made by the Fund with those monies. Any significant commitment of a Fund's
assets to the reverse repurchase agreements will tend to increase the volatility
of the Fund's net asset value per share.

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

The use of when-issued transactions and forward commitments enables a Fund to
hedge against anticipated changes in interest rates and prices. If Norwest or
Schroder were to forecast incorrectly the direction of interest rate movements,
however, a Fund might be required to complete these transactions when the value
of the security is lower than the price paid by the Fund. Except for dollar-roll
transactions, a Fund will not purchase securities on a when-issued or forward
commitment basis if, as a result, more than 15 percent (35 percent in the case
of Total Return Bond Fund) of the value of the Fund's total assets would be
committed to such transactions.

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

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

SWAP AGREEMENTS

STABLE INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, DIVERSIFIED BOND FUND,
BALANCED FUNDS. To manage its exposure to different types of investments, a Fund
may enter into interest rate, currency and mortgage (or other asset) swap
agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate swap agreement, one party agrees to make
regular payments equal to a floating interest rate on a specified amount (the
"notional principal amount") in return for payments equal

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to a fixed interest rate on the same amount for a specified period. If a swap
agreement provides for payment in different currencies, the parties may also
agree to exchange the notional principal amount. Mortgage swap agreements are
similar to interest rate swap agreements, except that the notional principal
amount is tied to a reference pool of mortgages. In a cap or floor, one party
agrees, usually in return for a fee, to make payments under particular
circumstances. For example, the purchaser of an interest rate cap has the right
to receive payments to the extent a specified interest rate exceeds an agreed
upon level; the purchaser of an interest rate floor has the right to receive
payments to the extent a specified interest rate falls below an agreed upon
level. A collar entitles the purchaser to receive payments to the extent a
specified interest rate falls outside an agreed upon range.

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

MUNICIPAL SECURITIES

MUNICIPAL MONEY MARKET FUND, TAX-EXEMPT FIXED INCOME FUNDS. The municipal
securities in which the Funds may invest include municipal bonds, notes and
leases. Municipal securities may be zero-coupon securities. Yields on municipal
securities are dependent on a variety of factors, including the general
conditions of the municipal security markets and the fixed income markets in
general, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The achievement of a Fund's investment objective is
dependent in part on the continuing ability of the issuers of municipal
securities in which the Fund invests to meet their obligations for the payment
of principal and interest when due.

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PARTICIPATION INTERESTS. The Funds may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution. Prior to purchasing any
participation interest, the Funds will obtain appropriate assurances that the
interest earned by the Funds from the obligations in which it holds
participation interests is exempt from federal and, in the case of Colorado
Tax-Free Fund and Minnesota Tax-Free Fund, applicable state income tax.

STAND-BY COMMITMENTS. The Funds may purchase municipal securities together with
the right to resell them to the seller or a third party at an agreed-upon price
or yield within specified periods prior to their maturity dates. Such a right to
resell is commonly known as a stand-by commitment, and the aggregate price which
a Fund pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit a Fund to be as fully invested as practicable in municipal securities
while preserving the necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, a Fund acquires stand-by commitments solely to
facilitate portfolio liquidity and does not exercise its rights thereunder for
trading purposes. Stand-by commitments involve certain expenses and risks,
including the inability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, non-marketability of the
commitment, and differences between the maturity of the underlying security and
the maturity of the commitment. The Fund's policy is to enter into stand-by
commitment transactions only with municipal securities dealers which, in the
view of Norwest, present minimal credit risks.

SHORT SALES

INTERMEDIATE GOVERNMENT INCOME FUND. The Fund is authorized to make short sales
of securities it owns or has the right to acquire at no added cost through
conversion or exchange of other securities it owns (referred to as short sales
"against the box") and to make short sales of securities which it does not own
or have the right to acquire. A short sale that is not made "against the box" is
a transaction in which a Fund sells a security it does not own in anticipation
of a decline in the market price for the security. When the Fund

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

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

MORTGAGE-BACKED SECURITIES

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

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mortgages, graduated payment mortgages and other types of mortgages. Mortgage
servicers impose qualification standards for local lending institutions which
originate mortgages for the pools as well as credit standards and underwriting
criteria for individual mortgages included in the pools. In addition, many
mortgages included in pools are insured through private mortgage insurance
companies.

LIQUIDITY AND MARKETABILITY. The market for mortgage-backed securities has
expanded considerably in recent years. The size of the primary issuance market
and active participation in the secondary market by securities dealers and many
types of investors make government and government-related pass-through pools
highly liquid. The recently introduced private conventional pools of mortgages
(pooled by commercial banks, savings and loan institutions and others, with no
relationship with government and government-related entities) have also achieved
broad market acceptance and consequently an active secondary market has emerged.
However, the market for conventional pools is smaller and less liquid than the
market for government and government-related mortgage pools.

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

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

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

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

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

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

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

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

COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized Mortgage Obligations
("CMOs") are debt obligations that are collateralized by mortgages or mortgage
pass-through securities issued by GNMA, FHLMC or FNMA or by pools of
conventional mortgages ("Mortgage Assets"). CMOs may be privately issued or U.S.
Government Securities. Payments of principal and interest on the Mortgage Assets
are passed through to the holders of the CMOs on the same schedule as they are
received, although, certain classes (often referred to as tranches) of CMOs have
priority over other classes with respect to the receipt of payments. Multi-class
mortgage pass-through securities are interests in trusts that hold Mortgage
Assets and that have multiple classes similar to those of CMOs. Unless the
context indicates otherwise, references to CMOs include multi-class mortgage
pass-through securities. Payments of principal of and interest on the underlying
Mortgage Assets (and in the case of CMOs, any reinvestment income thereon)
provide funds to pay debt service on the CMOs or to make scheduled distributions
on the multi-class mortgage pass-through securities. Parallel pay CMOs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating the
stated maturity date or final distribution date of each class, which, as with
other CMO structures, must be retired by its stated maturity date or final
distribution date but may be retired earlier. Planned amortization class
mortgage-based securities ("PAC Bonds") are a form of parallel pay CMO. PAC
Bonds are designed to provide relatively predictable

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payments of principal provided that, among other things, the actual prepayment
experience on the underlying mortgage loans falls within a contemplated range.
If the actual prepayment experience on the underlying mortgage loans is at a
rate faster or slower than the contemplated range, or if deviations from other
assumptions occur, principal payments on a PAC Bond may be greater or smaller
than predicted. The magnitude of the contemplated range varies from one PAC Bond
to another; a narrower range increases the risk that prepayments will be greater
or smaller than contemplated. CMOs may have complicated structures and generally
involve more risks than simpler forms of mortgage-backed securities.

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

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

ASSET-BACKED SECURITIES

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

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

FOREIGN EXCHANGE CONTRACTS AND FOREIGN CURRENCY FORWARD CONTRACTS

DIVERSIFIED BOND FUND, BALANCED FUNDS, DIVERSIFIED EQUITY FUND, GROWTH EQUITY
FUND, LARGE COMPANY GROWTH FUND, SMALL COMPANY GROWTH FUND, INTERNATIONAL FUND.
Changes in foreign currency exchange

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

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

FUTURES CONTRACTS AND OPTIONS

STABLE INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, DIVERSIFIED BOND FUND,
BALANCED FUNDS, INDEX FUND, SMALL CAP OPPORTUNITIES FUND. A Fund may seek to
enhance its return through the writing (selling) and purchasing of
exchange-traded and over-the-counter options on fixed income securities or
indices. A Fund may also to attempt to hedge against a decline in the value of
securities owned by it or an increase in the price of securities which it plans
to purchase through the use of those options and the purchase and sale of
interest rate futures contracts and options on those futures contracts. These
instruments are often referred to as "derivatives," which may be defined as
financial instruments whose performance is derived, at least in part, from the
performance of another asset (such as a security, currency or an index of
securities. A Fund may only write options that are covered. An option is covered
if, so long as the Fund is obligated under the option, it owns an offsetting
position in the underlying security or futures contract or maintains cash, U.S.
Government Securities or other liquid debt securities in a segregated account
with a value at all times sufficient to cover the Fund's obligation under the
option. Certain futures strategies employed by a Balanced Fund in making
temporary allocations may not be deemed to be for bona fide hedging purposes, as
defined by the Commodity Futures Trading Commission. A Fund may enter into these
futures contracts only if the aggregate of initial margin deposits for open
futures contract positions does not exceed 5 percent of the Fund's total assets.

RISK CONSIDERATIONS. The Fund's use of options and futures contracts subjects
the Fund to certain investment risks and transaction costs to which it might not
otherwise be subject. These risks include: (i) dependence on Norwest's ability
to predict movements in the prices of individual securities and

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fluctuations in the general securities markets; (ii) imperfect correlations
between movements in the prices of options or futures contracts and movements in
the price of the securities hedged or used for cover which may cause a given
hedge not to achieve its objective; (iii) the fact that the skills and
techniques needed to trade these instruments are different from those needed to
select the other securities in which the Fund invests; (iv) lack of assurance
that a liquid secondary market will exist for any particular instrument at any
particular time, which, among other things, may hinder a Fund's ability to limit
exposures by closing its positions; (v) the possible need to defer closing out
of certain options, futures contracts and related options to avoid adverse tax
consequences; and (vi) the potential for unlimited loss when investing in
futures contracts or writing options for which an offsetting position is not
held.

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

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

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

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

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

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[LOGO]

Shareholder Services
Minneapolis/St. Paul 612-667-8833
Elsewhere 800-338-1348

Norwest Bank Minnesota, N.A.
Investment Adviser
Transfer Agent
Custodian

Forum Financial Services, Inc.
Manager and Distributor

- -C-1997 NORWEST ADVANTAGE FUNDS
MHPA 069 (6/97)
<PAGE>

READY CASH INVESTMENT FUND
EXCHANGE SHARES

Prospectus

June 1, 1997

Not FDIC Insured

This Prospectus offers Exchange Shares of Ready Cash Investment Fund (the
"Fund"), a separate diversified money market portfolio of Norwest Funds (the
"Trust"), which is a registered, open-end, management investment company.

The Fund seeks to achieve its investment objective by investing all of its
investable assets in a separate portfolio of another registered, open-end,
management investment company with the same investment objective. See
"Prospectus Summary" and "Other Information - Core and Gateway-Registered
Trademark- Structure."

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") dated June 1, 1997, as may be amended from time
to time, which is available for reference on the SEC's Web Site
(http.://www.sec.gov) and 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) 879-0001. Investors should read this Prospectus
and retain it for future reference.

TABLE OF CONTENTS

1. Prospectus Summary . . . . . . 2 6. Purchases of Shares . . . . .18
2. Financial Highlights . . . . . 5 7. Redemptions of Shares . . . .21
3. Investment Objective 8. Exchanges . . . . . . . . . .23
and Policies . . . . . . . . . 6 9. Dividends and Tax Matters . .24
4. Management . . . . . . . . . .13 10. Other Information . . . . . .25
5. Characteristics of the Shares.16

NORWEST FUNDS IS A FAMILY OF 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. THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

<PAGE>

UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

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 Fund seeks to provide high current income
to the extent consistent with the preservation of capital and the maintenance of
liquidity. This objective is pursued by investing in a broad spectrum of high
quality money market instruments of United States and foreign issuers.

The Fund seeks to achieve its investment objective by investing all of its
investable assets in Prime Money Market Portfolio (a "Core Portfolio"), a
separate portfolio of Core Trust (Delaware) ("Core Trust"), a registered,
open-end, management investment company, that has the same investment objective
and substantially similar investment policies. Accordingly, the Fund's
investment experience will correspond directly with the investment experience of
Prime Money Market Portfolio. See "Other Information - Core and Gateway
Structure."

INVESTMENT ADVISER

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is the Fund's investment adviser. The Adviser
also is the investment adviser of the Core Portfolio. The Adviser provides
investment advice to various institutions, pension plans and other accounts and,
as of June 1, 1997, managed over $42.6 billion in assets. See "Management -
Investment Advisory Services." Norwest serves as transfer agent, dividend
disbursing agent and custodian of the Trust, and serves as the custodian of the
Core Portfolio. See "Management - Shareholder Servicing and Custody." The Fund
incurs investment advisory fees indirectly through the investment advisory fees
paid by Prime Money Market Portfolio.

FUND MANAGEMENT AND ADMINISTRATION

SHARES OF THE FUND. This prospectus offers exchange class shares ("Exchange
Shares") of the Fund. The Fund offers two other separate classes of shares:
investor class shares ("Investor Shares") and institutional class shares
("Institutional Shares"). Investor and Institutional Shares are offered by
separate prospectuses. 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."

PURCHASES OF SHARES. The minimum initial investment in Exchange Shares is
$1,000. The minimum subsequent investment is $100. Exchange Shares may be
purchased only through an exchange privilege available to shareholders of B
class shares of certain funds of the Trust ("B Shares") and are offered at a
price equal to their net asset value on each business day of the Fund solely to
those shareholders in

2
<PAGE>

exchange for B Shares held by the shareholders. Exchange Shares are subject to a
contingent deferred sales charge imposed on most redemptions made within a
certain number of years of the purchase of the B Shares that were first
purchased by the shareholder and then exchanged, either directly or indirectly
through a series of exchanges, for the Exchange Shares (the "original B
Shares"). Exchange Shares pay a distribution services fee at an annual rate not
to exceed 0.75%, and a maintenance fee in an amount equal to 0.25%, of the
Exchange Shares' average daily net assets. Exchange Shares automatically convert
to Investor Shares of the Fund a certain number of years after the end of the
calendar month in which the original B Shares were purchased. See
"Characteristics of the Shares."

REDEMPTIONS. Exchange Shares may be redeemed at their net asset value on each
business day of the Fund but are subject to any applicable contingent deferred
sales charge. See "Redemptions of Shares."

EXCHANGES. Shareholders may exchange Exchange Shares for B Shares of certain
other funds of the Trust. See "Exchanges."

DIVIDENDS. Dividends of the Fund's net investment income are declared daily and
paid monthly. The Fund's net capital gain, if any, is distributed annually. All
dividends and distributions are reinvested in additional shares of the Fund
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 or Core Portfolio will achieve its investment objective or
maintain a stable net asset value. An investment in the Fund involves certain
risks, depending on the types of investments made and the types of investment
techniques employed. All investments made by the Fund entail some risk. Certain
investments and investment techniques, however, entail additional risks, such as
investments in foreign issuers. See "Investment Objective and Policies -
Investment Policies - Foreign Instruments." The amount of income earned by the
Fund will tend to vary with changes in prevailing interest rates. For more
details about the Fund, its investments and their risks, see "Investment
Objective and Policies."

By pooling its assets in the Core Portfolio with other institutional investors,
the Fund may be able to achieve certain efficiencies and economies of scale that
it could not achieve by investing directly in securities. Nonetheless, these
investments could have adverse effects on the Fund which investors should
consider. See "Other Information - Core and Gateway Structure -- Certain Risks
of Investing in Core Portfolios."

EXPENSE INFORMATION

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

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

SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of offering price) Zero
Maximum deferred sales charge
(as a percentage of the lesser of original
purchase price or redemption proceeds) 4.0%(1)
Exchange Fee Zero

3
<PAGE>

ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets after applicable fee
waivers and expense reimbursements)

Ready Cash
Investment
Fund
Exchange
Shares
--------------

Investment Advisory Fees None
Rule 12b-1 Fees (after fee waivers (3) 0.75%
Other Expenses (after reimbursements)(3) 0.46%
Investment Advisory Fees - Core Portfolio 0.34%
Other Expenses-Core Portfolio (after reimbursements)(3)(5) 0.02%
Total Operating Expenses (after reimbursements)(4)(5) 1.57%

(1) ____The maximum 4.0% contingent deferred sales charge imposed on Exchange
Shares applies to redemptions of Exchange Shares that were purchased in exchange
of original B Shares of certain funds of the Trust. The maximum contingent
deferred sales charge imposed on B Shares of other funds of the Trust is 4.0%.
The charge declines from its maximum after the first year following the purchase
of the original B Shares and declines continuously thereafter, reaching zero
after a certain number of years. The amount of the contingent deferred sales
charge applicable to any Exchange Share will depend upon the deferred sales
charge schedule applicable to the original B Shares which is contained in the
applicable fund's prospectus. See "Characteristics of the Shares."

(2) ____For a further description of the various expenses associated with
investing in the Fund, see "Management." Expenses associated with Institutional
and Investor Shares of the Fund differ from those of Exchange Shares listed in
the table. The amounts of expenses are based on amounts incurred during the
Fund's most recent fiscal year ended May 31, 1996, restated to reflect current
fees. Except as otherwise noted, "Other Expenses" include transfer agency fees
payable to Norwest Bank of 0.25%.

(3) ____Absent fee waivers, "Rule 12b-1 Fees" would be 1.00%. Long-term
shareholders of Exchange 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.

(4) ____Norwest and Forum have agreed to waive their respective fees or
reimburse expenses in order to maintain the Fund's total combined operating
expenses through May 31, 1998 at or below 1.57%.

<PAGE>

(5) ____Absent estimated expense reimbursements and fee waivers, the expenses
of Exchange Shares would be: "Other Expenses, 3.40%; "Other Expenses -- Core
Portfolio," 0.12%; and Total Operating Expenses, 4.86%. Except as otherwise
noted, expense reimbursements and 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, the expenses listed in the "Annual Fund Operating Expenses" table, a 5%
annual return and reinvestment of all dividends and distributions. 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. The 5% annual
return is not predictive of and does not represent the Fund's projected returns;
rather, it is required by government regulation.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Ready Cash Investment Fund
Assuming redemption at
the end of the period 57 80 108 187
Assuming no redemption 16 50 86 187

2. FINANCIAL HIGHLIGHTS

The following table provides financial highlights for the Fund. This information
represents selected data for a single Exchange Share outstanding for the periods
shown. Information for the period ended November 30, 1996 is unaudited and
information for the periods ended May 31, 1994, 1995 and 1996, was audited by
KPMG Peat Marwick LLP, independent auditors. The Funds financial statements for
the period ended November 30, 1996 are contained in the Fund's Semi-Annual
Report. The Fund's financial statements for the fiscal year ended May 31, 1996,
and independent auditors' report thereon are contained in the Fund's Annual
Report. These financial statements are incorporated by reference into the SAI.
Further information about the Fund's performance is contained in the Semi-Annual
and Annual Reports, which may be obtained from the Trust without charge.

<PAGE>

Ready Cash Investment Fund
---------------------------------------------------
Exchange Shares
---------------------------------------------------
Period Year Period
Ended Ended Ended
November 30, May 31, May 31,
-------------- -------------------- -------------
1996* 1996 1995 1994(a)
-------------- -------------------- -------------
Beginning Net Asset
Value per Share $1.00 $1.00 $1.00 $1.00
Net Investment Income 0.020 0.043 0.038 0.001
Dividends from Net
Investment Income (0.020) (0.043) (0.038) (0.001)
Ending Net Asset Value
per Share $1.00 $1.00 $1.00 $1.00
Ratios to Average Net
Assets:
Expenses(b) 1.57%(c) 1.57% 1.57% 1.53%(c)
Net Investment Income 3.99%(c) 4.32% 3.62% 2.48%(c)
Total Return 4.06%(c) 4.38% 3.69% 2.51%(c)
Net Assets at End of Period
(000s omitted) $155 $129 $160 $151

* Unaudited.
(a) The Fund commenced the offering of Exchange Shares on May 9, 1994.
(b) During the periods, various fees and expenses were waived and reimbursed,
respectively. Had these waivers and reimbursements not occurred, the ratio
of expenses to average net assets would have been:
Expenses 2.77%(c) 8.24% 6.32% 1.85%(c)
(c) Annualized.

3. INVESTMENT OBJECTIVE AND POLICIES

There can be no assurance that the Fund or Core Portfolio will achieve its
investment objective or maintain a stable net asset value of $1.00 per share.

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.

INVESTMENT POLICIES

The Fund currently pursues its investment objective by investing all of its
investable assets in Prime Money Market Portfolio, which has the same investment
objective and substantially similar investment policies as the Fund. Prime
Money Market Portfolio seeks to maintain a rating from at least one NRSRO.
Accordingly, Prime Money Market Portfolio is limited in the type and amount of
permissible securities (as described below) which it may purchase. The Core
Portfolio invests in a broad spectrum of high quality money market instruments
of United States and foreign issuers. Although the following discusses the
investment policies of Prime Money Market Portfolio, it applies equally to the
Fund.

OBLIGATIONS OF FINANCIAL INSTITUTIONS. The Portfolio may invest in obligations
of financial institutions. These include negotiable certificates of deposit,
bank notes, bankers' acceptances and time

6
<PAGE>

deposits of U.S. banks (including savings banks and savings associations),
foreign branches of U.S. banks, foreign banks and their non-U.S. branches
(Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and
wholly owned banking-related subsidiaries of foreign banks. The Portfolio
limits its investments in obligations of financial institutions (including their
branches, agencies and subsidiaries) to institutions which at the time of
investment have total assets in excess of one billion dollars, or the equivalent
in other currencies. Investments in foreign bank obligations are limited to
banks, branches and subsidiaries located in countries which Norwest believes do
not present undue risk.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period. Bank
notes are a debt obligation of a bank. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a customer and are
usually backed by goods in international trade. Time deposits are
non-negotiable deposits with a banking institution that earn a specified
interest rate over a given period. Certificates of deposit and fixed time
deposits, which are payable at the stated maturity date and bear a fixed rate of
interest, generally may be withdrawn on demand by the Portfolio but may be
subject to early withdrawal penalties which could reduce the Portfolio's yield.
Unless there is a readily available market for them, deposits that are subject
to early withdrawal penalties or that mature in more than seven days are treated
as illiquid securities.

The Portfolio normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. This concentration may result in increased
exposure to risks pertaining to the banking industry. These risks include a
sustained increase in interest rates, which can adversely affect the
availability and cost of a bank's lending activities; exposure to credit losses
during times of economic decline; concentration of loan portfolios in certain
industries; regulatory developments; and competition among financial
institutions. The Portfolio may not invest more than 25% of its total assets in
any other single industry.

UNITED STATES GOVERNMENT SECURITIES. The Portfolio may invest without limit in
United States Government Securities. The U.S. Government Securities in which
the Portfolio may invest include U.S. Treasury Securities and obligations issued
or guaranteed by U.S. Government agencies and instrumentalities that are backed
by the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration or issued by the Government National Mortgage
Association. In addition, the U.S. Government Securities in which the Portfolio
may invest include securities supported primarily or solely by the
creditworthiness of the issuer, such as securities of the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation and the
Tennessee Valley Authority. There is no guarantee that the U.S. Government will
support securities not backed by its full faith and credit. Accordingly,
although these securities have historically involved little risk of loss of
principal if held to maturity, they may involve more risk than securities backed
by the U.S. Government's full faith and credit.

<PAGE>

U.S. GOVERNMENT AND OTHER RELATED ZERO-COUPON SECURITIES. The Portfolio may
invest without limit in U.S. Government and Other Related Zero-Coupon
Securities. The Portfolio may invest in separately traded principal and
interest components of securities issued or guaranteed by the U.S. Treasury
under the Treasury's Separate Trading of Registered Interest and Principal of
Securities ("STRIPS") program. In addition, the Portfolio may invest in other
types of related zero-coupon securities. For instance, a number of banks and
brokerage firms separate the principal and interest portions of U.S. Treasury
securities and sell them separately in the form of receipts or certificates
representing undivided interests in these instruments. These instruments are
generally held by a bank in a custodial or trust account on behalf of the owners
of the securities and are known by various names, including Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs") and Certificates of
Accrual on Treasury Securities ("CATS"). The Portfolio will not invest more
than 35% of its total assets in zero-coupon securities other than those issued
through the STRIPS program.

FOREIGN GOVERNMENT SECURITIES. Norwest may invest in U.S. dollar denominated
obligations issued or guaranteed by the governments of countries which Norwest
believes do not present undue risk or of those countries' political
subdivisions, agencies or instrumentalities. The Portfolio may also invest in
the obligations of supranational organizations such as the International Bank
for Reconstruction and Development (the "World Bank") and the Inter-American
Development Bank.

MUNICIPAL BONDS. The Portfolio may invest without limit in municipal bonds
which can be classified as either "general obligation" or "revenue" bonds.
General obligation bonds are secured by a municipality's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are usually payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise or other tax, but not from general tax revenues. Municipal
bonds include industrial development bonds. Municipal bonds may also be "moral
obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer.

The Portfolio may invest in tax-exempt industrial development bonds, which in
most cases are revenue bonds and generally do not have the pledge of the credit
of the municipality. The payment of the principal and interest on these bonds
is dependent solely on the ability of an initial or subsequent user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment. The Portfolio will acquire private activity securities only if the
interest payments on the security are exempt from federal income taxation (other
than the Alternative Minimum Tax (AMT)).

MUNICIPAL NOTES. The Portfolio may invest without limit in municipal notes,
which may be either "general obligation" or "revenue" securities, are intended
to fulfill short-term capital needs and generally have original maturities not
exceeding one year. They include tax anticipation notes, revenue anticipation
notes (which generally are issued in anticipation of various seasonal revenues),
bond anticipation notes, construction loan notes and tax-exempt commercial
paper. Tax-exempt commercial paper generally is issued with maturities of 270
days or less at fixed rates of interest.

MUNICIPAL LEASES. The Portfolio may invest without limit in municipal leases,
which may take the form of a lease or an installment purchase or conditional
sale contract, are issued by state and local governments and authorities to
acquire a wide variety of equipment and facilities such as fire and sanitation
vehicles, telecommunications equipment and other capital assets. Municipal
leases frequently

8
<PAGE>

have special risks not normally associated with general obligation or revenue
bonds. Lease and installment purchase or conditional sale contracts (which
normally provide for title to the leased assets to pass eventually to the
government issuer) have evolved as a means for governmental issuers to acquire
property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Generally,
the Portfolio will invest in municipal lease obligations through certificates of
participation.

CORPORATE DEBT SECURITIES. The Portfolio may invest in corporate debt
obligations of domestic or foreign issuers, including commercial paper
(short-term promissory notes) issued by companies to finance their, or their
affiliates', current obligations and corporate notes and bonds. The Portfolio
may invest in privately issued commercial paper or other corporate instruments
which are restricted as to disposition under the federal securities laws. Any
sale of this paper may not be made absent registration under the Securities Act
of 1933 or the availability of an appropriate exemption therefrom. Some of
these restricted securities, however, are eligible for resale to institutional
investors, and accordingly, a liquid market may exist for them. Pursuant to
guidelines adopted by the Board, Norwest will determine whether each such
investment is liquid.

PARTICIPATION INTERESTS. The Portfolio may purchase from financial institutions
participations in loans or securities. A participation interest gives a
Portfolio an undivided interest in the loan or security in the proportion that
the Portfolio's interest bears to the total principal amount of the security.
For certain participation interests a Portfolio will have the right to demand
payment, on not more than seven days' notice, for all or a part of the
Portfolio's participation interest. The Portfolio intends to exercise any
demand rights it may have only upon default under the terms of the loan or
security, to provide liquidity or to maintain or improve the quality of the
Portfolio's investment portfolio. The Portfolio will not invest more than 10%
of its total assets in participation interests in which the Portfolio does not
have demand rights.

FOREIGN INSTRUMENTS. The Portfolio's investments in securities of foreign
entities may involve certain risks that are different from investments in
domestic securities. These risks may include unfavorable political and economic
developments; the imposition of foreign withholding taxes on interest income
payable on these securities; the seizure or nationalization of foreign deposits;
the existence of accounting, auditing and financial reporting standards which
are not comparable to those of U.S. issuers; and the establishment of exchange
controls, interest limitations or other foreign governmental restrictions which
affect adversely the payment of principal and interest on these securities. In
addition, there may be less public information available about foreign issuers.
Norwest considers these factors when making investments in foreign instruments.
The Portfolio has no limit on the amount of its foreign assets which may be
invested in any one type of foreign instrument or in any foreign country;
however, to the extent the Portfolio concentrates its assets in a foreign
country, these risks will be increased.

ADDITIONAL INVESTMENT POLICIES AND RISK CONSIDERATIONS

<PAGE>

The Fund's (and Core Portfolio's) investment objective and all investment
policies of the Fund (and Core 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 Core Portfolio). A majority of the
outstanding voting securities means the lesser of 67% of the shares present or
represented at a meeting at which the holders of more than 50% of the
outstanding shares are present or represented, or more than 50% of the
outstanding shares. Except as otherwise indicated, investment policies of the
Fund (and Core Portfolio) are not deemed to be fundamental and may be changed by
the Board of Trustees of the Trust (the "Board") or the board of trustees of
Core Trust (the "Core Board"), as applicable, without shareholder approval.

Unless otherwise indicated, the discussion below of the investment policies of
the Fund refers to the investment policies of the Core Portfolio. A further
description of the Fund's investment policies, including additional fundamental
policies, is contained in the SAI.

The Fund may enter into repurchase agreements, may enter into reverse repurchase
agreements (which are considered borrowings), may lend their securities and may
purchase securities on a forward commitment basis as described below. As a
fundamental policy, the Fund may borrow money for temporary or emergency
purposes (including the meeting of redemption requests), but not in excess of 33
1/3% of the value of the Fund's total assets. Borrowing for other than meeting
redemption requests will not exceed 5% of the value of a Fund's net assets. The
Fund is permitted to invest in other investment companies which intend to comply
with Rule 2a-7 and have substantially similar investment objectives and
policies. The Fund has reserved the right to invest all or a portion of its
assets in one or more other investment companies.

The Fund's use of repurchase agreements, reverse repurchase agreements,
securities lending and forward commitments entails certain risks not associated
with direct investments in securities. For instance, in the event that
bankruptcy or similar proceedings were commenced against a counterparty in these
transactions or a counterparty defaulted on its obligations, the Fund might
suffer a loss. Failure by the other party to deliver a security purchased by
the Fund may result in a missed opportunity to make an alternative investment.
Norwest monitors the creditworthiness of counterparties to these transactions
and intends to enter into these transactions only when it believes the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.

As part of its regular banking operations, Norwest Bank may make loans to public
companies. Thus, it may be possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending clients of Norwest. A
lending relationship will not be a factor in the selection of portfolio
securities for the Fund.

GENERAL MONEY MARKET FUND GUIDELINES. The Fund invests only in high quality,
short-term money market instruments that are determined by Norwest, pursuant to
procedures adopted by the Board or Core Board, as applicable, to be eligible for
purchase and to present minimal credit risks. The Fund will invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act")) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less. Securities with ultimate

10
<PAGE>

maturities of greater than 397 days may be purchased in accordance with Rule
2a-7. Under that Rule, only those long-term instruments that have demand
features which comply with certain requirements and certain variable rate U.S.
Government Securities, as described below, may be purchased. The securities in
which the Fund may invest may have fixed, variable or floating rates of
interest.

Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, the Fund will not invest more than 5% of its total assets
in the securities of any one issuer. Also, the Fund may not purchase a security
if the value of all securities held by the Fund and issued or guaranteed by the
same issuer (including letters of credit in support of a security) would exceed
10% of the Fund's total assets. In addition, to ensure adequate liquidity, the
Fund may not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements maturing in more than seven days. Under the
supervision of the Board or Core Board, the Norwest determines and monitors the
liquidity of portfolio securities.

As used herein, high quality instruments include those that: (i) are rated (or,
if unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO; or (ii) are otherwise unrated and determined by
Norwest, pursuant to guidelines adopted by the Board and Core Board, to be of
comparable quality. The Fund will invest at least 95% of its total assets in
securities in the highest rating category as determined pursuant to Rule 2a-7.
A description of the rating categories of Standard & Poor's, Moody's Investors
Service and certain other NRSROs is contained in the SAI.

The market value of the interest-bearing debt securities held by the Fund,
including municipal securities, will be affected by changes in interest rates.
There is normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates;
i.e., a decline in interest rates produces an increase in market value, while an
increase in rates produces a decrease in market value. Moreover, the longer the
remaining maturity of a security, the greater will be the effect of interest
rate changes on the market value of that security. In addition, changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of an issuer's creditworthiness will also affect the market
value of the debt securities of that issuer. Obligations of issuers of debt
securities, including municipal securities, are also subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. The possibility exists, therefore, that, as a result of bankruptcy,
litigation or other conditions, the ability of any issuer to pay, when due, the
principal of and interest on its debt securities may be materially affected.

Although the Fund only invests in high quality money market instruments, an
investment in the Fund is subject to risk even if all securities in the Fund's
investment portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value as a
result of changes in interest rates and/or the issuer's actual or perceived
creditworthiness.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, which are
transactions in which a Fund purchases a security and simultaneously commits to
resell that security to the seller at an agreed-upon price on an agreed-upon
future date, normally one to seven days later. The resale price reflects a
market rate of interest that is not related to the coupon rate or maturity of
the purchased security. The Trust's custodian maintains possession of the
underlying collateral, which is maintained at not less than 100% of the
repurchase price.

LENDING OF PORTFOLIO SECURITIES. The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions. Securities
loans must be continuously secured by cash or U.S. Government Securities with a
market value, determined daily, at least equal to the value of the Fund's
securities

11
<PAGE>

loaned, including accrued interest. A Fund receives interest in respect of
securities loans from the borrower or from investing cash collateral. The Fund
may pay fees to arrange the loans. The Fund may not lend portfolio securities
in excess of 33 1/3% of the value of the Fund's total assets. Generally, the
lending of portfolio securities involves risks similar to, but slightly greater
than, those involved in entering into repurchase agreements.

FORWARD COMMITMENTS. The Fund may purchase securities on a when-issued or
delayed delivery basis (forward commitments). Securities so purchased are
subject to market price fluctuation from the time of purchase but no interest on
the securities accrues to the Fund until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Forward commitments will be entered into only when
the Fund has the intention of actually acquiring the securities, but the Fund
may sell the securities before the settlement date if deemed advisable. In
addition, forward commitments will not be entered into if the aggregate of the
commitments exceeds 15% of the value of the Fund's total assets.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements, which are transactions in which a Fund sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand
agreements, there is no specified repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.
The Fund will use the proceeds of reverse repurchase agreements only to fund
redemptions or to make investments which generally either mature or have a
demand feature to resell to the issuer on a date not later than the expiration
of the agreement. Interest costs on the money received in a reverse repurchase
agreement may exceed the return received on the investments made by a Fund with
those monies.

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Fund invests
may have variable or floating rates of interest. These securities pay interest
at rates that are adjusted periodically according to a specified formula,
usually with reference to some interest rate index or market interest rate. The
interest paid on these securities is a function primarily of the indexes or
market rates upon which the interest rate adjustments are based. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness. The rate of interest on securities purchased by the
Fund may be tied to Treasury or other government securities or indices on those
securities as well as any other rate of interest or index.

There may not be an active secondary market for any particular floating or
variable rate instrument which could make it difficult for the Fund to dispose
of the instrument if the issuer defaulted on its repayment obligation during
periods that the Fund is not entitled to exercise any demand rights it may have.
The Fund could, for this or other reasons, suffer a loss with respect to an
instrument. Norwest monitors the liquidity of the Fund's investments in
variable and floating rate instruments, but there can be no guarantee that an
active secondary market will exist.

The Fund also may purchase variable and floating rate demand notes of
corporations, which are unsecured obligations redeemable upon not more than 30
days' notice. These obligations include master demand notes that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. The issuer of these
obligations often has the right, after a given period, to prepay their
outstanding principal amount of the obligations upon a specified number of days'
notice. These obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent a demand note
does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.

<PAGE>

MORTGAGE- AND ASSET-BACKED SECURITIES. The Fund may purchase fixed or
adjustable rate mortgage or other asset-backed securities, including securities
backed by automobile loans, equipment leases or credit card receivables. These
securities may be U.S. Government Securities or privately issued and directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities may include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the effective
maturities of these securities. Some adjustable rate securities (or the
underlying loans) are subject to caps or floors that limit the maximum change in
interest rate during a specified period or over the life of the security.

ZERO-COUPON SECURITIES. The Fund may invest in zero-coupon securities (such as
Treasury bills), which are securities that are sold at original issue discount
and pay no interest to holders prior to maturity, but the Fund must include a
portion of the original issue discount of the security as income. Because the
Fund distributes substantially all of its net investment income, the Fund may
have to sell portfolio securities to distribute imputed income, which may occur
at a time when Norwest would not have chosen to sell such securities and which
may result in a taxable gain or loss. Zero-coupon securities may be subject to
greater fluctuation of market value than the other securities in which the Fund
may invest.

4. MANAGEMENT

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

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest Investment Management, Inc. makes investment decisions for the Fund and
continuously reviews, supervises and administers the Fund's investment program.
Norwest provides its investment advisory services indirectly to the Fund through
its investment advisory services to the Core Portfolio. Norwest, which is
located at Norwest Center, Sixth Street and Marquette, Minneapolis, Minnesota
55479, is an indirect subsidiary of Norwest Corporation, a multi-bank holding
company that was incorporated under the laws of Delaware in 1929. As of March
31, 1997, Norwest Corporation had assets of $83.6 billion which made it the 11th
largest bank holding company in the United States. As of December 31, 1996,
Norwest and its affiliates managed assets with a value of approximately $42.6
billion.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest contribute to
the investment services provided to the Fund and the Core Portfolio. The
following persons, however, are primarily responsible for day-to-day management
and, unless otherwise noted, have been since the inception of the Fund or
Portfolio. For periods prior to June 1, 1997, all persons associated with
Norwest served in their current positions with Norwest Bank. Prior to that date
Norwest bank was each Fund's investment adviser. In addition to their
responsibilities as listed below, each of the portfolio managers associated with
Norwest may perform other portfolio management duties for Norwest Bank.

David D. Sylvester and Laurie R. White. Mr. Sylvester has been associated with
Norwest for 16 years, the last 8 years as a Vice President and Senior Portfolio
Manager. He has over 20 years' experience in

13
<PAGE>

managing securities portfolios. Ms. White has been a Vice President and Senior
Portfolio Manager of Norwest since 1991; from 1989 to 1991, she was a Portfolio
Manager at Richfield Bank and Trust. Ms. White began serving as a portfolio
manager of Cash Investment Fund and Ready Cash Investment Fund in 1991.

ADVISORY FEES. For its services, Norwest receives investment advisory fees from
the Core Portfolio at an annual rate of 0.40% of the first $300 million of the
Core Portfolios' average daily net assets, 0.36% of the next $400 million of the
Core Portfolios' average daily net assets and 0.32% of the Core Portfolios'
remaining average daily net assets.

The Fund may withdraw its investments from the Core Portfolio at any time if the
Board determines that it is in the best interests of the Fund to do so. See
"Other Information - Core and Gateway Structure." Accordingly, the Fund has
retained Norwest as its investment adviser. In the event that the Fund was to
withdraw its assets from the Core Portfolio, Norwest would receive an investment
advisory fee at the same rate as it receives from the Core Portfolio.

MANAGEMENT, ADMINISTRATION AND DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Fund by others, including the Fund's
custodian, transfer agent, accountants, auditors and legal counsel. FAS is
responsible for performing certain administrative services necessary for the
Trust's operations with respect to the Fund including, but not limited to: (i)
preparing and printing updates of the Trust's registration statement and
prospectuses, the Trust's tax returns, and reports to its shareholders, the SEC
and state securities administrators; (ii) preparing proxy and information
statements and any other communications to shareholders; (iii) monitoring the
sale of shares and ensuring that such shares are properly and duly registered
with the SEC and applicable state securities administrators; and (iv)
determining the amount of and supervising the declaration of distributions to
shareholders.

FAS also serves as an administrator of the Core Portfolio and provides services
to the Core Portfolio that are similar to those provided to the Fund by Forum
and FAS. For its services FAS receives a fee with respect to the Core Portfolio
at an annual rate of 0.10% of the Portfolio's average daily net assets.

Pursuant to a separate agreement, Forum Accounting Services, Limited Liability
Company ("Forum Accounting") provides portfolio accounting services to the Fund
and to the Core Portfolio. Forum, FAS, and Forum Accounting are members of the
Forum Financial Group of

<PAGE>

companies which together provide a full range of services to the investment
company and financial services industry. As of June 1, 1997, Forum, FAS and
Forum Accounting were controlled by John Y. Keffer, President and Chairman of
the Trust.

Pursuant to a separate Distribution Services Agreement, Forum is the exclusive
representative of the Trust to act as principal underwriter and distributor of
the Fund, except under circumstances specified in that agreement. In addition,
the Fund has adopted a Rule 12b-1 Plan applicable to the Shares under which
Forum receives distribution fees. See "Characteristics of the Shares." From
its own resources, Forum may pay a fee to broker-dealers or other persons for
distribution or other services related to the Fund.

SHAREHOLDER SERVICING AND CUSTODY

Norwest Bank 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
functions and acts as dividend disbursing agent for the Trust. The Transfer
Agent is permitted to subcontract any or all of its functions with respect to
all or any portion of the Trust's shareholders to one or more qualified
sub-transfer agents or processing agents, which may be affiliates of the
Transfer Agent. Sub-transfer agents and processing agents may be "Processing
Organizations" as described under "How To Buy Shares - Purchase Procedures." The
Transfer Agent is permitted to compensate those agents for their services;
however, that compensation may not increase the aggregate amount of payments by
a Fund to the Transfer Agent. For its services, the Transfer Agent receives a
fee with respect to the Fund at an annual rate of 0.25% of the Fund's average
daily net assets attributable to the Shares.

Norwest Bank also serves as the Fund's and the Core Portfolio's custodian. For
its custodial services, Norwest Bank receives a fee with respect to the Fund and
the Core Portfolio at an annual rate of 0.02% of the first $100 million of the
Fund's or Core Portfolio's average daily net assets, 0.01% of the next $200
million of the Fund's or Core Portfolio's average daily net assets and 0.005% of
the Fund's or Core Portfolio's remaining average daily net assets. No fee is
payable to the extent the Fund is invested in the Core Portfolio.

EXPENSES OF THE FUND

Subject to the obligation of Norwest to reimburse the Trust for certain expenses
of the Funds, the Trust has confirmed its obligation to pay all the Trust's
expenses. The Fund's 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. Each service provider to the Fund 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 Fund's performance for the period during which the waiver is in
effect. Fee waivers are voluntary and may be reduced or eliminated at any time.

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain the Fund's total combined operating expenses
through May 31, 1998 at the same level as the

<PAGE>

Fund's total operating expenses prior to May 31, 1997, 1.57%. After May 31,
1998, any proposed reduction in the amount of the waiver or reimbursements would
be reviewed by the Board.

Each service and their agents and 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 Trust with respect to assets of
those customers invested in a Fund.

The expenses of the Fund include the Fund's pro rata share of the operating
expenses of the Core Portfolio in which the Fund invests, which are borne
indirectly by the Fund's shareholders.

5. CHARACTERISTICS OF THE SHARES

Exchange Shares are sold at their net asset value per share without the
imposition of a sales charge at the time of purchase. With respect to Exchange
Shares, the Fund has adopted a distribution plan pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act providing for distribution payments at an annual rate
of no more than 0.75% of the average daily net assets of the Fund attributable
to the Exchange 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 Exchange Shares comprise: (i) the unpaid balance of, at
the time the Exchange shares are acquired, sales commissions equal to a certain
percentage of the amount received by the Fund for each original B Share
exchanged for the Exchange Shares (excluding reinvestment of dividends and
distributions) ("sales commissions"); and (ii) an interest fee calculated by
applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of uncovered distribution charges (as
described below). Forum currently expects to pay sales commissions to each
broker-dealer at the time of sale of original B Shares of up to 4% of the
purchase price of the original B Shares sold by the broker-dealer. No
additional sales commissions are due to Forum at the time of an exchange of the
original B Shares for Exchange Shares.

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 Exchange Shares. The combined
contingent deferred sales charge and distribution services fee on Exchange
Shares are intended to finance the distribution of original B 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 original B Shares, such as the payment of
compensation to broker-dealers selling original B Shares. The distribution
services agreement provides that Forum may spend the distribution services fees
it receives as it deems appropriate on any activities primarily intended to
result in the sale of those shares.

Under the Plan, 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 calculated
daily and are equivalent on any given day to all sales commissions previously
due, less amounts received pursuant to the Plan, plus the interest fee to which
Forum is entitled under the Plan, less all contingent deferred sales charges
previously paid to Forum. At May 31, 1996, uncovered distribution expenses for
the Fund were $1,356 or approximately 0.10% of the Fund's net assets
attributable to Exchange Shares as of the same date.

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

<PAGE>

connection with providing distribution services to the original 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 original B Shares. Total expenses for this purpose include interest
expenses, carrying charges or other financing costs or allocations of Forum's
overhead; the Fund is not obligated to reimburse Forum for those expenses. The
amount of contingent deferred sales charges paid to Forum by the Fund may affect
the amount of: (i) uncovered distribution charges calculated under the Plan
with respect to the Fund; and (ii) the distribution services fee payable to
Forum under the Plan with respect to the Fund.

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 the Exchange 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 Exchange
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 Exchange Shares to have a higher expense ratio and to pay lower
dividends than Investor Shares of the Fund. Notwithstanding the discontinuation
of distribution services fees with respect to the Fund, the Fund may continue to
pay maintenance fees.

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

In the event that the Plan is terminated or not continued with respect to the
Exchange Shares of 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 Exchange Shares, 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.

Periods with a high level of sales of Exchange Shares 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 Exchange Shares 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 Exchange Shares during the next few years of the Fund's operations
coupled with the limitation on the amount of distribution services fee payable
by the Fund with respect to Exchange Shares during any fiscal year, would cause
a large portion of the distribution services fees attributable to a sale of the
Exchange Shares to be accrued and paid by the Fund to Forum with respect to
those shares in fiscal years subsequent to the years in which those shares were
sold. The payment delay would in turn result in the incurrence and payment of
increased interest fees under the Plan.

In approving the Plan, the Board determined that there was a reasonable
likelihood that the Plan would benefit the Fund and its Exchange shareholders.
Information with respect to distribution services fees, maintenance fees and
other revenues and expenses of Forum will be presented to the Board each year
for their consideration in connection with their deliberations as to the
continuance of the Plan with respect to the Fund. In its review of the Plan,
the Board takes into consideration the distribution and maintenance expenses
incurred by the Fund. The distribution services fee or maintenance fee of the
Exchange Shares

<PAGE>

will not be used to subsidize the provision of distribution services or personal
services with respect to any other shares of the Fund.

CONTINGENT DEFERRED SALES CHARGE. Exchange Shares which are redeemed within a
certain number of years of the purchase of the original B Shares will be subject
to contingent deferred sales charges applicable to the original B Shares as if
the original B Shares were being redeemed at the time of redemption of the
Exchange Shares. 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 the original B Shares and the redemption of the Exchange Shares.

The contingent deferred sales charge will be assessed on an amount equal to the
lesser of the cost of the original B Shares and the net asset value of the
Exchange Shares being redeemed 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
reinvestment of dividends or capital gains distributions.

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
Investor Shares in the Fund, second from Exchange Shares acquired pursuant to
reinvestment of dividends and distributions, third from Exchange Shares held for
longer than the time period for which a contingent deferred sales charge is
imposed on the original B Shares, and fourth from the longest outstanding
Exchange Shares held for less than that time period.

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; and (v) 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. See the SAI for further
information.

CONVERSION FEATURE. After a certain number of years from the end of the
calendar month in which the shareholder's purchase order for the original B
Shares was accepted, the shareholder's Exchange Shares will automatically
convert to Investor Shares of the Fund. The conversion will be on the basis of
the relative net asset values of Investor Shares and Exchange Shares, without
the imposition of any sales load, fee or other charge. For purposes of
conversion to Investor Shares, Exchange Shares purchased through the
reinvestment of dividends and distributions paid in respect of Exchange Shares
in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Exchange Shares in the shareholder's account (other
than those in the sub-account) convert, an equal pro-rata portion of those
shares in the sub-account will also convert. The conversion is subject to the
continuing availability of certain opinions of counsel and 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 would occur, and shares might continue to
be subject to distribution services and maintenance fees for an indefinite
period.

6. PURCHASES OF SHARES

GENERAL INFORMATION

Exchange Shares are continuously sold only through an exchange privilege
available to shareholders of B Shares of certain other series of the Trust on
every weekday except customary

<PAGE>

national business holidays and Good Friday ("Fund Business Day"). The purchase
price for Exchange Shares equals their net asset value next-determined after
acceptance of an order. The Trust reserves the right to advance the time by
which the Fund must receive purchase or redemption orders on days that the New
York Stock Exchange or Minneapolis Federal Reserve Bank closes early or the
Public Securities Association recommends that the government securities markets
close early, or due to other unusual circumstances which may affect the Fund's
trading hours.

All payments for Shares must be in U.S. dollars. 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 Exchange 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.

There is a $1,000 minimum for initial purchases and a $100 minimum for
subsequent purchases of Exchange Shares. The Fund may in its discretion waive
the investment minimums. Shareholders who elect the Directed Dividend Option are
not subject to the initial investment minimum. See "Dividends and Tax Matters."

An investor's order will not be accepted or invested by the Fund during the
period before the Fund's receipt of immediately available funds. Fund shares
become entitled to receive dividends and distributions on the Fund Business Day
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

Investors who exchange B shares for Exchange Shares will have an account opened
for them automatically.

To participate in shareholder services not referenced on the shareholder's
original account application form and to change information on a shareholder's
account (such as addresses), investors or existing shareholders should contact
the Trust at the following address:

Norwest Funds
Ready Cash Investment Fund
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040

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. Exchange purchases may be accomplished by written instructions to the
Transfer Agent accompanied by any share certificate that may have been issued to
the shareholder to evidence the B Shares being exchanged. All written exchange
requests must be signed by the shareholder, and all

<PAGE>

certificates submitted for exchange must be endorsed by the shareholder with
signature guaranteed. See "Redemptions of Shares -- Other Redemption Matters."

BY TELEPHONE. Exchange purchases may be accomplished by telephone by any
shareholder of B Shares of the Fund of the Trust that has elected telephone
exchange privileges 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. See "Redemptions of Shares -- Other Redemption Matters."

THROUGH FINANCIAL INSTITUTIONS. Shares may be exchanged 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 payments as a
processing agent from the Transfer Agent. In addition, financial institutions,
including Processing Organizations, may charge their customers a fee for their
services and are responsible for promptly transmitting purchase, redemption and
other requests to the Funds.

Investors who purchase shares through a Processing Organization will be subject
to the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in the Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Customers who purchase 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.

SUBSEQUENT EXCHANGES OF SHARES. Subsequent exchanges of B Shares of certain
other series of the Trust for Exchange Shares may be made by mailing
instructions, by telephone or through the shareholder's Processing Organization
as indicated above

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.
Generally, all contributions and investment earnings in an IRA will be
tax-deferred until withdrawn. 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.

<PAGE>

The foregoing discussion regarding IRAs is based on regulations in effect as of
June 1, 1997 and summarizes only some of the important federal tax
considerations generally affecting IRA contributions made by individuals or
their employers. It is not intended as a substitute for tax planning.
Investors should consult their tax advisors with respect to their specific tax
situations as well as with respect to state and local taxes.

7. REDEMPTIONS OF SHARES

GENERAL INFORMATION

Exchange Shares may be redeemed at their net asset value on any Fund Business
Days subject to a contingent deferred sales charge imposed on most redemptions
made within a certain number of years of purchase of the original B Shares.
There is no minimum period of investment and no restriction on the frequency of
redemptions. Fund shares are redeemed as of the next determination of the Fund's
net asset value following acceptance by the Transfer Agent of the redemption
order in proper form (and any supporting documentation which the Transfer Agent
may require). Redeemed shares are not entitled to receive dividends declared on
or after the day the redemption becomes effective.

Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check to purchase
the shares being redeemed has been cleared by the shareholder's bank, which may
take up to 15 days. This delay may be avoided by paying for shares through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates 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 to protect the
Fund's shareholders.

REDEMPTION PROCEDURES

Shareholders who have invested through a Processing Organization may redeem
their shares through the Processing Organization as described above.
Shareholders who have invested directly in the Fund may redeem their shares as
described below. 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.

Redemption orders will be accepted on Fund Business Day only until 3:00 p.m.
Eastern time. The Trust reserves the right to close early and advance the time
by which the Fund must receive redemption orders on days that the New York Stock
Exchange or Minneapolis Federal Reserve Bank closes early, the Public Securities
Association recommends that the government securities markets close early or due
to other circumstances which may affect a Fund's trading hours.

<PAGE>

guaranteed, and all certificates submitted for redemption must be endorsed by
the shareholder with signature guaranteed. See "Redemptions of Shares - Other
Redemption Matters."

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

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 Transfer Agent.

OTHER REDEMPTION MATTERS

To protect shareholders and the Fund against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (i)
endorsement on a share certificate; (ii) instruction to change a shareholder's
record name; (iii) modification of a designated bank account for wire
redemptions; (iv) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (v) dividend and distribution election; (vi)
telephone redemption; (vii) exchange option election or any other option
election in connection with the shareholder's account; (viii) written
instruction to redeem Shares whose value exceeds $50,000; (ix) redemption in an
account in which the account address has changed within the last 30 days; (x)
redemption when the proceeds are deposited in a Norwest Funds account under a
different account registration; and (xi) the remitting of redemption proceeds to
any address, person or account for which there are not established standing
instructions on the account.

Shareholders who want telephone redemption or exchange privileges must elect
those privileges. The Trust and Transfer Agent 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 and Transfer Agent did
not employ such procedures, they could be liable for losses due to 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.

<PAGE>

8. EXCHANGES

Shareholders of Exchange Shares may exchange their shares for B Shares of Stable
Income Fund, Intermediate Government Income Fund, Income Fund, Total Return Bond
Fund, Tax-Free Income Fund, Colorado Tax-Free Fund, Minnesota Tax-Free Fund,
Income Equity Fund, ValuGrowthSM Stock Fund, Small Company Stock Fund and
International Fund of the Trust. Those shares are offered through separate
prospectuses. It is anticipated that the Trust may in the future create
additional funds which will offer B Shares that are exchangeable with Exchange
Shares. Prospectuses for these funds, as well as a current list of the Funds of
the Trust that offer shares exchangeable with Exchange Shares, 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 charged (other than contingent deferred sales charges) by, and the
limitations (including minimum investment restrictions) of, the fund into which
a shareholder is exchanging.

Exchange Shares may be exchanged without the payment of any contingent deferred
sales charge. 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. For purposes of computing both the contingent deferred sales charge
payable upon redemption of the B Shares and the time remaining before the B
Shares convert to Investor A Shares of that fund, the deferred sales charge and
the time remaining applicable to the Exchange Shares will apply to the B Shares
rather than the deferred sales charge and time remaining that would otherwise
apply. The deferred sales charge and time remaining applicable to Exchange
Shares will apply to new B Shares resulting from both an initial and any
subsequent exchanges.

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 the Fund if that fund's shares may
legally be sold in the shareholder's state of residence.

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

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

<PAGE>

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 "Redemptions of Shares - Other Redemption Matters."

9. DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of the Fund's net investment income are declared daily and paid
monthly. Distributions of net capital gain, if any, realized by the Fund are
distributed annually. Dividends and distributions paid by the Fund with respect
to each class of shares are calculated in the same manner and at the same time.
The per share dividends on Exchange Shares will be lower than the per share
dividends on other classes of the Fund as a result of the distribution services
fees and maintenance fees applicable to Exchange Shares.

Shareholders may choose to have dividends and distributions reinvested in
Exchange Shares of the Fund (the "Reinvestment Option") or to receive dividends
and distributions in cash (the "Cash Option"). All dividends and distributions
are treated in the same manner for federal income tax purposes whether received
in cash or reinvested. 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 the Cash Option is selected. Under the Cash Option,
all dividends and distributions are paid to the shareholder in cash.

TAX MATTERS

The Fund intends to qualify 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 net
short-term capital gain) are taxable to shareholders of the Fund as ordinary
income. Distributions of net long-term capital gain by the Fund are taxable to
the 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.

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.

<PAGE>

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 calendar year.

CORE PORTFOLIO. The Core 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 Core Portfolio are deemed to have been "passed through" to the Fund in
proportion to the Fund's holdings of the Core Portfolio, regardless of whether
such interest, dividends or gains have been distributed by the Core Portfolio or
losses have been realized by the Core Portfolio.

10. OTHER INFORMATION

BANKING LAW MATTERS

Federal banking rules generally permit a bank or bank affiliate to act as
investment adviser, transfer agent, and custodian to an investment company and
to purchase shares of the investment company as agent for and upon the order of
a customer and, in connection therewith, to retain a sales charge or similar
payment. Forum believes that Norwest and any bank or other bank affiliate that
may also perform Processing Organization or similar services for the Trust and
its shareholders without violating applicable federal banking rules. If a bank
or bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the 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 net asset value per share of each class of the Fund is determined as of 3:00
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. The Fund does not determine net asset value on the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving and Christmas.

In order to maintain a stable net asset value per share of $1.00, the portfolio
securities of the Fund and Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If the market value of the a Fund's portfolio deviates more than 1/2 of
1% from the value determined on the basis of amortized cost, the Board will
consider whether any action should be initiated to prevent any material effect
on shareholders.

PERFORMANCE INFORMATION

<PAGE>

The Fund's performance may be quoted in terms of yield. All performance
information which 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 yield, the Fund takes the income it earned from its portfolio of
investments for a 7 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 7
day period.

The Fund's advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Lipper Analytical
Services, Inc. or IBC/Donoghue, Inc. In addition, the performance of the Fund
may be compared to securities indices 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.

THE TRUST AND ITS SHARES

OTHER CLASSES OF SHARES. The Fund currently issues two classes of shares:
Investor Shares and Exchange Shares. Investor Shares are offered by separate
prospectus to investors who invest a minimum of $1,000 without any sales charges
or distribution services or maintenance fees. Each class of a Fund may have a
different expense ratio and different sales charges (including distribution
fees) and each class' performance will be affected by its expenses and sales
charges. For more information on any other class of shares of the Fund,
investors may contact the Transfer Agent at 612-667-8833 or 800-338-1348 or the
Fund's distributor. Investors may also contact their Norwest sales
representative 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 Exchange and Investor Shares.

<PAGE>

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 series is entitled to the shareholder's pro rata share of all
dividends and distributions arising from that series' assets and, upon redeeming
shares, will receive the portion of the series' net assets represented by the
redeemed shares.

The Core Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Core Portfolio will be entitled
to vote in proportion to its relative beneficial interest in the Core Portfolio.
When required by the 1940 Act and other applicable law, the Fund will solicit
proxies from its shareholders and will vote its interest in the Core Portfolio
in proportion to the votes cast by its shareholders.

From time to time, these shareholders or other shareholders may own a large
percentage of the Shares of the Fund and, accordingly, may be able to greatly
affect (if not determine) the outcome of a shareholder vote.

CORE AND GATEWAY STRUCTURE

The Fund seeks to achieve it investment objective by investing all of its
investable assets in the Core Portfolio, that has the same investment objective
and substantially identical investment policies as the Fund. Accordingly, the
Core Portfolio directly acquires portfolio securities and the Fund acquires an
indirect interest in those securities. The Core Portfolio is a separate series
of Core Trust, a business trust organized under the laws of the State of
Delaware in 1994. Core Trust is registered under the 1940 Act as an open-end,
management, investment company. The assets of the Core Portfolio belong only
to, and the liabilities of the Core Portfolio are borne solely by, the Core
Portfolio and no other portfolio of Core Trust.

THE CORE PORTFOLIO. The Fund's investment in the Core Portfolio is in the form
of a non-transferable beneficial interest. All investors in the Core Portfolio
will invest on the same terms and conditions and will pay a proportionate share
of the Core Portfolio's expenses. As of June 1, 1997, one other fund of the
Trust invested a portion of its assets in Prime Money Market Portfolio.

The Core Portfolio will not sell its shares directly to members of the general
public. Another investor in the Core 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 in the Core Portfolio. Information
regarding any such funds is available from Core Trust by calling Forum at (207)
879-0001.

CERTAIN RISKS OF INVESTING IN CORE PORTFOLIOS. The Fund's investment in the
Core Portfolio may be affected by the actions of other large investors in the
Core Portfolio. For example, if the Core Portfolio had a large investor other
than the Fund that redeemed its interest, the Portfolio's remaining investors
(including the Fund) might, as a result, experience higher pro rata operating
expenses, thereby

<PAGE>

producing lower returns. As there may be other investors in the Core Portfolio,
there can be no assurance that any issue that receives a majority of the votes
cast by the Fund's shareholders will receive a majority of votes cast by all
investors in the Core Portfolio; indeed, other investors holding a majority
interest in the Core Portfolio could have voting control of the Core Portfolio.

The Fund may withdraw its entire investment from the Core 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 Core Portfolio with power to, and who did by a vote of
all investors (including the Fund), change the investment objective or policies
of the Core 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 Core 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 would incur brokerage fees or other transaction
costs. If the Fund withdrew its investment from the Core Portfolio, the Board
would consider what action might be taken, including the management of the
Fund's assets directly by the Adviser or the investment of the Fund's assets in
another pooled investment entity. The inability of the Fund to find a suitable
replacement investment, in the event the Board decided not to permit the Adviser
to manage the Fund's assets directly, could have a significant impact on
shareholders of the Fund.

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.
<PAGE>

NORWEST FUNDS

STATEMENT OF ADDITIONAL INFORMATION

JUNE 1, 1997

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

CASH INVESTMENT FUND CONSERVATIVE BALANCED FUND
READY CASH INVESTMENT FUND MODERATE BALANCED FUND
U.S. GOVERNMENT FUND GROWTH BALANCED FUND
TREASURY FUND INCOME EQUITY FUND
MUNICIPAL MONEY MARKET FUND INDEX FUND
STABLE INCOME FUND VALUGROWTH-SM- STOCK FUND
INTERMEDIATE GOVERNMENT INCOME FUND DIVERSIFIED EQUITY FUND
DIVERSIFIED BOND FUND GROWTH EQUITY FUND
INCOME FUND LARGE COMPANY GROWTH FUND
TOTAL RETURN BOND FUND SMALL COMPANY STOCK FUND
LIMITED TERM TAX-FREE FUND SMALL COMPANY GROWTH FUND
TAX-FREE INCOME FUND CONTRARIAN STOCK FUND
COLORADO TAX-FREE FUND INTERNATIONAL FUND
MINNESOTA TAX-FREE FUND

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

<PAGE>

NORWEST FUNDS
STATEMENT OF ADDITIONAL INFORMATION

JUNE 1, 1997

ACCOUNT INFORMATION AND
SHAREHOLDER SERVICING: DISTRIBUTION:
Norwest Bank Minnesota, N.A. Forum Financial Services, Inc.
Transfer Agent Manager and Distributor
733 Marquette Avenue Two Portland Square
Minneapolis, MN 55479-0040 Portland, Maine 04101
(612) 667-8833/(800) 338-1348 (207) 879-1900

Norwest Funds is registered with the Securities and Exchange Commission as an
open-end management investment company under the Investment Company Act of 1940,
as am Xended.

This Statement of Additional Information supplements the Prospectuses dated June
1, 1997, as may be amended from time to time, offering the following classes of
shares of the separate portfolios of Norwest Funds: Cash Investment Fund, Ready
Cash Investment Fund (Institutional Shares, Investor Shares and Exchange
Shares), U.S. Government Fund, Treasury Fund, Municipal Money Market Fund
(Institutional Shares and Investor Shares), and A Shares, B Shares and I Shares
of each of Stable Income Fund, Intermediate Government Income Fund, Income Fund,
Total Return Bond Fund, Tax-Free Income Fund, Colorado Tax-Free Fund, Minnesota
Tax-Free Fund, Conservative Balanced Fund, Moderate Balanced Fund, Growth
Balanced Fund, Income Equity Fund, ValuGrowth Stock Fund, Diversified Equity
Fund, Growth Equity Fund, Small Company Stock Fund, Contrarian Stock Fund and
International Fund and I Shares of each Diversified Bond Fund, Limited Term
Tax-Free Fund, and Small Company Growth Fund.

Norwest Funds offers shares of one other portfolio, Small Cap Opportunities
Fund. This Statement of Additional Information does not pertain to that
portfolio.

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
A CORRESPONDING PROSPECTUS, COPIES OF WHICH MAY BE OBTAINED BY AN INVESTOR
WITHOUT CHARGE BY CONTACTING THE DISTRIBUTOR AT THE ADDRESS LISTED ABOVE.

<PAGE>

TABLE OF CONTENTS
PAGE
----

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1. Investment Policies. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Security Ratings Information.......... . . . . . . . . . . . . . . . .3
Money Market Fund Matters. . . . . . . . . . . . . . . . . . . . . . .3
Fixed Income Investments . . . . . . . . . . . . . . . . . . . . . . .4
Mortgage-Backed And Asset-Backed Securities . . . . . . . . . . . . .10
Interest Rate Protection Transactions. . . . . . . . . . . . . . . . .12
Hedging And Option Income Strategies . . . . . . . . . . . . . . . . .13
Foreign Currency Transactions. . . . . . . . . . . . . . . . . . . . .17
Equity Securities and Additional Information
Concerning the Equity Funds. . . . . . . . . . . . . . . . . . . . . .18
Illiquid Securities and Restricted Securities. . . . . . . . . . . . .20
Borrowing And Transactions Involving Leverage. . . . . . . . . . . . .21
Repurchase Agreements. . . . . . . . . . . . . . . . . . . . . . . . .23
Temporary Defensive Position . . . . . . . . . . . . . . . . . . . . .24

2. Information Concerning Colorado and Minnesota. . . . . . . . . . . . . .25
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Minnesota. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

3. Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . .29
Fundamental Limitations. . . . . . . . . . . . . . . . . . . . . . . .29
Non-Fundamental Limitations. . . . . . . . . . . . . . . . . . . . . .32

4. Performance and Advertising Data . . . . . . . . . . . . . . . . . . . .35
SEC Yield Calculations . . . . . . . . . . . . . . . . . . . . . . . .35
Total Return Calculations. . . . . . . . . . . . . . . . . . . . . . .36
Multiclass, Collective Trust Fund and Core-Gateway Performance . . . .37
Other Advertisement Matters. . . . . . . . . . . . . . . . . . . . . .37

5. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Trustees and Officers. . . . . . . . . . . . . . . . . . . . . . . . .40
Investment Advisory Services . . . . . . . . . . . . . . . . . . . . .43
Management and Administrative Services . . . . . . . . . . . . . . . .46
Distribution . . . . . . . . . . . . . . . . . . . . . . . . .48
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Portfolio Accounting . . . . . . . . . . . . . . . . . . . . . . . . .51
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
6. Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . .53
7. Additional Purchase and Redemption Information . . . . . . . . . . . . .58
Statement of Intention . . . . . . . . . . . . . . . . . . . . . . . .58
Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Contingent Deferred Sales Charge (A Shares). . . . . . . . . . . . . .60
Contingent Deferred Sales Charge (A Shares and B Shares) . . . . . . .61
Conversion of B Shares . . . . . . . . . . . . . . . . . . . . . . . .61

8. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

(i)

<PAGE>
TABLE OF CONTENTS

9. Additional Information About the Trust and the
Shareholders of the Funds . . . . . . . . . . . . . . . . . . . . . .64
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . .64
Counsel and Auditors . . . . . . . . . . . . . . . . . . . . . . . . .64
General Information. . . . . . . . . . . . . . . . . . . . . . . . . .64
Recent Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Shareholdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .65
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . .65

Appendix A - Description of Securities Ratings . . . . . . . . . . . . . . .A-1
Appendix B - Miscellaneous Tables. . . . . . . . . . . . . . . . . . . . . .B-1
Table 1 - Investment Advisory Fees . . . . . . . . . . . . . . . . . . . . .
Table 2 - Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . .
Table 3 - Distribution Fees. . . . . . . . . . . . . . . . . . . . . . . . .
Table 4 - Sales Charges. . . . . . . . . . . . . . . . . . . . . . . . . . .
Table 5 - Accounting Fees. . . . . . . . . . . . . . . . . . . . . . . . . .
Table 6 - Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Table 7 - 5% Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix C - Performance Data. . . . . . . . . . . . . . . . . . . . . . . .C-1
Table 1 - Money Market Fund. . . . . . . . . . . . . . . . . . . . . . . . .C-1
Table 2 - Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .C-1
Table 3 - Total Returns. . . . . . . . . . . . . . . . . . . . . . . . . . .C3

(ii)

<PAGE>

INTRODUCTION

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 Funds" and on June 1, 1997, changed its
name back to "Norwest Funds." On October 1, 1995 the Trust also changed the
name of its various classes of shares as follows: Investor A class was renamed
A class ("A Shares"); Investor B class was renamed B class ("B Shares"); Trust
class was renamed I class ("I Shares"); and Advantage class, also was renamed I
Shares.

Each Fund's investment adviser is Norwest Investment Management, a part of
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A., which serves as the
Trust's transfer agent and custodian, is a subsidiary of Norwest Corporation.
Forum Financial Services, Inc., a registered broker-dealer, serves as the
Trust's manager and as distributor of the Trust's shares. Forum Administrative
Services, LLC serves as each Fund's administrator. Schroder Capital Management
International Inc. serves as investment subadviser to Conservative Balanced
Fund, Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity Fund,
Growth Equity Fund and International Fund. Schroder also serves as investment
adviser to International Portfolio, in which International Fund currently
invests all of its investable assets. Crestone Capital Management, Inc. serves
as investment subadviser to Small Company Stock Fund.

As used in this SAI, the following terms shall have the meanings listed:

"Adviser" shall mean Norwest Investment Management, Inc., a subsidiary of
Norwest Bank Minnesota, N.A.

"Investment Advisers" shall mean, collectively, Norwest, Schroder and
Crestone, as applicable.

"Board" shall mean the Board of Trustees of the Trust.

"Balanced Fund" shall mean each of Conservative Balanced Fund, Moderate
Balanced Fund and Growth Balanced Fund.

"CFTC" shall mean the U.S. Commodities Futures Trading Commission.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Core Trust" shall mean Core Trust (Delaware), an open-end, management
investment company registered under the 1940 Act.

"Core Trust Board" shall mean the Board of Trustees of Core Trust.

"Crestone" shall mean Crestone Capital Management, Inc.

"Custodian" shall mean Norwest acting in its capacity as custodian of a
Fund.

"Equity Fund" shall mean each of Income Equity Fund, Index Fund,
ValuGrowth Stock Fund, Diversified Equity Fund, Growth Equity Fund, Large
Company Growth Fund, Small Company Stock Fund, Small Company Growth Fund,
Contrarian Stock Fund and International Fund.

"FFC" shall mean Forum Financial Corp., the Trust's fund accountant.

"Fitch" shall mean Fitch Investors Service, L.P.

"Income Fund" shall mean each of Stable Income Fund, Intermediate
Government Income Fund, Diversified Bond Fund, Income Fund and Total
Return Bond Fund.

-1-

<PAGE>

"Forum" shall mean Forum Financial Services, Inc., the Trust's manager and
distributor of the Trust's shares.

"Forum Administrative" shall mean Forum Administrative Services, LLC, the
Trust's administrator.

"Fund" shall mean each of the twenty-seven separate portfolios of the Trust
to which this Statement of Additional Information relates as identified on
the cover page.

"Money Market Funds" shall mean each of Cash Investment Fund, Ready Cash
Investment Fund, U.S. Government Fund, Treasury Fund and Municipal Money
Market Fund.

"Moody's" shall mean Moody's Investors Service, Inc.

"Norwest" shall mean Norwest Investment Management, Inc., a subsidiary of
Norwest Bank Minnesota, N.A.

"Norwest Bank" shall mean Norwest Bank Minnesota, N.A., a subsidiary of
Norwest Corporation.

"NRSRO" shall mean a nationally recognized statistical rating organization.

"Portfolio" shall mean Prime Money Market Portfolio, Money Market
Portfolio, Stable Income Portfolio, Total Return Bond Portfolio, Positive
Return Bond Portfolio, Managed Fixed Income Portfolio, Income Equity
Portfolio, Large Company Growth Portfolio, Small Company Value Portfolio,
Small Company Growth Portfolio, Small Company Stock Portfolio, Index
Portfolio and International Portfolio, thirteen separate portfolios of Core
Trust.

"Schroder" shall mean Schroder Capital Management Inc., the investment
subadviser to Diversified Equity Fund, Growth Equity Fund, International
Fund, Conservative Balanced Fund, Moderate Balanced Fund and Growth
Balanced Fund and investment adviser to International Portfolio.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"S&P" shall mean Standard & Poor's Rating Group.

"Tax Free Income Fund" shall mean each of Limited Term Tax-Free Fund,
Tax-Free Income Fund, Colorado Tax-Free Fund and Minnesota Tax-Free Fund.

"Transfer Agent" shall mean Norwest Bank acting in its capacity as transfer
and dividend disbursing agent of the a Fund.

"Trust" shall mean Norwest Funds, an open-end management investment company
registered under the 1940 Act.

"U.S. Government Securities" shall mean obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.

"1933 Act" shall mean the Securities Act of 1933, as amended.

"1940 Act" shall mean the Investment Company Act of 1940, as amended.

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1. INVESTMENT POLICIES

The following discussion is intended to supplement the disclosure in each
Prospectus concerning each Fund's investments, investment techniques and
strategies and the risks associated therewith. No Fund may make any investment
or employ any investment technique or strategy not referenced in the Prospectus
which relates to that Fund. For example, while the SAI describes "swap"
transactions below, only those Funds whose investment policies, as described in
the Prospectus, allow the Fund to invest in swap transactions may do so.
References to the investment policies and investment limitations of
International Fund also pertain to the International Portfolio, in which that
Fund currently invests all of its assets. In addition, references to the Funds
which include International Fund also pertain to International Portfolio.

SECURITY RATINGS INFORMATION

Moody's, S&P and other NRSROs are private services that provide ratings of the
credit quality of debt obligations, including convertible securities. A
description of the range of ratings assigned to various types of bonds and other
securities by several NRSROs is included in Appendix A to this SAI. The Funds
may use these ratings to determine whether to purchase, sell or hold a security.
It should be emphasized, however, that ratings are general and are not absolute
standards of quality. Consequently, securities with the same maturity, interest
rate and rating may have different market prices. If an issue of securities
ceases to be rated or if its rating is reduced after it is purchased by a Fund
(neither event requiring sale of such security by a Fund - except in certain
cases with respect to the Money Market Funds), the Investment Adviser of the
Fund will determine whether the Fund should continue to hold the obligation. To
the extent that the ratings given by a NRSRO may change as a result of changes
in such organizations or their rating systems, the Investment Adviser will
attempt to substitute comparable ratings. Credit ratings attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings. An issuer's current financial condition may be
better or worse than a rating indicates.

A Fund may purchase unrated securities if its Investment Adviser determines the
security to be of comparable quality to a rated security that the Fund may
purchase. Unrated securities may not be as actively traded as rated securities.
A Fund may retain securities whose rating has been lowered below the lowest
permissible rating category (or that are unrated and determined by its
Investment Adviser to be of comparable quality to securities whose rating has
been lowered below the lowest permissible rating category) if the Investment
Adviser determines that retaining such security is in the best interests of the
Fund.

To limit credit risks, International Portfolio may only invest in securities
that are investment grade (rated in the top four long-term investment grades by
an NRSRO or in the top two short-term investment grades by an NRSRO.)
Accordingly, the lowest permissible long-term investment grades for corporate
bonds, including convertible bonds, are Baa in the case of Moody's and BBB in
the case of S&P and Fitch; the lowest permissible long-term investment grades
for preferred stock are Baa in the case of Moody's and BBB in the case of S&P
and Fitch; and the lowest permissible short-term investment grades for
short-term debt, including commercial paper, are Prime-2 (P-2) in the case of
Moody's, A-2 in the case of S&P and F-2 in the case of Fitch. All these ratings
are generally considered to be investment grade ratings, although Moody's
indicates that securities with long-term ratings of Baa have speculative
characteristics.

MONEY MARKET FUND MATTERS

Pursuant to Rule 2a-7 adopted under the 1940 Act, each of the Money Market Funds
may invest only in "eligible securities" as defined in that Rule. Generally, an
eligible security is a security that (i) is denominated in U.S. Dollars and has
a remaining maturity of 397 days or less; (ii) is rated, or is issued by an
issuer with short-term debt outstanding that is rated, in one of the two highest
rating categories by two NRSROs or, if only one NRSRO has issued a rating, by
that NRSRO; and (iii) has been determined by the Investment Adviser to present
minimal credit risks pursuant to procedures approved by the Board. In addition,
the Money Market Funds will maintain a dollar-weighted average maturity of 90
days or less. Unrated securities may also be eligible securities if the
Investment Adviser determines that they are of comparable quality to a rated
eligible security pursuant to guidelines approved by the Board.

Under Rule 2a-7, except for Municipal Money Market Fund, a Money Market Fund may
not invest more than five percent of its total assets in the securities of any
one issuer other than U.S. Government Securities, provided that in
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certain cases a Fund may invest 5% of its assets in a single issuer for a period
of up to three business days. Municipal Money Market Fund is, however, subject
to the issuer diversification rules described in paragraph (1) under "Investment
Limitations, Nonfundamental Limitations." Except for Municipal Money Market
Fund, a Money Market Fund may not invest in a security that has received, or is
deemed comparable in quality to a security that has received, the second highest
rating by the requisite number of NRSROs (a "second tier security") if
immediately after the acquisition thereof the Fund would have invested more than
(A) the greater of one percent of its total assets or one million dollars in
securities issued by that issuer which are second tier securities, or (B) five
percent of its total assets in second tier securities.

Immediately after the acquisition of any put, no more than five percent of a
Money Market Fund's total assets may be invested in securities issued by or
subject to conditional puts from the same institution and no more than ten
percent of a Money Market Fund's total assets may be invested in securities
issued by or subject to unconditional puts (including guarantees) from the same
institution. However, these restriction only apply with respect to 75% of the
Municipal Money Market Fund's total assets.

INVESTMENT BY FEDERAL CREDIT UNIONS

U.S. Government Fund and Treasury Fund limit their investments, as described in
each of the Prospectuses for those Funds, to investments that are legally
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act (including 12 U.S.C. Section 1757(7), (8) and (15))
and the applicable rules and regulations of the National Credit Union
Administration (including 12 C.F.R. Part 703, Investment and Deposit
Activities), as such statutes and rules and regulations may be amended.
Treasury Fund limits its investments to Treasury obligations, including Treasury
STRIPS with a maturity of less than 13 months. U.S. Government Fund limits its
investments to U.S. Government Securities (including Treasury STRIPS),
repurchase agreements fully collateralized by U.S. Government Securities and
other government related zero-coupon securities, such as TIGRs and CATs. All
zero-coupon securities in which the Fund invests will have a maturity of less
than 13 months. Certain U.S. Government Securities owned by the Fund may be
mortgage or asset backed, but, except to reduce interest rate risk, no such
security will be (i) a stripped mortgage backed security ("SMBS"), (ii) a
collateralized mortgage obligation ("CMO") or real estate mortgage investment
conduit ("REMIC") that meets any of the tests outlined in 12 C.F.R. Section
703.5(g) or (iii) a residual interest in a CMO or REMIC. In order to reduce
interest rate risk the Fund may purchase a SMBS, CMO, REMIC or residual interest
in a CMO or REMIC but only in accordance with 12 C.F.R. Section 703.5(i). Each
Fund also may invest in reverse repurchase agreements in accordance with 12
C.F.R. 703.4(e).

FIXED INCOME INVESTMENTS

GENERAL INFORMATION CONCERNING FIXED INCOME SECURITIES

Yields on fixed income securities, including municipal securities, are dependent
on a variety of factors including the general conditions of the money market and
other fixed income securities markets, the size of a particular offering, the
maturity of the obligation and the rating of the issue. Fixed income securities
with longer maturities tend to produce higher yields and are generally subject
to greater price movements than obligations with shorter maturities. There is
normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates. In
other words, an increase in interest rates will generally reduce the market
value of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments.

Obligations of issuers of fixed income securities (including municipal
securities) are subject to the provisions of bankruptcy, insolvency, and other
laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Reform Act of 1978. In addition, the obligations of municipal
issuers may become subject to laws enacted in the future by Congress, state
legislatures, or referenda extending the time for payment of principal and/or
interest, or imposing other constraints upon enforcement of such obligations or
upon the ability of municipalities to levy taxes. Changes in the ability of an
issuer to make payments of interest and principal and in the market's perception
of an issuer's creditworthiness will also affect the market value of the debt
securities of that issuer. The possibility exists, therefore, that, the ability
of any issuer to pay, when due, the principal of and interest on its debt
securities may become impaired.

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U.S. GOVERNMENT SECURITIES

In addition to obligations of the U.S. Treasury, each of the Funds (except
Treasury Fund) may invest in U.S. Government Securities. Obligations of certain
agencies and instrumentalities of the U.S. government are supported by the full
faith and credit of the U.S. Government such as those guaranteed by the Small
Business Administration or issued by the Government National Mortgage
Association; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others are supported
primarily or solely by the creditworthiness of the issuer, such as securities of
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Tennessee Valley Authority. No assurance can be given that
the U.S. government would provide financial support to U.S. government-sponsored
agencies or instrumentalities if it is not obligated to do so by law.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit. A Fund will
invest in the obligations of such agencies or instrumentalities only when
Norwest believes that the credit risk with respect thereto is consistent with
the Fund's investment policies.

BANK OBLIGATIONS

Each Fund may, in accordance with the policies described in its Prospectus,
invest in obligations of financial institutions, including negotiable
certificates of deposit, bankers' acceptances and time deposits of U.S. banks
(including savings banks and savings associations), foreign branches of U.S.
banks, foreign banks and their non-U.S. branches (Eurodollars), U.S. branches
and agencies of foreign banks (Yankee dollars), and wholly-owned banking-related
subsidiaries of foreign banks. A Fund's investments in the obligations of
foreign banks and their branches, agencies or subsidiaries may be obligations of
the parent, of the issuing branch, agency or subsidiary, or both. Investments
in foreign bank obligations are limited to banks and branches located in
countries which the Fund's Adviser believes do not present undue risk.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution
that earn a specified interest rate over a given period. Certificates of
deposit and fixed time deposits, which are payable at the stated maturity date
and bear a fixed rate of interest, generally may be withdrawn on demand by the
Fund but may be subject to early withdrawal penalties which vary depending upon
market conditions and the remaining maturity of the obligation and could reduce
the Fund's yield. Although fixed-time deposits do not in all cases have a
secondary market, there are no contractual restrictions on the Fund's right to
transfer a beneficial interest in the deposits to third parties. Deposits
subject to early withdrawal penalties or that mature in more than seven days are
treated as illiquid securities if there is no readily available market for the
securities.

The Funds may invest in Eurodollar certificates of deposit, which are U.S.
dollar denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States; Eurodollar time
deposits ("ETDs"), which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; and Canadian time deposits, which are
basically the same as ETDs except they are issued by Canadian offices of major
Canadian banks.

Investments that a Fund may make in securities of foreign banks, branches or
subsidiaries may involve certain risks, including future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on such securities, the possible seizure or nationalization of
foreign deposits, differences from domestic banks in applicable accounting,
auditing and financial reporting standards, and the possible establishment of
exchange controls or other foreign governmental laws or restrictions applicable
to the payment of certificates of deposit or time deposits which might affect
adversely the payment of principal and interest on such securities held by the
Fund.

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COMMERCIAL PAPER

Except for the Money Market Funds, each Fund may assume a temporary defensive
position and may invest without limit in commercial paper that is rated in one
of the two highest rating categories by an NRSRO or, if not rated, determined by
the Investment Adviser to be of comparable quality. Certain Funds may invest in
commercial paper as an investment and not as a temporary defensive position.
Commercial paper (short-term promissory notes) consists of unsecured promissory
notes issued by companies to finance their or their affiliates' current
obligations. Except as noted below with respect to variable master demand
notes, issues of commercial paper normally have maturities of less than nine
months and fixed rates of return.

Variable amount master demand notes are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, the
Fund may demand payment of principal and accrued interest at any time. Variable
amount master demand notes must satisfy the same criteria as set forth above for
commercial paper.

GUARANTEED INVESTMENT CONTRACTS

The Fixed Income Funds may invest in guaranteed investment contracts ("GICs")
issued by insurance companies. Pursuant to such contracts, a Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the deposit fund on a monthly basis guaranteed
interest at a rate based on an index. The GICs provide that this guaranteed
interest will not be less than a certain minimum rate. The insurance company
may assess periodic charges against a GIC for expense and service costs
allocable to it, and these charges will be deducted from the value of the
deposit fund. A Fund will purchase a GIC only when the Investment Adviser has
determined that the GIC presents minimal credit risks to the Fund and is of
comparable quality to instruments in which the Fund may otherwise invest.
Because a Fund may not receive the principal amount of a GIC from the insurance
company on seven days' notice or less, a GIC may be considered an illiquid
investment. The term of a GIC will be one year or less.

In determining the average weighted portfolio maturity of a Fund, a GIC will be
deemed to have a maturity equal to the period of time remaining until the next
readjustment of the guaranteed interest rate. The interest rate on a GIC may be
tied to a specified market index and is guaranteed not to be less than a certain
minimum rate.

ZERO COUPON SECURITIES

Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity. Accordingly, these securities usually trade at a
deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make current distributions of
interest. Federal tax law requires that a Fund accrue a portion of the discount
at which a zero-coupon security was purchased as income each year even though
the Fund receives no interest payment in cash on the security during the year.
Interest on these securities, however, is reported as income by the Fund and
must be distributed to its shareholders. The Funds distribute all of their net
investment income, and may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the Investment Adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.

Currently U.S. Treasury securities issued without coupons include Treasury bills
and separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. These stripped components are traded
independently under the Treasury's Separate Trading of Registered Interest and
Principal of Securities ("STRIPS") program or as Coupons Under Book Entry
Safekeeping ("CUBES"). A number of banks and brokerage firms separate the
principal and interest portions of U.S. Treasury securities and sell them
separately in the form of receipts or certificates representing undivided
interests in these instruments. These instruments are generally held by a bank
in a custodial or trust account on behalf of the owners of the securities and
are known by various names, including Treasury Receipts ("TRs"), Treasury
Investment Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury
Securities ("CATS"). In addition, corporate debt securities may be zero coupon
securities. For the purpose solely of an investment policy of investing at
least 65% of a Fund's assets in U.S. Government Securities, such

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securities are currently not deemed to be U.S. Government Securities but rather
securities issued by the bank or brokerage firm involved.

MUNICIPAL SECURITIES

Municipal securities are issued by the States, territories and possessions of
the United States, their political subdivisions (such as cities, counties and
towns) and various authorities (such as public housing or redevelopment
authorities), instrumentalities, public corporations and special districts (such
as water, sewer or sanitary districts) of the States, territories and
possessions of the United States or their political subdivisions. In addition,
municipal securities include securities issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds, that are backed only by the assets and revenues of the
non-governmental user (such as hospitals and airports).

Municipal securities historically have not been subject to registration with the
SEC, although there have been proposals which would require registration in the
future.

MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities are intended to fulfill the short-term capital needs of the
issuer and generally have maturities not exceeding one year. They include the
following: tax anticipation notes, revenue anticipation notes, bond
anticipation notes, construction loan notes and tax-exempt commercial paper. Tax
anticipation notes are issued to finance working capital needs of
municipalities, and are payable from various anticipated future seasonal tax
revenues, such as income, sales, use and business taxes. Revenue anticipation
notes are issued in expectation of receipt of other types of revenues, such as
federal revenues available under various federal revenue sharing programs. Bond
anticipation notes are issued to provide interim financing until long-term
financing can be arranged and are typically payable from proceeds of the
long-term bonds. Construction loan notes are sold to provide construction
financing. After successful completion and acceptance, many such projects
receive permanent financing through the Federal Housing Administration under the
Federal National Mortgage Association or the Government National Mortgage
Association. Tax-exempt commercial paper is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of state and
local governments to finance seasonal working capital needs or as short-term
financing in anticipation of longer term financing. Municipal notes also
include longer term issues that are remarketed to investors periodically,
usually at one year intervals or less.

MUNICIPAL BONDS. Municipal bonds meet longer term capital needs of a municipal
issuer and generally have maturities of more than one year when issued. General
obligation bonds are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its
full faith and credit and taxing power for the payment of principal and
interest. The taxes that can be levied for the payment of debt service may be
limited or unlimited as to the rate or amount. Revenue bonds in recent years
have come to include an increasingly wide variety of types of municipal
obligations. As with other kinds of municipal obligations, the issuers of
revenue bonds may consist of virtually any form of state or local governmental
entity. Generally, revenue bonds are secured by the revenues or net revenues
derived from a particular facility, class of facilities, or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not from
general tax revenues. Revenue bonds are issued to finance a wide variety of
capital projects including electric, gas, water and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and universities;
and hospitals. Many of these bonds are additionally secured by a debt service
reserve fund which can be used to make a limited number of principal and
interest payments should the pledged revenues be insufficient. Various forms of
credit enhancement, such as a bank letter of credit or municipal bond insurance,
may also be employed in revenue bond issues. Revenue bonds issued by housing
authorities may be secured in a number of ways, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, and/or the
net revenues from housing or other public projects. Some authorities provide
further security in the form of a state's ability (without obligation) to make
up deficiencies in the debt service reserve fund. In recent years, revenue
bonds have been issued in large volumes for projects that are privately owned
and operated, as discussed below.

Private activity bonds are considered municipal bonds if the interest paid
thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for

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business and manufacturing, housing, and health care and other nonprofit or
charitable purposes. These bonds are also used to finance public facilities
such as airports, mass transit systems and ports. The payment of the principal
and interest on such bonds is dependent solely on the ability of the facility's
user to meet its financial obligations and the pledge, if any, of real and
personal property as security for such payment.

While at one time the pertinent provisions of the Code permitted private
activity bonds to bear tax-exempt interest in connection with virtually any type
of commercial or industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume restrictions, and
other matters), the types of qualifying projects under the Code have become
increasingly limited, particularly since the enactment of the Tax Reform Act of
1986. Under current provisions of the Code, tax-exempt financing remains
available, under prescribed conditions, for certain privately owned and operated
facilities of a organization described in Section 501(c)(3) of the Code, rental
multi-family housing facilities, airports, docks and wharves, mass commuting
facilities and solid waste disposal projects, among others, and for the
refunding (that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt bonds. In
future years, the types of projects qualifying under the Code for tax-exempt
financing are expected to become increasingly limited.

Because of terminology formerly used in the Internal Revenue Code, virtually any
form of private activity bond may still be referred to as an "industrial
development bond," but more and more frequently revenue bonds have become
classified according to the particular type of facility being financed, such as
hospital revenue bonds, nursing home revenue bonds, multifamily housing revenues
bonds, single family housing revenue bonds, industrial development revenue
bonds, solid waste resource recovery revenue bonds, and so on.

OTHER MUNICIPAL OBLIGATIONS. Other municipal obligations, incurred for a
variety of financing purposes, include municipal leases, which may take the form
of a lease or an installment purchase or conditional sale contract. Municipal
leases are entered into by state and local governments and authorities to
acquire a wide variety of equipment and facilities such as fire and sanitation
vehicles, telecommunications equipment and other capital assets. Municipal
leases frequently have special risks not normally associated with general
obligation or revenue bonds. Leases and installment purchase or conditional
sale contracts (which normally provide for title to the leased asset to pass
eventually to the government issuer) have evolved as a means for governmental
issuers to acquire property and equipment without being required to meet the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis.

ALTERNATIVE MINIMUM TAX. Municipal securities are also categorized according to
whether the interest is or is not includable in the calculation of alternative
minimum taxes imposed on individuals, according to whether the costs of
acquiring or carrying the bonds are or are not deductible in part by banks and
other financial institutions, and according to other criteria relevant for
Federal income tax purposes. Due to the increasing complexity of the Code and
related requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required, as a condition to the issuance of such bonds,
but particularly for revenue bonds, an opinion of nationally recognized bond
counsel as to the tax-exempt status of interest on the bonds.

PUTS AND STANDBY COMMITMENTS ON MUNICIPAL SECURITIES. The Funds may acquire
"puts" with respect to municipal securities. A put gives the Fund the right to
sell the municipal security at a specified price at any time on or before a
specified date. The Funds may sell, transfer or assign a put only in
conjunction with its sale, transfer or assignment of the underlying security or
securities. The amount payable to a Fund upon its exercise of a "put" is
normally (i) the Fund's acquisition cost of the municipal securities (excluding
any accrued interest which the Fund paid on their acquisition), less any
amortized market premium or plus any amortized market or original issue discount
during the period the Fund owned the securities, plus (ii) all interest accrued
on the securities since the last interest payment date during that period.

Puts may be acquired by the Funds to facilitate the liquidity of its portfolio
assets. Puts may also be used to facilitate the reinvestment of a Fund's assets
at a rate of return more favorable than that of the underlying security. The
Funds expect that they will generally acquire puts only where the puts are
available without the payment of any direct or

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indirect consideration. However, if necessary or advisable, the Funds may pay
for a put either separately in cash or by paying a higher price for portfolio
securities which are acquired subject to the puts (thus reducing the yield to
maturity otherwise available for the same securities). The Funds intend to
enter into puts only with dealers, banks and broker-dealers which, in Norwest's
opinion, present minimal credit risks.

Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of a Fund's assets.

The Funds may purchase municipal securities together with the right to resell
them to the seller or a third party at an agreed-upon price or yield within
specified periods prior to their maturity dates. Such a right to resell is
commonly known as a "stand-by commitment," and the aggregate price which the
Fund pays for securities with a stand-by commitment may be higher than the price
which otherwise would be paid. The primary purpose of this practice is to
permit a Fund to be as fully invested as practicable in municipal securities
while preserving the necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, a Fund acquires stand-by commitments solely to
facilitate portfolio liquidity and does not exercise its rights thereunder for
trading purposes. Stand-by commitments involve certain expenses and risks,
including the inability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, non-marketability of the
commitment, and differences between the maturity of the underlying security and
the maturity of the commitment. The Funds' policy is to enter into stand-by
commitment transactions only with municipal securities dealers which are
determined to present minimal credit risks.

The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities which continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Fund are valued at zero in determining net asset value. When a Fund pays
directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the Fund's
portfolio of securities.

VARIABLE AND FLOATING RATE SECURITIES

The securities in which the Funds invest (including municipal securities or
mortgage- and asset-backed securities, as applicable) may have variable or
floating rates of interest and, under certain limited circumstances, may have
varying principal amounts. These securities pay interest at rates that are
adjusted periodically accordingly to a specified formula, usually with reference
to one or more interest rate indices or market interest rates (the "underlying
index"). The interest paid on these securities is a function primarily of the
underlying index upon which the interest rate adjustments are based. Such
adjustments minimize changes in the market value of the obligation and,
accordingly, enhance the ability of the Fund to maintain a stable net asset
value. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's creditworthiness. The rate of interest on
securities purchased by a Fund may be tied to Treasury or other government
securities or indices on those securities as well as any other rate of interest
or index. Certain variable rate securities (including mortgage-related
securities or mortgage-backed securities) pay interest at a rate that varies
inversely to prevailing short-term interest rates (sometimes referred to as
inverse floaters). For instance, upon reset the interest rate payable on a
security may go down when the underlying index has risen. During times when
short-term interest rates are relatively low as compared to long-term interest
rates a Fund may attempt to enhance its yield by purchasing inverse floaters.
Certain inverse floaters may have an interest rate reset mechanism that
multiplies the effects of changes in the underlying index. This form of
leverage may have the effect of increasing the volatility of the security's
market value while increasing the security's, and thus the Fund's, yield. Money
Market Funds may not invest in inverse floaters and certain other variable and
floating rates securities that do not imply with Rule 2a-17.

There may not be an active secondary market for any particular floating or
variable rate instruments (particularly inverse floaters and similar
instruments) which could make it difficult for a Fund to dispose of the
instrument if the issuer defaulted on its repayment obligation during periods
that the Fund is not entitled to exercise any demand rights it may have. A Fund
could, for this or other reasons, suffer a loss with respect to an instrument.
The Investment Advisers, as applicable, monitor the liquidity of the Funds'
investment in variable and floating rate instruments, but there can be no
guarantee that an active secondary market will exist.

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Many variable rate instruments include the right of the holder to demand
prepayment of the principal amount of the obligation prior to its stated
maturity and the right of the issuer to prepay the principal amount prior to
maturity. The payment of principal and interest by issuers of certain
securities purchased by the Funds may be guaranteed by letters of credit or
other credit facilities offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a municipal security meets
the Funds' investment quality requirements.

Variable rate obligations purchased by the Funds may include participation
interests in variable rate obligations purchased by the Funds from banks,
insurance companies or other financial institutions that are backed by
irrevocable letters of credit or guarantees of banks. The Funds can exercise
the right, on not more than thirty days' notice, to sell such an instrument back
to the bank from which it purchased the instrument and draw on the letter of
credit for all or any part of the principal amount of a Fund's participation
interest in the instrument, plus accrued interest, but will do so only (i) as
required to provide liquidity to a Fund, (ii) to maintain a high quality
investment portfolio, or (iii) upon a default under the terms of the demand
instrument. Banks and other financial institutions retain portions of the
interest paid on such variable rate obligations as their fees for servicing such
instruments and the issuance of related letters of credit, guarantees and
repurchase commitments.

The Funds will not purchase participation interests in variable rate obligations
unless it is advised by counsel or receives a ruling of the Internal Revenue
Service that interest earned by the Funds from the obligations in which it holds
participation interests is exempt from Federal income tax. The Internal Revenue
Service has announced that it ordinarily will not issue advance rulings on
certain of the Federal income tax consequences applicable to securities, or
participation interests therein, subject to a put. The Investment Advisers
monitor the pricing, quality and liquidity of variable rate demand obligations
and participation interests therein held by the Fund on the basis of published
financial information, rating agency reports and other research services to
which the Investment Adviser may subscribe.

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

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

TYPES OF CREDIT ENHANCEMENT

To lessen the effect of failures by obligors on Mortgage Assets (as defined in
the Prospectus) to make payments, mortgage-backed securities may contain
elements of credit enhancement. Credit enhancement falls into two categories:
(1) liquidity protection; and (2) protection against losses resulting after
default by an obligor on the underlying assets and collection of all amounts
recoverable directly from the obligor and through liquidation of the collateral.
Liquidity protection refers to the provisions of advances, generally by the
entity administering the pool of assets (usually the bank, savings association
or mortgage banker that transferred the underlying loans to the issuer of the
security), to ensure that the receipt of payments on the underlying pool occurs
in a timely fashion. Protection against losses resulting after default and
liquidation ensures ultimate payment of the obligations on at least a portion of
the assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The Funds will not pay any additional fees for
such credit enhancement, although the existence of credit enhancement may
increase the price of security.

Examples of credit enhancement arising out of the structure of the transaction
include (i) "senior-subordinated securities" (multiple class securities with one
or more classes subordinate to other classes as to the payment of principal
thereof and interest thereon, with the result that defaults on the underlying
assets are borne first by the holders of the subordinated class), (ii) creation
of "spread accounts" or "reserve funds" (where cash or investments, sometimes
funded from a portion of the payments on the underlying assets are held in
reserve against future losses)

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and (iii) "over-collateralization" (where the scheduled payments on, or the
principal amount of, the underlying assets exceeds that required to make payment
of the securities and pay any servicing or other fees). The degree of credit
enhancement provided for each issue generally is based on historical information
regarding the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that covered by credit enhancement protection
could adversely affect the return on an investment in such a security.

OTHER GOVERNMENTAL RELATED MORTGAGE-BACKED SECURITIES

The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
Government in connection with the savings and loan crisis, holds assets of
failed savings associations as either a conservator or receiver for such
associations, or it acquires such assets in its corporate capacity. These
assets include, among other things, single family and multi-family mortgage
loans, as well as commercial mortgage loans. In order to dispose of such assets
in an orderly manner, RTC has established a vehicle registered with the SEC
through which it sold mortgage-backed securities. RTC mortgage-backed
securities represent pro rata interests in pools of mortgage loans that RTC
holds or has acquired, as described above, and are supported by one or more of
the types of private credit enhancements used by Private Mortgage Lenders.

It is anticipated that in the future the Federal Deposit Insurance Corporation
(which also holds mortgage loans as a conservator or receiver of insolvent banks
or in its corporate capacity) or other governmental agencies or
instrumentalities may establish vehicles for the issuance of mortgage-backed
securities that are similar in structure and in types of credit enhancements to
RTC securities.

ASSET-BACKED SECURITIES

A Fund may invest in asset-backed securities, which have structural
characteristics similar to mortgage-backed securities but have underlying assets
that are not mortgage loans or interests in mortgage loans. Asset-backed
securities are securities that represent direct or indirect participations in,
or are secured by and payable from, assets such as motor vehicle installment
sales contracts, installment loan contracts, leases of various types of real and
personal property and receivables from revolving credit (credit card)
agreements. Such assets are securitized through the use of trusts and special
purpose corporations.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. Payments of principal and
interest may be guaranteed up to certain amounts and for a certain time period
by a letter of credit issued by a financial institution.

Asset-backed securities present certain risks that are not presented by
mortgage-backed debt securities or other securities in which a Fund may invest.
Primarily, these securities do not always have the benefit of a security
interest in comparable collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a number of state
and Federal consumer credit laws, many of which give such debtors the right to
set off certain amounts owed on the credit cards, thereby reducing the balance
due. Automobile receivables generally are secured by automobiles. Most issuers
of automobile receivables permit the loan servicers to retain possession of the
underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the asset-backed securities. In addition,
because of the large number of vehicles involved in a typical issuance and the
technical requirements under state laws, the trustee for the holders of the
automobile receivables may not have a proper security interest in the underlying
automobiles. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.

INTEREST-ONLY AND PRINCIPAL-ONLY SECURITIES

Some tranches of mortgage-backed securities, including CMOs, are structured so
that investors receive only principal payments generated by the underlying
collateral. Principal only ("POs") securities usually sell at a deep discount
from face value on the assumption that the purchaser will ultimately receive the
entire face value through

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scheduled payments and prepayments; however, the market values of POs are
extremely sensitive to prepayment rates, which, in turn, vary with interest rate
changes. If interest rates are falling and prepayments accelerate, the value of
the PO will increase. On the other hand, if rates rise and prepayments slow,
the value of the PO will drop.

Interest only ("IOs") securities result from the creation of POs; thus, CMOs
with PO tranches also have IO tranches. IO securities sell at a deep discount
to their "notional" principal amount, namely the principal balance used to
calculate the amount of interest due. They have no face or par value and, as
the notional principal amortizes and prepays, the IO cash-flow declines.

Unlike POs, IOs increase in value when interest rates rise and prepayment rates
slow; consequently they are often used to "hedge" portfolios against interest
rate risk. If prepayment rates are high, a Fund may receive less cash back than
it initially invested.

INTEREST RATE PROTECTION TRANSACTIONS

Certain Funds may enter into interest rate protection transactions, including
interest rate swaps, caps, collars and floors. Interest rate swap transactions
involve an agreement between two parties to exchange interest payment streams
that are based, for example, on variable and fixed rates that are calculated on
the basis of a specified amount of principal (the "notional principal amount")
for a specified period of time. Interest rate cap and floor transactions
involve an agreement between two parties in which the first party agrees to make
payments to the counterparty when a designated market interest rate goes above
(in the case of a cap) or below (in the case of a floor) a designated level on
predetermined dates or during a specified time period. Interest rate collar
transactions involve an agreement between two parties in which the payments are
made when a designated market interest rate either goes above a designated
ceiling or goes below a designated floor on predetermined dates or during a
specified time period.

A Fund expects to enter into interest rate protection transactions to preserve a
return or spread on a particular investment or portion of its portfolio or to
protect against any increase in the price of securities it anticipates
purchasing at a later date. The Funds intend to use these transactions as a
hedge and not as a speculative investment.

A Fund may enter into interest rate protection transactions on an asset-based
basis, depending on whether it is hedging its assets or its liabilities, and
will usually enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted out, with the Fund receiving or paying, as the case
may be, only the net amount of the two payments. Inasmuch as these interest
rate protection transactions are entered into for good faith hedging purposes,
and inasmuch as segregated accounts will be established with respect to such
transactions, the Funds believe such obligations do not constitute senior
securities. The net amount of the excess, if any, of a Fund's obligations over
its entitlements with respect to each interest rate swap will be accrued on a
daily basis and an amount of cash, U.S. Government Securities or other liquid
high grade debt obligations having an aggregate net asset value at least equal
to the accrued excess will be maintained in a segregated account by a custodian
that satisfies the requirements of the 1940 Act. The Funds also will establish
and maintain such segregated accounts with respect to its total obligations
under any interest rate swaps that are not entered into on a net basis and with
respect to any interest rate caps, collars and floors that are written by the
Fund.

A Fund will enter into interest rate protection transactions only with banks and
other institutions believed by the Investment Adviser to the Fund to present
minimal credit risks. If there is a default by the other party to such a
transaction, the Fund will have to rely on its contractual remedies (which may
be limited by bankruptcy, insolvency or similar laws) pursuant to the agreements
related to the transaction.

The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps, collars and floors are more
recent innovations for which documentation is less standardized and,
accordingly, they are less liquid than swaps.

HEDGING AND OPTION INCOME STRATEGIES

Other than the Money Market Funds, each Fund may (i) purchase or sell (write)
put and call options on securities to enhance the Fund's performance and (ii)
seek to hedge against a decline in the value of securities owned by it or an

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increase in the price of securities which it plans to purchase through the
writing and purchase of exchange-traded and over-the-counter options on
individual securities or securities or financial indices and through the
purchase and sale of financial futures contracts and related options. Certain
Funds currently do no not intend to enter into any such transactions. Whether
or not used for hedging purposes, these investments techniques involve risks
that are different in certain respects from the investment risks associated with
the other investments of a Fund. To the extent a Fund invests in foreign
securities, it may also invest in options on foreign currencies, foreign
currency futures contracts and options on those futures contracts. Use of these
instruments is subject to regulation by the SEC, the several options and futures
exchanges upon which options and futures are traded or the CFTC.

No assurance can be given, however, that any hedging or option income strategy
will succeed in achieving its intended result.

Except as otherwise noted in the Prospectus or herein, the Funds will not use
leverage in their option income and hedging strategies. In the case of
transactions entered into as a hedge, a Fund will hold securities, currencies or
other options or futures positions whose values are expected to offset ("cover")
its obligations thereunder. A Fund will not enter into a hedging strategy that
exposes it to an obligation to another party unless it owns either (i) an
offsetting ("covered") position or (ii) cash, U.S. Government Securities or
other liquid securities (or other assets as may be permitted by the SEC) with a
value sufficient at all times to cover its potential obligations. When required
by applicable regulatory guidelines, the Funds will set aside cash, U.S.
Government Securities or other liquid securities (or other assets as may be
permitted by the SEC) in a segregated account with its custodian in the
prescribed amount. Any assets used for cover or held in a segregated account
cannot be sold or closed out while the hedging or option income strategy is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that the use of cover or segregation involving a large percentage
of a Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.

OPTIONS STRATEGIES

A Fund may purchase put and call options written by others and sell put and call
options covering specified individual securities, securities or financial
indices or currencies. A put option (sometimes called a "standby commitment")
gives the buyer of the option, upon payment of a premium, the right to deliver a
specified amount of currency to the writer of the option on or before a fixed
date at a predetermined price. A call option (sometimes called a "reverse
standby commitment") gives the purchaser of the option, upon payment of a
premium, the right to call upon the writer to deliver a specified amount of
currency on or before a fixed date, at a predetermined price. The predetermined
prices may be higher or lower than the market value of the underlying currency.
A Fund may buy or sell both exchange-traded and over-the-counter ("OTC")
options. A Fund will purchase or write an option only if that option is traded
on a recognized U.S. options exchange or if the Investment Adviser believes that
a liquid secondary market for the option exists. When a Fund purchases an OTC
option, it relies on the dealer from which it has purchased the OTC option to
make or take delivery of the currency underlying the option. Failure by the
dealer to do so would result in the loss of the premium paid by the Fund as well
as the loss of the expected benefit of the transaction. OTC options and the
securities underlying these options currently are treated as illiquid securities
by the Funds.

Upon selling an option, a Fund receives a premium from the purchaser of the
option. Upon purchasing an option the Fund pays a premium to the seller of the
option. The amount of premium received or paid by the Fund is based upon certain
factors, including the market price of the underlying securities, index or
currency, the relationship of the exercise price to the market price, the
historical price volatility of the underlying assets, the option period, supply
and demand and interest rates.

Certain Funds may purchase call options on debt securities that Norwest intends
to include in the Fund's portfolio in order to fix the cost of a future
purchase. Call options may also be purchased as a means of participating in an
anticipated price increase of a security on a more limited risk basis than would
be possible if the security itself were purchased. In the event of a decline in
the price of the underlying security, use of this strategy would serve to limit
the potential loss to the Fund to the option premium paid; conversely, if the
market price of the underlying security increases above the exercise price and
the Fund either sells or exercises the option, any profit eventually realized
will be reduced by the premium paid. A Fund may similarly purchase put options
in order to hedge against a decline in market value of securities held in its
portfolio. The put enables the Fund to sell the underlying security at the

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predetermined exercise price; thus the potential for loss to the Fund is limited
to the option premium paid. If the market price of the underlying security is
lower than the exercise price of the put, any profit the Fund realizes on the
sale of the security would be reduced by the premium paid for the put option
less any amount for which the put may be sold.

An Investment Adviser may write call options when it believes that the market
value of the underlying security will not rise to a value greater than the
exercise price plus the premium received. Call options may also be written to
provide limited protection against a decrease in the market price of a security,
in an amount equal to the call premium received less any transaction costs.

Certain Funds may purchase and write put and call options on fixed income or
equity security indexes in much the same manner as the options discussed above,
except that index options may serve as a hedge against overall fluctuations in
the fixed income or equity securities markets (or market sectors) or as a means
of participating in an anticipated price increase in those markets. The
effectiveness of hedging techniques using index options will depend on the
extent to which price movements in the index selected correlate with price
movements of the securities which are being hedged. Index options are settled
exclusively in cash.

FOREIGN CURRENCY OPTIONS AND RELATED RISKS

A Fund may take positions in options on foreign currencies in order to hedge
against the risk of foreign exchange fluctuation on foreign securities the Fund
holds in its portfolio or which it intends to purchase. Options on foreign
currencies are affected by the factors discussed in "Hedging and Option Income
Strategies -- Options Strategies" and "Foreign Currency Transactions" which
influence foreign exchange sales and investments generally.

The value of foreign currency options is dependent upon the value of the foreign
currency relative to the U.S. dollar and has no relationship to the investment
merits of a foreign security. Because foreign currency transactions occurring
in the interbank market involve substantially larger amounts than those that may
be involved in the use of foreign currency options, a Fund may be disadvantaged
by having to deal in an odd lot market (generally consisting of transactions of
less than $1 million) for the underlying foreign currencies at prices that are
less favorable than for round lots.

To the extent that the U.S. options markets are closed while the market for the
underlying currencies remains open, significant price and rate movements may
take place in the underlying markets that cannot be reflected in the options
markets.

SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING

A Fund may effectively terminate its right or obligation under an option
contract by entering into a closing transaction. For instance, if the Fund
wished to terminate its potential obligation to sell securities or currencies
under a call option it had written, a call option of the same type would be
purchased by the Fund. Closing transactions essentially permit the Fund to
realize profits or limit losses on its options positions prior to the exercise
or expiration of the option. In addition:

(1) The successful use of options depends upon the Investment Adviser's
ability to forecast the direction of price fluctuations in the underlying
securities or currency markets, or in the case of an index option, fluctuations
in the market sector represented by the index.

(2) Options normally have expiration dates of up to nine months. Options
that expire unexercised have no value. Unless an option purchased by a Fund is
exercised or unless a closing transaction is effected with respect to that
position, a loss will be realized in the amount of the premium paid.

(3) A position in an exchange-listed option may be closed out only on an
exchange which provides a market for identical options. Most exchange-listed
options relate to equity securities. Exchange markets for options on foreign
currencies are relatively new, and the ability to establish and close out
positions on the exchanges is subject to the maintenance of a liquid secondary
market. Closing transactions may be effected with respect to options traded in
the over-the-counter markets (currently the primary markets for options on
foreign currencies) only by negotiating directly with the other party to the
option contract or in a secondary market for the option if such market exists.
There is no

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assurance that a liquid secondary market will exist for any particular option at
any specific time. If it is not possible to effect a closing transaction, a
Fund would have to exercise the option which it purchased in order to realize
any profit. The inability to effect a closing transaction on an option written
by a Fund may result in material losses to the Fund.

(4) A Fund's activities in the options markets may result in a higher
portfolio turnover rate and additional brokerage costs.

(5) When a Fund enters into an over-the-counter contract with a
counterparty, the Fund will assume the risk that the counterparty will fail to
perform its obligations, in which case the Fund could be worse off than if the
contract had not been entered into.

FUTURES STRATEGIES

A futures contract is a bilateral agreement wherein one party agrees to accept,
and the other party agrees to make, delivery of cash, an underlying debt
security or the currency as called for in the contract at a specified future
date and at a specified price. For futures contracts with respect to an index,
delivery is of an amount of cash equal to a specified dollar amount times the
difference between the index value at the time of the contract and the close of
trading of the contract.

A Fund may sell interest rate futures contracts in order to continue to receive
the income from a fixed income security, while endeavoring to avoid part of or
all of a decline in the market value of that security which would accompany an
increase in interest rates.

A Fund may purchase index futures contracts for several reasons: to simulate
full investment in the underlying index while retaining a cash balance for fund
management purposes, to facilitate trading, to reduce transactions costs, or to
seek higher investment returns when a futures contract is priced more
attractively than securities in the index.

A Fund may purchase call options on a futures contract as a means of obtaining
temporary exposure to market appreciation at limited risk. This strategy is
analogous to the purchase of a call option on an individual security, in that it
can be used as a temporary substitute for a position in the security itself.

A Fund may sell foreign currency futures contracts to hedge against possible
variations in the exchange rate of the foreign currency in relation to the U.S.
dollar. In addition, a Fund may sell foreign currency futures contracts when its
Investment Adviser anticipates a general weakening of foreign currency exchange
rates that could adversely affect the market values of the Fund's foreign
securities holdings. A Fund may purchase a foreign currency futures contract to
hedge against an anticipated foreign exchange rate increase pending completion
of anticipated transactions. Such a purchase would serve as a temporary measure
to protect the Fund against such increase. A Fund may also purchase call or put
options on foreign currency futures contracts to obtain a fixed foreign exchange
rate at limited risk. A Fund may write call options on foreign currency futures
contracts as a partial hedge against the effects of declining foreign exchange
rates on the value of foreign securities.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES AND RELATED OPTIONS TRADING

No price is paid upon entering into futures contracts; rather, a Fund is
required to deposit (typically with its custodian in a segregated account in the
name of the futures broker) an amount of cash or U.S. Government Securities
generally equal to 5% or less of the contract value. This amount is known as
initial margin. Subsequent payments, called variation margin, to and from the
broker, would be made on a daily basis as the value of the futures position
varies. When writing a call on a futures contract, variation margin must be
deposited in accordance with applicable exchange rules. The initial margin in
futures transactions is in the nature of a performance bond or good-faith
deposit on the contract that is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied.

Holders and writers of futures and options on futures contracts can enter into
offsetting closing transactions, similar to closing transactions on options, by
selling or purchasing, respectively, a futures contract or related option with
the same terms as the position held or written. Positions in futures contracts
may be closed only on an exchange or board of trade providing a secondary market
for such futures contracts.

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<PAGE>
Under certain circumstances, futures exchanges may establish daily limits in the
amount that the price of a futures contract or related option may vary either up
or down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. Prices could move to the daily limit for several consecutive
trading days with little or no trading and thereby prevent prompt liquidation of
positions. In such event, it may not be possible for a Fund to close a position,
and in the event of adverse price movements, it would have to make daily cash
payments of variation margin. In addition:

(1) Successful use by a Fund of futures contracts and related options will
depend upon the Investment Adviser's ability to predict movements in the
direction of the overall securities and currency markets, which requires
different skills and techniques than predicting changes in the prices of
individual securities. Moreover, futures contracts relate not to the current
level of the underlying instrument but to the anticipated levels at some point
in the future; thus, for example, trading of stock index futures may not reflect
the trading of the securities which are used to formulate an index or even
actual fluctuations in the relevant index itself.

(2) The price of futures contracts may not correlate perfectly with
movement in the price of the hedged currencies due to price distortions in the
futures market or otherwise. There may be several reasons unrelated to the value
of the underlying currencies which causes this situation to occur. As a result,
a correct forecast of general market trends may still not result in successful
hedging through the use of futures contracts over the short term.

(3) There is no assurance that a liquid secondary market will exist for
any particular contract at any particular time. In such event, it may not be
possible to close a position, and in the event of adverse price movements, the
Fund would continue to be required to make daily cash payments of variation
margin.

(4) Like other options, options on futures contracts have a limited life.
A Fund will not trade options on futures contracts on any exchange or board of
trade unless and until, in Norwest's opinion, the market for such options has
developed sufficiently that the risks in connection with options on futures
transactions are not greater than the risks in connection with futures
transactions.

(5) Purchasers of options on futures contracts pay a premium in cash at
the time of purchase. This amount and the transaction costs is all that is at
risk. Sellers of options on futures contracts, however, must post an initial
margin and are subject to additional margin calls which could be substantial in
the event of adverse price movements.

(6) A Fund's activities in the futures markets may result in a higher
portfolio turnover rate and additional transaction costs in the form of added
brokerage commissions.

(7) Buyers and sellers of foreign currency futures contracts are subject
to the same risks that apply to the buying and selling of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
foreign currencies described above. In addition, settlement of foreign currency
futures contracts must occur within the country issuing that currency. Thus, a
Fund must accept or make delivery of the underlying foreign currency in
accordance with any U.S. or foreign restrictions or regulations regarding the
maintenance of foreign banking arrangements by U.S. residents, and the Fund may
be required to pay any fees, taxes or charges associated with such delivery
which are assessed in the issuing country.

COMMODITY FUTURES CONTRACTS AND COMMODITY OPTIONS

A Fund may invest in certain financial futures contracts and options contracts
in accordance with the policies described in the Prospectus and above. A Fund
will only invest in futures contracts, options on futures contracts and other
options contracts that are subject to the jurisdiction of the CFTC after filing
a notice of eligibility and otherwise complying with the requirements of Section
4.5 of the rules of the CFTC. Under that section a Fund will not enter into any
futures contract or option on a futures contract if, as a result, the aggregate
initial margin and premiums required to establish such positions would exceed 5%
of the Fund's net assets.

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FOREIGN CURRENCY TRANSACTIONS

Investments in foreign companies will usually involve the currencies of foreign
countries. In addition, a Fund may temporarily hold funds in bank deposits in
foreign currencies pending the completion of certain investment programs.
Accordingly, the value of the assets of a Fund, as measured in U.S. dollars,
may be affected by changes in foreign currency exchange rates and exchange
control regulations. In addition, the Fund may incur costs in connection with
conversions between various currencies. A Fund may conduct foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or by entering into foreign
currency forward contracts ("forward contracts") to purchase or sell foreign
currencies. A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
(usually less than one year) from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers and involve the risk that the other
party to the contract may fail to deliver currency when due, which could result
in losses to the Fund. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. Foreign exchange
dealers realize a profit based on the difference between the price at which they
buy and sell various currencies.

A Fund may enter into forward contracts under two circumstances. First, with
respect to specific transactions, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to "lock in" the U.S. dollar price of the security. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying security transactions, the Fund
may be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.

Second, a Fund may enter into forward contracts in connection with existing
portfolio positions. For example, when an Investment Adviser believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, the Fund may enter into a forward contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's investment securities denominated in such
foreign currency.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term currency
market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Forward contracts involve the
risk of inaccurate predictions of currency price movements, which may cause the
Fund to incur losses on these contracts and transaction costs. The Advisers do
not intend to enter into forward contracts on a regular or continuous basis and
will not do so if, as a result, a Fund will have more than 25 percent of the
value of its total assets committed to such contracts or the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's investment securities or other assets denominated in that
currency.

At or before the settlement of a forward contract, a Fund may either make
delivery of the foreign currency or terminate its contractual obligation to
deliver the foreign currency by purchasing an offsetting contract. If the Fund
chooses to make delivery of the foreign currency, it may be required to obtain
the currency through the conversion of assets of the Fund into the currency.
The Fund may close out a forward contract obligating it to purchase a foreign
currency by selling an offsetting contract. If the Fund engages in an
offsetting transaction, it will realize a gain or a loss to the extent that
there has been a change in forward contract prices. Additionally, although
forward contracts may tend to minimize the risk of loss due to a decline in the
value of the hedged currency, at the same time they tend to limit any potential
gain which might result should the value of such currency increase.

There is no systematic reporting of last sale information for foreign
currencies, and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market. The interbank market in foreign
currencies is a global around-the-clock market.

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When required by applicable regulatory guidelines, a Fund will set aside cash,
U.S. Government Securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.

EQUITY SECURITIES AND ADDITIONAL INFORMATION CONCERNING THE EQUITY FUNDS

CONTRARIAN STOCK FUND

Contrarian Stock Fund invests primarily in common stocks which may be out of
favor with the investment community when purchased but for which Norwest
believes there is significant potential for price appreciation. The basic
premise to Norwest's "contrarian" investment approach is that security prices
change more than fundamental investment values. Norwest monitors a universe of
depressed issues as a starting point in making investment decisions for the
Fund. It then projects the earnings of these depressed companies in normal and
peak years and estimates how the market might value these earnings. Analysis of
possible investments is intensive and fundamental, with emphasis on the quality
of a firm's assets and its ability to earn good returns on those assets.

COMMON STOCK AND PREFERRED STOCK

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

CONVERTIBLE SECURITIES

A Fund may invest in convertible securities. A convertible security is a bond,
debenture, note, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. Although no
securities investment is without some risk, investment in convertible securities
generally entails less risk than in the issuer's common stock. However, the
extent to which such risk is reduced depends in large measure upon the degree to
which the convertible security sells above its value as a fixed income security.
Convertible securities have unique investment characteristics in that they
generally (1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stocks since they have fixed income characteristics
and (3) provide the potential for capital appreciation if the market price of
the underlying common stock increases.

The value of a convertible security is a function of its "investment value"
(determined by a comparison of its yield with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors

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also may have an effect on the convertible security's investment value. The
conversion value of a convertible security is determined by the market price of
the underlying common stock. If the conversion value is low relative to the
investment value, the price of the convertible security is governed principally
by its investment value and generally the conversion value decreases as the
convertible security approaches maturity. To the extent the market price of the
underlying common stock approaches or exceeds the conversion price, the price of
the convertible security will be increasingly influenced by its conversion
value. In addition, a convertible security generally will sell at a premium
over its conversion value determined by the extent to which investors place
value on the right to acquire the underlying common stock while holding a fixed
income security.

A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Fund is called for redemption, the Fund will be
required to permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.

EQUITY-LINKED SECURITIES

Equity-linked securities are securities that are convertible into or based upon
the value of, equity securities upon certain terms and conditions. The following
are three examples of equity-linked securities.

Preferred Equity Redemption Cumulative Stock ("PERCS") technically are preferred
stock with some characteristics of common stock. PERCS are mandatorily
convertible into common stock after a period of time, usually three years,
during which the investors' capital gains are capped, usually at 30%. Commonly,
PERCS may be redeemed by the issuer at any time or if the issuer's common stock
is trading at a specified price level or better. The redemption price starts at
the beginning of the PERCS' duration period at a price that is above the cap by
the amount of the extra dividends the PERCS holder is entitled to receive
relative to the common stock over the duration of the PERCS and declines to the
cap price shortly before maturity of the PERCS. In exchange for having the cap
on capital gains and giving the issuer the option to redeem the PERCS at any
time or at the specified common stock price level, a Fund may be compensated
with a substantially higher dividend yield than that on the underlying common
stock. Funds that seek current income find PERCS attractive because a PERCS
provides a higher dividend income than that paid with respect to a company's
common stock.

Equity-Linked Securities ("ELKS") differ from ordinary debt securities, in that
the principal amount received at maturity is not fixed but is based on the price
of the issuer's common stock. ELKS are debt securities commonly issued in fully
registered form for a term of three years under an indenture trust. At
maturity, the holder of ELKS will be entitled to receive a principal amount
equal to the lesser of a cap amount, commonly in the range of 30% to 55% greater
than the current price of the issuer's common stock, or the average closing
price per share of the issuer's common stock, subject to adjustment as a result
of certain dilution events, for the 10 trading days immediately prior to
maturity. Unlike PERCS, ELKS are commonly not subject to redemption prior to
maturity. ELKS usually bear interest during the three-year term at a
substantially higher rate than the dividend yield on the underlying common
stock. In exchange for having the cap on the return that might have been
received as capital gains on the underlying common stock, the Investment Fund
may be compensated with the higher yield, contingent on how well the underlying
common stock does. Funds that seek current income find ELKS attractive because
ELKS provide a higher dividend income than that paid with respect to a company's
common stock.

Liquid Yield Option Notes ("LYONs") differ from ordinary debt securities, in
that the amount received prior to maturity is not fixed but is based on the
price of the issuer's common stock. LYONs are zero-coupon notes that sell at a
large discount from face value. For an investment in LYONs, a Fund will not
receive any interest payments until the notes mature, typically in 15 or 20
years, when the notes are redeemed at face, or par, value. The yield on LYONs,
typically, is lower-than-market rate for debt securities of the same maturity,
due in part to the fact that the LYONs are convertible into common stock of the
issuer at any time at the option of the holder of the LYON. Commonly, LYONs are
redeemable by the issuer at any time after an initial period or if the issuer's
common stock is trading at a specified price level or better, or, at the option
of the holder, upon certain fixed dates. The redemption price typically is the
purchase price of the LYONs plus accrued original issue discount to the date of
redemption, which amounts to the lower-than-market yield. A Fund will receive
only the lower-than-market yield unless the

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underlying common stock increases in value at a substantial rate. LYONs are
attractive to investors when it appears that they will increase in value due to
the rise in value of the underlying common stock.

WARRANTS

A warrant is an option to purchase an equity security at a specified price
(usually representing a premium over the applicable market value of the
underlying equity security at the time of the warrant's issuance) and usually
during a specified period of time. Unlike convertible securities and preferred
stocks, warrants do not pay a fixed dividend. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised. To the extent that the market
value of the security that may be purchased upon exercise of the warrant rises
above the exercise price, the value of the warrant will tend to rise. To the
extent that the exercise price equals or exceeds the market value of such
security, the warrants will have little or no market value. If a warrant is not
exercised within the specified time period, it will become worthless and the
Fund will lose the purchase price paid for the warrant and the right to purchase
the underlying security.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES

Each Fund may invest up to 15 percent (ten percent in the case of the Money
Market Funds) of its net assets in securities that at the time of purchase are
illiquid. Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the 1933 Act ("restricted securities"), securities that cannot
be disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the securities and which
are otherwise not readily marketable and includes, among other things, purchased
over-the-counter (OTC) options and repurchase agreements not entitling the
holder to repayment within seven days. The Board and, in the case of
International Portfolio, the Core Trust Board, has the ultimate responsibility
for determining whether specific securities are liquid or illiquid and has
delegated the function of making day-to-day determinations of liquidity to the
Investment Adviser of each Fund, pursuant to guidelines approved by the
applicable Board. The Investment Advisers take into account a number of factors
in reaching liquidity decisions, including but not limited to: (1) the frequency
of trades and quotations for the security; (2) the number of dealers willing to
purchase or sell the security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the security; and (4)
the nature of the marketplace trades, including the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the transfer.
The Investment Advisers monitor the liquidity of the securities held by each
Fund and report periodically on such decisions to the Board or Core Trust Board,
as applicable.

Limitations on resale may have an adverse effect on the marketability of
portfolio securities and a Fund might also have to register restricted
securities in order to dispose of them, resulting in expense and delay. A Fund
might not be able to dispose of restricted or other securities promptly or at
reasonable prices and might thereby experience difficulty satisfying
redemptions. There can be no assurance that a liquid market will exist for any
security at any particular time.

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

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BORROWING AND TRANSACTIONS INVOLVING LEVERAGE

Each Fund may borrow money for temporary or emergency purposes, including the
meeting of redemption requests, in amounts up to 33 1/3 percent of the Fund's
total assets. Borrowing involves special risk considerations. Interest costs
on borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on borrowed funds (or on the assets
that were retained rather than sold to meet the needs for which funds were
borrowed). Under adverse market conditions, a Fund might have to sell portfolio
securities to meet interest or principal payments at a time when investment
considerations would not favor such sales. Except as otherwise noted, no Fund
may purchase securities for investment while any borrowing equaling five percent
or more of the Fund's total assets is outstanding or borrow for purposes other
than meeting redemptions in an amount exceeding five percent of the value of the
Fund's total assets. A Fund's use of borrowed proceeds to make investments
would subject the Fund to the risks of leveraging. Reverse repurchase
agreements, short sales not against the box, dollar roll transactions and other
similar investments that involve a form of leverage have characteristics similar
to borrowings but are not considered borrowings if the Fund maintains a
segregated account.

OTHER TECHNIQUES INVOLVING LEVERAGE

Utilization of leveraging involves special risks and may involve speculative
investment techniques. Certain Funds may borrow for other than temporary or
emergency purposes, lend their securities, enter reverse repurchase agreements,
and purchase securities on a when issued or forward commitment basis. In
addition, certain Funds may engage in dollar roll transactions. Each of these
transactions involve the use of "leverage" when cash made available to the Fund
through the investment technique is used to make additional portfolio
investments. The Funds use these investment techniques only when Norwest
believes that the leveraging and the returns available to the Fund from
investing the cash will provide shareholders a potentially higher return.

Leverage exists when a Fund achieves the right to a return on a capital base
that exceeds the investment the Fund has invested. Leverage creates the risk of
magnified capital losses which occur when losses affect an asset base, enlarged
by borrowings or the creation of liabilities, that exceeds the equity base of
the Fund. Leverage may involve the creation of a liability that requires the
Fund to pay interest (for instance, reverse repurchase agreements) or the
creation of a liability that does not entail any interest costs (for instance,
forward commitment transactions).

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

SEGREGATED ACCOUNT

In order to limit the risks involved in various transactions involving leverage,
the Trust's custodian will set and maintain in a segregated account cash, U.S.
Government Securities (or other assets as may be permitted by the SEC) in
accordance with SEC guidelines. The account's value, which is marked to market
daily, will be at least equal to the Fund's commitments under these
transactions. The Fund's commitments include the Fund's obligations to
repurchase securities under a reverse repurchase agreement and settle
when-issued and forward commitment transactions.

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MARGIN AND SHORT SALES

Certain Funds may enter into short sales as described in the prospectus of that
Fund. The Funds may short sales of securities against the box. A short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain at no added cost securities identical to those sold short.
Prohibitions on entering short sales other than against the box does not
restrict a Fund's ability to use short-term credits necessary for the clearance
of portfolio transactions and to make margin deposits in connection with
permitted transactions in options and futures contracts.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are transactions in which a Fund sells a security
and simultaneously commits to repurchase that security from the buyer at an
agreed upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate.
Counterparties to a Money Market Fund's reverse repurchase agreements must be a
primary dealer that reports to the Federal Reserve Bank of New York ("primary
dealers") or one of the largest 100 commercial banks in the United States.

Generally, a reverse repurchase agreement enables the Fund to recover for the
term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than
the cost of obtaining the cash otherwise. In addition, interest costs on the
money received in a reverse repurchase agreement may exceed the return
received on the investments made by a Fund with those monies. The use of
reverse repurchase agreement proceeds to make investments may be considered
to be a speculative technique.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

Certain Funds may purchase or sell portfolio securities on a when-issued or
delayed delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased by a Fund with payment and delivery to take place in
the future in order to secure what is considered to be an advantageous price and
yield to the Fund at the time it enters into the transaction. In those cases,
the purchase price and the interest rate payable on the securities are fixed on
the transaction date and delivery and payment may take place a month or more
after the date of the transaction. When a Fund enters into a delayed delivery
transaction, it becomes obligated to purchase securities and it has all of the
rights and risks attendant to ownership of the security, although delivery and
payment occur at a later date. To facilitate such acquisitions, the Fund will
maintain with its custodian a separate account with portfolio securities in an
amount at least equal to such commitments.

At the time a Fund makes the commitment to purchase securities on a when-issued
or delayed delivery basis, the Fund will record the transaction as a purchase
and thereafter reflect the value each day of such securities in determining its
net asset value. The value of the fixed income securities to be delivered in
the future will fluctuate as interest rates and the credit of the underlying
issuer vary. On delivery dates for such transactions, the Fund will meet its
obligations from maturities, sales of the securities held in the separate
account or from other available sources of cash. A Fund generally has the
ability to close out a purchase obligation on or before the settlement date,
rather than purchase the security. If a Fund chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it could, as with the
disposition of any other portfolio obligation, realize a gain or loss due to
market fluctuation.

To the extent a Fund engages in when-issued or delayed delivery transactions, it
will do so for the purpose of acquiring securities consistent with the Fund's
investment objectives and policies and not for the purpose of investment
leverage or to speculate in interest rate changes. A Fund will only make
commitments to purchase securities on a when-issued or delayed delivery basis
with the intention of actually acquiring the securities, but the Fund reserves
the right to dispose of the right to acquire these securities before the
settlement date if deemed advisable.

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The use of when-issued transactions and forward commitments enables the Fund to
hedge against anticipated changes in interest rates and prices. If an
Investment Adviser were to forecast incorrectly the direction of interest rate
movements, however, a Fund might be required to complete when-issued or forward
transactions at prices inferior to the current market values. When-issued
securities and forward commitments may be sold prior to the settlement date, but
a Fund enters into when-issued and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. In some
instances, the third-party seller of when-issued or forward commitment
securities may determine prior to the settlement date that it will be unable to
meet its existing transaction commitments without borrowing securities. If
advantageous from a yield perspective, a Fund may, in that event, agree to
resell its purchase commitment to the third-party seller at the current market
price on the date of sale and concurrently enter into another purchase
commitment for such securities at a later date. As an inducement for a Fund to
"roll over" its purchase commitment, the Fund may receive a negotiated fee.
When-issued securities may include bonds purchased on a "when, as and if issued"
basis under which the issuance of the securities depends upon the occurrence of
a subsequent event. Any significant commitment of a Fund's assets to the
purchase of securities on a "when, as and if issued" basis may increase the
volatility of the Fund's net asset value. For purposes of the Funds' investment
policies, the purchase of securities with a settlement date occurring on a
Public Securities Association approved settlement date is considered a normal
delivery and not a when-issued or forward commitment purchase.

REPURCHASE AGREEMENTS

The Funds maintain procedures for evaluating and monitoring the creditworthiness
of vendors of repurchase agreements. In addition, each Fund that may enter into
repurchase agreements requires continual maintenance of collateral held by its
custodian with a market value at least equal to the repurchase price.
Counterparties to a Money Market Fund's repurchase agreements must be a primary
dealer that reports to the Federal Reserve Bank of New York ("primary dealers")
or one of the largest 100 commercial banks in the United States.

Under the terms of a repurchase agreement, a Fund purchases securities from
registered broker-dealers, banks or their affiliates subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates, which may be more
or less than the rate on the underlying portfolio securities. The seller under
a repurchase agreement is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). If the seller were to default on its repurchase obligation
or become insolvent, the Fund holding such obligation would suffer a loss to the
extent that the proceeds from a sale of the underlying portfolio securities were
less than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent confirming that a Fund
would be entitled, as against a claim by such seller or its receiver or trustee
in bankruptcy, to retain the underlying securities, although the Fund's believe
that, under the regular procedures normally in effect for custody of a Fund's
securities subject to repurchase agreements, and under Federal laws, a court of
competent jurisdiction would rule in favor of the Fund if presented with the
question. Securities subject to repurchase agreements will be held by the
Fund's custodian or another qualified custodian or in the Federal Reserve
book-entry system. Repurchase agreements are considered to be loans by a Fund
for certain purposes under the 1940 Act.

TEMPORARY DEFENSIVE POSITION

When a Fund other than a Money Market Fund, in accordance with the policies
described in its Prospectus, assumes a temporary defensive position, it may
invest in (i) short-term U.S. Government Securities, (ii) certificates of
deposit, bankers' acceptances and interest-bearing savings deposits of
commercial banks doing business in the United States that have, at the time of
investment, except in the case of International Fund total assets in excess of
one billion dollars and that are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper of prime quality rated Prime-2 or higher by
Moody's or A-2 or higher by S&P or, if not rated, determined by Norwest to be of
comparable quality, (iv) repurchase agreements covering any of the securities in
which the Fund may invest directly and (v) money market mutual funds.

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Except as may be permitted by the SEC, the Funds may invest in the securities of
other investment companies within the limits prescribed by the 1940 Act. Under
normal circumstances and except as described below, each Fund intends to invest
less than 5% of the value of its net assets in the securities of other
investment companies. International Fund invests all of its investable assets
in International Portfolio and Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund, Diversified Equity Fund and Growth Equity Fund
invest in certain portfolios of Core Trust in accordance with an exemptive order
issued by the SEC. In addition to those Funds' expenses (including the various
fees), as a shareholder in another investment company, the Funds bear their pro
rata portion of the other investment companies' expenses (including fees).

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2. INFORMATION CONCERNING COLORADO AND MINNESOTA

Following is a brief summary of some of the factors that may affect the
financial condition of the State of Colorado and the State of Minnesota and
their respective political subdivisions. It is not a complete or comprehensive
description of these factors or an analysis of financial conditions and may not
be indicative of the financial condition of issuers of obligations held by
Colorado Tax Free Fund and Minnesota Tax-Free Fund or any particular projects
financed with the proceeds of such obligations. Many factors not included in
the summary, such as the national economy, social and environmental policies and
conditions, and the national and international markets for products produced in
each state could have an adverse impact on the financial condition of a State
and its political subdivisions, including the issuers of obligations held by a
Fund. It is not possible to predict whether and to what extent those factors
may affect the financial condition of a State and its political subdivisions,
including the issuers of obligations held by a Fund.

The State of Colorado's political subdivisions include approximately 1,600 units
of local government in Colorado, including counties, statutory cities and towns,
home-rule cities and counties, school districts and a variety of water,
irrigation, and other special districts and special improvement districts, all
with various constitutional and statutory authority to levy taxes and incur
indebtedness.

The following summary is based on publicly available information that has not
been independently verified by the Trust or its legal counsel.

COLORADO

THE COLORADO STATE ECONOMY

Among the most significant sectors of the State's economy are services, trade,
manufacture of durable and non-durable goods and tourism. Between late 1984 and
mid-1987, the State's economy was adversely affected by numerous factors,
including the contraction of the energy sector, layoffs by advanced technology
firms and an excess supply of both residential and nonresidential buildings
causing employment in the construction sector to decline. As a result of these
conditions, certain areas of the State experienced particularly high
unemployment. Furthermore, in 1986, for the first time in 32 years, job
generation in the State was negative and, in 1986, for the first time in 21
years, the State experienced negative migration, with more people leaving the
State than moving in.

From 1987 through 1995, there has been moderate but steady improvement in the
Colorado economy: per-capita income increased approximately 48.4% (4.4% in
1995) and retail trade sales increased approximately 63.3% (5.2% in 1995). The
State's estimated growth rate is above the national growth rate and the State's
unemployment rate is still below the national unemployment rate (in 1995 the
State's unemployment rate was 4.2% and the United State's unemployment rate was
5.6%).

STATE REVENUES

The State operates on a fiscal year beginning July 1 and ending June 30. Fiscal
year 1995 refers to the fiscal year ended June 30, 1995.

The State derives all of its General Fund revenues from taxes. The two most
important sources of these revenues are sales and use taxes and personal income
taxes, which accounted for approximately 31.2% and 53.3%, respectively, of total
General Fund revenues during fiscal year 1994 and approximately 31.5% and 53.2%,
respectively, of total General Fund revenues during fiscal year 1995. The
ending General Fund balance for fiscal year 1994 was $405.1 million and for
fiscal year 1995 was approximately $396.7 million.

The Colorado Constitution contains strict limitations on the ability of the
State to create debt except under certain very limited circumstances. However,
the constitutional provision has been interpreted not to limit the ability of
the State to issue certain obligations which do not constitute debt, including
short-term obligations which do not extend beyond the fiscal year in which they
are incurred and lease purchase obligations which are subject to annual

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appropriation. The State is authorized pursuant to State statutes to issue
short-term notices to alleviate temporary cash flow shortfalls. The most recent
issue of such notes, issued on July 1, 1996, was given the highest rating
available for short-term obligations by S&P, which is a division of The
McGraw-Hill Companies, Inc. (SP-1+) and Fitch Investors Service, Inc. (F-1+) (A
rating on such notes was not requested from, and consequently no rating was
given by, Moody's) Because of the short-term nature of such notes, their
ratings should not be considered necessarily indicative of the State's general
financial condition.

TAX AND SPENDING LIMITATION AMENDMENT

On November 3, 1992, the Colorado voters approved a State constitutional
amendment (the "Amendment") that restricts the ability of the State and local
governments to increase taxes, revenues, debt and spending. The Amendment
provides that its provisions supersede conflicting State constitutional, State
statutory, charter or other State or local provisions.

The provisions of the Amendment apply to "districts", which are defined in the
Amendment as the State or any local government, with certain exclusions. Under
the terms of the Amendment, districts must have prior voter approval to impose
any new tax, tax rate increase, mill levy increase, valuation for assessment
ratio increase and extension of an expiring tax. Such prior voter approval is
also required, except in certain limited circumstances, for the creation of "any
multiple-fiscal year direct or indirect district debt or other financial
obligation." The Amendment prescribes the timing and procedures for any
elections required by the Amendment.

Because the Amendment's voter approval requirements apply to any "multiple
fiscal year" debt or financial obligation, short-term obligations which do not
extend beyond the fiscal year in which they are incurred are exempt from the
voter approval requirements of the Amendment. In addition, the Colorado Court
of Appeals has determined that lease purchase obligations subject to annual
appropriation are not subject to the voter approval requirements of the
Amendment. The Amendment's voter approval requirements and other limitations
(discussed in the following paragraph) do not apply to "enterprises," which are
defined in the Amendment as follows: "a government-owned business authorized to
issue its own revenue bonds and receiving under 10% of annual revenue in grants
from all Colorado state and local governments combined."

Among other provisions, the Amendment requires the establishment of emergency
reserves, limits increases in district revenues and limits increases in district
fiscal year spending. As a general matter, annual State fiscal year spending
may change not more than inflation plus the percentage change in State
population in the prior calendar year. Annual local district fiscal year
spending may change no more than inflation in the prior calendar year plus
annual local growth, as defined in and subject to the adjustments provided in
the Amendment. The Amendment provides that annual district property tax
revenues may change no more than inflation in the prior calendar year plus
annual local growth, as defined in and subject to the adjustments provided in
the Amendment. District revenues in excess of the limits prescribed by the
Amendment are required, absent voter approval, to be refunded by any reasonable
method, including temporary tax credits or rate reductions. In addition, the
Amendment prohibits new or increased real property transfer taxes, new State
real property taxes and new local district income taxes. The Amendment also
provides that a local district may reduce or end its subsidy to any program
(other than public education through grade 12 or as required by federal law)
delegated to it by the State General Assembly for administration.

This description is not intended to constitute a complete description of all of
the provisions of the Amendment. Furthermore, many provisions of the Amendment
and their application are unclear. Several statutes have been enacted since the
passage of the Amendment attempting to clarify the application of the Amendment
with respect to certain governmental entities and activities and numerous court
decisions have been rendered interpreting certain of the Amendment's provisions.
However, many provisions of the Amendment may require further legislative or
judicial clarification. The future impact of the Amendment on the financial
operations and obligations of the State and local governments in the State
cannot be determined at this time. Attempts to apply the provisions of the
Amendment to obligations issued prior to the approval of the Amendment may be
challenged as violation of protections afforded by the federal constitution
against impairment of contracts.

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MINNESOTA

The following information has been derived from the ECONOMIC REPORT TO THE
GOVERNOR for 1993 and 1994, prepared by the Economic Resource Group, and COMPARE
MINNESOTA: AN ECONOMIC AND STATISTICAL FACT BOOK 1994/1995 by the Minnesota
Department of Trade and Economic Development. More recent editions of such
publications were not available at the time this prospectus was prepared.

THE STRUCTURE OF THE MINNESOTA STATE'S ECONOMY

Diversity and a significant natural resource base are two important
characteristics of the State's economy.

When viewed in 1993 on an aggregate level, the structure of the State's economy
parallels the structure of the United States economy as a whole. State
employment in 10 major sectors was distributed in approximately the same
proportions as national employment. In all sectors, the share of total State
employment was within 2 percentage points of national employment share.

Some unique characteristics of the State's economy are apparent in employment
concentrations in industries that comprise the durable goods and non-durable
goods manufacturing categories. In the durable goods industries, the State's
employment in 1993 was highly concentrated in industrial machinery, fabricated
metals, instruments and miscellaneous categories. Of particular importance is
the industrial machinery category in which 32.6 percent of the State's durable
goods employment was concentrated in 1993, as compared to 18.9 percent for the
United States as a whole. The emphasis is partly explained by the location in
the State of Ceridian, Unisys, IBM, Cray Research, and other computer equipment
manufacturers which are included in the industrial machinery classification.

The importance of the State's resource base for overall employment is apparent
in the employment mix in non-durable goods industries. In 1993, 29.4 percent of
the State's non-durable goods employment was concentrated in food and kindred
industries, and 19.1 percent in paper and allied industries. This compares to
21.4 percent and 8.8 percent, respectively, for comparable sectors in the
national economy. Both of these rely heavily on renewable resources in the
State. Over half of the State's acreage is devoted to agricultural purposes,
and nearly one-third to forestry. Printing and publishing is also relatively
more important in the State than in the U.S.

Mining is currently a less significant factor in the State economy than it once
was. Mining employment, primarily in the iron ore or taconite industry, dropped
from 17.3 thousand in 1979 to 7.4 thousand in 1993. It is not expected that
mining employment will return to 1979 levels. However, Minnesota retains
significant quantities of taconite as well as copper, nickel, cobalt, and peat
which may be utilized in the future.

EMPLOYMENT GROWTH IN THE STATE

In the period 1980 to 1993, overall employment growth in Minnesota lagged behind
national growth. However, manufacturing has been a strong sector, with
Minnesota employment outperforming its U.S. counterpart in both the 1980-1990
and 1990-1993 periods. Over 40 percent of the total increase in Minnesota
employment between the years 1983-1992 resulted from a 50.2 percent increase in
employees in the services industry during this period. Mining was the only
industry where employment decreased between 1983-1992 in both Minnesota and the
United States, dropping by almost 14 percent in Minnesota and 33 percent in the
United States.

In spite of a strong manufacturing sector, during the 1980 to 1990 period total
employment in Minnesota increased 18.1 percent while increasing 20.1 percent
nationally. Most of Minnesota's relatively slower growth is associated with
declining agricultural employment and with the two recessions in the U.S.
economy during the early 1980's which were more severe in Minnesota than
nationwide. Minnesota non-farm employment growth generally kept pace with the
nation in the period after the 1981-82 recession ended in late 1982. Employment
data through December, 1993 indicate the recession which began in July, 1990 was
less severe in Minnesota than in the national economy, and that Minnesota's
recovery has been more rapid than the nation's. Between 1990 and 1993,
Minnesota's non-farm employment grew 5.1 percent compared to only 0.7 percent
nationwide.

PERFORMANCE OF THE STATE'S ECONOMY

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Since 1980, State per capita personal income has been within three percentage
points of national per capita personal income. The State's per capita income,
which is computed by dividing personal income by total resident population, has
generally remained above the national average in spite of the early 1980's
recessions and some difficult years in agriculture. In 1992, Minnesota per
capita personal income was 101.6 percent of its U.S. counterpart.

In the level of personal income per capita, Minnesota ranked second among twelve
north central states in both 1990 and 1992. During the period 1983 to 1992,
Minnesota ranked first among such states in growth of personal income and third
during the period 1991 to 1992. Minnesota ranked seventeenth nationally and
second among the twelve north central states with a per capita disposable income
of $17,448 in 1992. During 1990-1992, wage and salary disbursements which
constitute some 60% of total personal income grew 12.3 percent in Minnesota as
compared to 8.3 percent for the United States. Personal income in Minnesota
grew more rapidly than eleven other north central states' averages during
1991-1992, and faster than the United States average. Over the period 1983 to
1992, Minnesota non-agricultural employment grew 27.4 percent while such
employment in the United States grew 19.7 percent. During the 1990-1993 period,
Minnesota non-agricultural employment increased 5.1 percent, while regional
employment increased 1.3 percent.

Retail sales in Minnesota increased an average of 5.9 percent per year,
compounded, between 1983 and 1992. This growth, however, was not uniform from
year to year. Retail sales grew only 3.4 percent in 1982, a recession year, and
3.0 percent in 1985, while growing 12.1 percent in 1984, and 2.0 percent in
1986.

During 1992 and 1993, the State's monthly unemployment rate was generally less
than the national unemployment rate, averaging 5.1 percent in 1993, as compared
to the national average of 7.4 percent.

POPULATION TRENDS IN THE STATE

Minnesota resident population grew from 4,085,000 in 1980 to 4,390,000 in 1990,
or at an average annual compound rate of 0.7 percent. In comparison, U.S.
population grew at an annual compound rate of 0.9 percent during this period.
Minnesota resident population increased 4,625,000 in 1995. Minnesota population
is currently forecast to grow at an annual compound rate of 0.6 percent between
1990 and 2000. Minnesota population growth accelerated during the late 1980's.

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3. INVESTMENT LIMITATIONS

Except as required by the 1940 Act, if any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of a
Fund's assets or purchases and redemptions of shares will not be considered a
violation of the limitation.

Whenever reference is made throughout this SAI or the applicable prospectus to
the limitations of the 1940 Act, to "the extent permitted by the 1940 Act" or to
similar language, the reference shall be deemed to include reference to any
exemptive order obtained by the Trust or which may be relied upon by the Trust.

For purposes of the fundamental and nonfundamental limitations which relate to
diversification, the District of Columbia, each state, each political
subdivision, agency, instrumentality and authority thereof, and each multi-state
agency of which a state is a member is deemed to be a separate "issuer." When
the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from the government creating the subdivision
and the security is backed only by the assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the case
of private activity bonds, if the bond is backed only by the assets and revenues
of the nongovernmental user, then such nongovernmental user would be deemed to
be the sole issuer. However, if in either case, the creating government or some
other agency guarantees a security, that guarantee would be considered a
separate security and would be treated as an issue of such government or other
agency.

A Fund's fundamental limitations cannot be changed without the affirmative vote
of the lesser of (i) more than 50% of the outstanding shares of the Fund or (ii)
67% of the shares of the Fund present or represented at a shareholders meeting
at which the holders of more than 50% of the outstanding shares of the Fund are
present or represented.

FUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are fundamental
policies of the Fund. Reference to International Fund includes reference to
International Portfolio, which has the same fundamental policies.

(1) DIVERSIFICATION

EACH FUND (other than Colorado Tax-Free Fund and Minnesota Tax-Free
Fund) may not, with respect to 75% of its assets, purchase a security
(other than a U.S. Government Security or a security of an investment
company) if, as a result (i) more than 5% of the Fund's total assets
would be invested in the securities of a single issuer, or (ii) the
Fund would own more than 10% of the outstanding voting securities of
any single issuer

(2) CONCENTRATION

(a) CASH INVESTMENT FUND and READY CASH INVESTMENT FUND may not purchase a
security if, as a result, more than 25% of the Fund's total assets
would be invested in securities of issuers conducting their principal
business activities in the same industry; provided, (i) there is no
limit on investments in U.S. Government Securities, in repurchase
agreements covering U.S. Government Securities or in foreign
government securities, (ii) municipal securities are not treated as
involving a single industry, (iii) there is no limit on investment in
issuers domiciled in a single country, (iv) financial service
companies are classified according to the end users of their services
(for example, automobile finance, bank finance and diversified
finance) and (v) utility companies are classified according to their
services (for example, gas, gas transmission, electric and gas,
electric and telephone); and provided the Fund will invest more than
25% of the value of the Fund's total assets in obligations of domestic
and foreign financial institutions and their holding companies.
Notwithstanding anything to the contrary, to the extent permitted by
the 1940 Act, the Fund may invest in one or more investment companies;
provided that, except to the extent the Fund invests in other
investment companies pursuant to Section 12(d)(1)(A) of the 1940 Act,
the Fund treats the assets of the investment companies in which it
invests as its own for purposes of this policy.

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<PAGE>
(b) TREASURY FUND, U.S. GOVERNMENT FUND and MUNICIPAL MONEY MARKET FUND
may not purchase a security if, as a result, more than 25% of the
Fund's total assets would be invested in securities of issuers
conducting their principal business activities in the same industry;
provided, (i) there is no limit on investments in U.S. Government
Securities, in repurchase agreements covering U.S. Government
Securities, in foreign government securities, or in obligations of
domestic commercial banks (including U.S. branches of foreign banks
subject to regulations under U.S. laws applicable to domestic banks
and, to the extent that its parent is unconditionally liable for the
obligation, foreign branches of U.S. banks), (ii) municipal securities
are not treated as involving a single industry, (iii) there is no
limit on investment in issuers domiciled in a single country, (iv)
financial service companies are classified according to the end users
of their services (for example, automobile finance, bank finance and
diversified finance) and (v) utility companies are classified
according to their services (for example, gas, gas transmission,
electric and gas, electric and telephone). Notwithstanding anything to
the contrary, to the extent permitted by the 1940 Act, the Fund may
invest in one or more investment companies; provided that, except to
the extent the Fund invests in other investment companies pursuant to
Section 12(d)(1)(A) of the 1940 Act, the Fund treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.

(c) INCOME FUND, LIMITED TERM TAX-FREE FUND, TAX-FREE INCOME FUND,
COLORADO TAX-FREE FUND, MINNESOTA TAX-FREE FUND and VALUGROWTH STOCK
FUND may not purchase a security if, as a result, more than 25% of the
Fund's total assets would be invested in securities of issuers
conducting their principal business activities in the same industry;
provided, (i) there is no limit on investments in repurchase
agreements covering U.S. Government Securities or (ii) municipal
securities are not treated as involving a single industry, (iii)
financial service companies are classified according to the end users
of their services (for example, automobile finance, bank finance and
diversified finance) and (iv) utility companies are classified
according to their services (for example, gas, gas transmission,
electric and gas, electric and telephone). Notwithstanding anything to
the contrary, to the extent permitted by the 1940 Act, the Fund may
invest in one or more investment companies; provided that, except to
the extent the Fund invests in other investment companies pursuant to
Section 12(d)(1)(A) of the 1940 Act, the Fund treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.

(d) TOTAL RETURN BOND FUND may not purchase a security if, as a result,
more than 25% of the Fund's total assets would be invested in
securities of issuers conducting their principal business activities
in the same industry; provided, (i) there is no limit on investments
in U.S. Government Securities, or in repurchase agreements covering
U.S. Government Securities, (ii) mortgage-related or housing-related
securities (including mortgage-related or housing-related U.S.
Government Securities) and municipal securities are not treated as
involving a single industry, (iii) financial service companies are
classified according to the end users of their services (for example,
automobile finance, bank finance and diversified finance), (iv)
utility companies are classified according to their services (for
example, gas, gas transmission, electric and gas, electric and
telephone). Notwithstanding anything to the contrary, to the extent
permitted by the 1940 Act, the Fund may invest in one or more
investment companies; provided that, except to the extent the Fund
invests in other investment companies pursuant to Section 12(d)(1)(A)
of the 1940 Act, the Fund treats the assets of the investment
companies in which it invests as its own for purposes of this policy.

(e) SMALL COMPANY STOCK FUND and CONTRARIAN STOCK FUND may not purchase a
security if, as a result, more than 25% of the Fund's total assets
would be invested in securities of issuers conducting their principal
business activities in the same industry; provided, (i) there is no
limit on investments in U.S. Government Securities, or in repurchase
agreements covering U.S. Government Securities, municipal securities
are not treated as involving a single industry, (iii) financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance and
diversified finance) (iv) utility companies are classified

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<PAGE>
according to their services (for example, gas, gas transmission,
electric and gas, electric and telephone). Notwithstanding anything to
the contrary, to the extent permitted by the 1940 Act, the Fund may
invest in one or more investment companies; provided that, except to
the extent the Fund invests in other investment companies pursuant to
Section 12(d)(1)(A) of the 1940 Act, the Fund treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.

(f) INTERNATIONAL FUND may not purchase a security if, as a result, more
than 25% of the Fund's total assets would be invested in securities of
issuers conducting their principal business activities in the same
industry; provided, (i) there is no limit on investments in U.S.
Government Securities, or in repurchase agreements covering U.S.
Government Securities, (ii) there is no limit on investment in issuers
domiciled in a single country, (iii) financial service companies are
classified according to the end users of their services (for example,
automobile finance, bank finance and diversified finance) and (iv)
utility companies are classified according to their services (for
example, gas, gas transmission, electric and gas, electric and
telephone). Notwithstanding anything to the contrary, to the extent
permitted by the 1940 Act, the Fund may invest in one or more
investment companies; provided that, except to the extent the Fund
invests in other investment companies pursuant to Section 12(d)(1)(A)
of the 1940 Act, the Fund treats the assets of the investment
companies in which it invests as its own for purposes of this policy.

(g) STABLE INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, DIVERSIFIED
BOND FUND, CONSERVATIVE BALANCED FUND, MODERATE BALANCED FUND, GROWTH
BALANCED FUND, INCOME EQUITY FUND, INDEX FUND, DIVERSIFIED EQUITY
FUND, GROWTH EQUITY FUND, LARGE COMPANY GROWTH FUND, SMALL COMPANY
GROWTH FUND and INTERNATIONAL FUND may not purchase a security if, as
a result, more than 25% of the Fund's total assets would be invested
in securities of issuers conducting their principal business
activities in the same industry; provided, however, that there is no
limit on investments in U.S. Government Securities, repurchase
agreements covering U.S. Government Securities, foreign government
securities, mortgage-related or housing-related securities, municipal
securities and issuers domiciled in a single country; that financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance and
diversified finance); that utility companies are classified according
to their services (for example, gas, gas transmission, electric and
gas, electric and telephone. Notwithstanding anything to the contrary,
to the extent permitted by the 1940 Act, the Fund may invest in one or
more investment companies; provided that, except to the extent the
Fund invests in other investment companies pursuant to Section
12(d)(1)(A) of the 1940 Act, the Fund treats the assets of the
investment companies in which it invests as its own for purposes of
this policy.

(3) BORROWING

(a) CASH INVESTMENT FUND, READY CASH FUND, U.S. GOVERNMENT FUND, TREASURY
FUND, MUNICIPAL MONEY MARKET FUND, INCOME FUND, TOTAL RETURN BOND
FUND, LIMITED TAX-FREE INCOME FUND, COLORADO TAX-FREE FUND, MINNESOTA
TAX-FREE FUND, VALUGROWTH STOCK FUND, SMALL COMPANY STOCK FUND AND
CONTRARIAN STOCK FUND may borrow money from banks or by entering into
reverse repurchase agreements, but the Fund will limit borrowings to
amounts not in excess of 33 1/3% of the value of the Fund's total
assets (computed immediately after the borrowing).

(b) STABLE INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, DIVERSIFIED
BOND FUND, CONSERVATIVE BALANCED FUND, MODERATE BALANCED FUND, GROWTH
BALANCED FUND, INCOME EQUITY FUND, INDEX FUND, DIVERSIFIED EQUITY
FUND, GROWTH EQUITY FUND, LARGE COMPANY GROWTH FUND, SMALL COMPANY
GROWTH FUND and INTERNATIONAL FUND may borrow money for temporary or
emergency purposes, including the meeting of redemption requests, but
not in excess of 33 1/3% of the value of the Fund's total assets (as
computed immediately after the borrowing).

(4) ISSUANCE OF SENIOR SECURITIES

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<PAGE>
NO FUND may issue senior securities except to the extent permitted by the
1940 Act.

(5) UNDERWRITING ACTIVITIES
NO FUND may underwrite securities of other issuers, except to the extent
that the Fund may be considered to be acting as an underwriter in
connection with the disposition of portfolio securities.

(6) MAKING LOANS

NO FUND may make loans, except a Fund may enter into repurchase agreements,
purchase debt securities that are otherwise permitted investments and lend
portfolio securities.

(7) PURCHASES AND SALES OF REAL ESTATE

EACH FUND, INTERNATIONAL FUND, TAX-FREE INCOME FUND may not purchase or
sell real estate or any interest therein or real estate limited partnership
interests, except that the Fund may invest in debt obligations secured by
real estate or interests therein or securities issued by companies that
invest in real estate or interests therein.

(8) PURCHASES AND SALES OF COMMODITIES

EACH FIXED INCOME FUND, EQUITY FUND, and BALANCED FUND may not purchase or
sell physical commodities or contracts, options or options on contracts to
purchase or sell physical commodities; provided that currency and
currency-related contracts and contracts on indices will not be deemed to
be physical commodities.

NONFUNDAMENTAL LIMITATIONS

Each Fund has adopted the following investment limitations which are not
fundamental policies of the Fund. Reference to the International Fund includes
reference to International Fund, which has the same fundamentals as policies may
be changed by the Board, or in the case of International Portfolio, the Core
Trust Board.

(1) DIVERSIFICATION

(a) To the extent required to qualify as a regulated investment company,
and with respect to 50% of its assets, Municipal Money Market Fund
may not purchase a security other than a U.S. Government Security, if
as a result, more than 5% of the Fund' s total assets would be
invested in the section as a single issuer or the Fund would own more
than 10% of the outstanding rate securities of any single issuer.

(b) With respect to each of COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE
FUND, the Fund is "non-diversified" as that term is defined in the
1940 Act.

(c) With respect to each of COLORADO TAX-FREE FUND and MINNESOTA TAX-FREE
FUND, to the extent required to qualify as a regulated investment
company under the [Internat Revenue] Code [of 1986, as amended], the
Fund may not purchase a security (other than a U.S. Government
security or a security of an investment company) if, as a result (i)
with respect to 50% of its assets, more than 5% of the Fund's total
assets would be invested in the securities of any single issuer, (ii)
with respect to 50% of its assets, the Fund would own more than 10%
of the outstanding securities of any single issuer, or (iii) more
than 25% of the Fund's total assets would be invested in the
securities of any single issuer.

(2) BORROWING

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EACH FUND'S (other than INTERMEDIATE GOVERNMENT INCOME FUND'S and
DIVERSIFIED BOND FUND'S) borrowings for other than temporary or emergency
purposes or meeting redemption requests may not exceed an amount equal to
5% of the value of the Fund's net assets. When STABLE INCOME FUND,
INTERMEDIATE GOVERNMENT INCOME FUND, DIVERSIFIED BOND FUND, CONSERVATIVE
BALANCED FUND, MODERATE BALANCED FUND, GROWTH BALANCED FUND, INCOME EQUITY
FUND, INDEX FUND, DIVERSIFIED EQUITY FUND, GROWTH EQUITY FUND, LARGE
COMPANY GROWTH FUND, SMALL COMPANY GROWTH FUND and INTERNATIONAL FUND
establish a segregated account to limit the amount of leveraging with
respect to certain investment techniques, they do not treat those
techniques as involving borrowings for purposes of this or other borrowing
limitations.

(3) ILLIQUID SECURITIES

(a) EACH MONEY MARKET FUND may not acquire securities or invest in
repurchase agreements with respect to any securities if, as a result,
more than 10% of the Fund's net assets (taken at current value) would
be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in securities which are
not readily marketable, including securities that are not readily
marketable by virtue of restrictions on the sale of such securities
to the public without registration under the 1933 Act ("Restricted
Securities").

(b) EACH FIXED INCOME FUND, EQUITY FUND and BALANCED FUND may not acquire
securities or invest in repurchase agreements with respect to any
securities if, as result, more than 15% of the Fund's net assets
(taken at current value) would be invested in repurchase agreements
not entitling the holder to payment of principal within seven days
and in securities which are not readily marketable, including
securities that are not readily marketable by virtue of restrictions
on the sale of such securities to the public without registration
under the 1933 Act ("Restricted Securities").

(4) OTHER INVESTMENT COMPANIES

EACH FUND may not invest in securities of another investment company,
except to the extent permitted by the 1940 Act.

(5) MARGIN AND SHORT SALES

EACH FUND (other than INTERMEDIATE GOVERNMENT INCOME FUND) may not
purchase securities on margin, or make short sales of securities (except
short sales against the box), except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio
securities. Each Fund may make margin deposits in connection with
permitted transactions in options, futures contracts and options on
futures contracts. NO FUND may enter short sales if, as a result, more
that 25% of the value of the Fund's total assets would be so invested, or
such a position would represent more than 2% of the outstanding voting
securities of any single issuer or class of an issuer.

(6) UNSEASONED ISSUERS

NO FUND may not invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous operations
for less than three years, including the operations of predecessors,
unless guaranteed as to principal and interest by an issuer in whose
securities the Fund could invest, if, as a result, more than 5% of the
value of the Fund's total assets would be so invested; provided, that each
Fund may invest all or a portion of its assets in another diversified,
open-end management investment company with substantially the same
investment objective, policies and restrictions as the Fund.

(7) PLEDGING

NO FUND may pledge, mortgage, hypothecate or encumber any of its assets
except to secure permitted borrowings or to secure other permitted
transactions.
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(8) INVESTMENTS BY OFFICERS AND TRUSTEES

NO FUND may invest in or hold securities of any issuer if, to the Trust's
or, in the case of International Portfolio, Core Trust's knowledge,
officers and Trustees of the Trust or Core Trust, as applicable, or an
Investment Adviser to a Fund, individually owning beneficially more than
1/2 of 1% of the securities of the issuer, in the aggregate own more than
five percent of the issuer's securities.

(9) OIL, GAS AND MINERAL INVESTMENTS

NO FUND may invest in interests in oil and gas or interests in other
mineral exploration or development programs, including oil, gas and other
mineral leases.

(10) SECURITIES WITH VOTING RIGHTS

NO MONEY MARKET FUND or FIXED INCOME FUND may purchase securities having
voting rights except securities of other investment companies; provided
that the Funds may hold securities with voting rights obtained through a
conversion or other corporate transaction of the issuer of the securities,
whether or not the Fund was permitted to exercise any rights with respect
to the conversion or other transaction.

(11) LENDING OF PORTFOLIO SECURITIES

NO FUND may lend portfolio securities if the total value of all loaned
securities would exceed 33 1/3% of the Fund's total assets.

(12) REAL ESTATE LIMITED PARTNERSHIPS

NO FUND may invest in real estate limited partnerships.

(13) OPTIONS AND FUTURES CONTRACTS

(a) NO MONEY MARKET FUND may invest in options, futures contracts or
options on futures contracts.

(b) NO FIXED INCOME FUND, EQUITY FUND or BALANCED FUND may purchase an
option if, as a result, more that 5% of the value of the Fund's total
assets would be so invested.

(14) WARRANTS

NO FUND may invest in warrants if (i) more than 5% of the value of the
Fund's net assets would will be invested in warrants (valued at the lower
of cost or market) or (ii) more than 2% of the value of the Fund's net
assets would be invested in warrants which are not listed on the New York
Stock Exchange or the American Stock Exchange; provided, that warrants
acquired by a Fund attached to securities are deemed to have no value.

(15) TREASURY FUND INVESTMENT LIMITATIONS

TREASURY FUND may not enter into repurchase agreements or purchase any
security other than those that are issued or guaranteed by the U.S.
Treasury, including separately traded principal and interest components of
securities issued or guaranteed by the U.S. Treasury.

(16) PURCHASES AND SALES OF COMMODITIES

NO MONEY MARKET FUND may purchase or sell physical commodities or
contracts, options or options on contracts to purchase or sell physical
commodities, provided that currencies and currency-related contracts and
contracts on indices are not be deemed to be physical commodities.

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(17) VALUGROWTH STOCK FUND INVESTMENT LIMITATIONS

VALUGROWTH STOCK FUND may not enter into commitments under when-issued and
forward commitment obligations in an amount greater than 15% of the value of the
Fund's total assets..

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4. PERFORMANCE AND ADVERTISING DATA

Quotations of performance may from time to time be used in advertisements, sales
literature, shareholder reports or other communications to shareholders or
prospective investors. All performance information supplied by the Funds is
historical and is not intended to indicate future returns. Each Fund's yield
and total return fluctuate in response to market conditions and other factors.
The value of a Fund's shares when redeemed may be more or less than their
original cost. There can be no assurance that the Money Market Funds will be
able maintain a stable net asset value of $1.00.

For a listing of certain performance data as of May 31, 1996, see Appendix
Performance Data.

In performance advertising, the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., or other companies which track the
investment performance of investment companies ("Fund Tracking Companies"). The
Funds may also compare any of their performance information with the performance
of recognized stock, bond and other indexes, including but not limited to the
Municipal Bond Buyers Indices, the Salomon Brothers Bond Index, Shearson Lehman
Bond Index, the Standard & Poor's 500 Composite Stock Price Index, Russell 2000
Index, Morgan Stanley - Europe, Australian and Far East Index, Lehman Brothers
Intermediate Government Index, Lehman Brothers Intermediate Government/Corporate
Index, the Dow Jones Industrial Average, U.S. Treasury bonds, bills or notes and
changes in the Consumer Price Index as published by the U.S. Department of
Commerce. The Funds may refer to general market performances over past time
periods such as those published by Ibbotson Associates (for instance, its
"Stocks, Bonds, Bills and Inflation Yearbook"). The Funds may also refer in
such materials to mutual fund performance rankings and other data published by
Fund Tracking Companies. Performance advertising may also refer to discussions
of the Funds' and comparative mutual fund data and ratings reported in
independent periodicals, such as newspapers and financial magazines.

SEC YIELD CALCULATIONS

Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Norwest, Processing Organizations and others may charge
their customers, various retirement plans or other shareholders that invest in a
Fund fees in connection with an investment in a Fund, which will have the effect
of reducing the Fund's net yield to those shareholders. The yields of a Fund
are not fixed or guaranteed, and an investment in a Fund is not insured or
guaranteed. Accordingly, yield information may not necessarily be used to
compare shares of a Fund with investment alternatives which, like money market
instruments or bank accounts, may provide a fixed rate of interest. Also, it
may not be appropriate to compare a Fund's yield information directly to similar
information regarding investment alternatives which are insured or guaranteed.

MONEY MARKET FUNDS

Yield quotations for the Money Market Funds will include an annualized
historical yield, carried at least to the nearest hundredth of one percent,
based on a specific seven-calendar-day period and are calculated by dividing the
net change during the seven-day period in the value of an account having a
balance of one share at the beginning of the period by the value of the account
at the beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value reflects the value of additional shares
purchased with dividends declared on the original share and dividends declared
on both the original share and any such additional shares, but would not reflect
any realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any
effective annualized yield quotation used by a Money Market Fund is calculated
by compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result. The standardized tax equivalent yield is the rate an investor would have
to earn from a fully taxable investment in order to equal a Fund's yield after
taxes. Tax equivalent yields are calculated by dividing the Fund's yield by one
minus the stated Federal or combined Federal and state tax rate. If a portion
of a Fund's yield is tax-exempt, only that portion is adjusted in the
calculation.

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<PAGE>
FIXED INCOME AND EQUITY FUNDS

Standardized yields for the Funds used in advertising are computed by dividing a
Fund's interest income (in accordance with specific standardized rules) for a
given 30 days or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income in accordance with specific
standardized rules) in order to arrive at an annual percentage rate. In
general, interest income is reduced with respect to municipal securities
purchased at a premium over their par value by subtracting a portion of the
premium from income on a daily basis. In general, interest income is increased
with respect to municipal securities purchased at original issue at a discount
by adding a portion of the discount to daily income. Capital gains and losses
generally are excluded from these calculations.

The standardized tax equivalent yield is the rate an investor would have to earn
from a fully taxable investment in order to equal a Fund's yield after taxes.
Tax equivalent yields are calculated by dividing the Fund's yield by one minus
the stated Federal or combined Federal and state tax rate. If a portion of a
Fund's yield is tax-exempt, only that portion is adjusted in the calculation.

Income calculated for the purpose of determining each Fund's standardized yield
differs from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distribution the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.

TOTAL RETURN CALCULATIONS

Standardized total returns quoted in advertising and sales literature reflect
all aspects of a Fund's return, including the effect of reinvesting dividends
and capital gain distributions, any change in the Fund's net asset value per
share over the period and maximum sales charge, if any, applicable to purchases
of the Fund's shares. Average annual total returns are calculated, through the
use of a formula prescribed by the SEC, by determining the growth or decline in
value of a hypothetical historical investment in a Fund over a stated period,
and then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady
annual rate that would equal 100% growth on a compounded basis in ten years. The
average annual total return is computed separately for each class of shares of a
Fund. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:

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, each Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns, yields, and other performance

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<PAGE>
information may be quoted numerically or in a table, graph, or similar
illustration. Period total return is calculated according to the following
formula:

PT = (ERV/P-1)

Where:
PT = period total return
The other definitions are the same as in average annual total
return above

MULTICLASS, COLLECTIVE TRUST FUND AND MASTER-FEEDER PERFORMANCE

MULTICLASS PERFORMANCE

When a Fund has more than one class of shares, performance calculations for the
classes of shares that are created after the initial class may be stated so as
to include the performance of the initial class or classes of the Fund.
Generally, performance of the initial class is not restated to reflect the
expenses or expense ratio of the subsequent class. For instance, if A Shares of
a Fund are created after I Shares have been in existence, the inception of
performance for the A Shares will be deemed to be the inception date of the I
Shares and the performance of the I Shares (based on the I Shares actual
expenses) from the inception of I Shares to the inception of A Shares will be
deemed to be the performance of A Shares for that period. For standardized
total return calculations, the current maximum initial sales load on A Shares
would be used in determining the total return of A Shares as if assessed at the
inception of I Shares. Generally, the performance of B Shares will be
calculated only from the inception date of B Shares, regardless of the existence
of prior share classes in the same Fund.

COLLECTIVE TRUST FUND PERFORMANCE

Prior to November 11, 1994, Norwest Bank Minnesota, N.A. managed several
collective trust funds with investment objectives and investment policies
substantially similar to those of certain of the Funds. Therefore, the
performance for those applicable Funds includes the performance of their
predecessor collective investment funds for periods before those funds became
mutual funds on November 11, 1994. The collective investment fund performance
was adjusted to reflect those Funds 1994 estimate of their expense ratios for
the first year of operations as a mutual fund. The collective investment funds
were not registered under the 1940 Act or subject to certain investment
restrictions that are imposed by the Act. If the collective investment fund had
been registered under the 1040 Act, the collective investment fund historical
return may have been adversely affected. The performance of International Fund
reflects the historical performance of Schroder International Equity Fund
(managed by Schroder Capital Management International Inc.) in which the
collective investment fund invested. Performance of International Fund has been
adjusted to reflect fees and expenses of the Schroder International Equity Fund.

OTHER ADVERTISEMENT MATTERS

The Funds may advertise other forms of performance. For example, the Funds may
quote unaveraged or cumulative total returns reflecting the change in the value
of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period. Total returns may be 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 may be quoted with or without
taking into consideration a Fund's front-end sales charge or contingent deferred
sales charge; excluding sales charges from a total return calculation produces a
higher return figure. Any performance information may be presented numerically
or in a table, graph or similar illustration.

The Funds may also include various information in their advertisements
including, but 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

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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 principal of dollar cost averaging, (vii)
descriptions of the Funds' portfolio managers and the portfolio management staff
of the Investment Advisers or summaries of the views of the portfolio managers
with respect to the financial markets, (viii) the results of a hypothetical
investment in a Fund over a given number of years, including the amount that the
investment would be at the end of the period, (ix) the effects of earning
Federally and, if applicable, state tax-exempt income from a Fund or investing
in a tax-deferred account, such as an individual retirement account or Section
401(k) pension plan and (x) the net asset value, net assets or number of
shareholders of a Fund as of one or more dates.

As an example of compounding, $1,000 compounded annually at 9.00% will grow to
$1,090 at the end of the first year (an increase in $90) and $1,118 at the end
of the second year (an increase in $98). The extra $8 that was earned on the
$90 interest from the first year is the compound interest. One thousand dollars
compounded annually at 9.00% will grow to $2,367 at the end of ten years and
$5,604 at the end of 20 years. Other examples of compounding are as follows: at
7% and 12% annually, $1,000 will grow to $1,967 and $3,106, respectively, at the
end of ten years and $3,870 and $9,646, respectively, at the end of twenty
years. These examples are for illustrative purposes only and are not indicative
of any Fund's performance.

The Funds may advertise information regarding the effects of automatic
investment and systematic withdrawal plans, including the principal of dollar
cost averaging. In a dollar cost averaging program, an investor invests a fixed
dollar amount in a Fund at period intervals, thereby purchasing fewer shares
when prices are high and more shares when prices are low. While such a strategy
does not insure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
had been purchased at those intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares through periods of
low price levels. For example, if an investor invests $100 a month for a period
of six months in a Fund the following will be the relationship between average
cost per share ($14.35 in the example given) and average price per share:

Systematic Share Shares
Period Investment Price Purchased
------ ---------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- ----
Total Invested $600 Average Price $15.17 Total Shares 41.81

With respect to the Funds that invest in municipal securities and distribute
Federally tax-exempt (and in certain cases state tax exempt) dividends, the
Funds may advertise the benefits of and other effects of investing in municipal
securities. For instance, the Funds' advertisements may note that municipal
bonds have historically offered higher after tax yields than comparable taxable
alternatives for those persons in the higher tax brackets, that municipal bond
yields may tend to outpace inflation and that changes in tax law have eliminated
many of the tax advantages of other investments. The combined Federal and state
income tax rates for a particular state may also be described and advertisements
may indicate equivalent taxable and tax-free yields at various approximate
combined marginal Federal an state tax bracket rates. All yields so advertised
are for illustration only are not necessarily representative of a Fund's yield.

In connection with its advertisements each Fund may provide "shareholders
letters" which serve to provide shareholders or investors an introduction into
the Fund's, the Trust's or any of the Trust's service provider's policies or
business practices. For instance, advertisements may provide for a message from
Norwest or its parent

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<PAGE>
corporation that Norwest has for more than 60 years been committed to quality
products and outstanding service to assist its customers in meeting their
financial goals and setting forth the reasons that Norwest believes that it has
been successful as a national financial service firm.

CORE-GATEWAY PERFORMANCE

When a Fund such as International Fund (a "Gateway fund") invests all of its
investable assets in another investment company such as International Portfolio
(a "Core fund"), special performance calculation rules apply. For instance, if
a gateway fund invests in a Core fund that has a performance history prior to
the investment by the Gateway fund, the Gateway fund will assume the performance
history of the Core fund. That history will not be restated to reflect the
internal expense ratio of the Gateway fund. However, a Core Fund's performance
will be restated to reflect any sales charges that are applicable to the Gateway
fund's shares.

5. MANAGEMENT

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.

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 and age as of October 31, 1996 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, Chairman and President,* Age 54.

President and Owner, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Administrative Services, Limited Liability Company (a
mutual fund administrator), Forum Financial Corp. (a registered transfer
agent), and other companies within the Forum Financial Group of companies.
Mr. Keffer is a Director, Trustee and/or officer of various registered
investment companies for which Forum Financial Services, Inc. or its
affiliates serves as manager, administrator or distributor. His address is
Two Portland Square, Portland, Maine 04101.

Robert C. Brown, Trustee,* Age 65.

Director, Federal Farm Credit Banks Funding Corporation and Farm Credit
System Financial Assistance Corporation since February 1993. Prior
thereto, he was Manager of 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, Age 70.

Principal of The Burkhardt Law Firm. His address is 777 South Steele
Street, Denver, Colorado 80209.

James C. Harris, Trustee, Age 76.

President and sole Director of James C. Harris & Co., Inc. (a financial
consulting firm). Mr. Harris is also a liquidating Trustee and former
Director of First Midwest Corporation (a small business investment
company). His address is 6950 France Avenue South, Minneapolis, Minnesota
55435.

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<PAGE>

Richard M. Leach, Trustee, Age 63.

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 of 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, Age 45.

Senior Counselor to the public relations firm of Himle-Horner since January
1995 and Senior Fellow at the Humphrey Institute, Minneapolis, Minnesota (a
public policy organization) since January 1995. 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, Age 56.

Principal of the law firm of Willeke & Daniels. His address is 201
Ridgewood Avenue, Minneapolis, Minnesota 55403.

Robert Campbell, Treasurer, Age 35.

Director of Fund Accounting, Forum Financial Services, Inc., with which he
has been associated since April 1997. Prior thereto, from February 1994 -
April 1996 Mr. Campbell was Vice President-Business Unit Head, Domestic
Fund Services at State Street Fund Services, Inc. Prior thereto, from
September 1992 - January 1994 Mr. Campbell was Assistant Vice
President-Fund Manager at State Street Bank & Trust Company, and prior
thereto First Line Manager. His address is Two Portland Square, Portland,
Maine 04101.

David I. Goldstein, Vice President and Secretary, Age 35.

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.

Sara M. Clark, Vice President and Assistant Treasurer, Age 33.

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, Age 42.

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.

Catherine S. Wooledge, Assistant Secretary, Age 54.

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<PAGE>

thereto associate at Drinker Biddle & Reath, Washington, D.C. Her address
is Two Portland Square, Portland, Maine 04101.

Don L. Evans, Assistant Secretary, Age 48.

Assistant Counsel, Forum Financial Services, Inc., with which he has been
associated since 1995. Prior thereto, Mr. Evans was associated with the
law firm of Bisk & Lutz and prior thereto was associated with the law firm
of Weiner & Strother. Mr. Evans is also Assistant Secretary 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.

Renee A. Walker, Assistant Secretary, Age 26.

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 from 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.

COMPENSATION OF TRUSTEES AND OFFICERS OF THE TRUST

Each Trustee of the Trust is paid a retainer fee in the total amount of $5,000,
payable quarterly, 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. In addition, each Trustee is paid $3,000 for
each Board meeting attended (whether in person or by electronic communication)
and is paid $1,000 for each Committee meeting attended on a date when a Board
meeting is not held. Trustees are also reimbursed for travel and related
expenses incurred in attending meetings of the Board. Mr. Keffer received no
compensation for his services as Trustee for the past year or compensation or
reimbursement for his associated expenses. In addition, no officer of the Trust
is compensated by the Trust.

Mr. Burkhardt, Chairman of the Trust's and Norwest Select Funds' audit
committees, receives additional compensation of $6,000 from the Trust and
Norwest Select Funds allocated pro rata between the Trust and Norwest Select
Funds based upon relative net assets, for his services as Chairman. Mr. Willeke
was appointed a Trustee in July 1995 and Mr. Penny was appointed a Trustee in
January 1996.

The following table provides the aggregate compensation paid to the Trustees of
the Trust by the Trust and Norwest Select Funds, combined. Norwest Select Funds
have a December 31 fiscal year end. Information is presented for the twelve
month period ended May 31, 1996, which was the fiscal year end of all of the
Trust's portfolios.

Total Compensation From
Total Compensation the Trust and Norwest
from the Trust Select Funds
-------------- ------------
Mr. Brown $28,974 $29,000
Mr. Burkhardt $36,223 $36,250
Mr. Harris $28,000 $28,975
Mr. Leach $33,000 $33,970
Mr. Penny $16,000 $16,985
Mr. Willeke $29,973 $30,000

Neither the Trust nor Norwest Select Funds has adopted any form of retirement
plan covering Trustees or officers. For the twelve month period ended May 31,
1996 total expenses of the Trustees (other than Mr. Keffer) was $30,408 and
total expenses of the trustees of Norwest Select Funds was $27.

As of June 1, 1997, the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding shares of the Funds.

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<PAGE>
TRUSTEES AND OFFICERS OF CORE TRUST

The Trustees and officers of Core Trust and their principal occupations during
the past five years and ages are set forth below. Each Trustee who is an
"interested person" (as defined by the 1940 Act) of Core Trust is indicated by
an asterisk. Messrs. Keffer, Goldstein, Butt, Sheehan, and Misses. Clark and
Walker, officers of Core Trust, all currently serve as officers of the Trust.
Accordingly, for background information pertaining to these officers, see
"Management - Trustees and Officers - Trustees and Officers of the Trust."

John Y. Keffer,* Chairman and President.

Costas Azariadis, Trustee, Age 53.

Professor of Economics, University of California, Los Angeles, since July
1992. Prior thereto, Dr. Azariadis was Professor of Economics at the
University of Pennsylvania. His address is Department of Economics,
University of California, Los Angeles, 405 Hilgard Avenue, Los Angeles,
California 90024.

James C. Cheng, Trustee, Age 54.

Managing Director, Forum Financial Services, Inc. since September 1991.
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President and
Chief Executive Officer of Network Dynamics, Incorporated (a software
development company). His address is Two Portland Square, Portland, Maine
04101.

J. Michael Parish, Trustee, Age 53.

Partner at the law firm of Winthrop Stimson Putnam & Roberts since 1989.
Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby & MacRae, a law
firm of which he was a member from 1974 to 1989. His address is 40 Wall
Street, New York, New York 10005.

Richard C. Butt, Treasurer

Sara M. Clark, Vice President, Assistant Secretary and Assistant Treasurer.

David I. Goldstein, Secretary.

Thomas G. Sheehan, Assistant Secretary.

Renee A. Walker, Assistant Secretary

INVESTMENT ADVISORY SERVICES

GENERAL

Table 1 in Appendix B shows the dollar amount of fees payable under the
Investment Advisory Agreements between Norwest and the Trust with respect to
each Fund, the amount of fee that was waived by Norwest, if any, and the actual
fee received by Norwest. That table also shows similar information with respect
to Schroder for its services to International Portfolio. The data is for the
past three fiscal years or a shorter period if the Fund has been in operation
for a shorter period.

The advisory fee for each fund (and any class of the fund) is based on the
average daily net asset of each fund (or class thereof) at the annual rate
disclosed in the fund's prospectives.

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All investment advisory fees are accrued daily and paid monthly. The Advisers,
in their its sole discretion, may waive or continue to waive all or any portion
of their investment advisory fees. In addition to receiving its advisory fee
from the Funds, Norwest or its affiliates may act and be compensated as
investment manager for their clients with respect to assets which are invested
in a Fund. In some instances Norwest or its affiliates 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 a Fund an amount equal to all
or a portion of the fees received by Norwest or any of its affiliates from a
Fund with respect to the client's assets invested in the Fund.

NORWEST INVESTMENT MANAGEMENT

Norwest furnishes at its expense all services, facilities and personnel
necessary in connection with managing each Fund's investments and effecting
portfolio transactions for each Fund. For further information about the
investment subadvisory services for certain Funds and the advisory services for
International Portfolio of Core Trust, see "Management - Investment Advisory
Services - Schroder Capital Management International, Inc." and "- Crestone
Capital Management, Inc." below. Under its various Investment Advisory
Agreements, Norwest may delegate its responsibilities to any investment
subadviser approved by the Board and, as applicable, shareholders, with respect
to all or a portion of the assets of the Fund. The Investment Advisory
Agreement between each Fund and Norwest will continue in effect only if such
continuance is specifically approved at least annually by the Board or by vote
of the shareholders, and in either case, by a majority of the Trustees who are
not interested persons of any party to the Investment Advisory Agreement, at a
meeting called for the purpose of voting on the Investment Advisory Agreement.

Each Investment Advisory Agreement is terminable without penalty with respect to
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 of Trustees, or by Norwest
on not more than 60 days' nor less than 30 days' written notice, and will
automatically terminate in the event of its assignment. The Investment Advisory
Agreements also provide that, with respect to the Funds, 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 their duties to the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of
Norwest's duties or by reason of reckless disregard of its obligations and
duties under the

Investment Advisory Agreements. The Investment Advisory Agreements provide that
Norwest may render services to others.

Norwest acts as investment adviser to Index Portfolio and Small Company
Portfolio, two separate series of Core Trust in which Conservative Balanced
Fund, Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity Fund and
Growth Equity Fund (the "Blended Funds") invest a portion of their assets. The
Blended Funds also invest a portion of their assets in International Portfolio
II of Core Trust. See "Investment Advisory Services -- Schroder Capital
Management International, Inc.-- International Portfolio/International
Portfolio II" below. The investment advisory agreements between Core Trust on
behalf of Index Portfolio and Small Company Portfolio are identical to the
Investment Advisory Agreements between the Trust and Norwest, except for the
fees payable thereunder and certain immaterial matters. While the Advisor
receives investment advisory fees from the Blended Funds, Norwest is required
to waive all of its investment advisory fees payable by Index Portfolio and
Small Company Portfolio.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL, INC. -- INTERNATIONAL
PORTFOLIO/INTERNATIONAL PORTFOLIO II

International Fund invests all of its assets in International Portfolio and each
Blended Fund invests a portion of its assets in International Portfolio II.
Pursuant to separate Advisory Agreements between Core Trust and Schroder,
Schroder acts as investment adviser to International Portfolio and International
Portfolio II and is required to furnish at its expense all services, facilities
and personnel necessary in connection with managing International Portfolio's
investments and effecting portfolio transactions for International Portfolio.
The Advisory Agreement between International Portfolio and Schroder and
International Portfolio II and Schroder each will continue in effect only if
such continuance is specifically approved at least annually by the Core Trust or
by vote of the holders of beneficial interest of the respective Portfolio, and
in either case by a majority of the Trustees of Core Trust who are not parties

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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 Agreements and Investment Subadvisory Agreements are each
terminable without penalty by the respective Portfolio or Fund on 60 days'
written notice when authorized either by vote of the unitholders of the
Portfolio or Fund, as applicable or by a vote of a majority of the Core Trust
Board or Board as applicable, or by Schroder on not more than 60 days' nor less
than 30 days' written notice, and will automatically terminate in the event of
their assignment. The Advisory Agreements and Investment Subadvisory Agreements
also provide that, with respect to each Portfolio or Fund, 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
or Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of Schroder's or their duties or by reason of reckless disregard of
its or their obligations and duties under the Advisory Agreement. The Advisory
Agreements provide and Investment Subadvisory Agreements that Schroder may
render service to others.

On behalf of Blended Fund and International, Norwest and the Trust have entered
into an Investment Subadvisory Agreement with Schroder. An Investment
Subadvisory Agreement would become operative and Schroder would directly manage
a Fund's assets if the Board determined it was no longer in the best interest of
the Fund to invest in international securities by investing in another
registered investment company. In that event, pursuant to the Investment
Subadvisory Agreement Schroder would makes investment decisions directly for a
Fund and continuously review, supervise and administer the Fund's investment
program with respect to that portion, if any, of the Fund's portfolio that
Norwest has so delegated. Schroder would be required to furnish at its own
expense all services, facilities and personnel necessary in connection with
managing of the Funds' investments and effecting portfolio transactions for the
Funds (to the extent of Norwest's delegation).

The Investment Subadvisory Agreements 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 respective Fund, and in either case by a majority of
the Trustees who are not interested persons of any party to the Investment
Subadvisory Agreement, at a meeting called for the purpose of voting on the
Investment Subadvisory Agreement.

No payments are made under the Funds' Investment Subadvisory Agreements with
Schroder because no assets are allocated to Schroder to manage directly.

The Advisory Agreements between Schroder and Core Trust on behalf of
International Portfolio and International Portfolio II are identical to the
Investment Advisory Agreements between the Trust and Norwest, except for the
fees payable thereunder and certain immaterial matters. Norwest is required to
reimburse International Portfolio II in an amount equal to the investment
advisory fees payable by the Portfolio to Schroder.

CRESTONE CAPITAL MANAGEMENT, INC.

To assist Norwest in carrying out its obligations under the Investment Advisory
Agreement with the Small Company Stock Fund (the "Fund"), Norwest has entered
into a Sub-Investment Advisory Agreement with Crestone, located at 7720 East
Belleview Avenue, Suite 220, Englewood, Colorado 80111. Crestone is registered
with the SEC as an investment adviser and is a non-wholly owned subsidiary of
Norwest. Pursuant to the Sub-Investment Advisory Agreement, Crestone makes
investment decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program with respect to that portion, if any,
of the Fund's portfolio that Norwest believes should be invested using Crestone
as a subadviser. Currently, Crestone manages the entire portfolio of the Fund
and has since the Fund's inception. Norwest supervises the performance of
Crestone including its adherence to the Portfolio's investment objectives and
policies and pays Crestone a fee for its investment management services. For
its services under the Sub-Investment Advisory Agreement, Norwest pays Crestone
a fee based on the Fund's average daily net assets at an annual rate of 0.40% on
the first $30 million; 0.30% on the next $30 million; 0.20% on the next $40
million and 0.15% on all sums in excess of $100 million. For the Fund's fiscal
years ended May 31, 1996, 1995 and 1994, Norwest paid Crestone subadvisory fees
of $180,748, $137,862 and $8,792, respectively.

Under its Sub-Investment Subadvisory Agreement, Crestone makes investment
decisions for the Fund and continuously reviews, supervises and administers the
Fund's investment program with respect to that portion, if any,

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of the Fund's portfolio for which Norwest has delegated management
responsibility. Crestone 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 Sub-Investment Advisory Agreement 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 interested persons of any party to the Sub-Investment
Advisory Agreement, at a meeting called for the purpose of voting on the
Sub-Investment Advisory Agreement.

The Sub-Investment 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 Crestone on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate in
the event of its assignment. The Sub-Investment Advisory Agreement also
provides that neither Crestone 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 its or their duties or by reason of
reckless disregard of its or their obligations and duties under the
Sub-Investment Advisory Agreement. The Sub-Investment Advisory Agreement
provides that Crestone may render services to others.

GALLIARD

To assist Norwest in carrying out its obligations under the Investment Advisory
Agreement with ________ (the "Fund"), Norwest has entered into a Sub-Investment
Advisory Agreement with Galliard, located at _______________________. Galliard
is registered with the SEC as an investment adviser and is a _________ owned
subsidiary of Norwest. Pursuant to the Sub-Investment Advisory Agreement,
Galliard makes investment decisions for the Fund and continuously reviews,
supervises and administers the Fund's investment program with respect to that
portion, if any, of the Fund's portfolio that Norwest believes should be
invested using Galliard as a subadviser. Currently, Galliard manages the entire
portfolio of the Fund and has since the Fund's inception. Norwest supervises
the performance of Galliard including its adherence to the Portfolio's
investment objectives and policies and pays Galliard a fee for its investment
management services. For its services under the Sub-Investment Advisory
Agreement, Norwest pays Galliard a fee based on the Fund's average daily net
assets at an annual rate of 0.40% on the first $30 million; 0.30% on the next
$30 million; 0.20% on the next $40 million and 0.15% on all sums in excess of
$100 million.

Under its Sub-Investment Subadvisory Agreement, Galliard makes investment
decisions for the Fund and continuously reviews, supervises and administers the
Fund's investment program with respect to that portion, if any, of the Fund's
portfolio for which Norwest has delegated management responsibility. Galliard
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 Sub-Investment 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 Galliard on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate in
the event of its assignment. The Sub-Investment Advisory Agreement also
provides that neither Galliard 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 its or their duties or by reason of
reckless disregard of its or their obligations and duties under the
Sub-Investment Advisory Agreement. The Sub-Investment Advisory Agreement
provides that Galliard may render services to others.

PEREGRINE CAPITAL MANAGEMENT, INC.

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To assist Norwest in carrying out its obligations under the Investment Advisory
Agreement with ________ (the "Fund"), Norwest has entered into a Sub-Investment
Advisory Agreement with Peregrine, located at _______________________.
Peregrine is registered with the SEC as an investment adviser and is a _________
owned subsidiary of Norwest. Pursuant to the Sub-Investment Advisory Agreement,
Peregrine makes investment decisions for the Fund and continuously reviews,
supervises and administers the Fund's investment program with respect to that
portion, if any, of the Fund's portfolio that Norwest believes should be
invested using Peregrine as a subadviser. Currently, Peregrine manages the
entire portfolio of the Fund and has since the Fund's inception. Norwest
supervises the performance of Peregrine including its adherence to the
Portfolio's investment objectives and policies and pays Peregrine a fee for its
investment management services. For its services under the Sub-Investment
Advisory Agreement, Norwest pays Peregrine a fee based on the Fund's average
daily net assets at an annual rate of 0.40% on the first $30 million; 0.30% on
the next $30 million; 0.20% on the next $40 million and 0.15% on all sums in
excess of $100 million.

Under its Sub-Investment Subadvisory Agreement, Peregrine makes investment
decisions for the Fund and continuously reviews, supervises and administers the
Fund's investment program with respect to that portion, if any, of the Fund's
portfolio for which Norwest has delegated management responsibility. Peregrine
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 Sub-Investment 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 Peregrine on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate in
the event of its assignment. The Sub-Investment Advisory Agreement also
provides that neither Peregrine 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 its or their duties or by reason of
reckless disregard of its or their obligations and duties under the
Sub-Investment Advisory Agreement. The Sub-Investment Advisory Agreement
provides that Peregrine may render services to others.

UNITED CAPITAL MANAGEMENT

To assist Norwest in carrying out its obligations under the Investment Advisory
Agreement with ________ (the "Fund"), Norwest has entered into a Sub-Investment
Advisory Agreement with United Capital management, located at
_______________________. United Capital management is registered with the SEC
as an investment adviser and is a _________ owned subsidiary of Norwest.
Pursuant to the Sub-Investment Advisory Agreement, United Capital management
makes investment decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program with respect to that portion, if any,
of the Fund's portfolio that Norwest believes should be invested using United
Capital management as a subadviser. Currently, United Capital management
manages the entire portfolio of the Fund and has since the Fund's inception.
Norwest supervises the performance of United Capital management including its
adherence to the Portfolio's investment objectives and policies and pays United
Capital management a fee for its investment management services. For its
services under the Sub-Investment Advisory Agreement, Norwest pays United
Capital management a fee based on the Fund's average daily net assets at an
annual rate of 0.40% on the first $30 million; 0.30% on the next $30 million;
0.20% on the next $40 million and 0.15% on all sums in excess of $100 million.

Under its Sub-Investment Subadvisory Agreement, United Capital management makes
investment decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program with respect to that portion, if any,
of the Fund's portfolio for which Norwest has delegated management
responsibility. United Capital management is required to furnish at its own
expense all services, facilities and personnel necessary in connection

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with managing of the Fund's investments and effecting portfolio transactions for
the Fund (to the extent of Norwest's delegation).

The Sub-Investment 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 United Capital management on not
more than 60 days' nor less than 30 days' written notice, and will automatically
terminate in the event of its assignment. The Sub-Investment Advisory Agreement
also provides that neither United Capital management 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 its or their
duties or by reason of reckless disregard of its or their obligations and duties
under the Sub-Investment Advisory Agreement. The Sub-Investment Advisory
Agreement provides that United Capital management may render services to others.

MANAGEMENT AND ADMINISTRATIVE SERVICES

MANAGER AND ADMINISTRATOR

Forum manages all aspects of the Trust's operations with respect to each Fund
except those which are the responsibility of Norwest, any other investment
adviser or investment subadviser to a Fund, or Norwest in its capacity as
administrator pursuant to an investment administration or similar agreement.
With respect to each Fund, Forum has entered into a Management Agreement that
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 interested persons of any party to the
Management Agreement.

On behalf of the Trust and with respect to each Fund, Forum (i) oversees (A)
the preparation and maintenance by the Advisers and the Trust's administrator,
custodian, transfer agent, dividend disbursing agent and fund accountant (or if
appropriate, prepares and maintains) in such form, for such periods and in such
locations as may be required by applicable law, of all documents and records
relating to the operation of the Trust required to be prepared or maintained by
the Trust or its agents pursuant to applicable law; (B) the reconciliation of
account information and balances among the Advisers and the Trust's custodian,
transfer agent, dividend disbursing agent and fund accountant; (C) the
transmission of purchase and redemption orders for Shares; (D) the notification
of the Advisers of available funds for investment; and (E) the performance of
fund accounting, including the calculation of the net asset value per Share;
(ii) oversees the Trust's receipt of the services of persons competent to
perform such supervisory, administrative and clerical functions as are
necessary to provide effective operation of the Trust; (iii) oversees the
performance of administrative and professional services rendered to the Trust
by others, including its administrator, custodian, transfer agent, dividend
disbursing agent and fund accountant, as well as accounting, auditing, legal
and other services performed for the Trust; (iv) provides the Trust with
adequate general office space and facilities and provides, at the Trust's
request and expense, persons suitable to the Board to serve as officers of the
Trust; (v) oversees the preparation and the printing of the periodic updating
of the Trust's registration statement, Prospectuses and SAIs, the Trust's tax
returns, and reports to its shareholders, the SEC and state and other
securities administrators; (vi) oversees the preparation of proxy and
information statements and any other communications to shareholders; (vii) with
the cooperation of the Trust's counsel, Investment Advisers and other relevant
parties, oversees the preparation and dissemination of materials for meetings
of the Board; (viii) oversees the preparation, filing and maintenance of the
Trust's governing documents, including the Trust Instrument, Bylaws and minutes
of meetings of Trustees, Board committees and shareholders; (ix) oversees
registration and sale of Fund shares, to ensure that such shares are properly
and duly registered with the SEC and applicable state and other securities
commissions;(x) oversees the calculation of performance data for dissemination
to information services covering the investment company industry, sales
literature of the Trust and other appropriate purposes; (xi) oversees the
determination of the amount of and supervises the declaration of dividends and
other distributions to shareholders as

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necessary to, among other things, maintain the qualification of each Fund as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, and oversees the preparation and distribution to appropriate parties of
notices announcing the declaration of dividends and other distributions to
shareholders; (xii) reviews and negotiates on behalf of the Trust normal course
of business contracts and agreements; (xiii) maintains and reviews periodically
the Trust's fidelity bond and errors and omission insurance coverage; and (xiv)
advises the Trust and the Board on matters concerning the Trust and its affairs.

The Management Agreement terminates automatically if assigned and may be
terminated without penalty with respect to any Fund by vote of that Fund's
shareholders or by either party on not more than 60 days' nor less than 30 days'
written notice. The Management Agreement also provides that 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 administration or management of the Trust, 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 their obligations and
duties under the Management Agreement.

Forum manages all aspects of the Trust's operations with respect to each Fund
except those which are the responsibility of Forum, Norwest, or any other
investment adviser or investment subadviser to a Fund, or Norwest in its
capacity as administrator pursuant to an investment administration or similar
agreement. With respect to each Fund, Forum has entered into a Administrative
Agreement that 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 interested persons of any party
to the Management Agreement.

On behalf of the Trust and with respect to each Fund, Forum Administrative (i)
provides the Trust with, or arranges for the provision of, the services of
persons competent to perform such supervisory, administrative and clerical
functions as are necessary to provide effective operation of the Trust; (ii)
assists in the preparation and the printing and the periodic updating of the
Trust's registration statement, Prospectuses and SAIs, the Trust's tax returns,
and reports to its shareholders, the SEC and state and other securities
administrators; (iii) assists in the preparation of proxy and information
statements and any other communications to shareholders; (iv) assists the
Advisers in monitoring Fund holdings for compliance with Prospectus and SAI
investment restrictions and assist in preparation of periodic compliance
reports;(v) with the cooperation of the Trust's counsel, Investment Advisers,
the officers of the Trust and other relevant parties, is responsible for the
preparation and dissemination of materials for meetings of the Board; (vi) is
responsible for preparing, filing and maintaining the Trust's governing
documents, including the Trust Instrument, Bylaws and minutes of meetings of
Trustees, Board committees and shareholders; (vii) is responsible for
maintaining the Trust's existence and good standing under state law; (viii)
monitors sales of shares and ensures that such shares are properly and duly
registered with the SEC and applicable state and other securities commissions;
(ix) is responsible for the calculation of performance data for dissemination to
information services covering the investment company industry, sales literature
of the Trust and other appropriate purposes; and (x) is responsible for the
determination of the amount of and supervises the declaration of dividends and
other distributions to shareholders as necessary to, among other things,
maintain the qualification of each Fund as a regulated investment company under
the Internal Revenue Code of 1986, as amended, and prepares and distributes to
appropriate parties notices announcing the declaration of dividends and other
distributions to shareholders.

The Administrative Agreement terminates automatically if assigned and may be
terminated without penalty with respect to any Fund by vote of that Fund's
shareholders or by either party on not more than 60 days' nor less than 30 days'
written notice. The Administrative Agreement also provides that neither Forum
Administrative nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the administration or management of
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of Forum Administrative's or their duties or by reason of reckless
disregard of their obligations and duties under the Administrative Agreement.

Pursuant to their agreements with the Trust, Forum and Forum Administrative may
subcontract any or all of their duties to one or more qualified
subadministrators who agree to comply with the terms of Forum's Management
Agreement or Forum Administrative's Administration Agreement, respectively.
Forum and Forum Administrative may compensate those agents for their services;
however, no such compensation may increase the aggregate amount

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of payments by the Trust to Forum or Forum Administrative pursuant to their
Management and Administration Agreements with the Trust.

Table 2 in Appendix B shows the dollar amount of fees payable to Forum for its
management services with respect to each Fund (or class thereof for those
periods when multiple classes were outstanding), the amount of fee that was
waived by Forum, if any, and the actual fee received by Forum. The data is for
the past three fiscal years or shorter period if the Fund has been in operation
for a shorter period.

The Administration Agreement became effective on October 1, 1996 and,
accordingly, no fees have been paid pursuant to that agreement during the
past three years.

PORTFOLIOS OF CORE TRUST

Forum manages all aspects of Core Trust's operations with respect to small
company portfolio, International Portfolio II (the "Blended Portfolios") and
International Portfolio (collectively, the "Portfolios") except those which are
the responsibility of Norwest or Schroder. With respect to each Portfolio,
Forum has entered into a management agreement (the "Core Trust Management
Agreement") that will continue in effect only if such continuance is
specifically approved at least annually by the Core Trust Board or by the
shareholders and, in either case, by a majority of the Trustees who are not
interested persons of any party to the Core Trust Management Agreement. Under
the Core Trust Management Agreement, Forum performs similar services for each
Portfolio as it and Forum Administrative perform for the Blended Funds under the
Management and Administration Agreements, to the extent the services are
applicable to the Portfolios and their structure. Forum and Forum
Administrative waive their fees payable by each of the Blended Funds under the
Management and Administration Agreements to the extent those Funds incur
indirectly management fees charged by Forum to a Blended Portfolio.

NORWEST ADMINISTRATIVE SERVICES

Under an Administrative Servicing Agreement between the Trust and Norwest with
respect to International Fund, Norwest performs ministerial, administrative and
oversight functions for the Fund and undertakes to reimburse certain excess
expenses of the Fund. Among other things, Norwest gathers performance and other
data from Schroder as the adviser of International Portfolio and from other
sources, formats the data and prepares reports to the Fund's shareholders and
the Trustees. Norwest also insures that Schroder is aware of pending net
purchases or redemptions of Fund shares and other matters that may affect
Schroder'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 Administrative
Servicing Agreement unless the Fund's assets are invested solely in
International Portfolio or in a portfolio of another registered investment
company. This agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board or by the shareholders and,
in either case, by a majority of the Trustees who are not parties to the
Management Agreement or interested persons of any such party.

The Administrative Service 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.

Table 2 in Appendix B shows the dollar amount of fees payable under the
Servicing Agreement, the amount of the fee that was waived, if any, and the
amount received by Norwest for the past three fiscal years of the Fund.

DISTRIBUTION

Forum also acts as distributor of the shares of the Fund. Forum acts as the
agent of the Trust in connection with the offering of shares of the Funds on a
"best efforts" basis pursuant to a Distribution Services Agreement.

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Under the Distribution Services Agreement, the Trust has agreed to indemnify,
defend and hold Forum, and any person who controls Forum within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which Forum or any such controlling person may incur,
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in the Trust's
Registration Statement or a Fund's Prospectus or Statement of Additional
Information in effect from time to time under the 1933 Act or arising out of or
based upon any alleged omission to state a material fact required to be stated
in any one thereof or necessary to make the statements in any one thereof not
misleading. Forum is not, however, protected against any liability to the Trust
or its shareholders to which Forum would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Forum's reckless disregard of its obligations and duties
under the Distribution Services Agreement.

With respect to each Fund, the Distribution Services Agreement will continue in
effect only if such continuance is specifically approved at least annually by
the Board or by the shareholders and, in either case, by a majority of the
Trustees who are not parties to the Distribution Services Agreement or
interested persons of any such party and, with respect to each class of a Fund
for which there is an effective plan of distribution adopted pursuant to Rule
12b-1, who do not have any direct or indirect financial interest in any
distribution plan of the Fund or in any agreement related to the distribution
plan cast in person at a meeting called for the purpose of voting on such
approval ("12b-1 Trustees").

The Distribution Services Agreement terminates automatically if assigned. With
respect to each Fund, the Distribution Services Agreement may be terminated at
any time without the payment of any penalty (i) by the Board or by a vote of the
Fund's shareholders or, with respect to each class of a Fund for which there is
an effective plan

of distribution adopted pursuant to Rule 12b-1, a majority of 12b-1 Trustees, on
60 days' written notice to Forum or (ii) by Forum on 60 days' written notice to
the Trust.

Under the Distribution Services Agreement related to the Fixed Income Equity and
Balanced Funds, Forum receives, and may reallow to certain financial
institutions, the initial sales charges assessed on purchases of A Shares of the
Funds. With respect to B Shares of each Fixed Income and Equity Fund, and with
respect to Exchange Shares of Ready Cash Investment Fund, the Funds have adopted
a distribution plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") which
authorizes the payment to Forum under the Distribution Services Agreement of a
distribution services fee, which may not exceed an annual rate of 0.75%, and a
maintenance fee in an amount equal to 0.25%, of the average daily net assets of
the Fund attributable to the B Shares and Exchange Shares.

The Plan provides that all written agreements relating to the Plan must be in a
form satisfactory to the Board. In addition, the Plan requires the Trust and
Forum to prepare, at least quarterly, written reports setting forth all amounts
expended for distribution purposes by the Funds and Forum pursuant to the Plan
and identifying the distribution activities for which those expenditures were
made.

The Plan provides that, with respect to each class of each Fund to which it
applies, it will remain in effect for one year from the date of its adoption and
thereafter may continue in effect for successive annual periods provided it is
approved by the shareholders of the respective class or by the Board, including
a majority of the 12b-1 trustees. The Plan further provides that it may not be
amended to increase materially the costs which may be borne by the Trust for
distribution pursuant to the Plan without shareholder approval and that other
material amendments to the Plan must be approved by the trustees in the manner
described in the preceding sentence. The Plan may be terminated at any time by
a vote of the Board or by the shareholders of the respective classes.

The Plan is "semi-enhanced" in that under the circumstances described below,
payments to Forum under the Plan continue while there are uncovered distribution
charges even though the Plan has been terminated. Uncovered distribution
charges include all sales commissions previously due, plus interest, less
amounts previously received by Forum (or other distributor) pursuant to the Plan
and contingent deferred sales charges previously paid to Forum. The Plan
provides that in the event of a Complete Termination (as defined below) of the
Plan with respect to a Fund, payments by a Fund in consideration of sales of B
Shares that occurred prior to termination of the Plan will cease. A

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<PAGE>
Complete Termination in respect of any Fund means: (i) the 12b-1 Trustees acting
in good faith have determined that termination is in the best interest of the
Trust and the shareholders of the Fund; (ii) the Trust does not alter the terms
of the CDSC applicable to the B Shares of the Fund outstanding at the time of
the termination; (iii) the Trust does not pay any portion of the asset based
sales charge or service fees to an entity other than the distributor or its
assignee (unless the distributor at the time of the termination was in material
breach under the Distribution Agreement in respect of the Fund); and (iv) the
Fund does not adopt 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

In the event of a termination of the Plan that does not satisfy clauses (ii),
(iii) and (iv) of the definition of a Complete Termination above, Ready Cash
Investment Fund, ValuGrowth Stock Fund, Small Company Stock Fund, Contrarian
Stock Fund, Income Fund, Tax-Free Income Fund, Total Return Bond Fund and
Minnesota Tax-Free Fund would continue to pay distribution services fees for no
more than four years. In contrast, payments by Stable Income Fund, Intermediate
Government Income Fund, Growth Equity Fund and Diversified Equity Fund would
continue until such time as there exist no outstanding uncovered distribution
charges attributable to the Fund and, therefore, could continue for periods of
time beyond four years after the date of termination.

In addition, pursuant to the Plan each of Stable Income Fund, Income Equity
Fund, Intermediate Government Income Fund, Diversified Equity Fund and Growth
Equity Fund may, subject to approval by the Trustees, assume and pay (i) any
uncovered distribution charges of the distributor of a fund whose assets are
being acquired by the Fund and (ii) any other amounts expended for distribution
on behalf of such fund that are not reimbursed or paid by the fund upon the
merger or combination with or acquisition of substantially all of the assets of
that fund.

Table 3 in Appendix B shows the dollar amount of fees payable to Forum for its
distribution services with respect to each Fund (or class thereof), the amount
of fee that was waived by Forum, if any, and the actual fee received by Forum.
All maintenance fees were waived by Forum during the fiscal years ended May 31,
1994, 1995 and 1996. With respect to each Fund, Forum has paid brokers that
sold B Shares in amounts greater than the distribution fees received by Forum
with respect to that Fund. The data is for the past three fiscal years or
shorter period if the Fund has been in operation for a shorter period.

Table 4 in Appendix B shows the dollar amount of sales charges payable to Forum
with respect to sales of A Shares (or of the respective Funds prior to the
offering of multiple classes of shares) and the amount of sales charge retained
by Forum and not reallowed to other persons. The data is for the past three
fiscal years or shorter period if the Fund has been in operation for a shorter
period.

TRANSFER AGENT

Norwest Bank 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.

The responsibilities of the Transfer Agent include: (i) 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; (ii) assisting shareholders in initiating and changing
account designations and addresses; (iii) providing necessary personnel and
facilities to establish and maintain shareholder accounts and records, (iv)
assisting in processing purchase and redemption transactions and receiving wired
funds; (v) transmitting and receiving funds in connection with customer orders
to purchase or redeem shares; (vi) verifying shareholder signatures in
connection with changes in the registration of shareholder accounts; (vii)
furnishing periodic statements and confirmations of purchases and redemptions;
(viii) transmitting proxy statements, annual reports, prospectuses and other
communications from the Trust to its shareholders; (ix) receiving, tabulating
and transmitting to the Trust proxies executed by shareholders with respect to
meetings of shareholders of the Trust; and (x) providing such other related
services as the Trust or a shareholder may request.

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<PAGE>

For its services, the Transfer Agent receives from the Trust, with respect to
Cash Investment Fund, U.S. Government Fund, Treasury Fund, Investor Shares and
Exchange Shares of Ready Cash Investment Fund, Investor Shares of Municipal
Money Market Fund and each class of each Fixed Income and Equity Fund, a fee
computed and paid monthly at the annual rate of 0.25% of the Fund's average
daily net assets (or, in those Funds with more than one class, the Fund's
average daily net assets attributable to the class). For its services, the
Transfer Agent receives from the Trust, with respect to Institutional Shares of
Ready Cash Investment Fund and Municipal Money Market Fund, a fee computed and
paid monthly at the annual rate of 0.10% of the Fund's average daily net assets
attributable to the class plus reimbursement of Norwest Bank's out-of-pocket
expenses relating to the Institutional Shares.

CUSTODIAN

Pursuant to a Custodian Agreement, Norwest Bank acts as the custodian of the
Trust's assets (in this capacity the "Custodian"). The Custodian's
responsibilities include safeguarding and controlling the Trust's cash and
securities, determining income and collecting interest on Fund investments. The
fee is computed and paid monthly, based on the average daily net assets of the
Fund, the number of portfolio transactions of the Fund and the number of
securities in the Fund's portfolio.

With respect to Cash Investment Fund, U.S. Government Fund and Treasury Fund,
the Custodian's fee for any fiscal year of the Trust will not exceed 0.03% of
the Fund's average daily net assets. With respect to Ready Cash Investment
Fund, Municipal Money Market Fund, Income Fund, Total Return Bond Fund, Limited
Term Tax-Free Fund, Tax-Free Income Fund, Colorado Tax-Free Fund, Minnesota
Tax-Free Fund, ValuGrowth Stock Fund, Small Company Stock Fund and Contrarian
Stock Fund, the Custodian's fee for any fiscal year of the Trust will not exceed

0.05% of the Fund's average daily net assets. The fee is Stable Income Fund,
Intermediate Government Income Fund, Diversified Bond Fund, each Balanced Fund,
Income Equity Fund, Index Fund, Diversified Equity fund, Growth Equity Fund,
Large Company Growth Fund, Small Company Growth Fund and International Fund pay
no custodian fees, but incur the expenses of subcustodians. In addition, the
Funds permitted to lend their portfolio securities pay, the custodian a separate
fee for performing certain functions in connection with those loans.

Pursuant to rules adopted under the 1940 Act, Conservative Balanced Fund,
Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity Fund, Growth
Equity Fund and International Fund may maintain their foreign securities and
cash in the custody of certain eligible foreign banks and securities
depositories. Selection of these foreign custodial institutions is made by the
Board upon consideration of a number of factors, including (but not limited to)
the reliability and financial stability of the institution; the ability of the
institution to perform capably custodial services for the Fund; the reputation
of the institution in its national market; the political and economic stability
of the country in which the institution is located; and possible risks of
potential nationalization or expropriation of Fund assets. The Custodian
employs qualified foreign subcustodians to provide custody of the Funds foreign
assets in accordance with applicable regulations. The Chase Manhattan Bank,
N.A., through its Global Custody Division located in London, England, acts as
custodian for International Portfolio and International Portfolio II, but plays
no role in making decisions as to the purchase or sale of portfolio securities.

International Fund will not pay custodian fees to the extent the Fund invests in
shares of another registered investment company. International Fund incurs,
however, its proportionate share of the custodial fees of International
Portfolio and Conservative Balanced Fund, Moderate Balanced Fund, Growth
Balanced Fund, Diversified Equity Fund and Growth Equity Fund incur their
proportionate share of the custodial fees of International Portfolio II.

PORTFOLIO ACCOUNTING

FFC, an affiliate of Forum, performs portfolio accounting services for each Fund
pursuant to a Fund Accounting Agreement with the Trust. The Fund Accounting
Agreement will continue in effect only if such continuance is specifically
approved at least annually by the Board or by a vote of the shareholders of the
Trust and in either case

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<PAGE>
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 the Fund Accounting Agreement, FFC prepares and maintains books and
records of each Fund on behalf of the Trust that are required to be maintained
under the 1940 Act, calculates the net asset value per share of each Fund (and
class thereof) and dividends and capital gain distributions and prepares
periodic reports to shareholders and the SEC. For its services, FFC receives
from the Trust with respect to each Fund a fee of $36,000 per year plus, for
each class of the Fund above one, $12,000 per year. In addition, FFC is paid an
additional $12,000 per year with respect to tax-free money market funds, global
and international funds and funds with more than 25% of their total assets
invested in asset backed securities, that have more than 100 security positions
or that have a monthly portfolio turnover rate of 10% or greater. As of October
1, 1996 those funds included Municipal Money Market Fund, International Fund,
Stable Income Fund and Intermediate Government Income Fund. Under International
Fund's Fund Accounting Agreement so long as all of the Fund's investments
consist solely of securities of International Portfolio or any other registered
investment company, the Fund pays $12,000 per year plus $12,000 for each class
of shares above one.

FFC is required to use its best judgment and efforts in rendering fund
accounting services and is not be liable to the Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FFC is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and the Trust has agreed to
indemnify and hold harmless FFC, its employees, agents, officers and directors
against and from any and all claims, demands,

actions, suits, judgments, liabilities, losses, damages, costs, charges, counsel
fees and other expenses of every nature and character arising out of or in any
way related to FFC's actions taken or failures to act with respect to a Fund or
based, if applicable, upon information, instructions or requests with respect to
a Fund given or made to FFC by an officer of the Trust duly authorized. This
indemnification does not apply to FFC's actions taken or failures to act in
cases of FFC's own bad faith, willful misconduct or gross negligence.

Table 5 in Appendix B shows the dollar amount of fees payable to FFC for its
accounting services with respect to each Fund, the amount of fee that was waived
by FFC, if any, and the actual fee received by FFC. The data is for the past
three fiscal years or shorter period if the Fund has been in operation for a
shorter period.

EXPENSES

The Trust may elect not to qualify the shares of all of its Funds and classes
thereof for sale in every state. Norwest has agreed to reimburse the Trust for
certain of the operating expenses of the Funds (exclusive of interest, taxes,
brokerage, fees and organization expenses, all to the extent permitted by
applicable state law or regulation) which in any year exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale.
Forum believes that currently the most restrictive expense ratio limitation
imposed by any state is 2-1/2% of the first $30 million of each Fund's average
net assets, 2% of the next $70 million of its average net assets and 1-1/2% of
its average net assets in excess of $100 million. For the purpose of this
obligation to reimburse expenses, a Fund's annual expenses are estimated and
accrued daily, and any appropriate estimated payments will be made by Norwest or
Forum monthly.

Subject to the obligations of Norwest to reimburse the Trust for its excess
expenses as described above, the Trust has, under its Investment Advisory
Agreements, confirmed its obligation to pay all its other expenses, including:
(i) interest charges, taxes, brokerage fees and commissions; (ii) certain
insurance premiums; (iii) fees, interest charges and expenses of the Trust's
custodian, transfer agent and dividend disbursing agent; (iv) telecommunications
expenses; (v) auditing, legal and compliance expenses; (vi) costs of the Trust's
formation and maintaining its existence; (vii) 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; (viii) 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; (ix) costs of
reproduction, stationery and supplies; (x) compensation of the Trust's trustees,
officers and employees and costs of other personnel performing services for the
Trust who are not officers of Norwest, Forum or affiliated persons of Norwest or
Forum; (xi) costs of corporate

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<PAGE>
meetings; (xii) registration fees and related expenses for registration with the
SEC and the securities regulatory authorities of other countries in which the
Trust's shares are sold; (xiii) state securities law registration fees and
related expenses; (xiv) fees and out-of-pocket expenses payable to Forum
Financial Services, Inc. under any distribution, management or similar
agreement; (xv) and all other fees and expenses paid by the Trust pursuant to
any distribution or shareholder service plan adopted pursuant to Rule 12b-1
under the Act.

6. PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities for the Money Market and Fixed
Income Funds usually are, principal transactions. Debit instruments are
normally the Balanced Funds, 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. The Equity Funds and the Balanced Funds
generally will effect purchases and sales of equity securities through brokers
who charge commissions except in the over-the-counter markets. Purchases of
debt and equity securities from underwriters of the securities include a
disclosed fixed 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 asked price. In the case of debt and equities securities,
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. 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 each Fund 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, each Fund Portfolio and International
Portfolio will seek to deal with the primary market makers; but when necessary
in order to obtain best execution, they will utilize the services of others. In
all cases the Funds Portfolios and International Portfolio will attempt to
negotiate best execution.

The Money Market Funds and Fixed Income Funds may effect purchases and sales
through brokers who charge commissions, although the Trust does not anticipate
that the Money Market Funds will do so. Table 6 in Appendix B shows the
aggregate brokerage commissions with respect to each Fund. The data presented
is for the past three fiscal years or a shorter period if the Fund has been in
operation for a shorter period. Except as otherwise noted. Any material change
in the last two years in the amount of brokerage commissions paid by a fund was
due to an increase or decrease in the Fund's assets.

Subject to the general policies regarding allocation of portfolio brokerage as
set forth above, the Board and Core Trust Board has authorized the Investment
Advisers to employ their respective affiliates to effect securities transactions
of the Funds the Portfolios, provided certain other conditions are satisfied.
Payment of brokerage commissions to an affiliate of an Investment 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. ("NISI") and
other affiliates of an Investment Adviser will, in the judgment of the
Investment Adviser responsible for making portfolio decisions and selecting
brokers, be (i) at least as favorable as commissions contemporaneously charged
by the affiliate on comparable transactions for its most favored unaffiliated
customers and (ii) at least as favorable as those which would be charged on
comparable transactions by other qualified brokers having comparable execution
capability. The Board, including a majority of the non-interested Trustees, has
adopted procedures to ensure that commissions paid to affiliates of an Adviser
by the Funds satisfy the foregoing standards. The Core Trust Board has adopted
similar policies with respect to the Portfolios.

No Fund has an understanding or arrangement to direct any specific portion of
its brokerage to an affiliate of an Investment Adviser, and will not direct
brokerage to an affiliate of an Investment Adviser in recognition of research
services.

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During the last three fiscal years certain Funds paid brokerage commissions to
NISI, a wholly-owned broker-dealer subsidiary of the parent of Norwest, Norwest
Corporation. The following table indicates the Funds that paid commissions to
NISI, the aggregate amounts of commissions paid, the percentage of aggregate
brokerage commissions paid to NISI and the percentage of the aggregate dollar
amount of transactions involving payment of commissions that were effected
through NISI.

<TABLE>
<CAPTION>
Percentage of
Commission
Aggregate Percentage Transactions
Commissions of Commissions Executed
Paid to NISI Paid to NISI Through NISI
------------ -------------- -------------
VALUGROWTH STOCK FUND
<S> <C> <C> <C>
Year Ended May 31, 1996 $10,494 2.41% 1.73%
Year Ended May 31, 1995 $12,213 1.78% 2.28%
Year Ended May 31, 1994 $25,713 4.65% 6.00%
</TABLE>

The practice of placing orders with NISI is consistent with each Fund's
objective of obtaining best execution and is not dependent on the fact that NISI
is an affiliate of Norwest.

The Funds and the Portfolios may not always pay the lowest commission or spread
available. Rather, in determining the amount of commissions, including certain
dealer spreads, paid in connection with securities transactions, an Investment
Adviser takes 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
Investment Advisers may also take into account payments made by brokers
effecting transactions for a Fund or Portfolio (i) to the Fund or Portfolio or
(ii) to other persons on behalf of the Fund or Portfolio for services provided
to the Fund or Portfolio for which it would be obligated to pay.

In addition, the Investment Advisers may give consideration to research services
furnished by brokers to the Advisers for their use and may cause the Funds and
Portfolios to pay these brokers a higher amount of commission than may be
charged by other brokers. Such research and analysis is of the types described
in Section 28(e)(3) of the Securities Exchange Act of 1934, as amended, and is
designed to augment the Investment Adviser own internal research and investment
strategy capabilities. Such research and analysis may be used by the Investment
Advisers in connection with services to clients other than the Funds and
Portfolios, and not all such services may be used by the Investment Adviser in
connection with the Funds. An Investment Adviser's fees are not reduced by
reason of the Investment Adviser's receipt of the research services.

Investment decisions for the Funds (and for the Portfolios) will be made
independently from those for any other account or investment company that is or
may in the future become managed by the Investment Advisers or their 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 a portfolio security for one client
could have an adverse effect on another client that has a position in that
security. In addition, when purchases or sales of the same security for a Fund
and other client accounts managed by the Advisers occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantages available to large denomination purchases or sales.

During their last fiscal year, certain Funds acquired securities issued by their
"regular brokers and dealers" or the parents of those brokers and dealers.
Regular brokers and dealers means the 10 brokers or dealers that (i) received

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<PAGE>
the greatest amount of brokerage commissions during the Fund's last fiscal year,
(ii) engaged in the largest amount of principal transactions for portfolio
transactions of the Fund during the Fund's last fiscal year or (iii) sold the
largest amount of the Fund's shares during the Fund's last fiscal year.
Following is a list of the regular brokers and dealers of the Funds whose
securities (or the securities of the parent company) were acquired during the
past fiscal year and the aggregate value of the Funds' holdings of those
securities as of May 31, 1996.

Regular Broker Value of
or Dealer Securities Held
--------- ---------------

CASH INVESTMENT FUND Bear, Stearns & Company $75,000,000
CS First Boston $15,000,000
Merrill Lynch & Co. $47,497,784
Morgan Stanley $345,781,386

READY CASH INVESTMENT FUND Bear, Stearns & Company $50,000,000
CS First Boston $10,000,000
Merrill Lynch & Co. $37,499,817
Morgan Stanley $55,000,000

U.S. GOVERNMENT FUND Bank of America Securities 345,781,386

TREASURY FUND None 0

MUNICIPAL MONEY MARKET FUND None 0

STABLE INCOME FUND Lehman Brothers Holdings 1,043,889

INTERMEDIATE GOVERNMENT FUND None 0

DIVERSIFIED BOND FUND Lehman Brothers Holdings 1,092,216
Paine Webber Group, Inc. 991,450
Dean Witter 977,500
Charles Schwab Corporation 562,630

INCOME FUND None 0

TOTAL RETURN BOND FUND Salomon Brothers Inc. 1,205,617

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<PAGE>
Regular Broker Value of
or Dealer Securities Held
--------- ---------------

LIMITED TERM TAX-FREE FUND None 0

TAX-FREE INCOME FUND None 0

COLORADO TAX FREE FUND None 0

MINNESOTA TAX FREE FUND` None 0

CONSERVATIVE BALANCED FUND Charles SCHWAB CORPORATION 187,544
Dean Witter 293,598
Paine Webber Group, Inc. 495,725
Salomon Brothers Inc. 497,433
Bear Stearns Company 500,232
Charles SCHWAB CORP. 487,425
Donaldson, Lufkin & Jenrette, Inc. 111,562

MODERATE BALANCED FUND Charles SCHWAB CORPORATION 562,630
Dean Witter 636,131
Lehman Brothers Inc. 819,162
Paine Webber Group, Inc. 1,090,595
Salomon Brothers Inc. 895,522
Charles SCHWAB CORP. 1,940,000
Donaldson, Lufkin & Jenrette, Inc. 427,126

GROWTH BALANCED FUND Charles SCHWAB CORPORATION 562,629
Dean Witter 636,130
Lehman Brothers, Inc. 819,162
Paine Webber Group, Inc. 991,450
Salomon Brothers Inc. 497,432
Charles Schwab Corp. 3,533,225
Donaldson, Lufkin & Jenrette, Inc. 784,125

INCOME EQUITY FUND None 0

INDEX FUND Merrill Lynch & Co., Inc. 498,575
Morgan Stanley Group, Inc. 336,600
Salomon Brothers, Inc. 192,626

VALUGROWTH STOCK FUND None 0

DIVERSIFIED EQUITY FUND Charles SCHWAB CORPORATION 9,971,600
Donaldson, Lufkin & Jenrette, Inc. 2,218,502

GROWTH EQUITY FUND Charles SCHWAB CORPORATION 11,300,500
Donaldson, Lufkin & Jenrette, Inc. 2,524,500

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<PAGE>
Regular Broker Value of
or Dealer Securities Held
--------- ---------------

LARGE COMPANY GROWTH FUND Charles Schwab Corporation 11,300,500
Donaldson, Lufkin & Jenrette, Inc. 2,524,500

SMALL COMPANY STOCK FUND None 0

SMALL COMPANY GROWTH FUND None 0

CONTRARIAN STOCK FUND None 0

INTERNATIONAL FUND None 0

PORTFOLIO TURNOVER. A high rate of portfolio turnover involves corresponding
greater expenses than a lower rate, which expenses must be borne by a fund and
its shareholders. High portfolio turnover also may result in the realization of
substantial net short-term capital gains. In order to continue for Federal tax
purposes, less than 30% of the annual gross income of the Fund must be desired
from the sale of securities held by the Fund for less than three months. See
"Taxation" below. Portfolio turnover rates are set forth under "Financial
Highlight's" in the Funds Prospectuses. The change in portfolio turnover rate
for Income Fund and Intermediate Government Fund from 1995 to 1996 was due in
part to the change in portfolio managers. Other significant changes in
portfolio turnover rates was due to changing market conditions and the effect of
those conditions on the Funds' investment policies.

7. ADDITIONAL PURCHASE, REDEMPTION AND EXCHANGE INFORMATION

GENERAL

Shares of all Funds are sold on a continuous basis by the distributor.

The per share net asset values of each class of shares of a Fund are expected to
be substantially the same. Under certain circumstances, however, the per share
net asset value of each class may vary. Due to the higher expenses of B Shares,
the net asset value of B Shares will generally be lower than the net asset value
of the other classes. The per share net asset value of each class of a Fund
eventually will tend to converge immediately after the payment of dividends,
which will differ by approximately the amount of the expense accrual
differential among the classes.

MONEY MARKET FUNDS

As described in the Prospectuses, under certain circumstances a Money Market
Fund may close early and advance time by which the Fund must receive a purchase
or redemption order and payments. In that case, if an investor placed an order
after the cut-off time the order would be processed on the follow-up business
day and the investor's access to the fund would be temporarily limited.

CLASS A SHARES

GENERAL

OFFERING PRICE. Set forth below is an example of the method of computing the
offering price of the A Shares of the Funds that offer A Shares. Other shares
of the Trust are offered at their next determined net asset value. The example
assumes a purchase of A Shares of the Fixed Income and Equity Funds' in an
amount such that the purchase would be subject to each Fund's maximum sales
charges set forth in the Prospectus at a price based on the net asset value per
share of A Shares of each Fund at May 31, 1996. The maximum sales charges as of
May 31, 1995 was 4.5% for each Equity Fund and 3.75% for each Fixed Income Fund,
except Stable Income Fund, for which it was 1.50%. 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).

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Net Asset Offering
Value Per Share Price
--------------- -----

Stable Income Fund $ 10.20 10.35
Intermediate Government Income Fund 10.89 11.30
Diversified Bond Fund (No A Shares Outstanding)
Income Fund 9.27 9.62
Total Return Bond Fund 9.40 9.75
Tax-Free Income Fund 9.78 10.15
Colorado Tax-Free Fund 9.89 10.26
Minnesota Tax-Free Fund 10.30 10.69
Conservative Balanced Fund (No A Shares Outstanding)
Moderate Balanced Fund (No A Shares Outstanding)
Growth Balanced Fund (No A Shares Outstanding)
Income Equity Fund 27.56 28.80
Index Fund (No A Shares Outstanding)
ValuGrowth Stock Fund 22.63 23.65
Diversified Equity Fund 30.56 31.93
Growth Equity Fund 29.08 30.39
Large Company Growth Fund (No A Shares Outstanding)
Small Company Stock Fund 14.02 14.65
Small Company Growth Fund (No A Shares Outstanding)
Contrarian Stock Fund 10.82 11.31
International Fund 19.82 20.71

STATEMENT OF INTENTION. As more fully described in the Prospectus, investors
may obtain reduced sales charges with respect to the purchase of A Shares of the
Funds by means of a written Statement of Intention, which expresses the
investor's intention to invest $50,000 or more within a period of 13 months in A
Shares of a Fund. The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. A Shares purchased with the
first 5% of such amount will be held subject to a registered pledge (while
remaining registered in the name of the investor) to secure payment of the
higher sales charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such pledged shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. When the full amount
indicated has been purchased, the shares will be released from pledge.

EXCHANGES

By making an exchange by telephone, the investor authorizes the Trust's transfer
agent to act on telephonic instructions believed by the Trust's transfer agent
to be genuine instructions from any person representing himself or herself to be
the investor. 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 the shareholder's basis in such shares at the time of such 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 that offer A Shares or
Investor Shares of Ready Cash Investment Fund or Municipal Money Market Fund.
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 that offer B Shares or
Exchange Shares of Ready Cash Investment Fund. Shareholders of I Shares may
purchase, with the proceeds from a redemption of all or part of their shares, I
Shares of the other Funds or Institutional Shares of Ready Cash Investment Fund
or Municipal Money Market Fund or shares of U.S. Government Fund and Treasury
Fund.

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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
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 that offer B Shares.

Shareholders of Institutional Shares of Ready Cash Investment Fund and Municipal
Money Market Fund and others who are eligible to purchase I Shares may purchase,
with the proceeds from a redemption of all or part of their shares,
Institutional Shares of these Funds, or I Shares of the other Funds of the
Trust. Shareholders of U.S. Government Fund and Treasury Fund and Municipal
Money Market Fund

Shareholders of Institutional Shares of Municipal Money Market Fund who are not
eligible to purchase I Shares may purchase, with the proceeds from a redemption
of all or part of their shares, shares of Cash Investment Fund, U.S. Government
Fund and Treasury Fund. Similarly, shareholders of Cash Investment Fund, U.S.
Government Fund and Treasury Fund who are not eligible to purchase I Shares may
purchase, with the proceeds from a redemption of all or part of their shares,
shares of the other two Funds or Institutional Shares of Municipal Money Market
Fund.

Shareholders of A Shares or Investor Shares making an exchange will be subject
to the applicable sales charge of any A Shares acquired in the exchange;
provided, that the sales charge charged with respect to the acquired shares will
be assessed at a rate that is equal to the excess (if any) of the rate of the
sales charge that would be applicable to the acquired shares in the absence of
an exchange over the rate of the sales charge previously paid on the exchanged
shares. For purposes of the preceding sentence, A Shares acquired through the
reinvestment of dividends or distributions are deemed to have been acquired with
a sales charge rate equal to that paid on the shares on which the dividend or
distribution was paid.

In addition, A Shares and Investor Shares acquired by a previous exchange
transaction involving shares on which a sales charge has directly or indirectly
been paid (e.g., shares purchased with a sales charge or issued in connection
with an exchange transaction involving shares that had been purchased with a
sales charge), as well as additional shares acquired through reinvestment of
dividends or distributions on such shares will be treated as if they had been
acquired subject to that sales charge.

Exchange Shares may only be acquired in exchange for B Shares of a Fund. B
Shares ("original B Shares") may be exchanged for Exchange Shares without the
payment of any contingent deferred sales charge; however, B Shares or Exchange
Shares acquired as a result of an 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 original B 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 a
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder or to collect any charge
relating to transactions effected for the benefit of a shareholder which is
applicable to a Fund's shares as provided in the Prospectus from time to time.

Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partially in portfolio securities,
brokerage costs may be incurred by the shareholder in converting the securities
to cash. The Trust has filed a formal election with the SEC pursuant to which a
Fund will only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.

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CONTINGENT DEFERRED SALES CHARGE (A SHARES)

A Shares of the Funds on which no initial sales charge was assessed pursuant to
the Right of Accumulation or Statement of Intention, 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 A Shares purchased without
an initial sales charge pursuant to the Cumulative Quantity Discount (Right of
Accumulation) that are redeemed within the first two years after purchase. No
initial sales charge will apply to A Shares purchased if the value of those
shares on the date of purchase plus the net asset value of all A Shares held by
the shareholder (as of the close of business on the previous Fund Business Day)
exceed $1,000,000. In that case the contingent deferred sales charge will apply
to redemptions of shares within the first two years after purchase. 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 without an initial sales charge pursuant to a Statement of Intention
("SOI")that are redeemed within the first two years after purchase. If a
shareholder purchases $1,000,000 or more within a 13 month period under an SOI,
no initial sales charge will apply with respect to the entire amount purchased.
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; however, the contingent
deferred sales charge will apply. The holding period for each A Share, however,
shall be determined from the date the share was purchased. If the shareholder
redeems A Shares during the period that the SOI is in effect, a contingent
deferred sales charge will be charged at the time the shareholder has purchased
$1,000,000 or more worth of A Shares pursuant to the SOI and will be assessed at
the rate applicable in the case of a single purchase of the minimum amount
specified in the SOI. If the shareholder purchases less than the amount
specified under the SOI, an additional contingent deferred sales charge may be
assessed in respect of A Shares previously redeemed based on the amount actually
purchased pursuant to the SOI.

REINSTATEMENT PRIVILEGE

A Shares purchased by a shareholder within 60 days following the redemption by
the shareholder of A Shares in the same Fund with a value at least equal to the
A Shares being purchased will not be subject to a contingent deferred sales
charge; provided, however, that this exemption is not applicable to more than
two purchases within a 12-month period.

CONTINGENT DEFERRED SALES CHARGE (A SHARES AND B SHARES)

With respect to A Shares and B Shares of the Funds, certain redemptions are not
subject to any contingent deferred sales charge. No contingent deferred sales
charge is imposed on (i) redemptions of shares acquired through the reinvestment
of dividends and distributions, (ii) involuntary redemptions by a Fund of
shareholder accounts with low account balances, (iii) redemptions of shares
following the death or disability of a shareholder if the Fund is notified
within one year of the shareholder's death or disability, (iv) redemptions to
effect a distribution (other than a lump sum distribution) from an IRA, Keogh
plan or Section 403(b) custodial account or from a qualified retirement plan.
For these purposes, the term disability shall have the meaning ascribed thereto
in Section 72(m)(7) of the Code. Under that provision, a person is considered
disabled if the person is unable to engage in any substantial activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite duration.
Appropriate documentation satisfactory to the Fund is required to substantiate
any shareholder death or disability.

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CONVERSION OF B SHARES AND EXCHANGE SHARES

The conversion of Exchange Shares to Investor Shares and B Shares to A 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 and B Shares does not result in the Funds dividends or
distributions constituting "preferential dividends" under the Code, and (ii) the
conversion of Exchange Shares and B Shares does not constitute a taxable event
under Federal income tax law. The conversion of Exchange Shares to Investor
Shares and 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 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.

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8. TAXATION

Each Fund intends for each taxable year to qualify for tax treatment as a
"regulated investment company" under the Code. Such qualification does not, of
course, involve governmental supervision of management or investment practices
or policies. Investors should consult their own counsel for a complete
understanding of the requirements each Fund must meet to qualify for such
treatment, and of the application of state and local tax laws to his or her
particular situation.

Since each Money Market Fund and Fixed Income Fund expects to derive
substantially all of its gross income (exclusive of capital gains) from sources
other than dividends, it is expected that none of such Funds dividends or
distributions will qualify for the dividends-received deduction for
corporations.

Certain listed options and regulated futures contracts are considered "section
1256 contracts" for Federal income tax purposes. Section 1256 contracts held by
a Fund at the end of each taxable year will be "marked to market" and treated
for Federal income tax purposes as though sold for fair market value on the last
business day of such taxable year. Gain or loss realized by a Fund on section
1256 contracts generally will be considered 60% long-term and 40% short-term
capital gain or loss. Each Fund can elect to exempt its section 1256 contracts
which are part of a "mixed straddle" (as described below) from the application
of section 1256.

With respect to over-the-counter put and call options, gain or loss realized by
a Fund upon the lapse or sale of such options held by such Fund will be either
long-term or short-term capital gain or loss depending upon the Fund's holding
period with respect to such option. However, gain or loss realized upon the
lapse or closing out of such options that are written by a Fund will be treated
as short-term capital gain or loss. In general, if a Fund exercises an option,
or an option that a Fund has written is exercised, gain or loss on the option
will not be separately recognized but the premium received or paid will be
included in the calculation of gain or loss upon disposition of the property
underlying the option.

Any option, futures contract, or other position entered into or held by a Fund
in conjunction with any other position held by such Fund may constitute a
"straddle" for Federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may constitute a "mixed
straddle". In general, straddles are subject to certain rules that may affect
the character and timing of a Fund's gains and losses with respect to straddle
positions by requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to the extent that a
Fund has unrealized gains with respect to the other position in such straddle;
(ii) a Fund's holding period in straddle positions be suspended while the
straddle exists (possibly resulting in gain being treated as short-term capital
gain rather than long-term capital gain); (iii) losses recognized with respect
to certain straddle positions which are part of a mixed straddle and which are
non-section 1256 positions be treated as 60% long-term and 40% 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 a Fund which may mitigate the effects of the straddle rules,
particularly with respect to mixed straddles. In general, the straddle rules
described above do not apply to any straddles held by a Fund all of the
offsetting positions of which consist of section 1256 contracts.

A Fund's investments in zero coupon securities will be subject to special
provisions of the Code which may cause the Fund to recognize income without
receiving cash necessary to pay dividends or make distributions in amounts
necessary to satisfy the distribution requirements for avoiding federal income
and excise taxes. In order to satisfy those distribution requirements the Fund
may be forced to sell other portfolio securities.

Each International Fund shareholder should include in the shareholder's report
of gross income in his Federal income tax return both cash dividends received by
the shareholder from the Fund and also the amount which the Fund advises the
shareholder is the shareholder's pro rata portion, if any, of foreign income
taxes paid with respect to, or withheld from, dividends and interest paid to
International Portfolio from its foreign investments. Each shareholder then
would be entitled, subject to certain limitations, to take a foreign tax credit
against the shareholders'

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Federal income tax liability for the amount of such foreign taxes or else to
deduct such foreign taxes as an itemized deduction from gross income.

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9. ADDITIONAL INFORMATION ABOUT THE TRUST AND THE SHAREHOLDERS OF THE FUNDS

DETERMINATION OF NET ASSET VALUE - MONEY MARKET FUNDS

Pursuant to the rules of the SEC, the Board has established procedures to
stabilize each Money Market Funds' net asset value at $1.00 per share. These
procedures include a review of the extent of any deviation of net asset value
per share as a result of fluctuating interest rates, based on available market
rates, from the Fund's $1.00 amortized cost price per share. Should that
deviation exceed 1/2 of 1%, the Board will consider whether any action should be
initiated to eliminate or reduce material dilution or other unfair results to
shareholders. Such action may include redemption of shares in kind, selling
portfolio securities prior to maturity, reducing or withholding dividends and
utilizing a net asset value per share as determined by using available market
quotations. Each Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, will not purchase any instrument with a remaining
maturity greater than 397 days or subject to a repurchase agreement having a
duration of greater than 397 days, will limit portfolio investments, including
repurchase agreements, to those U.S. dollar-denominated instruments that the
Board has determined present minimal credit risks and will comply with certain
reporting and recordkeeping procedures. The Trust has also established
procedures to ensure that portfolio securities meet the Funds' high quality
criteria.

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, NY 10004.

KPMG Peat Marwick LLP, 99 High Street, Boston, MA 02110, independent auditors,
served as the independent auditors for the Trust for the fiscal years ended May
31, 1996, 1995 and 1994, as well as for the fiscal year ended October 31, 1995
for those Funds that had that fiscal year end. KPMG Peat Marwick LLP have been
selected as independent auditors for the Trust for the fiscal year ending May
31, 1997. For the prior fiscal periods another audit firm acted as independent
auditors of the Trust's predecessor corporation.

GENERAL INFORMATION

The Trust is divided into twenty eight separate series representing shares of
the Funds and Small Cap Opportunities Fund. The Trust received an order from
the SEC permitting the issuance and sale of separate classes of shares
representing interests in each of the Trust's existing funds; however, the Trust
currently issues and operates the various Funds, separate classes of shares
under the provisions of 1940 Act .

The Board has determined that currently no conflict of interest exists between
or among each Fund's A Shares, B Shares and I Shares, among Ready Cash
Investment Fund's Institutional, Investor and Exchange Shares and between
Municipal Money Market Fund's Institutional and Investor Shares. 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. 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 (i) a court refuses
to apply Delaware law, (ii) no contractual limitation of liability is in effect,
and (iii) the Trust itself is unable to meet its obligations. In light of
Delaware law,

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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.

In order to adopt the name Norwest Funds, the Trust agreed in each Investment
Advisory Agreement with Norwest that if Norwest ceases to act as investment
adviser to the Trust or any Fund whose name includes the word "Norwest," or if
Norwest requests in writing, the Trust shall take prompt action to change the
name of the Trust and any such Fund to a name that does not include the word
"Norwest." Norwest may from time to time make available without charge to the
Trust for the Trust's use any marks or symbols owned by Norwest, including marks
or symbols containing the word "Norwest" or any variation thereof, as Norwest
deems appropriate. Upon Norwest's request in writing, the Trust shall cease to
use any such mark or symbol at any time. The Trust has acknowledged that any
rights in or to the word "Norwest" and any such marks or symbols which exist or
may exist, and under any and all circumstances, shall continue to be, the sole
property of Norwest. Norwest 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 Norwest.

RECENT MERGERS

As of May 17, 1996, three portfolios of the Trust, Adjustable U.S. Government
Reserve Fund, Government Income Fund and Income Stock Fund (the "Acquired
Funds") were reorganized into Stable Income Fund, Intermediate Government Income
Fund and Income Equity Fund (the "Acquiring Funds"), respectively through the
acquisition of all the assets and liabilities of the Acquired Funds by the
corresponding Acquiring Funds. Each Acquiring Fund commenced operations prior
to that date and was the entity that continued its existence after the
transactions. Performance information for the Acquiring Funds only reflects the
Acquiring Funds, performance and all fees listed in this Statement of Additional
Information reflect the fees paid by the Acquiring Funds.

SHAREHOLDINGS

Table 7 to Appendix A lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares of a Fund as of May 1, 1997.

FINANCIAL STATEMENTS

The financial statements of each Fund for the semi-annual period ended November
30, 1996 (which include statements of assets and liabilities, statements of
operations, statements of changes in net assets, notes to financial statements,
financial highlights and portfolios of investments) are included in the
Semi-Annual Report to Shareholders of the Trust delivered along with this SAI
and are incorporated herein by reference. The financial statements of each Fund
for the year ended May 31, 1996 (which include statements of assets and
liabilities, statements of operations, statements of changes in net assets,
notes to financial statements, financial highlights, portfolios of investments
and the independent auditors' report thereon) are included in the Annual Report
to Shareholders of the Trust delivered along with this SAI and are incorporated
herein by reference. The fiscal year end of Stable Income Fund, Intermediate
Government Income Fund, Diversified Bond Fund, Conservative Balanced Fund,
Moderate Balanced Fund, Growth Balanced Fund, Income Equity Fund, Index Fund,
Diversified Equity Fund, Growth Equity Fund, Large Company Growth Fund, Small
Company Growth Fund and International Fund was October 31 prior to the year
ended May 31, 1996.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act 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.

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Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by, reference is made to the copy of such contract or other
documents filed as exhibits to the registration statement.

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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

MUNICIPAL AND CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

Moody's rates corporate bond issues, including convertible debt issues, as
follows:

Bonds which are rated Aaa are judged by Moody's to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payment and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1, and B1.

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STANDARD AND POOR'S CORPORATION ("S&P")

S&P rates corporate bond issues, including convertible debt issues, as follows:

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.

Bonds rated BBB are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

Bonds rated BB, B, CCC, CC and C are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal payments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

Bonds rated CCC have currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

Bonds rated C typically are subordinated to senior debt which as assigned an
actual or implied CCC debt rating. This rating may also be used to indicate
imminent default.

The C rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued. The rating Cl is reserved
for income bonds on which no interest is being paid.

Bonds are rated D when the issue is in payment default, or the obligor has filed
for bankruptcy. Bonds rated D are in payment default or the obligor has filed
for bankruptcy. The D rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will made during
such grace period.

Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the rating category.

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<PAGE>

FITCH INVESTORS SERVICE, INC. ("FITCH")

Fitch rates corporate bond issues, including convertible debt issues, as
follows:

AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.

A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB Bonds are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

BB Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, DD, and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA, DDD, DD, or D categories.

-A3-
<PAGE>

PREFERRED STOCK

MOODY'S INVESTORS SERVICE, INC.

Moody's rates preferred stock as follows:

An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
among preferred stock issues.

An issue rated aa is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.

An issue rated a is considered to be an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.

An issue rated baa is considered to be a medium-grade, neither highly protected
nor poorly secured. Earnings and asset protection appear adequate at present
but may be questionable over any great length of time.

An issue rated ba is considered to have speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.

An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of
the issue over any long period of time may be small.

An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.

An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.

An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from aa through b in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issuer ranks in the lower end of its generic rating
category.

STANDARD & POOR'S CORPORATION

S&P rates preferred stock as follows:

AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.

A preferred stock issue rated AA also qualifies as a high-quality fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.

An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

-A4-
<PAGE>

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 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.

SHORT TERM MUNICIPAL LOANS

MOODY'S INVESTORS SERVICE, INC. Moody's highest rating for short-term municipal
loans is MIG-1/VMIG-1. A rating of MIG-1/VMIG-1 denotes best quality. There is
present strong protection by established cash flows, superior liquidity support
or demonstrated broadbased access to the market for refinancing. Loans bearing
the MIG-2/VMIG-2 designation are of high quality. Margins of protection are
ample although not so large as in the MIG-1/VMIG-1 group. A rating of MIG
3/VMIG 3 denotes favorable quality. All security elements are accounted for but
there is lacking the undeniable strength of the preceding grades. Liquidity and
cash flow protection may be narrow and market access for refinancing is likely
to be less well established. A rating of MIG 4/VMIG 4 denotes adequate quality.
Protection commonly regarded as required of an investment security is present
and although not distinctly or predominantly speculative, there is specific
risk.

STANDARD & POOR'S RATING GROUP. S&P's highest rating for short-term municipal
loans is SP-1. S&P states that short-term municipal securities bearing the SP-1
designation have very strong or strong capacity to pay principal and interest.
Those issues rated SP-1 which are determined to possess overwhelming safety
characteristics will be given a plus (+) designation. Issues rated SP-2 have
satisfactory capacity to pay principal and interest. Issues rated SP-3 have
speculative capacity to pay principal and interest.

FITCH INVESTORS SERVICE, INC. Fitch's short-term ratings apply to debt
obligations that are payable on demand or have original maturities of generally
up to three years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes.

Short-term issues rated F-1+ are regarded as having the strongest degree of
assurance for timely payment. Issues assigned a rating of F-1 reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
Issues assigned a rating of F-2 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.

-A5-
<PAGE>

OTHER MUNICIPAL SECURITIES AND COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE, INC.

Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics: Leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S CORPORATION

S&P's two highest commercial paper ratings are A-1 and A-2. Issues assigned an
A rating are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to indicate
the relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety is
not as high as for issues designated A-1. A-3 issues have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations. Issues rated A-2 are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.

FITCH INVESTORS SERVICE, INC.

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 rating.

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.

-A6-
<PAGE>

APPENDIX B - MISCELLANEOUS TABLES

TABLE 1 - INVESTMENT ADVISORY FEES

The following Table shows the dollar amount of fees payable under the Investment
Advisory Agreements between Norwest and the Trust with respect to each Fund, the
amount of fee that was waived by Norwest, if any, and the actual fee received by
Norwest. That table also shows the dollar amount of fees payable under the
investment advisory agreement between Schroder and Core Trust with respect to
International Portfolio, the amount of fee that was waived by Schroder, if any,
and the actual fee received by Schroder. The data is for the past three fiscal
years or shorter period if the Fund/Portfolio has been in operation for a
shorter period.

ADVISORY FEE ADVISORY FEE ADVISORY FEE
PAYABLE WAIVED RETAINED
------- ------ --------
<S> <C> <C> <C>
CASH INVESTMENT FUND
Year Ended May 31, 1996 2,383,128 0 2,383,128
Year Ended May 31, 1995 2,067,323 0 2,067,323
Year Ended May 31, 1994 2,631,318 0 2,631,318

READY CASH INVESTMENT FUND
Year Ended May 31, 1996 4,128,532 44,547 4,083,985
Year Ended May 31, 1995 2,153,906 71,093 2,082,813
Year Ended May 31, 1994 1,187,810 250,039 937,771

U.S. GOVERNMENT FUND

Year Ended May 31, 1996 2,205,102 0 2,205,102
Year Ended May 31, 1995 1,687,958 0 1,687,958
Year Ended May 31, 1994 1,618,648 18,841 1,599,807

TREASURY FUND
Year Ended May 31, 1996 1,308,984 0 1,308,984
Year Ended May 31, 1995 1,152,801 0 1,152,801
Year Ended May 31, 1994 786,588 31,704 754,884

MUNICIPAL MONEY MARKET FUND
Year Ended May 31, 1996 1,907,103 303,321 1,603,782
Year Ended May 31, 1995 987,273 175,377 811,896
Year Ended May 31, 1994 480,381 296,671 183,710

STABLE INCOME FUND
Year Ended May 31, 1996 106,127 0 106,127
Year End October 31, 1995 114,429 0 114,429

INTERMEDIATE GOVERNMENT INCOME FUND
Year Ended May 31, 1996 142,125 0 142,125
Year End October 31, 1995 160,764 0 160,764

DIVERSIFIED BOND FUND
Year Ended May 31, 1996 344,777 0 344,777
Year End October 31, 1995 607,061 0 607,061

-B1-

<PAGE>

ADVISORY FEE ADVISORY FEE ADVISORY FEE
PAYABLE WAIVED RETAINED
------- ------ --------
INCOME FUND
Year Ended May 31, 1996 981,244 196,249 784,995
Year Ended May 31, 1995 560,463 149,529 410,934
Year Ended May 31, 1994 501,265 399,431 101,834

TOTAL RETURN BOND FUND
Year Ended May 31, 1996 584,872 352,590 232,282
Year Ended May 31, 1995 305,162 244,711 60,451
Year Ended May 31, 1994 18,515 18,515 0

LIMITED TERM TAX-FREE FUND
Year Ended May 31, 1996 N/A N/A N/A

TAX-FREE INCOME FUND
Year Ended May 31, 1996 1,187,026 1,032,179 154,847
Year Ended May 31, 1995 671,570 306,789 364,781
Year Ended May 31, 1994 600,178 516,714 143,464

COLORADO TAX-FREE FUND
Year Ended May 31, 1996 286,768 286,768 0
Year Ended May 31, 1995 257,147 257,147 0
Year Ended May 31, 1994 200,552 200,552 0

MINNESOTA TAX-FREE FUND
Year Ended May 31, 1996 154,733 154,733 0
Year Ended May 31, 1995 67,504 67,504 0
Year Ended May 31, 1994 64,534 60,030 4,504

CONSERVATIVE BALANCED FUND
Year Ended May 31, 1996 376,529 0 376,529
Year Ended October 31, 1995 547,353 0 547,353

MODERATE BALANCED FUND
Year Ended May 31, 1996 1,208,825 0 1,208,825
Year End October 31, 1995 1,722,174 0 1,722,174

GROWTH BALANCED FUND
Year Ended May 31, 1996 1,424,260 0 1,424,260
Year End October 31, 1995 1,849,672 0 1,849,672

INCOME EQUITY FUND
Year Ended May 31, 1996 227,790 0 227,790
Year End October 31, 1995 187,584 0 187,584

INDEX FUND
Year Ended May 31, 1996 193,373 143,795 49,578
Year End October 31, 1995 212,875 0 212,875

-B2-

<PAGE>

ADVISORY FEE ADVISORY FEE ADVISORY FEE
PAYABLE WAIVED RETAINED
------- ------ --------
VALUGROWTH STOCK FUND
Year Ended May 31, 1996 1,335,281 16,691 1,318,590
Year Ended May 31, 1995 1,132,507 4,813 1,127,694
Year Ended May 31, 1994 992,202 168,379 823,823

DIVERSIFIED EQUITY FUND
Year Ended May 31, 1996 3,038,858 0 3,038,858
Year End October 31, 1995 3,737,147 0 3,737,147

GROWTH EQUITY FUND
Year Ended May 31, 1996 3,342,391 0 3,342,390
Year End October 31, 1995 3,961,897 0 3,961,897

LARGE COMPANY GROWTH FUND
Year Ended May 31, 1996 274,152 0 274,152
Year End October 31, 1995 362,480 0 362,480

SMALL COMPANY STOCK FUND
Year Ended May 31, 1996 909,200 327,218 581,982
Year Ended May 31, 1995 322,908 322,908 0
Year Ended May 31, 1994 21,501 21,501 0

SMALL COMPANY GROWTH FUND
Year Ended May 31, 1996 1,653,578 0 1,653,578
Year End October 31, 1995 1,984,348 0 1,984,348

CONTRARIAN STOCK FUND
Year Ended May 31, 1996 349,877 70,170 279,707
Year Ended May 31, 1995 258,669 128,979 129,690
Year Ended May 31, 1994 9,927 9,927 0

INTERNATIONAL FUND*
Year Ended May 31, 1996 316,701 0 316,701
Year End October 31, 1995 367,007 0 367,007

</TABLE>

* Represents investment advisory fees paid to Schroder Capital Management
Inc. by International Portfolio of Core Trust.

-B3-

<PAGE>

TABLE 2 - MANAGEMENT FEES

The following table shows the dollar amount of fees payable to (i) Forum for its
management services with respect to each Fund (or class thereof for those
periods when multiple classes were outstanding), (ii) Norwest for its
administrative services with respect to International Fund and (iii) Forum with
respect to its administrative securities with respect to International
Portfolio. Also shown are the amount of fees that were waived by Forum and
Norwest, if any, and the actual fees received by Forum and Norwest. The data is
for the past three fiscal years or shorter period if the Fund has been in
operation for a shorter period.

(i) MANAGEMENT FEES TO FORUM

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
<S> <C> <C> <C>
CASH INVESTMENT FUND
Year Ended May 31, 1996 1,076,303 160,959 915,344
Year Ended May 31, 1995 944,718 263,073 681,645
Year Ended May 31, 1994 1,179,716 0 1,179,716

U.S. GOVERNMENT FUND
Year Ended May 31, 1996 1,002,126 40,949 9,611,177
Year Ended May 31, 1995 786,649 135,127 651,522
Year Ended May 31, 1994 757,658 36,670 720,988

TREASURY FUND
Year Ended May 31, 1996 627,992 448,841 179,151
Year Ended May 31, 1995 558,734 467,978 90,756
Year Ended May 31, 1994 387,463 88,351 299,112

READY CASH INVESTMENT FUND
Investor Shares
Year Ended May 31, 1996 760,979 60,072 700,907
Year Ended May 31, 1995 391,466 147,704 243,762
Year Ended May 31, 1994 305,534 5,338 300,146
Institutional Shares
Year Ended May 31, 1996 1,569,081 1,569,081 0
Year Ended May 31, 1995 739,794 589,996 149,797
Year Ended May 31, 1994 260,556 205,978 54,578
Exchange Shares
Year Ended May 31, 1996 273 273 0
Year Ended May 31, 1995 417 331 86

MUNICIPAL MONEY MARKET FUND
Investor Shares
Year Ended May 31, 1996 115,294 65,869 49,425
Year Ended May 31, 1995 82,763 75,983 6,780
Year Ended May 31, 1994 89,824 26,370 63,554
Institutional Shares
Year Ended May 31, 1996 990,763 814,669 176,094
Year Ended May 31, 1995 481,393 393,600 87,793
Year Ended May 31, 1994 184,579 8,730 175,849

-B4-

<PAGE>

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
STABLE INCOME FUND
A Shares
Year Ended May 31, 1996 623 623 0
B Shares
Year Ended May 31, 1996 33 33 0
I Shares
Year Ended May 31, 1996 34,720 34,720 0
Year End October 31, 1995 38,143 38,143 0

INTERMEDIATE GOVERNMENT INCOME FUND
A Shares
Year Ended May 31, 1996 666 666 0
B Shares
Year Ended May 31, 1996 412 412 0
I Shares
Year Ended May 31, 1996 41,991 41,991 0
Year End October 31, 1995 48,716 48,716 0

DIVERSIFIED BOND FUND
I Shares
Year Ended May 31, 1996 98,508 69,269 29,239
Year Ended October 31, 1995 173,446 147,461 25,985

INCOME FUND
A Shares
Year Ended May 31, 1996 11,894 11,894 0
Year Ended May 31, 1995 12,210 11,607 603
Year Ended May 31, 1994 50,378 6,025 44,353
B Shares
Year Ended May 31, 1996 6,732 6,732 0
Year Ended May 31, 1995 5,559 3,553 2,006
Year Ended May 31, 1994 2,799 0 2,799
I Shares
Year Ended May 31, 1996 373,872 353,908 19,964
Year Ended May 31, 1995 206,416 124,725 81,691
Year Ended May 31, 1994 147,328 13,243 134,085

TOTAL RETURN BOND FUND
A Shares
Year Ended May 31, 1996 2,416 2,416 0
Year Ended May 31, 1995 674 674 0
Year Ended May 31, 1994 27 9 18
B Shares
Year Ended May 31, 1996 3,264 3,264 0
Year Ended May 31, 1995 923 923 0
Year Ended May 31, 1994 60 52 8
I Shares
Year Ended May 31, 1996 228,269 12,744 215,525
Year Ended May 31, 1995 120,468 17,639 102,829
Year Ended May 31, 1994 7,320 923 6,397

-B5-

<PAGE>

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
LIMITED TERM TAX-FREE FUND
A Shares
Year Ended May 31, 1996 N/A N/A N/A
B Shares
Year Ended May 31, 1996 N/A N/A N/A
I Shares
Year Ended May 31, 1996 N/A N/A N/A

TAX-FREE INCOME FUND
A Shares
Year Ended May 31, 1996 67,046 27,085 39,961
Year Ended May 31, 1995 64,084 64,084 0
Year Ended May 31, 1994 114,072 28,475 85,597
B Shares
Year Ended May 31, 1996 9,866 9,866 0
Year Ended May 31, 1995 6,348 5,591 757
Year Ended May 31, 1994 2,493 333 2,160
I Shares
Year Ended May 31, 1996 397,898 304,725 93,173
Year Ended May 31, 1995 198,196 139,199 58,997
Year Ended May 31, 1994 147,507 17,206 130,301

COLORADO TAX-FREE FUND
A Shares
Year Ended May 31, 1996 53,988 48,022 5,966
Year Ended May 31, 1995 56,039 40,684 15,355
Year Ended May 31, 1994 63,445 63,445 0
B Shares
Year Ended May 31, 1996 11,566 11,566 0
Year Ended May 31, 1995 9,429 7,791 1,638
Year Ended May 31, 1994 4,341 3,571 770
I Shares
Year Ended May 31, 1996 49,153 41,507 7,646
Year Ended May 31, 1995 37,392 31,974 5,418
Year Ended May 31, 1994 14,112 10,883 3,229

MINNESOTA TAX-FREE FUND
A Shares
Year Ended May 31, 1996 43,885 26,289 17,596
Year Ended May 31, 1995 19,236 19,236 0
Year Ended May 31, 1994 21,698 21,698 0
B Shares
Year Ended May 31, 1996 13,910 10,499 3,411
Year Ended May 31, 1995 5,974 5,974 0
Year Ended May 31, 1994 2,446 1,527 919
I Shares
Year Ended May 31, 1996 4,098 2,630 1,468
Year Ended May 31, 1995 1,781 1,622 159
Year Ended May 31, 1994 1,507 1,279 228

-B6-

<PAGE>

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
CONSERVATIVE BALANCED FUND
Year Ended May 31, 1996 83,673 69,584 14,089
Year Ended October 31, 1995 121,634 121,634 0

MODERATE BALANCED FUND
Year Ended May 31, 1996 228,080 126,077 102,003
Year Ended October 31, 1995 324,938 212,921 112,017

GROWTH BALANCED FUND
Year Ended May 31, 1996 245,562 136,905 108,657
Year Ended October 31, 1995 318,909 209,411 109,498

INCOME EQUITY FUND
A Shares
Year Ended May 31, 1996 1,196 1,196 0
B Shares
Year Ended May 31, 1996 670 670 0
I Shares
Year Ended May 31, 1996 43,691 43,691 0
Year Ended October 31, 1995 37,517 37,517 0

INDEX FUND
Year Ended May 31, 1996 128,916 93,961 34,955
Year Ended October 31, 1995 141,917 141,917 0

VALUGROWTH STOCK FUND
A Shares
Year Ended May 31, 1996 27,427 27,427 0
Year Ended May 31, 1995 24,465 24,465 0
Year Ended May 31, 1994 87,585 8,799 78,786
B Shares
Year Ended May 31, 1996 8,763 8,763 0
Year Ended May 31, 1995 5,593 4,617 976
Year Ended May 31, 1994 1,686 0 1,686
I Shares
Year Ended May 31, 1996 297,630 147,086 150,544
Year Ended May 31, 1995 253,243 148,800 104,443
Year Ended May 31, 1994 158,779 26,640 132,139

DIVERSIFIED EQUITY FUND
A Shares
Year Ended May 31, 1996 99 99 0
B Shares
Year Ended May 31, 1996 96 96 0
I Shares
Year Ended May 31, 1996 467,322 238,224 229,098
Year Ended October 31, 1995 574,946 287,473 287,473

-B7-

<PAGE>

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
GROWTH EQUITY FUND
A Shares
Year Ended May 31, 1996 100 100 0
B Shares
Year Ended May 31, 1996 25 25 0
I Shares
Year Ended May 31, 1996 371,252 187,661 183,591
Year Ended October 31, 1995 440,211 286,1371 154,107

LARGE COMPANY GROWTH FUND
Year Ended May 31, 1996 42,177 40,150 2,027
Year Ended October 31, 1995 55,766 55,766 0

SMALL COMPANY STOCK FUND
A Shares
Year Ended May 31, 1996 5,800 5,800 0
Year Ended May 31, 1995 1,655 1,515 140
Year Ended May 31, 1994 88 22 66
B Shares
Year Ended May 31, 1996 4,426 4,426 0
Year Ended May 31, 1995 1,051 1,051 0
Year Ended May 31, 1994 67 19 48
I Shares
Year Ended May 31, 1996 171,614 15,664 155,950
Year Ended May 31, 1995 61,876 14,997 46,878
Year Ended May 31, 1994 4,146 1,395 2,751

SMALL COMPANY GROWTH FUND
Year Ended May 31, 1996 183,731 76,278 107,453
Year Ended October 31, 1995 220,483 177,287 43,196

CONTRARIAN STOCK FUND
A Shares
Year Ended May 31, 1996 1,439 1,439 0
Year Ended May 31, 1995 646 646 0
Year Ended May 31, 1994 45 0 45
B Shares
Year Ended May 31, 1996 1,194 1,194 0
Year Ended May 31, 1995 328 328 0
Year Ended May 31, 1994 19 3 16
I Shares
Year Ended May 31, 1996 84,836 37,213 47,623
Year Ended May 31, 1995 63,693 543 63,150
Year Ended May 31, 1994 2,418 0 2,418

-B8-

<PAGE>

MANAGEMENT MANAGEMENT MANAGEMENT
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
INTERNATIONAL FUND
A Shares
Year Ended May 31, 1996 345 345 0
B Shares
Year Ended May 31, 1996 395 395 0
I Shares
Year Ended May 31, 1996 69,616 0 69,616
Year Ended October 31, 1995 205,140 41,566 163,574

</TABLE>
(II) ADMINISTRATIVE FEES TO NORWEST

<TABLE>
<CAPTION>
INTERNATIONAL FUND
<S> <C> <C> <C>
Year Ended May 31, 1996 175,887 0 175,887
Year Ended October 31, 1995 205,150 0 205,150

</TABLE>

(III) ADMINISTRATIVE FEES TO FORUM

INTERNATIONAL PORTFOLIO
<S> <C> <C> <C>
Year Ended May 31, 1996 105,567 11,873 93,694
Year Ended October 31, 1995 122,669 70,043 52,626

</TABLE>

-B9-

<PAGE>

TABLE 3 - DISTRIBUTION FEES

The following table shows the dollar amount of fees payable to Forum for its
distribution services with respect to each Fund (or class thereof), the amount
of fee that was waived by Forum, if any, and the actual fee received by Forum.
All maintenance fees were waived by Forum during the fiscal years ended May 31,
1995 and 1996. The data is for the past three fiscal years or shorter period if
the Fund has been in operation for a shorter period. Only Exchange Shares and B
Shares incur distribution fees.

<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION DISTRIBUTION
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
<S> <C> <C> <C>
READY CASH INVESTMENT FUND
Exchange Shares
Year Ended May 31, 1996 1,023 1,023 0
Year Ended May 31, 1995 2,050 2,050 0
Year Ended May 31, 1994 62 62 0

STABLE INCOME FUND
B Shares
Year Ended May 31, 1996 245 245 0

INTERMEDIATE GOVERNMENT INCOME FUND
B Shares
Year Ended May 31, 1996 2,646 2,646 0

INCOME FUND
B Shares
Year Ended May 31, 1996 25,247 6,666 18,581
Year Ended May 31, 1995 27,796 6,949 20,847
Year Ended May 31, 1994 13,997 3,954 10,043

TOTAL RETURN BOND FUND
B Shares
Year Ended May 31, 1996 12,239 3,619 8,620
Year Ended May 31, 1995 4,612 1,153 3,459
Year Ended May 31, 1994 297 74 223

TAX-FREE INCOME FUND
B Shares
Year Ended May 31, 1996 36,997 2,390 34,607
Year Ended May 31, 1995 31,738 7,934 23,803
Year Ended May 31, 1994 12,467 3,566 8,901

COLORADO TAX-FREE FUND
B Shares
Year Ended May 31, 1996 43,374 207 43,167
Year Ended May 31, 1995 47,144 11,786 35,358
Year Ended May 31, 1994 21,705 5,476 16,279

-B10-

<PAGE>

DISTRIBUTION DISTRIBUTION DISTRIBUTION
FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
MINNESOTA TAX-FREE FUND
B Shares
Year Ended May 31, 1996 52,163 0 52,163
Year Ended May 31, 1995 30,386 8,880 21,506
Year Ended May 31, 1994 12,231 3,058 9,173

INCOME EQUITY FUND
B Shares
Year Ended May 31, 1996 5,031 0 5,031

VALUGROWTH STOCK FUND
B Shares
Year Ended May 31, 1996 32,860 5,269 27,591
Year Ended May 31, 1995 27,965 6,991 20,974
Year Ended May 31, 1994 8,429 3,245 5,184

DIVERSIFIED EQUITY FUND
B Shares
Year Ended May 31, 1996 719 719 0

GROWTH EQUITY FUND
B Shares
Year Ended May 31, 1996 187 187 0

SMALL COMPANY STOCK FUND
B Shares
Year Ended May 31, 1996 16,598 4,077 12,521
Year Ended May 31, 1995 5,256 2,038 3,218
Year Ended May 31, 1994 332 0 332

CONTRARIAN STOCK FUND
B Shares
Year Ended May 31, 1996 4,479 4,479 0
Year Ended May 31, 1995 1,642 411 1,232
Year Ended May 31, 1994 95 0 95

INTERNATIONAL FUND
B Shares
Year Ended May 31, 1996 2,959 2,930 29

</TABLE>

-B11-

<PAGE>

TABLE 4 - SALES CHARGES

The following table shows (i) the dollar amount of sales charges payable to
Forum with respect to sales of A Shares (or of the respective Funds prior to the
offering of multiple classes of shares), (ii) the amount of sales charge
retained by Forum and not reallowed to other persons, and (iii) the amount of
contingent deferred sales charge ("CDSL") paid to Forum. The data is for the
past three fiscal years or shorter period if the Fund has been in operation for
a shorter period.

SALES RETAINED CDSL
CHARGES AMOUNT PAID
------- ------ ----
<S> <C> <C> <C>
STABLE INCOME FUND
A Shares
Year Ended May 31, 1996 423 52 --
B Shares
Year Ended May 31, 1996 -- -- 75

INTERMEDIATE GOVERNMENT INCOME FUND
A Shares
Year Ended May 31, 1996 1.482 129 --
B Shares
Year Ended May 31, 1996 -- -- 964

INCOME FUND
A Shares
Year Ended May 31, 1996 1,567,755 4,428 --
B Shares
Year Ended May 31, 1996 -- -- 8,272

TOTAL RETURN BOND FUND
A Shares
Year Ended May 31, 1996 1,194,198 3,074 --
B Shares
Year Ended May 31, 1996 -- -- 2,853

LIMITED TERM TAX-FREE FUND
A Shares
Year Ended May 31, 1996 N/A N/A --
B Shares
Year Ended May 31, 1996 -- -- N/A

TAX-FREE INCOME FUND
A Shares
Year Ended May 31, 1996 5,429,389 12,264 --
B Shares
Year Ended May 31, 1996 -- -- 6,576

COLORADO TAX-FREE FUND
A Shares
Year Ended May 31, 1996 2,889,945 7,135 --
B Shares
Year Ended May 31, 1996 -- -- 12,557

-B12-

<PAGE>

SALES RETAINED CDSL
CHARGES AMOUNT PAID
------- ------ ----

MINNESOTA TAX-FREE FUND
A Shares
Year Ended May 31, 1996 4,598,204 12,506 --
B Shares
Year Ended May 31, 1996 -- -- 8,412

INCOME EQUITY FUND
A Shares
Year Ended May 31, 1996 10,996 1,088 --
B Shares
Year Ended May 31, 1996 -- -- 570

VALUGROWTH STOCK FUND
A Shares
Year Ended May 31, 1996 1,162,647 4,628 --
B Shares
Year Ended May 31, 1996 -- -- 12,911

DIVERSIFIED EQUITY FUND
A Shares
Year Ended May 31, 1996 50,658 15 --
B Shares
Year Ended May 31, 1996 -- -- 0

GROWTH EQUITY FUND
A Shares
Year Ended May 31, 1996 26,825 7 --
B Shares
Year Ended May 31, 1996 -- -- 0

SMALL COMPANY STOCK FUND
A Shares
Year Ended May 31, 1996 1,309,565 5,153 2,972
B Shares
Year Ended May 31, 1996 -- -- --

CONTRARIAN STOCK FUND
A Shares
Year Ended May 31, 1996 103,499 425 --
B Shares
Year Ended May 31, 1996 -- -- 1,432

INTERNATIONAL FUND
Year Ended May 31, 1996 269 30 --
B Shares
Year Ended May 31, 1996 -- -- 213

</TABLE>

-B13-
<PAGE>

TABLE 5 - ACCOUNTING FEES

The following table shows the dollar amount of fees payable to FFC for its
accounting services with respect to each Fund, the amount of fee that was waived
by FFC, if any, and the actual fee received by FFC. The table also shows
similar information with respect to International Portfolio. The data is for
the past three fiscal years or shorter period if the Fund has been in operation
for a shorter period.

FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
CASH INVESTMENT FUND
Year Ended May 31, 1996 49,000 0 49,000
Year Ended May 31, 1995 36,000 0 36,000
Year Ended May 31, 1994 47,000 0 47,000

U.S. GOVERNMENT FUND
Year Ended May 31, 1996 46,000 0 46,000
Year Ended May 31, 1995 36,000 0 36,000
Year Ended May 31, 1994 36,000 0 36,000

TREASURY FUND
Year Ended May 31, 1996 43,500 0 43,500
Year Ended May 31, 1995 36,000 0 36,000
Year Ended May 31, 1994 36,000 0 36,000

READY CASH INVESTMENT FUND
Year Ended May 31, 1996 63,000 0 63,000
Year Ended May 31, 1995 48,000 0 48,000
Year Ended May 31, 1994 41,000 0 41,000

MUNICIPAL MONEY MARKET FUND
Year Ended May 31, 1996 72,500 0 72,500
Year Ended May 31, 1995 60,000 0 60,000
Year Ended May 31, 1994 60,000 0 60,000

STABLE INCOME FUND
Year Ended May 31, 1996 37,452 7,136 30,316
Year Ended October 31, 1995 51,700 0 51,700

INTERMEDIATE GOVERNMENT INCOME FUND
Year Ended May 31, 1996 29,452 5,322 24,130
Year Ended October 31, 1995 52,700 0 52,700

DIVERSIFIED BOND FUND
Year Ended May 31, 1996 29,500 5,561 23,939
Year Ended October 31, 1995 46,700 0 36,700

INCOME FUND
Year Ended May 31, 1996 79,500 0 79,500
Year Ended May 31, 1995 64,000 0 64,000
Year Ended May 31, 1994 63,000 0 63,000

-B14-

<PAGE>

FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
TOTAL RETURN BOND FUND
Year Ended May 31, 1996 57,500 0 57,500
Year Ended May 31, 1995 50,000 0 50,000
Year Ended May 31, 1994 23,500 23,500 0

LIMITED TERM TAX-FREE FUND
Year Ended May 31, 1996 N/A N/A N/A

TAX-FREE INCOME FUND
Year Ended May 31, 1996 66,000 0 66,000
Year Ended May 31, 1995 62,000 0 62,000
Year Ended May 31, 1994 65,100 0 65,100

COLORADO TAX-FREE FUND
Year Ended May 31, 1996 60,000 0 60,000
Year Ended May 31, 1995 55,000 0 55,000
Year Ended May 31, 1994 50,000 50,000 0

MINNESOTA TAX-FREE FUND
Year Ended May 31, 1996 56,000 0 56,000
Year Ended May 31, 1995 55,300 0 55,300
Year Ended May 31, 1994 54,000 0 54,000

CONSERVATIVE BALANCED FUND
Year Ended May 31, 1996 32,500 6,054 26,446
Year Ended October 31, 1995 54,266 0 54,266

MODERATE BALANCED FUND
Year Ended May 31, 1996 36,000 7,104 28,896
Year Ended October 31, 1995 52,266 0 52,266

GROWTH BALANCED FUND
Year Ended May 31, 1996 34,000 6,591 27,409
Year Ended October 31, 1995 50,833 0 50,833

INCOME EQUITY FUND
Year Ended May 31, 1996 22,935 4,293 18,642
Year Ended October 31, 1995 34,700 0 34,700

VALUGROWTH STOCK FUND
Year Ended May 31, 1996 57,500 0 57,500
Year Ended May 31, 1995 48,500 0 48,500
Year Ended October 31, 1995 53,000 0 53,000

INDEX FUND
Year Ended May 31, 1996 30,500 5,659 24,841
Year Ended October 31, 1995 46,266 0 46,266

DIVERSIFIED EQUITY FUND
Year Ended May 31, 1996 30,306 6,216 24,090
Year Ended October 31, 1995 34,700 0 34,700

-B15-

<PAGE>

FEE FEE FEE
PAYABLE WAIVED RETAINED
------- ------ --------
GROWTH EQUITY FUND
Year Ended May 31, 1996 30,306 6,216 24,090
Year Ended October 31, 1995 34,700 0 34,700

LARGE COMPANY GROWTH FUND
Year Ended May 31, 1996 21,000 3,755 17,245
Year Ended October 31, 1995 34,700 0 34,700

SMALL COMPANY STOCK FUND
Year Ended May 31, 1996 60,500 0 60,500
Year Ended May 31, 1995 51,000 0 51,000
Year Ended May 31, 1994 22,500 22,500 0

SMALL COMPANY GROWTH FUND
Year Ended May 31, 1996 30,000 5,759 24,241
Year Ended October 31, 1995 36,700 0 36,700

CONTRARIAN STOCK FUND
Year Ended May 31, 1996 52,000 0 52,000
Year Ended May 31, 1995 50,000 0 50,000
Year Ended May 31, 1994 22,500 22,500 0

INTERNATIONAL FUND
Year Ended May 31, 1996 23,000 3,952 19,048
Year Ended October 31, 1995 51,766 39,766 12,000

INTERNATIONAL PORTFOLIO
Year Ended May 31, 1996 50,500 8,500 42,000
Year Ended October 31, 1995 77,967 8,567 69,400

-B16-
<PAGE>

TABLE 6 - COMMISSIONS

The following table shows the aggregate brokerage commissions with respect to
each Fund that incurred brokerage costs. The data is for the past three fiscal
years or shorter period if the Fund has been in operation for a shorter period.

AGGREGATE
COMMISSIONS PAID

DIVERSIFIED BOND FUND
Year Ended May 31, 1996 5,261
Year Ended October 31, 1995 1,750

CONSERVATIVE BALANCED FUND
Year Ended May 31, 1996 8,406
Year Ended October 31, 1995 9,298

MODERATE BALANCED FUND
Year Ended May 31, 1996 54,332
Year Ended October 31, 1995 57,931

GROWTH BALANCED FUND
Year Ended May 31, 1996 69,732
Year Ended October 31, 1995 66,361

INCOME EQUITY FUND
Year Ended May 31, 1996 52,904
Year Ended October 31, 1995 25,321

INDEX FUND
Year Ended May 31, 1996 121,170
Year Ended October 31, 1995 107,321

VALUGROWTH STOCK FUND
Year Ended May 31, 1996 436,274
Year Ended May 31, 1995 485,176
Year Ended May 31, 1994 553,049

DIVERSIFIED EQUITY FUND
Year Ended May 31, 1996 175,648
Year Ended October 31, 1995 180,093

GROWTH EQUITY FUND
Year Ended May 31, 1996 127,666
Year Ended October 31, 1995 115,993

LARGE COMPANY GROWTH FUND
Year Ended May 31, 1996 42,229
Year Ended October 31, 1995 60,264

-B17-

<PAGE>

AGGREGATE
COMMISSIONS PAID
SMALL COMPANY STOCK FUND
Year Ended May 31, 1996 208,021
Year Ended May 31, 1995 67,471
Year Ended May 31, 1994 10,127

SMALL COMPANY GROWTH FUND
Year Ended May 31, 1996 785,875
Year Ended October 31, 1995 600,341

CONTRARIAN STOCK FUND
Year Ended May 31, 1996 52,162
Year Ended May 31, 1995 43,397
Year Ended May 31, 1994 9,311

INTERNATIONAL FUND*
Year Ended May 31, 1996 188,849
Year Ended October 31, 1995 348,358

* Reflects commission paid by International Portfolio; International Fund
paid no commissions directly during either year.

-B18-

<PAGE>

TABLE 7 - 5% SHAREHOLDERS

The following table lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares of a Fund as of May 1, 1997, as well as
their percentage holding of all shares of the Fund. All percentages are rounded
off to the nearest one percent. Certain persons own shares of the Funds of
record only, including Alpine & Co., BHC Securities, Inc., EMSEG & Co., First
Stock Co., Norwest Bank Minnesota, N.A. and Stout & Co.

SHARE % OF % OF
NAME AND ADDRESS BALANCE CLASS FUND
<S> <C> <C> <C> <C>
CASH INVESTMENT FUND Norwest Bank Minnesota NA 232,972,631.500 11.166% 11.166%
Collective Trust Funds
Clearing Account
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Investment Services 1,631,937,513.720 78.220% 78.220%
c/o Greg Wraalstad
608 2nd Avenue South
8th Floor MS 0162
Minneapolis, MN 55479-0162
READY CASH INVESTMENT FUND
Investor Shares BHC Securities, Inc. 190,326,428.770 33.905% 10.570%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Norwest Investment Services 358,876,573.770 63.930% 19.931%
c/o Greg Warrlstad
608 2nd Avenue South
8th Floor, MS 0162
Minneapolis MN 55479-0162
Institutional Shares Norwest Bank Minnesota NA AMS 271,456,847.024 21.917% 15.076%
VP4600301
Attn: Cash Sweep Processing
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Bank Minnesota NA 610,356,675.500 49.279% 33.898%
AMS
VP460500022
Attn: Cash Sweep Processing
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Bank Minnesota NA AMS 94,510,122.000 7.630% 5.248%
VP4500030
Attn: Cash Sweep Processing
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Alpine & Co 106,021,035.290 8.559% 5.888%

-B19-

<PAGE>

Non Discretionary
1740 Broadway MS 8751
Denver, CO 80274

Exchange Shares Stephen P. Arkulary 89,170.870 14.112% 0.0004%
and Helen M. Doane
Jt. Ten 711266
595 W. Wabasha Street
Duluth MN 55803

Norwest Bank Minnesota 438,636.600 69.417% 0.0243%
Cust. for IRA Account of
Dennis M. Dougherty
RD 1, Box 1444
East Stroudsburg PA 18301

BHC Securities Inc. 57,559.460 9.109% 0.0031%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

U.S. GOVERNMENT FUND Alpine & Co 166,894,993.810 9.592% 9.592%
Non-Discretionary
1740 Broadway MS 8751
Denver, CO 80274

Norwest Bank Minnesota NA 1,311,407,849.360 75.377% 75.377%
AMS
Collective Trust Funds
Clearing Account
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Investment Services 326,370,481.810 18.759% 18.759%
c/o Greg Wraalstad
608 2nd Avenue South
8th Floor -- MS 0162
Minneapolis MN 55479-0162
TREASURY FUND Alpine & Co. 85,502,626.510 8.311% 8.311%
Discretionary
1740 Broadway MS 8751
Denver, CO 80274

Norwest Bank Minnesota NA 525,518,273.310 51.085% 51.085%
AMS
Collective Trust Funds
Clearing Account
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Bank Colorado Springs 62,598,435.560 6.085% 6.085%
Attn: Jan Peto
P.O. Box 400
Colorado Springs, CO 80901

-B20-

<PAGE>

Norwest Investment Services 236,266,678.130 22.967% 22.967%
c/o Greg Wraalstad
608 2nd Avenue South
8th Floor -- MS 0162
Minneapolis MN 55479-0162

MUNICIPAL MONEY MARKET
FUND
Investor Shares BHC Securities, Inc. 11,856,549.960 22.548% 1.847%
Attn: Cash Sweeps
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Norwest Investment Services 39,468,399.560 75.060% 6.148%
c/o Greg Wraalstad
608 2nd Avenue South
8th Floor MS - 0162

Institutional Shares Norwest Bank Minnesota NA 183,035,857.010 31.064% 28.519%
AMS
Collective Trust Funds
Clearing Account
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Norwest Bank Minnesota NA 218,179,174.990 37.028% 33.994%
VP4620002
Attn: Cash Sweep Processing
733 Marquette Avenue 4th Floor
Minneapolis, MN 55479-0050

Finaba 45,723,443.990 7.760% 7.124%
Non Discretionary Cash Account
Attn: Jon Rutter
1314 Avenue K
Lubbock TX 79401

Norwest Investment Services 95,761,229.530 16.252% 14.920%
c/o Greg Wraalstad
608 2nd Avenue South
8th Floor MS - 0162
Minneapolis MN 55479-0162

-B21-

<PAGE>

STABLE INCOME FUND
A Shares Ramsey Foundation 136,738.146 11.138% 10.260%
8100 34th Avenue South
PO Box 1309
Minneapolis, MN 55440-1309

St. Paul Ramsey Medical Center 274,203.562 22.335% 20.575%
6th Floor
8100 34th Ave South
PO Box 1309
Minneapolis, MN 55440-1309

Von Maur Investment Co 116,567.861 9.495% 8.746%
6565 Brady St.
Davenport, IA 52806

Aspen Medical Group, PA 98,818.627 7.397% 7.415%
1021 Bandana Blvd. E, Suite 200
St. Paul, MN 55108

Analysts International Corporation 216,969.473 17.673% 16.280%
7615 Metro Blvd.
Minneapolis, MN 55439

B Shares Fred P. Mattson 7,979.911 7.597% 0.598%
and Berry J. Matton
P.O. Box 248
Elmwood, WI 54740-0248

BHC Securities, Inc. 6,758.457 6.434% 0.507%
FBO 52443692
One Commerce Square
2005 Market St. STE 1200
Philadelphia, PA 19103

BHC Securities, Inc. 6,122.083 5.828% 0.459%
FBO 52509602
One Commerce Square
2005 Market St. STE 1200
Philadelphia, PA 19103

Norwest Investment Services, 11,773.862 11.209% 0.883%
Inc.
FBO 800059291
Northstar Building East - 8th Fl.
618 Second Avenue - South
Minneapolis MN 55479-0162

Janet R. Anderson 6,183.057 5.886% 0.463%
TOD
1874 Summit Avenue

-B22-

<PAGE>

St. Paul MN 55105

Charles Anjad-Ali 8,420.307 8.016% 0.631%
1305 Dayton Avenue
St. Paul MN 55104

INTERMEDIATE GOVERNMENT
INCOME FUND
A Shares BHC Securities, Inc. 263,205.698 21.597% 12.660%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Ibrahim M. Almadani 108,812.262 8.928% 5.195%
and Salwa A. Aboulghaffar
c/o Bernie Harkel
10010 Regency Circle
Omaha NE 68114

INCOME FUND
A Shares BHC Securities, Inc. 172,137.075 30.515% 0.575%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

TOTAL RETURN BOND FUND
A Shares BHC Securities, Inc. 59,085.463 18.060% 0.416%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Norwest Wealthbuilder 165,292.626 50.523% 1.165%
Reinvest Account
733 Marquette Avenue
Minneapolis, MN 55479-0050

I Shares Dentru & Co 3,205,076.083
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver CO 80274

Seret & Co. 7,150,049.422
Discretionary Reinvest
1700 Broadway MS 0076
Denver, CO 80274

LIMITED TERM TAX-FREE FUNDS
Investor Shares Victoria & Co. 296,095.170 7.874% 7.874%
Non-Discretionary Reinvest

-B23-

<PAGE>

Trust Operations
One O'Connor Plaza
Victoria TX 77901

Victoria & Co. Special 435,765.150 11.588% 11.588%
Common Trust Fund
Trust Operations
One O'Connor Plaza
Victoria TX 77901

Norwest Limited Term 2,697,945.102 71.747% 71.747%
Tax-Exempt Bond Fund
PO Box 1450 NW 8477
Minneapolis MN 55480-8477

TAX-FREE INCOME FUND
A Shares BHC Securities, Inc. 410,978.560 14.641% 1.374%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

I Shares Dentru & Co 6,897,542.824 26.155% 23.063%
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver CO 80274

FINABA 1,579,783.465 26.155% 5.282%
Discretionary Cash Acct.
1314 Avenue K
Lubbock, TX 79401

Norwest Tax Exempt Bond Fund 14,714,203.086 55.797% 49.199%
P.O. Box 1450 NW 8477
Minneapolis, MN 55480-8477

COLORADO TAX-FREE FUND
A Shares BHC Securities, Inc. 252,004.510 9.273% 4.195%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Walter Stonehocker and 539,066.141 19.774% 8.973%
Roswitha Stonehocker
15600 Holly
Brighton, CO 80601

B Shares Ronald T. Stecker and 38,614.513 5.660% 0.642%
Dorothy E. Stecker
Jt Ten
27 Eagle Drive
Littleton CO 80123

I Shares Dentru & Co 2534,093.903 97.468% 42.184%
Non-Discretionary Cash
1740 Broadway Mail 8676

-B24-

<PAGE>

Denver CO 80274

MINNESOTA TAX-FREE FUND
A Shares BHC Securities, Inc. 397,738.332 16.441% 8.901%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

I Shares Norwest Bank Minnesota, NA 171,712.754 17.196% 3.843%
Agnt Madri Inc. Agency
U/A/DT 5/14/96
733 Marquette Avenue MS-0036
Minneapolis, MN 55479-0036

INCOME EQUITY FUND
A Shares BHC Securities, Inc. 478,613.759 36.954% 21.227%
Trade House Acct.
One Commerce Square
2005 Market St.
Philadelphia, PA 19103-3212

VALUGROWTH STOCK FUND
A Shares BHC Securities, Inc. 278,884.096 37.072% 3.402%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Norwest Wealthbuilder 42,559.160 5.657% 0.519%
Reinvest Account
733 Marquette Avenue
Minneapolis MN 55479-0040

DIVERSIFIED EQUITY FUND
A Shares BHC Securities, Inc. 329,190.800 50.024% 21.520%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

GROWTH EQUITY FUND
A Shares BHC Securities, Inc. 116,402.090 27.723% 17.267%
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

Norwest Wealthbuilder 171,390.554 40.820% 25.424%
Reinvest Account
733 Marquette Avenue
Minneapolis MN 55479-0040

-B25-

<PAGE>

SMALL COMPANY STOCK FUND
A Shares Norwest Wealthbuilder 115,727.168 22.352% 0.937%
Reinvest Account
733 Marquette Avenue
Minneapolis, MN 55479-0040

BHC Securities, Inc. 188,110.701 36.333% 1.524%
One Commerce Square
2005 Market Street Suite 1200
Philadelphia PA 19103

B Shares BHC Securities, Inc. 28,973.933 7.749% 0.234%
FAO 52711393
One Commerce Square
2005 Market Street
Philadelphia PA 19103-3212

I Shares Dentru & Co 2,222,356.042 6.814% 18.010%
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver CO 80274

Norwest Bank Minnesota 779,625.000 6.814% 6.318%
Cust Norwest Foundation - NIM
A/C 12928201
PO Box 1450 NW 0477
Minneapolis MN 55480-8477

SMALL CAP OPPORTUNITIES FUND
A Shares Richard M. Leach 1,180.781 5.583% 4.109
and Peter W. Nash
Trst The Edward Sturgis Trust
U/A DTD 3/10/72
2 Portland Square
Portland ME 04101

BHC Securities, Inc. 2,876.045 13.599% 10.009%
Trade House Act
Attn: Mutual Fd Dept.
One Commerce Square
2505 Market Street
Philadelphia PA 19103

Norwest Investment 2,619.172 12.385% 9.115%
Services, Inc.
FBO 7022167001
Northstar Building East - 8th Fl.
608 Second Avenue South
Minneapolis MN 55479-0162
Norwest Investment 8,355.091 39.508% 29.079%
Services, Inc.
FBO 101482111

-B26-

<PAGE>

Northstar Building East - 8th Fl.
608 Second Avenue South
Minneapolis MN 55479-0162
B Shares Tom S. Haupin 577.156 7.609% 2.008%
1667 Oriole Drive
Galesburg IL 61401

Norwest Investment 582.244 7.676% 2.026%
Services, Inc.
FBO 701984451
Northstar Building East - 8th Fl.
608 Second Avenue South
Minneapolis MN 55479-0162

Norwest Investment 2,418.821 31.891% 8.418%
Services, Inc.
FBO 701942871
Northstar Building East - 8th Fl.
608 Second Avenue South
Minneapolis MN 55479-0162

BHC Securities, Inc. 1,728.180 22.785% 6.014%
FAO 51729488
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia PA 19103

CONTRARIAN STOCK FUND
A Shares BHC Securities, Inc. 3,792.159 65.390% 0.341%
One Commerce Square
2005 Market Street Suite 1200
Philadelphia PA 19103

Richard and Ramute Bell 1,146.308 19.766% 0.103%
Richard & Ramute Bell Consvtrs
Consv Jody Kay Bell
726367
Norfolk NE 68701

Marcia Mattson 630.481 10.354% 0.056%
2039 Virginia Lane
Grafton WI 53024

B Shares Lynda J. Best 1,279.541 72.464% 0.115%
3270 Jay Avenue
Bravton IA 50042

Norwest Investment 427.163 24.191% 0.038%
Services, Inc.
FBO 702022391
Northstar Building East - 8th Fl.
608 Second Avenue South

-B27-
<PAGE>

Minneapolis MN 55479-0162

I Shares Dentru & Co 442,129.284 40.118% 39.844%
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver CO 80274

Seret & Co. 435,626.799 39.528% 39.258%
Discretionary Reinvest
1740 Broadway MS 8751
Denver, CO 80274

INTERNATIONAL FUND
A Shares Norwest Wealthbuilder 35,880.846 37.965% 21.107%
Reinvest Account
733 Marquette Avenue
Minneapolis, MN 55479-0040

BHC Securities, Inc. 29,438.561 31.140% 17.317%
One Commerce Square
2005 Market Street Suite 1200
Philadelphia PA 19103

B Shares BHC Securities, Inc. 7,722.102 10.230% 4.542%
FAO 43268824
One Commerce Square
2005 Market Street Suite 1200
Philadelphia PA 19103

David A. Struvk 4,764.293 6.311% 2.802%
1941 Crestview Circle
Ewcelsior MN 55331
</TABLE>

-B28-
<PAGE>

APPENDIX C - PERFORMANCE DATA

TABLE 1 - MONEY MARKET FUND YIELDS

As of November 30, 1996, the SEVEN DAY yield, SEVEN DAY effective yield and, for
Municipal Money Market Fund, the SEVEN DAY tax equivalent yield, of each class
of the Money Market Funds was as follows. For the tax-equivalent yield
quotations, the assumed Federal income tax rate is 39.6%.

Effective Tax-Equivalent Tax-Equivalent
Yield Yield Yield Effective Yield
----- ------ ------ ----------------
<S> <C> <C> <C> <C>
CASH INVESTMENT FUND 5.06% 5.19% N/A N/A

READY CASH INVESTMENT FUND
Investor Shares 4.76% 4.87% N/A N/A
Institutional Shares 5.0978% 5.23% N/A N/A
Exchange Shares 5.10% 5.23% N/A N/A

U.S. GOVERNMENT FUND 4.97% 5.09% N/A N/A

TREASURY FUND 4.78% 4.89% N/A N/A

MUNICIPAL MONEY MARKET FUND
Investor Shares 3.06% 3.10% 5.07% 5.13%
Institutional Shares 3.26% 3.31% 5.40% 5.48%
</TABLE>

TABLE 2 - YIELDS

For the 30-day period ended November 30, 1996 the annualized yield and, where
applicable, the tax equivalent yield of each class of the Fixed Income Funds
balanced Funds and Equity Funds was as follows. For the tax-equivalent yield
quotations, the assumed Federal income tax rate is 39.6%. In addition, for the
tax-equivalent yields of the Colorado and Minnesota Tax-Free Funds, the assumed
Colorado and Minnesota income tax rates are 5% and 8.5%, respectively. Limited
Term Tax-Free Fund had not commenced operations as of November 30, 1996.

Tax Equivalent
Yield Yield
----- -----

STABLE INCOME FUND
A Shares 6.06% N/A
B Shares 4.91% N/A
I Shares 5.66% N/A

INTERMEDIATE GOVERNMENT INCOME FUND
A Shares 5.46% N/A
B Shares 4.93% N/A
I Shares 5.67% N/A

DIVERSIFIED BOND FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares 5.86% N/A

<PAGE>

Tax Equivalent
Yield Yield
----- -----

INCOME FUND
A Shares 5.68% N/A
B Shares 5.13% N/A
I Shares 5.87% N/A

TOTAL RETURN BOND FUND
A Shares 5.21% N/A
B Shares 4.62% N/A
I Shares 5.38% N/A

LIMITED TERM TAX-FREE FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

TAX-FREE INCOME FUND
A Shares 4.95% 8.20%
B Shares 4.37% 8.00%
I Shares 5.12% 9.25%

COLORADO TAX-FREE FUND
A Shares 5.42% 9.45%
B Shares 4.88% 8.19%
I Shares 5.64% 9.82%

MINNESOTA TAX-FREE FUND
A Shares 4.73% 8.55%
B Shares 4.14% 7.11%
I Shares 4.88% 8.83%

CONSERVATIVE BALANCED FUND
I Shares N/A N/A

MODERATE BALANCED FUND
I Shares N/A N/A

GROWTH BALANCED FUND
I Shares N/A N/A

DIVERSIFIED EQUITY FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

GROWTH EQUITY FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

INDEX FUND
I Shares N/A N/A

-C2-

<PAGE>

Tax Equivalent
Yield Yield
----- -----

VALUGROWTH STOCK FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

INCOME EQUITY FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

LARGE COMPANY GROWTH FUND
I Shares N/A N/A

SMALL COMPANY STOCK FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

SMALL COMPANY GROWTH FUND
I Shares N/A N/A

CONTRARIAN STOCK FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

INTERNATIONAL FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

SMALL CAP OPPORTUNITIES FUND
A Shares N/A N/A
B Shares N/A N/A
I Shares N/A N/A

TABLE 3 - TOTAL RETURNS

The average annual total return of each class of each Fixed Income and Equity
Fund for the periods ended November 30, 1996 was as follows. The actual dates
of the commencement of each Fund's operations, or the commencement of the
offering of each class' shares, is listed in the Fund's financial statements.
The performance of the Funds marked with an asterisk (*) includes the
performance of a collective investment fund prior to its conversion into the
Fund. See "Performance and Advertising Data - Multiclass, Collective Trust Fund
and Core-Gateway Performance."
<TABLE>
<CAPTION>
Since
One Year Five Years Ten Years Inception
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
STABLE INCOME FUND
A Shares 4.28% N/A N/A 5.92%
B Shares N/A N/A N/A 3.27%
I Shares 5.83% N/A N/A 6.70%

-C3-

<PAGE>

Since
One Year Five Years Ten Years Inception
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INTERMEDIATE GOVERNMENT INCOME FUND*
A Shares 1.42% 4.91% 6.60% N/A
B Shares 3.00% N/A N/A 3.00%
I Shares 5.38% 5.72% 7.01% N/A

DIVERSIFIED BOND FUND*
A Shares N/A N/A N/A N/A
B Shares N/A N/A N/A N/A
I Shares 5.13% 5.87% 7.03% N/A

INCOME FUND
A Shares 0.68% 5.59% N/A 7.68%
B Shares 1.73% N/A N/A 2.92%
I Shares 4.59% 6.40% N/A 8.10%

TOTAL RETURN BOND FUND
A Shares 1.32% N/A N/A 4.36%
B Shares 2.57% N/A N/A 4.41%
I Shares 5.25% N/A N/A 5.79%

LIMITED TERM TAX-FREE FUND
A Shares N/A N/A N/A N/A
B Shares N/A N/A N/A N/A
I Shares N/A N/A N/A 37.45%

TAX-FREE INCOME FUND
A Shares 2.36% 5.96% N/A 6.27%
B Shares 3.53% N/A N/A 4.63%
I Shares 6.33% 6.79% N/A 6.83%

COLORADO TAX-FREE FUND
A Shares 2.22% N/A N/A 4.95%
B Shares 3.33% N/A N/A 4.72%
I Shares 6.13% N/A N/A 6.10%

MINNESOTA TAX-FREE FUND
A Shares 1.46% 6.04% N/A 6.51%
B Shares 2.66% N/A N/A 4.35%
I Shares 5.46% 6.86% N/A 6.97%

CONSERVATIVE BALANCED FUND
I Shares 9.49% 8.28% N/A 9.13%

MODERATE BALANCED FUND
I Shares 11.80% 9.85% N/A 10.68%

GROWTH BALANCED FUND
I Shares 16.36% 12.25% N/A 12.36%

INCOME EQUITY FUND*

-C4-

<PAGE>

A Shares 19.84% 16.39% N/A 15.61%
B Shares N/A N/A N/A 19.75%
I Shares 25.51% 17.48% N/A 16.31%

<CAPTION>
Since
One Year Five Years Ten Years Inception
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INDEX FUND*
A Shares N/A N/A N/A N/A
B Shares N/A N/A N/A N/A
I Shares 27.25% 17.56% N/A 13.69%

VALUGROWTH STOCK FUND
A Shares 16.53% 12.70% N/A 12.69%
B Shares 18.03% N/A N/A 12.55%
I Shares 21.98% 13.71% N/A 13.25%

DIVERSIFIED EQUITY FUND*
A Shares 17.26% 15.01% N/A 15.70%
B Shares N/A N/A N/A N/A
I Shares 22.78% 16.07% N/A 16.37%

GROWTH EQUITY FUND*
A Shares 13.13% 14.43% N/A 15.31%
B Shares N/A N/A N/A 7.34%
I Shares 18.48% 15.48% N/A 16.01%

LARGE COMPANY GROWTH FUND*
A Shares N/A N/A N/A N/A
B Shares N/A N/A N/A N/A
I Shares 22.83% 13.46% 13.92% N/A

SMALL COMPANY STOCK FUND
A Shares 16.64% N/A N/A 13.17%
B Shares 18.09% N/A N/A 13.28%
I Shares 22.12% N/A N/A 14.81%

SMALL COMPANY GROWTH FUND*
I Shares 17.57% 20.71% 19.40% N/A

CONTRARIAN STOCK FUND
A Shares (1.66%) N/A N/A 4.59%
B Shares (0.89%) N/A N/A 4.56%
I Shares 2.94% N/A N/A 6.26%

INTERNATIONAL FUND*
A Shares 8.27% N/A N/A 10.89%
B Shares 9.45% N/A N/A 11.52%
I Shares 13.34% N/A N/A 8.78%

SMALL CAP OPPORTUNITIES FUND
A Shares 20.99% N/A N/A 23.42%
B Shares N/A N/A N/A 21.54%

-C5-

<PAGE>

I Shares 26.76% N/A N/A 25.16%
</TABLE>

-C6-

<PAGE>

NORWEST FUNDS
STATEMENT OF ADDITIONAL INFORMATION
JUNE 1, 1997

SMALL CAP OPPORTUNITIES FUND

A SHARES
B SHARES
I SHARES

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

STATEMENT OF ADDITIONAL INFORMATION
JUNE 1, 1997

This Statement of Additional Information ("SAI") supplements the Prospectuses
offering A Shares, B Shares and I Shares of Small Cap Opportunities Fund (the
"Fund"). The Fund is a diversified series of Norwest Funds, a registered,
open-end, management investment company (the "Trust"). The Fund currently
invests all of its investment assets in the Schroder U.S. Smaller Companies
Portfolio of Schroder Capital Funds (the "Portfolio"), a registered open-end,
management investment company. This SAI should be read only in conjunction with
the Fund's Prospectuses, copies of which may be obtained without charge.

TABLE OF CONTENTS

Page
----

1. Norwest Funds
2. Investment Policies
3. Investment Restrictions
4. Performance Data and Advertising
5. Management
6. Other Information

Appendix A - Description of Securities Ratings

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 FUNDS

DEFINITIONS

"Adviser" shall mean the Fund's investment adviser, Norwest Investment
Management, Inc. (Norwest), a subsidiary of Norwest Bank Minnesota, N.A.
"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 Bank" shall mean Norwest Bank Minnesota, N.A., a subsidiary of
Norwest Corporation.

"NRSRO" shall mean a nationally recognized statistical rating organization.

"Portfolio" shall mean Schroder U.S. Smaller Companies Portfolio, a
separate portfolio of Core Trust.

"Schroder" shall mean Schroder Capital Management International Inc., the
Fund's investment subadviser and the Portfolio's investment adviser.

-2-
<PAGE>

"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.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"Transfer Agent" shall mean Norwest Bank acting in its capacity as transfer
and dividend disbursing agent of the Trust.

"Trust" shall mean Norwest 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.

-3-
<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 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

-4-
<PAGE>

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 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 to sell its higher rated securities, resulting in
a

-5-
<PAGE>

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.

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 instruments to hedge
("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

-6-
<PAGE>

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.

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.

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

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<PAGE>

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 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.

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<PAGE>

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 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

-9-
<PAGE>

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 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
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 investments, including Stock Index Futures,
held for less than

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<PAGE>

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
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.

DERIVATIVE SECURITIES: WARRANTS, OPTIONS AND FUTURES TRANSACTIONS.

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<PAGE>

WARRANTS. The Portfolio may invest in warrants, which are options to
purchase an equity security at a specified price (usually representing a premium
over the applicable market value of the underlying equity security at the time
of the warrant's issuance) and usually during a specified period of time. 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
Exchanges.

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'
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.

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.

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<PAGE>

The following investment restrictions of the Portfolio are fundamental policies:

(a) The Portfolio may not, with respect to 75% of its assets,
purchase a security (other than a U.S. Government Security or a
security of an investment company) if, as a result (i) more than
5% of the Fund's total assets would be invested in the securities
of a single issuer, or (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer.

(b) The Portfolio may not purchase a security if, as a
result, more than 25% of the Fund's total assets would be invested
in 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.
Notwithstanding anything to the contrary, to the extent permitted
by the 1940 Act, the Fund may invest in one or more investment
companies; provided that, except to the extent the Fund invests in
other investment companies pursuant to Section 12(d)(1)(A) of the
1940 Act, the Fund treats the assets of the investment companies in
which it invests as its own for purposes of this policy.

(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.

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<PAGE>

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.

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 employees of
the Portfolio or officers and directors of Schroder, individually
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.

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<PAGE>

(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

For purposes of advertising performance, and in accordance with Securities and
Exchange Commission interpretations, the Fund has adopted the performance of the
Portfolio. The Portfolio in turn has adopted the performance of Schroder U.S.
Smaller Companies Fund, a series of Schroder Capital Funds (Delaware), which has
an identical investment objective to the Fund and the Portfolio. Like the Fund,
the Schroder U.S. Smaller Companies Fund also invests all of its investable
assets in the Portfolio. 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 Inflation Yearbook").
In addition, the Fund may refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of the Fund and comparative mutual
fund data and ratings reported in independent periodicals, such as newspapers
and financial magazines.

SEC YIELD CALCULATIONS

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<PAGE>

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.

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, maximum sales load 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

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<PAGE>

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:

n
P(1+T) = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000 payment
made at the beginning of the applicable period.

Based on this formula, annualized total returns for the Fund were as follows for
the periods shown below:

For the period from
For the one-year the commencement of
period ended operations through

November 30, 1996(1)(2) November 30, 1996(2)
- -------------------- ------------------------

A Shares 20.99% 23.42%
B Shares N/A 21.54%
I Shares 26.76% 25.16%

(1) Small Cap Opportunities Fund commenced operations with the offering of
I Shares on August 15, 1996. The Fund commenced the offering of A Shares and B
Shares on October 9, 1996 and November 8, 1996, respectively.

(2) The Fund currently seeks to achieve its investment objective by
investing all of its investable assets in Schroder U.S. Smaller Companies
Portfolio (the "Portfolio"), a separate portfolio of a registered, open-end,
management company which has the same investment objective and substantially
similar investment policies as the Fund. Accordingly, Small cap Opportunities
Fund's investment experience will correspond directly with the Portfolio's
investment experience. Total return for A Shares and I Shares reflects the
returns from August 6, 1993 (commencement of operations) of Schroder U.S.
Smaller Companies Fund - Investor Shares. B Shares has not adopted the
performance of the Portfolio and the since inception total return reflects the
Fund's total return.

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<PAGE>

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:

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

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<PAGE>

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 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.

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

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<PAGE>

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. 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, Chairman and President,* Age 54.

Robert C. Brown, Trustee,* Age 65.

Donald H. Burkhardt, Trustee, Age 70.

Principal of The Burkhardt Law Firm. His address is 777 South Steele
Street, Denver, Colorado 80209.

James C. Harris, Trustee, Age 76.

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<PAGE>

Richard M. Leach, Trustee, Age 63.

Timothy J. Penny, Trustee, Age 45.

Donald C. Willeke, Trustee, Age 56.

Principal of the law firm of Willeke & Daniels. His address is 201
Ridgewood Avenue, Minneapolis, Minnesota 55403.

Robert Campbell, Treasurer, Age 35.

David I. Goldstein, Vice President and Secretary, Age 35.

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<PAGE>

Sara M. Clark, Vice President and Assistant Treasurer, Age 33.

Thomas G. Sheehan, Vice President and Assistant Secretary, Age 42.

Catherine S. Wooledge, Assistant Secretary, Age 54.

Counsel, Forum Financial Services, Inc. Prior thereto, associate at
Morrison & Foerster since September 1994, prior thereto associate corporate
counsel at Franklin Resources, Inc. since September 1993, and prior thereto
associate at Drinker Biddle & Reath, Washington, D.C. Her address is Two
Portland Square, Portland, Maine 04101.

Don L. Evans, Assistant Secretary, Age 48.

Renee A. Walker, Assistant Secretary, Age 26.

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

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<PAGE>

manager of a hedge fund partnership) for a year. After graduating from
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.

COMPENSATION OF TRUSTEES AND OFFICERS

Effective June 1, 1995, each Trustee of the Trust is paid a quarterly retained
fee for the Trustee's service to the Trust and to Norwest Select Funds, a
separate registered open-end management investment company for which each
Trustee serves as trustee. of $4,000. In addition, each Trustee is paid $3,000
for each Board meeting attended (whether in person or by electronic
communication) and is paid $1,000 for each Committee meeting attended on a date
when a Board meeting is not held. Trustees are also reimbursed for travel and
related expenses incurred in attending meetings of the Board. Mr. Keffer
received no compensation for his services as Trustee for the past year and no
officer of the Trust is compensated by the Trust. In addition, Mr. Keffer
currently is not compensated or reimbursed for his expenses in serving as
Trustee. Prior to June 1, 1995, each 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

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<PAGE>

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, 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.

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.

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<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. 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.

Ira L. Unschuld, Vice President.

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<PAGE>

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
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.

INVESTMENT ADVISORY SERVICES

ADVISER OF THE FUND

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<PAGE>

Norwest Investment Management, Inc., a subsidiary 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 Norwest 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 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 Norwest'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 Norwest 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
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.

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<PAGE>

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 Norwest, Forum Financial Services, Inc. or affiliated
persons of Norwest 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.

SUBADVISORY ARRANGEMENT

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 Schroder 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 Schroder on
not more than 60 days' nor less than 30 days' written notice, and will
automatically terminate in the event of its assignment. The Subadvisory
Agreement also provides that, with respect to the Fund, 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 Fund, except
for willful misfeasance, bad faith or gross

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<PAGE>

negligence in the performance of Schroder or their duties or by reason of
reckless disregard of its or their obligations and duties under the Subadvisory
Agreement. The Subadvisory Agreement provides that Schroder 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 portfolio transactions
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 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 Norwest, or by
Norwest 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.

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<PAGE>

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 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.

Forum 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 Norwest 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 Norwest to the Portfolio is aware of
pending net purchases or redemptions of Fund shares and other matters that may
affect Norwest'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.

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<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
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.

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.

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<PAGE>

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 occurred
prior to any replacement or termination. Except as described above, in the
event that the Plan is terminated with respect to a Fund, the Fund will cease
paying any distribution services fees.

TRANSFER AGENT

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

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<PAGE>

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 Bank 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.

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.

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<PAGE>

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.

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 Norwest'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

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<PAGE>

investor to purchase the full amount indicated. A Shares purchased with the
first 5% of such amount will be held subject to a registered pledge (while
remaining registered in the name of the investor) to secure payment of the
higher sales charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such pledged shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. When the full amount
indicated has been purchased, the shares will be released from pledge.

EXCHANGES AND TELEPHONE TRANSACTIONS

By making an exchange, the investor authorizes the Trust's transfer agent to act
on telephonic instructions from any person representing himself or herself to be
the investor and believed by the Trust's transfer agent to be genuine. The
records of the Trust's transfer agent of such instructions are binding. The
exchange procedures may be modified or terminated at any time upon appropriate
notice to shareholders. For Federal income tax purposes, exchanges are treated
as sales on which a purchaser will realize a capital gain or loss depending on
whether the value of the shares redeemed is more or less than his basis in such
shares at the time of such transaction.

The exchange privilege permits I 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 charge rate equal
to that paid on the shares on which the dividend or distribution was paid.

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<PAGE>

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.

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

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<PAGE>

shareholder has made prior purchases of A Shares which now have a value of
$900,000, the purchase of $150,000 of A Shares will not be subject to an initial
sales charge but will be subject to the contingent deferred sales charge. The
$900,000 of A Shares is not subject to the contingent deferred sales charge.

STATEMENT OF INTENTION. Contingent deferred sales charges may be charged on
redemptions of A Shares purchased pursuant to a Statement of Intention ("SOI").
The contingent deferred sales charge will not apply to SOIs of under $1,000,000
and will not be applied to SOIs for a greater amount if the shareholder never
purchases $1,000,000 or more of A Shares under the SOI. If a shareholder
purchases $1,000,000 or more under an SOI, the contingent deferred sales charge
will apply with respect to the entire amount purchased. The holding period for
each A Share, however, shall be determined from the date the share was
purchased. If the shareholder redeems A Shares during the period that the SOI
is in effect, a contingent deferred sales charge will be charged at the time the
shareholder has purchased $1,000,000 or more worth of A Shares pursuant to the
SOI and will be assessed at the rate applicable in the case of a single purchase
of the minimum amount specified in the SOI. If the shareholder purchases less
than the amount specified under the SOI, an additional contingent deferred sales
charge may be assessed in respect of A Shares previously redeemed based on the
amount actually purchased pursuant to the SOI.

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

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<PAGE>

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 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 the original net asset value and the recalculated net
asset value divided by the recalculated net asset value is 0.005 (1/2 of 1%) or
less or shareholder transactions are otherwise insubstantially affected, further
action is not required.

PORTFOLIO TRANSACTIONS

The following discussion concerning portfolio transactions relates to the 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 Norwest 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

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<PAGE>

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 Norwest occurs contemporaneously,
the purchase or sale orders may be aggregated in order to obtain any price
advantages available to large denomination purchases or sales.

Purchases and sales of fixed income portfolio securities are generally effected
as principal transactions. These securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and ask prices. In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup. In underwritten offerings, the price includes a disclosed
fixed commission or discount.

Purchases and sales of equity securities on exchanges are generally effected
through brokers who charge commissions. Allocations of transactions to brokers
and dealers and the frequency of transactions are determined by Norwests 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 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.

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<PAGE>

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 ("Schroder Securities"),
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.

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

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<PAGE>

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 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.

KPMG Peat Marwick LLP, independent auditors, acts as auditors for the Trust.

OWNERSHIP OF FUND SHARES

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<PAGE>

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 31, 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, 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 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

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<PAGE>

The fiscal year end of the Fund is May 31. 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.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the information included in the
Fund's registration statement filed with the SEC under the Securities Act of
1933 with respect to the securities offered hereby, certain portions of which
have been omitted pursuant to the rules and regulations of the SEC. The
registration statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any
contract of other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.

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<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 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.

A-1

<PAGE>

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.

A-2

<PAGE>

Bonds rated C typically are subordinated to senior debt which as assigned an
actual or implied CCC debt rating. This rating may also be used to indicate
imminent default.

Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the rating category.

FITCH INVESTORS SERVICE, L.P. ("FITCH")

Fitch rates corporate bond issues, including convertible debt issues, as
follows:

A-3

<PAGE>

CCC Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

PREFERRED STOCK

MOODY'S INVESTORS SERVICE

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.

A-4

<PAGE>

An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.

An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.

An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.

STANDARD & POOR'S

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-5

<PAGE>

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 preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.

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-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

A-6

<PAGE>

somewhat more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. Issues rated A-2 are regarded as
having only an adequate capacity for timely payment. However, such capacity may
be damaged by changing conditions or short-term adversities.

FITCH INVESTORS SERVICE

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-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-7
<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS.

Included in the Prospectus:

For all Funds (A Shares, B Shares and I Shares) for which a Prospectus is
contained in this amendment to the Registration Statement.

Included in the Statement of Additional Information:

For all Funds (A Shares, B Shares and I Shares) for which a Prospectus is
contained in this amendment to the Registration Statement:

Audited financial statements for the fiscal year ended May 31, 1996
including Statements of Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets, Notes to Financial Statements,
Financial Highlights, Portfolio of Investments and Report of Independent
Auditors.

Unaudited financial statements for the period June 1, 1996 through November
30, 1996 including Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Notes to Financial
Statements, and Financial Highlights

(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).
<PAGE>

(5) (a)* Investment Advisory Agreement between Registrant and Norwest Bank
Minnesota, N.A. relating to the Diversified Equity Fund, Growth
Equity Fund, Large Company Growth Fund, Small Company Growth Fund,
International Fund, Income Equity Fund, Index Fund, Conservative
Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund,
Intermediate U.S. Government Fund, Managed Fixed Income Fund and
Stable Income Fund. Except for the names of each series of the
Registrant, the Investment Advisory Agreement of each series of
Registrant is substantially the same as the Investment Advisory
Agreement, and therefore, is omitted pursuant to Rule 483(d)(2)
under the 1933 Act (filed as Exhibit 5(a) to PEA No. 35).

(b)* Investment Sub-Advisory Agreement between Registrant and Crestone
Capital Management, Inc. relating to Small Company Stock Fund
(filed as Exhibit 5(b) to PEA No. 35).

(c)* Investment Sub-Advisory Agreement between Registrant and Schroder
Capital Management International Inc. relating to the Diversified
Equity Fund, Growth Equity Fund, International Fund, Conservative
Balanced Fund, Moderate Balanced Fund and Growth Balanced Fund
(filed as Exhibit 5(c) to PEA No. 35).

(d)* Advisory Agreement between Registrant and Norwest Bank Minnesota,
N.A., relating to Cash Investment Fund, Treasury Fund, U.S.
Government Fund, Ready Cash Investment Fund, Municipal Money Market
Fund, Minnesota Tax-Free Fund, Colorado Tax-Free Fund, Government
Income Fund, Income Fund, Tax-Free Income Fund, Adjustable U.S.
Government Reserve Fund, ValuGrowth Stock Fund, and Income Stock
Fund (filed 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).

(b)* Fund Accounting Agreement between Registrant and Forum Financial
Corp. (filed as Exhibit 9(b) to PEA No. 35).

2
<PAGE>

(c)* Administration Services Agreement between Registrant and Norwest
Bank Minnesota, N.A. relating to International Fund (filed as
Exhibit 9(c) to PEA No. 35).

(10) (a)* Opinion of Seward & Kissel (filed on December 31, 1986 as Exhibit
10(a) of PreEA 2).

(b)* Opinion of Seward & Kissel (filed as Exhibit 10(b) to PEA No.
35).

(11) (a) Consent of KPMG Peat Marwick LLP, independent auditors (filed
herewith).

(11) (b) Consent of Coopers & Lybrand L.L.P., independent auditors (filed
herewith).

(12) Not Applicable.

(13)* Investment representation letter of John Y. Keffer as initial purchaser
of shares of stock of Registrant (filed on December 31, 1986 as Exhibit
13 of PreEA 2).

(14)* Individual Retirement Account materials (filed on April 22, 1994 as
Exhibit 14 to PEA 24).

(15)* Rule 12b-1 Plan adopted by Registrant with respect to the Income Fund,
Tax-Free Income Fund, Minnesota Tax-Free Fund, ValuGrowth Stock Fund,
Adjustable U.S. Government Reserve Fund, Colorado Tax-Free Fund, Income
Stock Fund, Arizona Tax-Free Fund, Contrarian Stock Fund, Small Company
Stock Fund, Government Income Fund, Total Return Bond Fund, Stable Income
Fund, Income Equity Fund, Diversified Equity Fund, Intermediate U.S.
Government Fund, Growth Equity Fund and Exchange Shares of Ready Cash
Investment Fund (filed as Exhibit 15 to PEA No. 35).

(16) Schedule for Computation of each Performance Quotation provided in the
Registration Statement in response to Item 22 (filed herewith).

(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).

3
<PAGE>

(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 MAY 1, 1997.

Number of
Title of Class of Unit of Beneficial Interest Record Holders
- --------------------------------------------- --------------

Cash Investment Fund 49
U.S. Government Fund 34
Treasury Fund 25
Municipal Money Market Fund
Investor Shares 20
Institutional Shares 13
Ready Cash Investment Fund
Investor Shares 160
Institutional Shares 14
Exchange Class 14
Income Fund
A Shares 248
B Shares 245

4
<PAGE>

I Shares 846
Total Return Bond Fund
A Shares 73
B Shares 205
I Shares 275
Colorado Tax-Free Fund
A Shares 413
B Shares 181
I Shares 6
Minnesota Tax-Free Fund
A Shares 443
B Shares 362
I Shares 103
Tax-Free Income Fund
A Shares 592
B Shares 231
I Shares 285
ValuGrowth Stock Fund
A Shares 1,178
B Shares 637
I Shares 1,087
Small Cap Opportunities Fund
A Shares 41
B Shares 23
I Shares 17
Contrarian Stock Fund
A Shares 5

5
<PAGE>

B Shares 4
I Shares 88
Small Company Stock Fund
A Shares 569
B Shares 634
I Shares 1,832
Diversified Equity Fund
A Shares 1,148
B Shares 2,320
I Shares 14
Growth Equity Fund
A Shares 609
B Shares 915
I Shares 12
Large Company Growth Fund
I Shares 13
Small Company Growth Fund
I Shares 11
International Fund
A Shares 171
B Shares 197
I Shares 18
Income Equity Fund
A Shares 1,996
B Shares 2,616
I Shares 20
Index Fund
I Shares 13

6
<PAGE>

Conservative Balanced Fund
I Shares 11
Moderate Balanced Fund
I Shares 13
Growth Balanced Fund
I Shares 13
Intermediate Government Income Fund
A Shares 475
B Shares 476
I Shares 18
Diversified Bond Fund
I Shares 14
Stable Income Fund
A Shares 71
B Shares 51
I Shares 15

ITEM 27. INDEMNIFICATION.

The general effect of Section 10.02 of Registrant's Trust Instrument is to
indemnify existing or former trustees and officers of the Trust to the fullest
extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Section 10.02 of Registrant's Trust Instrument contained in this Registration
Statement as Exhibit 1 and incorporated herein by reference.

Registrant's Investment Advisory Agreements, Investment Subadvisory Agreements,
Management and Distribution Agreements and Distribution Services Agreements
provide that Registrant's investment advisers and principal underwriter are
protected against liability to the extent permitted by Section 17(i) of the
Investment Company Act of 1940. Similar provisions are contained in the
Management Agreement and Transfer Agency and Fund Accounting Agreement.
Registrant's principal underwriter is also provided with indemnification against
various liabilities and expenses under the Management and Distribution
Agreements and Distribution Services Agreements between Registrant and the
principal underwriter; provided, however, that in no event shall the
indemnification provision be construed as to protect the principal underwriter
against any liability to Registrant or its security holders to which the
principal underwriter would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations and duties under those
agreements. Registrant's transfer agent and fund accountant

7
<PAGE>

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 SubAdvisory Agreements, Management
and Distribution Agreements, Distribution Services Agreements, Management
Agreements, Transfer Agency Agreement and Fund Accounting Agreement of
Registrant filed as Exhibits 5, 6, and 9 to Registrant's Registration Statement
and incorporated herein by reference.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

NORWEST INVESTMENT MANAGEMENT, INC.

The description of Norwest Investment Management, Inc., under the caption
"Management-Advisor" or Management of the Funds-Norwest Investment Management"
in each Prospectus and under the caption "Management-Adviser" or "Management -
Investment Advisory Services-Norwest Investment Management" in each Statement of
Additional Information constituting Parts A and B, respectively, of this
Registration Statement are incorporated by reference herein.

The following are the directors and principal executive officers of Norwest Bank
Minnesota, N.A., including their business connections which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A., is Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota, 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,
Minnesota 55479.

8
<PAGE>

Barbara S. Brett was elected Senior Vice President and Treasurer of Norwest Bank
Minnesota, N.A. on February 1, 1996.

James R. Campbell, previously Director, President and Chief Executive Officer of
Norwest Bank Minnesota, N.A. was elected Chairman of the Board of Norwest Bank
Minnesota, N.A. on December 11, 1995. He is also Executive Vice President of
Norwest Corporation. He is a Director of Centennial Investment Corporation,
Flore Properties, Inc., Minnesota FSL Corporation, The Foothill Group, Inc.,
located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California,
90025, and Peregrine Capital Management, Inc., located at LaSalle Plaza, 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402-2056. He is the
President and Chief Executive Officer of BNRN Merger Corporation, and Director
and Chairman of Norwest Investment Advisors, Inc. Mr. Campbell is also Director
of a number of non-profit organizations located in Minneapolis, Minnesota.

Richard P. Ferris, Senior Vice President of Norwest Bank Minnesota, N.A. is also
a Director and Senior Vice President of Norwest Bank International.

Michael A. Graf, Vice President, Controller and Cashier, also serves as Senior
Vice Present 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 Executive Vice President of BNRN Merger
Corporation. He is Director and President of Galliard Capital Management, Inc.,
Suite 2060, 800 LaSalle Avenue, Minneapolis, Minnesota. 55479-2052 and Director
of Norwest Investment Management Inc., and Crestone Capital Management, Inc.,
7720 E. Belleview Avenue, Suite 220, Engelwood, CO 80111. Mr. Kiedrowski is the
Chairman of Project for Pride in Living, Inc., and a Director of the University
of Minnesota Alumni Association, both non-profit organizations.

Scott A. Kissing, Director of Norwest Bank Minnesota, N.A. was elected President
and Chief Executive Officer on December 11, 1995 and is also Executive Vice
President of Norwest Corporation. He is also Executive Vice President of BNRN
Merger Corporation and Director and Executive Vice President of Norwest Bank
Faribault, N.A., 25 Northwest 4th Street, Faribault, Minnesota 55021. Mr.
Kisting is on the Board of several non-profit organizations in Minneapolis,
Minnesota.

William H. Queenan, Director, is also Executive Vice President of Norwest
Corporation. He is a Director of AMFED Financial, Inc., Alexandria Securities
and Investment Company, Alice Bancshares, Inc., AmeriGroup, Incorporated,
American Community Bank Group Service Corporation, American Republic Bancshares,
Inc., B & G. Investment Company, Babbscha Company, Bancshares Holding Company,
Benson Financial Corporation, Canton Bancshares, Inc., Central Computers., Inc.,
One O'Connor Plaza, Victoria, TX 77902, Comfort Bancshares, Inc., Copper
Bancshares, Inc., D.L. Bancshares, Inc., Dickenson Bancorporation, Inc., First
Tule Bancorp of Delaware, Inc., 1209 Orange Street, Wilmington, Delaware 19807,
First Tule Bancorp, Inc., Ford Bank Group Holdings, Inc., 300 Delaware Avenue,
Suite 1704, Wilmington

9
<PAGE>

Delaware 19807, Ford Bank Group, Inc., 1500 Broadway, Suite 301, Lubbock, TX
79408, GST Co., Goldenbanks of Colorado, Inc., Guardian Trust Co., Inc.,
Henrietta Bancshares, Inc., Henrietta Delaware Financial Corporation, 15 E. N
Street, Dover, Delaware 19901, Independent Bancorp of Arizona, Inc., 3800 N.
Central Avenue, Suite 900, Phoenix, AZ 85012, Irene Bancorporation, Inc., Ken-
Caryl Investment Company, La Porte Bancorp. Lindeberg Financial Corporation, New
Braunfels Bancshares, Inc., Norwest Bank Wisconsin, N.A., 735 West Wisconsin
Avenue, Milwaukee, Wisconsin 53201-2057, Norwest Colorado, Inc., 1700 Lincoln,
Denver, CO 80274, Norwest Holding Company, Parker Bankshares, Incorporated,
Texas National Bankshares, Inc., The Foothill Group, Inc., 1111 Santa Monica
Boulevard, Suite 1500, Los Angeles, CA 90025, Transact Financial Corporation,
One O'Connor Plaza, Victoria, TX 77902, Union Texas Bancorporation, United New
Mexico Financial Corporation, 200 Lomas Blvd., Suite 200, Albuquerque, NM 87103,
United Texas Financial Corporation, Valley-Hi Investment Company, Victoria
Bankshares, Inc., Victoria Capital Corporation, One O'Connor Plaza, Victoria, TX
77902 and Victoria Financial Services, Inc., 1013 Centre Road, Wilmington,
Delaware.

Peggy O. Roush was named Executive Vice President on January 30, 1995. She is a
Director, Executive Vice President, Secretary and CTR Officer of Norwest Bank
Faribault, N.A., 25 Northwest Fourth Street, Faribault, MN 55021-0189, and
Director, Executive Vice President, Cashier and Secretary of Norwest National
Bank, 10001 Wadsworth Parkway, Westminister, CO 80021.

John T. Thornton, Director, is also Executive Vice President and Chief Financial
Officer of Norwest Corporation. Mr. Thornton is also a Director and President
of AMFED Financial, Inc. Alexandria Securities and Investment Company, Alice
Bancshares, Inc., Am-Can Investments, Inc., AmeriGroup, Incorporated, American
Community Bank Group Service Corporation, American Republic Bancshares, Inc., B
& G Investment Company, Babbscha Company, Bancshares Holding Company, Benson
Financial Corporation, Canton Bancshares, Inc. Central Computers, Inc., One
O'Conner Plaza, Victoria, Texas 77902, Comfort Bancshares, Inc., Copper
Bancshares, Inc., D.L. Bancshares, Inc., Dickinson Bancorporation, Inc., First
Tule Bancorp, Inc., Ford Bank Group Holdings, Inc., 300 Delaware Avenue, Suite
1704, Wilmington, DE 19807, Ford Bank Group, Inc., 1500 Broadway Suite 301,
Lubbock, TX 79408, GST Co., Goldenbanks of Colorado, Inc., Guardian Trust Co.,
Henrietta Bancshares, Inc., Henrietta Delaware Financial Corporation, 15 East N
Street, Dover, DE 19901, Independent Bancorp of Arizona, Inc., 3800 N. Central
Avenue, Suite 900, Phoenix, Arizona 85012, Irene Bancorporation, Inc., Ken-Caryl
Investment Company, La Porte Bancorp, Lindeberg Financial Corporation, New
Braunfels Bancshares, Inc., Northern Prairie Indemnity, Grand Cayman, Cayman
Islands, British West Indies, Norwest Colorado, Inc., 1700 Lincoln, Denver,
Colorado 80274, Norwest Holding Company, Parker Bankshares, Incorporation,
Superior Guaranty Insurance Company, Texas National Bankshares, Inc., Transact
Financial Corporation, One O'Connor Plaza, Victoria, TX 77902, Union Texas
Bancorporation, Inc., United New Mexico Financial Corporation, 200 Lomas Blvd.,
Suite 200, Albuquerque, New Mexico 87103, United Texas Financial Corporation,
Valley-Hi Investment Company, Victoria Bankshares, Inc., Victoria Capital
Corporation, One O"Connor Plaza, Victoria, TX 77902, and Victoria Financial
Services, Inc., 1013 Centre Road, Wilmington, Delaware.

10
<PAGE>

He is also a Director of BNRN Merger Corporation, Blue Jay Asset Management,
Inc., Cardinal Asset Management, Inc., 100 W. Commons. Blvd., Suite 303, New
Castle, Delaware 19720, Copper Asset Management, Inc., 100 W. Commons, Blvd.,
Suite 303, New Castle, Delaware 19720, Falcon Asset Management, Inc., 100 W.
Commons Blvd., Suite 303, New Castle, Delaware 19720, Great Plains Insurance
Company, Green Bay Asset Management, Inc., 735 W. Wisconsin Avenue, Milwaukee,
Wisconsin 53201, IntraWest Asset Management, Inc., Iowa Asset Management, Inc.,
100 West Commons Blvd., Suite 303, New Castle, DE 19720, LaCrosse Asset
Management, Inc., 100 West Commons Blvd., Suite 303, New Castle, DE 19720,
Norwest Equity Capital, LLC, 2800 Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, MN 54402, Norwest Growth Fund, Inc., 2800 Piper Jaffray Tower, 222
South Ninth Street, Minneapolis, MN 54402, Norwest Venture Capital Management,
Inc., 2800 Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, MN 54402,
Osprey Asset Management, Inc., South Dakota Asset Management, Inc., 100 West
Commons Blvd., Suite 303, New Castle, DE 19720 and The Foothill Group, Inc.,
11111 Santa Monica Blvd., Suite 1500, Los Angeles, CA 90025.

Mr. Thornton is Director and Vice President of Blue Spirit Insurance Company,
2929 North 44th Street, Suite 120, Phoenix, Arizona 85018 and Treasurer of
Norwest Foundation.

Richard C. Westergaard, Executive Vice President since January of 1990 and
Director since January of 1994, has served in various capacities as an employee
of Norwest Bank Minnesota, N.A. and/or its affiliates. Mr. Westergaard is also
a Director of Centennial Investment Corporation, Flore Properties, Inc.,
Minnesota FSL Corporation, The Foothill Group, 11111 Santa Monica Boulevard,
Suite 1500 Los Angeles, CA 90025, Norwest Business Credit, Inc., Norwest Credit,
Inc., First Interstate Equipment Finance, Inc., R.D. Leasing, Inc., Norwest
Alliance System, Inc., Commonwealth Leasing Corporation, Norwest Equipment
Finance, Inc., Investors Building, 733 Marquette, Suite 300, Minneapolis, MN
55479-2048 and Nat-Lea, Inc., 112 W. Jefferson Blvd., South Bend, Indiana 46601.
He is Executive Vice President of BNRN Merger Corporation and Director and
Executive Vice President of Norwest Bank Faribault, N.A., 25 Northwest Fourth
Street, Faribault, Minnesota 55021-0189.

J. Thomas Wiklund, Executive Vice President and Chief Lending Officer since July
1, 1996, is a Vice President of Flore Properties, Inc., and Norwest Bank
Wisconsin, N.A. located at 735 West Wisconsin Avenue, Milwaukee, Wisconsin
53201-2057. He is Executive Vice President of Norwest Bank Faribault, N.A.
located at 25 Northwest 4th Street, Faribault, Minnesota 55021.

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

11
<PAGE>

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.

David M. Salisbury. Chief Executive Officer, Director and Chairman of
Schroder Capital; Joint Chief Executive and Director of Schroder.

Richard R. Foulkes. Senior Vice President and Managing Director of Schroder
Capital.

John A. Troiano. Managing Director and Senior Vice President. Mr. Troiano
is also a Director of Schroder Ltd.

David Gibson. Senior Vice President and Director of Schroder Capital.
Director of Schroder Wertheim Investment Services Inc.

John S. Ager. Senior Vice President and Director of Schroder Capital.

Sharon L. Haugh. Senior Vice President and Director of Schroder Capital,
Director and Chairman of Schroder Advisors Inc.

12
<PAGE>

Gavin D.L. Ralston. Senior Vice President and Director of Schroder Capital.

Mark J. Smith. Senior Vice President and Director of Schroder Capital.

Robert G. Davy. Senior Vice President. Mr. Davy is also a Director of
Schroder Ltd. and an officer of open end investment companies for which
SCMI and/or its affiliates provide investment services.

Jane P. Lucas. Senior Vice President and Director of Schroder Capital;
Director of Schroder Advisors Inc.; Director of Schroder Wertheim
Investment Services, Inc.

13
<PAGE>

C. John Govett. Director of Schroder Capital; Group Managing Director of
Schroder Investment Management Ltd. And Director of Schroders plc.

Phillipa J. Gould. Senior Vice President and Director of Schroder Capital.

Louise Croset. First Vice President and Director of Schroder Capital.

Abdallah Nauphal, Group Vice President and Director.

14
<PAGE>

CRESTONE CAPITAL MANAGEMENT, INC.

15
<PAGE>

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.

PEREGRINE CAPITAL MANAGEMENT, INC.

The description of Peregrine Capital Management, Inc. ("Peregrine") under the
caption "Management - SubAdviser" in the Prospectus and "Management- Adviser -
SubAdviser - Diversified Bond Fund, Conservative Balanced Fund, Moderate
Balanced Fund, Growth Balanced Fund, Diversified Equity Fund, Growth Equity
Fund, Large Company Growth Fund and Small Company Growth Fund in the Statement
of Additional Information relating to Diversified Bond Fund, Conservative
Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund, Diversified Equity
Fund, Growth Equity Fund, Large Company Growth Fund and Small Company Growth
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 Peregrine, including
their business connections which are of a substantial nature. The address of
each company listed, unless otherwise noted, is LaSalle Plaza, 800 LaSalle
Avenue, Suite 1850, Minneapolis, Minnesota 55402-2018.

James R. Campbell, Director. Mr. Campbell is director of Norwest Bank
Minnesota, National Association. His address is Norwest Bank Minnesota,
National Association, Sixth and Marquette Avenue, Minneapolis, Minnesota
55479-0116

16
<PAGE>

Robert B. Mersky, Director. Mr. Mersky is Director of Peregrine Capital
Management.

Patricia D. Burns, Senior Vice President. Ms. Burns is Senior Vice
President of Peregrine Capital Management.

Tasso H. Coin, Senior Vice President. Mr. Coin is Senior Vice President of
Peregrine Capital Management.

John S. Dale, Senior Vice President. Mr. Dale is Senior Vice President of
Peregrine Capital Management.

Julie M. Gerend, Senior Vice President. Ms. Gerend is Senior Vice
President of Peregrine Capital Management. Prior to September, 1995, Ms.
Gerend was Manager, Account Executive at Fidelity Institutional Retirement
Services, Co.

William D. Diese, Senior Vice President. Mr. Diese is Senior Vice
President of Peregrine Capital Management.

Daniel J. Hagen, Vice President. Mr. Hagen is Vice President of Peregrine
Capital Management. Prior to May, 1996, Mr. Hagen was Managing Director of
Piper Jaffray, Inc.

Ronald G. Hoffman, Senior Vice President and Secretary. Mr. Hoffman is
Senior Vice President and Secretary of Peregrine Capital Management.

Frank T. Matthews, Vice President. Mr. Matthews is Vice President of
Peregrine Capital Management.

Jeannine McCormick, Senior Vice President. Ms. McCormick is Senior Vice
President of Peregrine Capital Management.

Barbara K. McFadden, Senior Vice President. Ms. McFadden is Senior Vice
President of Peregrine Capital Management.

Robert B. Mersky, Chairman, President and Chief Executive Officer. Mr.
Mersky is Chairman, President and Chief Executive Officer of Peregrine
Capital Management.

Gary E. Nussbaum, Senior Vice President. Mr. Nussbaum is Senior Vice
President of Peregrine Capital Management.

James P. Ross, Vice President. Mr. Ross is Vice President of Peregrine
Capital Management. Prior to November, 1996, Mr. Ross was Vice President
of Norwest Bank Minnesota, National Association.

17
<PAGE>

Jonathan L. Scharlau, Assistant Vice President. Mr. Scharlau is Assistant
Vice President of Peregrine Capital Management.

Jay H. Strohmaier, Senior Vice President. Mr. Strohmaier is Senior Vice
President of Peregrine Capital Management. Prior to September, 1996, Mr.
Strohmaier was Senior Vice President/Managed Accounts for Voyageur Asset
Management.

Paul E. von Kuster, Senior Vice President. Mr. von Kuster is Senior Vice
President of Peregrine Capital Management.

Janelle M. Walter, Assistant Vice President. Ms. Walter is Assistant Vice
President of Peregrine Capital Management.

Paul R. Wurm, Senior Vice President. Mr. Wurm is Senior Vice President of
Peregrine Capital Management.

J. Daniel Vandermark, Vice President. Mr. Vandermark is Vice President of
Peregrine Capital Management. His address is Norwest Corporation, Sixth
and Marquette Avenue, Minneapolis, Minnesota 55479-1013

GALLIARD CAPITAL MANAGEMENT, INC.

The description of Galliard Capital Management, Inc. ("Galliard") under the
caption "Management - SubAdviser" in the Prospectus and "Management- Adviser -
SubAdviser - Stable Income Fund, Diversified Bond Fund, Conservative Balanced
Fund, Moderate Balanced Fund and Growth Balanced Fund" in the Statement of
Additional Information relating to the Stable Income Fund, Diversified Bond
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 Galliard, including
their business connections which are of a substantial nature. The address of
each company listed, unless otherwise noted, is LaSalle Plaza, Suite 2060, 800
LaSalle Avenue, Minneapolis, Minnesota 55479-2052.

Peter Jay Kiedrowski, Chairman. Mr. Kiedrowski is Chairman of Galliard
Capital Management, Inc. He is also President and Chief Executive Officer
of Norwest Investment Management; Chairman of Crestone Capital Management
and Executive Vice President of Norwest Bank Minnesota, N.A.

Richard Merriam, Principal. Mr. Merriam is Principal of Galliard Capital
Management, Inc. He is also Chief Investment Officer of Insight Investment
Management.

John Caswell, Principal. Mr. Caswell is Principal of Galliard Capital
Management, Inc. His is also Chief Investment Officer of Norwest Bank
Minnesota, N.A.

18
<PAGE>

Karl Tourville, Principal. Mr. Tourville is Principal of Galliard Capital
Management, Inc. His is also Vice President/Head of Fixed Income of
Norwest Bank Minnesota, N.A.

Laura Gideon, Senior Vice President of Marketing. Ms. Gideon is Senior
Vice President of Marketing for Galliard Capital Management, Inc. She is
also Vice President of Marketing for American Express.

Leela Scattum, Vice President of Operations. Ms. Scattum is Vice President
of Operations for Galliard Capital Management, Inc. She is also Fund
Accountant for Norwest Bank Minnesota, N.A.

UNITED CAPITAL MANAGEMENT

The description of United Capital Management ("UCM") under the caption
"Management - SubAdviser" in the Prospectus and "Management- Adviser -
SubAdviser - Diversified Bond Fund, Total return Bond Fund, Conservative
Balanced Fund, Moderate Balanced Fund, Growth Balanced Fund and Contrarian Stock
Fund" in the Statement of Additional Information relating to the, Diversified
Bond Fund, Total Return Bond Fund, Conservative Balanced Fund, Moderate Balanced
Fund, Growth Balanced Fund and Contrarian 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 UCM, including their
business connections which are of a substantial nature. The address of each
company listed, unless otherwise noted, is 1700 Lincoln Street, Suite 3301,
Denver, Colorado 80274-8677

W. Lon Schreur, President. Mr. Schreur is President of United Capital
Management. He is also Senior Vice President of Norwest Bank Colorado,
N.A. and an Officer of Norwest Bank Minnesota, N.A.

John T. Groton, Vice President. Mr. Groton is Vice President of United
Capital Management. He is also Vice President of Norwest Bank Colorado,
N.A.

David B. Kinney, Vice President. Mr. Kinney is Vice President of United
Capital Management. He is also Vice President of Norwest Bank Colorado,
N.A. and an Officer of Norwest Bank Minnesota, N.A.

James C. Peery, Senior Vice President. Mr. Peery is Senior Vice President
of United Capital Management. He is also Vice President of Norwest Bank
Colorado, N.A.

Leona F. Bennett, Vice President. Ms. Bennett is Vice President of United
Capital Management. She is also Vice President of Norwest Bank Colorado,
N.A.

Denise B. Johnson, Vice President. Mr. Johnson is Vice President of United
Capital Management. He is also Vice President of Norwest Bank Colorado,
N.A.

19
<PAGE>

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter to Core Trust (Delaware), The CRM Funds, The Cutler Trust,
Forum Funds, The Highland Family of Funds, Monarch Funds, Norwest Funds,
Norwest Select Funds, Sound Shore Fund, 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.

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, at Forum Financial Corp., Two Portland Square,
Portland, Maine 04101 and Forum Administrative Services, Limited Liability
Company, 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 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.

20
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Portland, and State of Maine on the 29th
day of May, 1997.

NORWEST 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 29th
day of May, 1997.

SIGNATURES TITLE
---------- -----

(a) Principal Executive Officer

/s/ John Y. Keffer Chairman and President
------------------------------
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Robert B. Campbell Treasurer
-------------------------
Robert B. Campbell

/s/ John Y. Keffer Chairman
-------------------------------
John Y. Keffer

Robert C. Brown* Trustee
Donald H. Burkhardt* Trustee
James C. Harris* Trustee
Richard M. Leach* Trustee
Donald C. Willeke* Trustee
Timothy J. Penny* Trustee
John C. McCune Trustee

*By: /s/ John Y. Keffer
----------------------------
John Y. Keffer
Attorney in Fact

<PAGE>

SIGNATURES

On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Norwest Funds to be signed in
the City of Portland, State of Maine on the 29th day of May, 1997.

CORE TRUST (DELAWARE)

By: /s/ John Y. Keffer
----------------------
John Y. Keffer
President

This amendment to the Registration Statement of Norwest Advantage Funds has been
signed below by the following persons in the capacities indicated on the 29th
day of May, 1997.

SIGNATURES TITLE

(a) Principal Executive Officer

/s/ John Y. Keffer Chairman and President
--------------------
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Richard C. Butt Treasurer, Principal Financial
-------------------- and Accounting Officer
Richard C. Butt

/s/ John Y. Keffer Chairman
--------------------
John Y. Keffer

J. Michael Parish Trustee
James C. Cheng Trustee
Costas Azariadis Trustee

By: /s/ John Y. Keffer
--------------------
John Y. Keffer
Attorney in Fact

-2-
<PAGE>

SIGNATURES

On behalf of Schroder Capital Funds, being duly authorized, I have duly caused
this amendment to the Registration Statement of Norwest Funds to be signed in
the City of New York, State of New York on the 30th day of May, 1997.

SCHRODER CAPITAL FUNDS

By: /S/ Catherine A. Mazza
---------------------------
Catherine A. Mazza

This amendment to the Registration Statement of Norwest Funds has been signed
below by the following persons in the capacities indicated on the 30th day of
May, 1997.

SIGNATURES TITLE
---------- -----

(a) Principal Executive Officer

MARK J. SMITH

*By: /s/Thomas G. Sheehan President and Trustee
--------------------------
Thomas G. Sheehan
Attorney-in-Fact

(b) Principal Financial and
Accounting Officer

ROBERT JACKOWITZ Treasurer

By: /s/ Thomas G. Sheehan
---------------------------
Thomas G. Sheehan
Attorney-in-Fact

PETER E. GUERNSEY Trustee
RALPH E. HANSMANN Trustee
JOHN I. HOWELL Trustee
HERMANN C. SCHWAB Trustee

By: /s/ Thomas G. Sheehan
---------------------------
Thomas G. Sheehan
Attorney-in-Fact

-3-

<PAGE>

Index to Exhibits

Sequential
Exhibit Page Number
- ------- -----------

11(a) Consent of KPMG Peat Marwick LLP

11(b) Consent of Coopers & Lybrand L.L.P.

<PAGE>

EXHIBIT 11(a)

CONSENT OF INDEPENDENT AUDITORS

The Board of Trustees
Norwest Funds:

We consent to the use of our reports dated July 19, 1996 incorporated by
reference herein and to the references to our Firm under the headings "Financial
Highlights" in the Prospectuses and "Counsel and Auditors" in the Statements of
Additional Information.

/s/KPMG PEAT MARWICK L.L.P.//

KPMG PEAT MARWICK L.L.P.

Boston, Massachusetts
June 2, 1997

<PAGE>

EXHIBIT 11(b)

[LOGO] COOPERS & LYBRAND L.L.P.

a professional services firm

CONSENT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Norwest Funds:

We hereby consent to the incorporation by reference of our reports dated July
15, 1996 on our audits of the financial statements and financial highlights of
Core Trust (Delaware), which reports are included in the Funds' Annual Reports
for the year ended May 31, 1996, which are incorporated by reference in the
Statements of Additional Information with respect to Post-Effective Amendment
No. 42 to the Registration Statement on Form N-1A (File No. 33-9645).

/s/ COOPERS & LYBRAND L.L.P.//

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
June 2, 1997

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] A NORWEST ADVANTAGE FUNDS-SMALL COMPANY STOCK

Note: All performance is for the period ended: 11/30/96
----------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at the
end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.34
ERV 1010.60 978.4 1005.4 1024.3 1023.6 1149.6 1336.7 N/A 1623.5
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
T(%) 1.16 (23.05) 2.16 4.93 2.36 4.76 5.96 N/A 6.27
- --------------------------------------------------------------------------------
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.34
ERV 1050.00 1016.5 1044.2 1064.2 1063.3 1194.40 1138.9 N/A 1623.4
T(%) 5.47 22.06 18.95 13.22 6.33 6.10 6.78 N/A 6.83
- --------------------------------------------------------------------------------

1
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment over the
specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1010.60 978.40 1005.4 1024.3 1023.60 1149.60 1336.7 N/A 1623.5
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
C(%) 1.06 .54 2.43 2.36 14.96 33.67 N/A 62.35
(2.16)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.34
ERV 1050.0 1016.5 1044.2 1064.2 1063.3 1194.40 1138.90 N/A 1623.4
C(%) 5.00 1.65 4.42 6.42 6.33 19.44 38.90 N/A 62.34
- --------------------------------------------------------------------------------

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends

2
<PAGE>
d = the maximum offering price per share on the last day of the
period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
129,743.5 11,419.84 2,767,973.100 10.13 4.95
- --------------------------------------------------------------------------------

3
<PAGE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
39.6% 8.20
- --------------------------------------------------------------------------------

4
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0425-1 VALUGROWTH STOCK A

Note: All performance is for the period ended: 11/30/97
------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at the
end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on _______)
(i.e., lower of purchase amount or redemption amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.90
ERV 1172.50 1018.1 1089.4 1072.2 1165.3 1449.2 1818.8 N/A 3032.30
S 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5
R - - - - - - - - -
T(%) 18.96 23.95 40.86 14.95 16.53 13.16 12.70 N/A 12.69
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 8.90
ERV 1227.8 10660 1140.8 1122.7 1220.2 1517.5 1904.6 N/A 3032.9
0 0 0
T(%) 2509 112.29 25.80 25.80 22.02 14.91 13.75 N/A 13.27
68.62
- --------------------------------------------------------------------------------

5
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.9
ERV 1172.5 1018.1 1089.4 1072.2 1165.30 1449.2 1818.8 N/A 3032.30
S 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5
R - - - - - - - - -
C(%) 17.25 1.81 8.94 7.22 16.53 44.92 81.88 N/A 203.23
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.9
ERV 1227.8 1066.0 1140.80 1122.70 1220.20 1517.5 1904.6 N/A 3032.90
C(%) 22.78 6.60 14.08 12.27 22.02 51.75 90.46 N/A 203.29
- --------------------------------------------------------------------------------

6
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS) 0430-A INCOME BOND A]

Note: All performance is for the period ended: 11/30/96
---------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 992.2 78.9 1017.9 1029.3 100638 1087.2 1313.6 N/A 2095.3
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
- - - - - - - - - - -
T(%) (.85) (22.54) 7.37 5.94 .68 2.84 5.59 N/A 7.68
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 1030.9 1017.1 1057.2 1069.4 1046.0 1129.6 1364.9 N/A 2095.20
T(%) 3.38 22.08 4.69 14.24 4.60 4.15 6.42 N/A 8.11
- --------------------------------------------------------------------------------

7
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 992.20 978.90 1017.9 1029.3 1006.80 1087.2 1313.6 N/A 2095.3
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
C(%) (.78) (2.11) 1.79 2.93 .68 8.72 31.36 N/A 109.53
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 1030.9 1017.1 1057.2 1069.4 1046.0 1129.60 1364.9 N/A 2095.20
C(%) 3.09 1.71 5.72 6.94 4.60 12.96 36.49 N/A 109.52
- --------------------------------------------------------------------------------

8
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
29,430.58 3310.18 563,732.4 9.59 5.68
- --------------------------------------------------------------------------------

9
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] GROWTH EQUITY CLASS A

Note: All performance is for the period ended: 11/30/96
---------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1131.10 10033.30 1045.30 995.70 1131.30 1481.20 1962.0 -
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R 04 - - - - - - - -
T(%) 14.38 4.05 19.40 (.85) 13.13 13.99 14.43 - 15.31

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 10 1000
00
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1184.40 1050.60 1094.60 1042.60 1184.80 1497.00 1940.20 - 3088.60
(%) 20.28 78379 43.13 8.64 18.48 15.76 15.48 - 16.01
- --------------------------------------------------------------------------------

10
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1131.10 1003.30 1045.30 995.70 1131.60 1481.20 1962.0 - 2948.3
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R OK - - - - - - - -
C(%) 13.11 .33 4.53 (.43) 13.13 18.12 96.20 - 194.83
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 100 1000
0
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1184.40 1050.60 1094.60 1042.60 1184.80 1497.00 1940.20 - 3088.10
C(%) 18.44 5.06 9.46 4.26 18.48 49.70 94.02 - 208.81
- --------------------------------------------------------------------------------

11
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL CAP OPPORTUNITIES CLASS A

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1157.10 986.60 1035.2 953.90 1209.90 1882.3 - - 2015.20
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R OK - - - - - - - -
T(%) 17.26 (14.95) 14.85 (9.00) 20.99 23.47 - - 23.42
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1211.70 1033.10 1084.00 998.90 1266.90 1972.10 - - 2112.10
T(%) 23.30 46.70 37.74 (.22) 26.69 25.38 - - 25.14
- --------------------------------------------------------------------------------

12
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1157.1 986.60 1035.20 953.90 1209.90 1882.30 - - 2015.20
0
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R - - - - - - - - -
C(%) 15.71 (1.34) 3.52 20.99 88.23 - - 101.52
(4.16)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1211.7 1033.10 1084.0 998.90 1266.90 1972.10 - - 2112.1
0 0 0
C(%) 21.17 3.31 8.40 26.69 97.21 - - 111.21
(.11)
- --------------------------------------------------------------------------------

13
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)]DIVERSIFIED EQUITY CLASS A

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1162.80 1015.00 1076.50 1041.20 1172.60 1587.3 2012.2 - 3174.0
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 450 4.50
R OK - - - - - - - -
T(%) 17.88 1958 34.28 8.42 17.26 16365 15.01 - 15.70
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1217.50 1062.80 1127.20 1090.30 1227.80 1707.00 2108.50 - 3323.30
T(%) 23.95 104.94 60.81 18.71 22.78 18.45 16.07 - 16.37
- --------------------------------------------------------------------------------

14
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1162.80 1015.00 1076.50 1041.20 1172.60 1587.3 2012.2 - 3174.0
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R OK - - - - - - - -
C(%) 16.28 1.50 7.65 4.12 17.26 58.73 101.22 - 217.40
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1217.50 1062.80 1127.20 1090.30 1227.80 1707.00 2108.50 - 3323.30
C(%) 21.75 6.28 12.72 9.03 22.78 70.70 110.85 - 232.33
- --------------------------------------------------------------------------------

15
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INTERMEDIATE GOVERNMENT INCOME CLASS A

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1003.8 977.90 1011.20 1021.00 1014.20 1076.9 1270.8 1894.8 N/A
3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R OK - - - - - - - -
.T% .42 (23.49) 4.56 4.24 1.42 2.50 4.91 6.60 N/A
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1043.00 1016.00 1050.60 1060.80 1053.80 1119.10 1321.10 1970.50 N/A
T(%) 4370 20.61 21.64 12.41 5.38 3.82 5.72 7.01 N/A
- --------------------------------------------------------------------------------

16
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------

P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1003.8 977.90 101120 1021.00 1014.20 1076.9 1270.8 1894.8
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R OK - - - - - - - -
C(%) .38 (2.21) 1.12 2.10 1.42 7.69 27.08 89.48 N/A
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1043.00 1016.50 1050.60 4060.80 1053.80 1119.10 1321.10 1970.50 N/A
C(%) 4.30 1.60 5.06 6.08 5.38 11.91 32.11 97.05 N/A
- --------------------------------------------------------------------------------

17
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
76,420.16 8,125.41 1,308,799.91 11.61 5.46
- --------------------------------------------------------------------------------

18
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INCOME EQUITY CLASS A

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.7
ERV 1170.00 1022.10 4087.40 1069.50 1198.40 1706.9 2136.9 - 3055.4
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R - - - - - - - - -
T(%) 18368 30.06 39.80 14.39 19.84 19.51 16.39 - 15.61
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.7
ERV 1225.10 1070.30 1138.60 1119.90 1254.70 1787.80 2238.30 - 3187.20
T(%) 24.79 122.55 67.36 25.19 25.47 21.35 17.46 - 16.31
- --------------------------------------------------------------------------------

19
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.7
ERV 1170.00 1022.10 4087.40 1069.50 1198.40 1706.9 2135.90 - 3055.4
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R - - - - - - - - -
C(%) 17.00 2.21 8.74 6.95 19.84 70.69 113.59 - 205.54
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.7
ERV 1225.10 1070.30 1138.60 1119.90 1254.70 1787.80 2238.30 - 3187.20
C(%) 22.51 7.03 13.86 11.99 25.47 78.78 123.83 - 218.72
- --------------------------------------------------------------------------------

20
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] COLORADO TAX- FREE CLASS A

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1009.90 975.40 1003.10 1025.30 1022.20 1138.60 - - 1184.2
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 - 3.75
R - - - - - - - - -
T(%) 1.08 (25.86) 1.25 5.11 2.22 4.42 - - 4.95
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

YTD 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1049.20 1013.40 1041.90 1065.20 1062.30 1183.00 - - 1230.40
T(%) 5.38 16.94 17.68 13.35 6.23 5.76 - - 6.10
- --------------------------------------------------------------------------------

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1009.90 975.40 1003.10 1025.30 1022.20 1138.60 - - 1184.2
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
C(%) .99 (2.46) 0.31 2.53 2.22 13.86 - - 18.42
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1049.20 1013.40 1041.90 1065.20 1062.30 1183.00 - - 1230.40
C(%) 4.92 1.43 4.19 6.52 6.23 18.30 - - 23.04
- --------------------------------------------------------------------------------

22
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
138,375.36 9,098.27 2,716,296.40 10.65 5.42
- --------------------------------------------------------------------------------

23
<PAGE>
EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS) CONTRARIAN STOCK CLASS A

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 998.92 999.99 999.28 992.63 998.34 - - - 1140.00
S 4.5 4.5 4.5 4.5 4.50 - - - 4.50
R - - - - - - - - -
T(%) (1.18) (0.08) (2.87) (14.20) (1.66) - - - 4.59
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1035.80 1047.00 1039.50 996.99 1029.40 - - - 1193.70
T(%) 3.91 71.82 16.63 (5.88) 2.94 - - - 6.26
- --------------------------------------------------------------------------------

24
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 998.92 999.99 999.8 992.63 992.63 - - - 1140.90
S 4.50 4.50 4.50 4.50 4.50 - - - 4.50
R - - - - - - - - -
C(%) (1.08) (0.01) (0.72) (7.37) (1.66) - - - 14.00
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1035.80 1047.00 1039.50 996.99 1029.40 1193.70
C(%) 3.58 4.70 3.95 (3.01) 2.94 19.39
- --------------------------------------------------------------------------------

25
<PAGE>

26
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[NORWEST ADVANTAGE FUNDS INTERNATIONAL INVESTMENT] CLASS A

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1048.10 991.40 989.40 971.40 1082.70 -- -- -- 188.4
S 4.5 4.5 4.5 4.5 4.50 4.50 4.50 4.50 4.50
R OK -- -- -- -- -- -- -- --
T(%) 5.25 (9.86) (4.19) (5.16) 8.26 -- -- -- 10.89
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1092.40 1038.10 1036.00 1017.20 1133.50 -- -- -- 1244.10
T(%) 5.25 55.32 15.05 3.43 13.35 -- -- -- 13.99
- --------------------------------------------------------------------------------

27
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1048.10 991.40 989.40 971.40 1082.70 -- -- -- 1188.40
S 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
R OK -- -- -- -- -- -- -- --
C(%) 4.81 (.86) (-1.06) (2.86) 8.27 -- -- -- 18.84
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1097.40 1038.10 1036.00 1017.20 1133.50 -- -- -- 1244.10
C(%) 9.74 3.81 3.60 1.72 13.35 -- -- -- 24.41
- --------------------------------------------------------------------------------

28
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[NORWEST ADVANTAGE FUNDS-SMALL COMPANY STOCK CLASS A

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1163.70 999.95 1058.20 994.96 1166.40 - - - 1431.6
S 4.5 4.5 4.5 4.5 4.50 - - - 4.50
R - - - - - - - - -
T(%) 17.98 (0.66) 25.41 (9.84) 16.64 - - - 13.37
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR)11/12 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1021.85 1046.50 1108.10 999.43 1221.10 - - - 1502.40
T(%) 2.39 70.86 50.27 (1.13) 22.11 - - - 14.97
- --------------------------------------------------------------------------------

29
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR)11/12 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1163.70 999.95 1058.20 994.96 1166.40 - - - 1431.6
S 4.50 4.50 4.50 4.50 4.50 - - - 4.50
R - - - - - - - - -
C(%) 16.37 (0.05) 5.82 (5.04) 16.64 - - - 43.16
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR)11/12 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1021.85 1046.50 1108.10 999.43 1221.10 - - - 1502.40
C(%) 21.85 4.65 10.81 (0.57) 22.11 - - - 50.24
- --------------------------------------------------------------------------------

30
<PAGE>

31
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[NORWEST ADVANTAGE FUNDS-TOTAL RETURN CLASS A

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1002.10 997.99 1010.20 1020.90 1013.20 - - - 1,134.6
S 3.75 3.75 3.75 3.75 3.75 - - - 3.75
R - - - - - - - -
T(%) 0.23 (23.72) 4.15 4.22 1.32 - - - 4.36
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1041.10 1015.80 1044.20 1060.70 1052.50 - - - 1176.70
T(%) 4.49 20.26 21.00 12.39 5.25 - - - 5.73
- --------------------------------------------------------------------------------

32
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1002.10 997.77 1010.20 1020.90 1013.20 - - - 1134.6
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
C(%) 0.21 (2.23) 1.02 2.09 1.32 - - - 13.46
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1041.10 1015.80 1049.20 1060.70 1052.50 - - - 1176.70
C(%) 4.11 1.58 4.92 6.07 5.25 - - - 17.67
- --------------------------------------------------------------------------------

33
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[NORWEST ADVANTAGE FUNDS-04272 MN TX FREE A]

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1003.1 979.5 1006.9 1024.70 1014.6 1128.7 1341.0 N/A 1,751.9
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R - - - - - - - - -
T(%) .34 < 22.03 > 2.78 5.00 1.46 4.10 6.04 N/A 6.51
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1042.20 1017.60 1045.8 1064.6 1054.6 1140.6 1373.3 N/A 1820.8
T(%) 4.61 14.24 10.25 13.23 5.46 5.45 6.86 N/A 6.97
- --------------------------------------------------------------------------------

34
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1003.1 979.50 1006.9 1024.7 1014.60 1128.70 1341.10 N/A 1751.9
S 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
R
C(%) .31 < 2.05 > .69 2.47 1.46 12.87 34.10 N/A 75.19
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1042.2 1017.60 1045.80 1064.60 1054.60 1140.60 1373.3 N/A 1,820.80
C(%) 4.22 1.76 4.58 6.46 5.46 14.06 37.33 N/A 82.08
- --------------------------------------------------------------------------------

35
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
117,185.75 12689.16 2,425000.500 10.69 4.73
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
44.73 8.55
- --------------------------------------------------------------------------------

36
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[NORWEST ADVANTAGE FUNDS-STABLE INCOME CLASS A]

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1035.80 990.50 1005.40 1019.90 1042.80 - - - 1143.00
S 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
R - - - - - - - - -
T(%) 3.91 (10.85) 2.18 4.03 4.28 - - - -
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1051.16 1005.60 1020.70 1035.50 1058.30 - - - 1143.00
T(%) 5.64 6.75 8.47 7.16 5.83 - - - 6.70
- --------------------------------------------------------------------------------

37
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1035.8 990.50 1005.40 1019.90 1042.80 - - - 1143.00
S 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
R - - - - - - - - -
C(%) 3.58 (.95) .54 1.99 4.28 - - - 14.30
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 11/12 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1051.16 1005.60 1020.70 1035.50 1058.30 - - - 1143.00
C(%) 5.16 .56 2.07 3.55 5.83 - - - 14.30
- --------------------------------------------------------------------------------

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INCOME EQUITY CLASS B

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .58
ERV
S - - - - - - - - -
R 4.00 4.00 4.00 4.00 4.00 3.00 2.00 - 4.0
T(%) - - - - - - - - 19.75
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .58
ERV - 1069.7 1136.9 1116.0 - - - - 1079.5
T(%) - 121.08 66.35 24.33 - - - - 14.09
- --------------------------------------------------------------------------------

39
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .58
ERV - - - -
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.0 2.0 - 4.0
C(%) - - - -
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .58
ERV - 1069.7 1136.90 1116.0 - - - - 1079.5
C(%) - 6.97 13.69 11.60 - - - - 7.95
- --------------------------------------------------------------------------------

40
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] COLORADO TAX FREE CLASS B

Note: All performance is for the period ended: 11/30/96
---------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1033.3
S -
R 3.00 3.00 3.00 3.00 3.00 2.0 0 0 0
T(%) 3.33 - - 4.72
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1042.00 1012.70 1038.90 1061.20 1053.30 1156.60 - - 1186.20
T(%) 1605 16.35 12.51 5.33 4397 - - 5.26
- --------------------------------------------------------------------------------

41
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1033.3
S -
R 3.0 3.0 3.0 3.0 3.0 2.0 - - -
C(%)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1042.00 1012.70 1038.90 1061.20 1053.30 156.60 - - 1186.20
C(%) 4.20 1.27 3.89 6.12 5.33 15.66 - - 18.62
- --------------------------------------------------------------------------------

42
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

- --------------------------------------------------------------------------------
a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
4.88
- --------------------------------------------------------------------------------

43
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] TOTAL RETURN CLASS B

Note: All performance is for the period ended: 11/30/96
--------------
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1025.7
S
R 3.00 3.00 3.00 3.00 3.00 2.00 - - -
T(%) 2.57 4.41
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1036.10 1016.20 1048.40 1058.90 1045.70 - - - 1154.20
T(%) 20.81 20.60 12.02 4.75 - - - 5.04
- --------------------------------------------------------------------------------

44
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1025.7
S
R
C(%) 2.57
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1036.10 1016.20 1048.40 1058.90 1045.70 - - - 1154.20
C(%) 3.61 1.62 4.84 5.89 4.57 - - - 15.42
- --------------------------------------------------------------------------------

45
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

- --------------------------------------------------------------------------------
a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
4.62
- --------------------------------------------------------------------------------

46
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] CONTRARIAN STOCK CLASS B

Note: All performance is for the period ended: 11/30/96
---------------
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 991.10
S - - - - - - - - -
R 4.00 4.00 4.00 4.00 4.00 3.0 2.0 - 3.00
T(%) (0.89) - - - 4.56
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1029.30 1046.60 1037.90 960.60 1021.11 - - - 1168.90
T(%) 3.20 70.97 15.89 6.52) 2.11 - - - 5.49
- --------------------------------------------------------------------------------

47
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 991.10
S - - - - - - - - -
R 4.00
C(%) (0.89)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1029.30 1046.60 1037.90 966.60 1021.10 - - - 1168.90
C(%) 2.93 4.66 3.79 (3.34) 2.11 - - - 16.89
- --------------------------------------------------------------------------------

48
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

- --------------------------------------------------------------------------------
a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

49
<PAGE>
EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL COMPANY STOCK CLASS B

Note: All performance is for the period ended: 113096
--------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1,180.9 1439.2
S -
R 4.00 4.00 4.00 4.00 4.00 3.00 2.0 - 3.00
T(%) 18.09 - - 13.28
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1209.40 1045.80 1105.80 989.90 1210.90 - - - 1468.80
T(%) 23.05 69.50 49.04 (2.00) 21.09 - - - 14.08
- --------------------------------------------------------------------------------

50
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1,180.9 1439.2
S - -
3.00 3.00 4.00 4.00 4.00 4.00 3.00 2.00 - 3.00
C(%) 18.90 43.92
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 292
ERV 1209.40 1045.80 1105.80 989.90 1210.90 - - - 1468.80
C(%) 20.94 4.58 10.58 (1.01) 21.09 - - - 46.88
- --------------------------------------------------------------------------------

51
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0425 VALUGROWTH STOCK B

Note: All performance is for the period ended: 11/30/96
---------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1180.03
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.00 2.00 - 2.00
T(%) 18.03 N/A N/A 12.55
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1219.0 1065.50 1138.60 1118.20 1210.3 1485.40 N/A N/A 1512.90
T(%) 110.99 67.34 24.81 21.08 14.01 N/A N/A 13.23
- --------------------------------------------------------------------------------

52
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1180.3
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.00 2.0 - 2.0
C(%) 18.03
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1219.0 1065.50 1138.6 1118.20 1210.30 1485.4 N/A N/A 1512.90
C(%) 21.90 6.55 13.86 11.82 21.03 48.54 N/A N/A 51.29
- --------------------------------------------------------------------------------

53
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0427 B TX FREE B

Note: All performance is for the period ended: 11/30/96
--------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.31
ERV 102.60
S - - - - - - - - -
R 3.00 3.0 3.0 3.0 3.0 2.00 - - 1.0
T(%) 2.66 N/A N/A 4.35
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.31
ERV 1034.0 1016.0 1042.9 1059.7 1046.6 1145.2 N/A N/A 1172.3
T(%) 20.61 18.14 12.18 4.66 4.62 N/A N/A 4.89
- --------------------------------------------------------------------------------

54
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.31
ERV 1026.60
S - - - - - - - - -
R 3.0 3.0 3.0 3.0 3.0 2.0 - - 1.0
C(%) 2.66
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.31
ERV 1034.0 1016.0 1042.9 1059.7 1046.6 1145.2 N/A N/A 1172.3
C(%) 3.40 1.60 4.29 5.97 4.66 14.52 N/A N/A 17.23
- --------------------------------------------------------------------------------

55
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

- --------------------------------------------------------------------------------
a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
46,797.03 11,413.67 968,513.87 10.68 4.14
- --------------------------------------------------------------------------------

56
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0430 B INCOME BOND

Note: All performance is for the period ended: 11/30/96
--------------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV
S - - - - - - - - -
R 3.0 3.0 3.0 3.0 3.0 2.0 - - 1.0
T(%) 1.13 N/A N/A 2.92
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1024.1 1016.5 1055.6 1064.7 1037.3 1104.5 N/A N/ 1120.5
T(%) 21.21 23.97 13.24 3.73 3.37 N/A N/A 3.47
- --------------------------------------------------------------------------------

57
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1017.3
S
R 3.0 3.0 3.0 3.0 3.0 2.0 - - 1.00
C(%) 1.73
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1024. 1016.5 1055.6 1064.7 1037.3 1104.5 N/A N/A 1,120.5
C(%) 2.41 1.65 5.56 6.47 3.73 10.45 N/A N/A 12.05
- --------------------------------------------------------------------------------

58
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

- --------------------------------------------------------------------------------
a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
19,135.39 4300.34 366,534.42 9.57 5.13
- --------------------------------------------------------------------------------

59
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INTERNATIONAL INVESTMENT CLASS B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1094.50 - - - 1229.50
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.0 2.0 - 4.0
T(%) 9.45
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
N(YR) 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1089.50 1037.90 1034.20 1013.20 1124.50 - - - 1229.50
T(%) 55.03 14.26 2.63 12.45 - - - 13.18
- --------------------------------------------------------------------------------

60
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1094.50 - - - 1229.50
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 6.0 2.0 - 4.00
C(%) 3.79 3.42 1.32 9.45 - - -
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
N(YR) 1/12 1/4 1/2 1 3 5 10 1.67
ERV 1089.50 1037.60 1034.20 1013.20 1124.50 - - - 1229.50
C(%) 8.95 3.79 3.42 1.32 12.45 - - - 22.95
- --------------------------------------------------------------------------------

61
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] GROWTH EQUITY CLASS B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}1 - n

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - - - - - - - - 1071.70
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.0 2.0 - 4.00
T(%) - - - - - 7.34
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1050.10 1092.60 1038.90 - - - - 1071.70
T(%) - 77.76 42.11 7.86 - - - - 12.76
- --------------------------------------------------------------------------------

62
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - - - - -
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.0 2.0 - 4.0
C(%)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1850.10 1092.60 1038.90 - - - - 1071.70
C(%) - 5.01 9.26 3.89 - - - - 7.17
- --------------------------------------------------------------------------------

63
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL CAP OPPORTUNITIES CLASS B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/1 1/4 1/2 1 3 5 10 .06
ERV - 1021.95 - - - - - - 1021.80
S - - - - - - - - -
R 4.00 4.00 4.00 4.00 4.00 3.00 2.0 - 4.00
T(%) - - - - - - - 21.54
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .06
ERV - 1021.80 - - - - - - 1021.80
T(%) - 28.95 - - - - - - 43.08
- --------------------------------------------------------------------------------

64
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n - 1
Formula: C = {{[(T + 1) - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .06
ERV - 1021.80 - - - - - - 1021.80
S - - - - - - - - -
R 4.0 4.0 4.0 4.0 4.0 3.0 2.0 - 4.0
C(%) - 2.18 - - - - - - 2.18
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .06
ERV - 1021.80 - - - - - - 1021.80
C(%) - 2.18 - - - - - - 2.18
- --------------------------------------------------------------------------------

65
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] STABLE INCOME CLASS B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - - - -
S - - - - - - - - -
R 1.50 1.50 1.50 1.50 1.50 .75 - - 1.5
T(%) - - - - 3.27
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1005.00 1018.90 1031.30 - - - - 1032.60
T(%) - 6.01 7.72 6.31 - - - - 6.10
- --------------------------------------------------------------------------------

66
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - - - - -
S - - - - - - - - -
R 1.5 1.5 1.5 1.5 1.5 .75 - - 1.5
C(%) - - - - -
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1005.00 1018.90 1031.30 - - - - 1032.60
C(%) - .50 1.89 3.13 - - - - 3.26
- --------------------------------------------------------------------------------

67
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
3004.41 662.98 56,330.20 10.27 4.91
- --------------------------------------------------------------------------------

68
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INTERMEDIATE GOVERNMENT INCOME CLASS B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - - - -
S - - - - - - - - -
R 3.00 3.00 3.00 3.00 3.00 2.00 - - 3.00
- - - - 3.19
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1014.60 1047.90 1056.20 - - - - 1050.90
T(%) - 18.59 20.38 11.45 - - - - 9.64
- --------------------------------------------------------------------------------

69
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV - - - - -
S - - - - - - - - -
R 3.00 3.00 3.00 3.00 3.00 2.00 0 0 3.00
C(%) - - - - -
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------

P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .57
ERV - 1014.60 1047.90 1056.20 - - - - 1050.90
C(%) - 1.46 4.79 5.62 - - - - 5.09
- --------------------------------------------------------------------------------

70
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
53,324.71 11,872.47 913,265.31 11.16 4.93
- --------------------------------------------------------------------------------

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0431-B TAX FREE INCOME B

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1035.3 N/A N/A
S - - - - - - - - -
R 3.00 3.00 3.00 3.00 3.00 2.00 - - -
T(%) 3.53
- --------------------------------------------------------------------------------

71
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period

72
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0427-I MN TX FREE I

Note: All performance is for the period ended: 11/30/97
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1042.10 1017.60 1045.8 1064.6 1054.6 1171360 1393.5 N/A 1820.8
T(%) 4.60 22.86 19.45 13.23 5.46 5.42 6.86 N/A 6.97
- --------------------------------------------------------------------------------

73
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.89
ERV 1042.01 1017.60 1045.8 1064.6 1054.6 1171.60 1393.5 N/A 1820.8
C(%) 4.21 1.76 4.58 6.46 5.46 17.16 39.35 N/A 82.08
- --------------------------------------------------------------------------------

74
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
26,408.43 2856.66 544549.69 10.69 4.88
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
44.73 8.83
- --------------------------------------------------------------------------------

75
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)]COLORADO TAX FREE CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}1 - n

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1049.20 1013.40 1041.90 1065.20 1061.30 1057.60 - - 1230.40
T(%) 5.38 16.93 17.67 13.35 6.13 5.76 - - 6.10
- --------------------------------------------------------------------------------

76
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.5
ERV 1049.20 1013.40 1041.90 1065.20 1061.30 1057.60 - - 1230.40
C(%) 4.92 1.34 4.19 6.52 6.13 5.76 - - 23.04
- --------------------------------------------------------------------------------

77
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
130,332.18 8,582.68 2,558,138.73 10.25 5.64
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
4262 9.82
- --------------------------------------------------------------------------------

78
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] LARGE COMPANY GROWTH CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1267.40 1063.50 1153.10 1086.00 4558.3 1654.7 1882.2 3684.20
0 0 0
T(%) 29.50 106.55 76.00 17.79 22.83 18.26 13.46 13.92
- --------------------------------------------------------------------------------

79
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

- --------------------------------------------------------------------------------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT

- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- --------------------------------------------------------------------------------
n(YR) 1/12 1/4 1/2 1 3 5 10
- --------------------------------------------------------------------------------
ERV 1267.4 1063.50 1153.1 1086.0 1228.3 1654.7 1882.20 3684.20
0 0 0 0 0 0 0
C(%)
- --------------------------------------------------------------------------------

80
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------

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

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

81
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)]0431-I TAX FREE INCOME

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.34
ERV 1050 1015.5 1044.2 1064.2 1063.3 1193.3 1389.1 N/A 1624.1
T(%) 5.47 20.59 18.94 13.22 6.33 6.07 6.79 N/A 6.83
- --------------------------------------------------------------------------------

82
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.34
ERV 1050.0 1015.5 1044.2 1064.2 1063.3 1193.3 1389.1 N/A 1624.1
C(%) 5.00 1.55 4.42 6.42 6.33 19.33 38.91 N/A 62.41
- --------------------------------------------------------------------------------

83
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
1,293,138.12 114,129.79 27,584,177.8 10.13 5.12
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
.396 8.47
- --------------------------------------------------------------------------------

84
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL COMPANY GROWTH CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1172.50 1036.90 1054.10 999.700 1175.7 1661.1 2565.5 5899.5
0 0 0 0
T(%) 18.69 53.16 23.27 (0.60) 17.57 18.41 20.71 19.40
- --------------------------------------------------------------------------------

85
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1172.5 1036.90 1045.1 999.70 1175.7 1661.1 2565.50 5899.50
0 0 0 0
C(%) 17.25 3.69 5.41 (0.30) 17.57 66.11 156.55 489.95
- --------------------------------------------------------------------------------

86
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

87
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0430I INCOME BOND

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 1030.9 1171.0 1057.2 1069.4 1045.9 1129.5 1363.6 N/A 2093.0
T(%) 3.38 22.10 24.71 14.24 4.59 4.14 6.40 N/A 8.10
- --------------------------------------------------------------------------------

88
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.48
ERV 1030.9 1171.0 1057.2 1069.4 1045.9 1129.5 1363.6 N/A 2093
0
C(%) 3.09 1.71 5.72 6.94 4.59 12.95 36.36 N/A 109.30
- --------------------------------------------------------------------------------

89
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
1,517,457.57 170,656.68 29,066,987.52 9.58 5.87
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

90
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)]LIMITED TERM CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .2
ERV - 1014.40 - - - - - - 1053.7
0
T(%) - 18.34 - - - - - - 37.45
- --------------------------------------------------------------------------------

91
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 .2
ERV - 1014.40 - - - - - - 1053.70
C(%) - 1.44 - - - - - - 5.37
- --------------------------------------------------------------------------------

92
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

93
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL COMPANY STOCK 0437 CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1219.7 1046.8 1108.6 999.43 1221.2 - - - 1496.3
T(%) 24.19 73.13 51.04 (1.13) 22.12 - - - 14.81
- --------------------------------------------------------------------------------

94
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.92
ERV 1219.7 1046.80 1108.6 999.43 1221.2 - - - 1496.30
0 0 0
C(%) 21.97 4.68 10.86 (0.57) 22.12 - - - 49.63
- --------------------------------------------------------------------------------

95
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

96
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] CONTRAIAN STOCK CLASS I

Note: All performance is for the period ended: 11/30/96
--------
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- --------------------------------------------------------------------------------
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
T(%)
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1035.80 1047.00 1039.50 996.99 1029.4 - - - 1193.7
0 0
T(%) 3.91 71.82 16.63 (5.88) 2.94 - - - 6.26
- --------------------------------------------------------------------------------

97
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.9
ERV 1035.8 1047.00 1039.5 996.99 1029.4 - - - 1193.7
0 0 0
C(%) 3.58 4.70 3.95 (3.01) 2.94 - - - 19.37
- --------------------------------------------------------------------------------

98
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

99
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INDEX CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------

P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
T(%)
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.84
ERV 1249.5 1075.4 1166.4 1141.9 1272.5 1736.7 2245.4 N/A 3534.6
T(%) 27.51 139.24 85.09 30.39 27.25 20.20 17.56 N/A 13.69
- --------------------------------------------------------------------------------

100

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.84
ERV 1249.5 1075.4 1166.4 1141.9 1272.5 1736.7 2245.4 N/A 3534.6
C(%) 24.95 7.54 16.64 14.19 27.25 73.67 124.54 N/A 253.46
- --------------------------------------------------------------------------------

101
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1]- 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

102
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] TOTAL RETURN CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on ______)
(i.e., lower of purchase amount or redemption amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1042.20 1015.80 1049.20 1061.70 1052.50 - - - 1178.30
T(%) 4.61 20.24 20.98 12.62 5.25 - - - 5.79
- --------------------------------------------------------------------------------

103
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.96
ERV 1042.20 1015.80 1049.20 1061.70 1052.50 - - - 1178.30
C(%) 4.22 1.58 4.92 6.17 5.25 - - - 17.83
- --------------------------------------------------------------------------------

104
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
656,280.00 79,806.76 13,454,608.59 9.67 5.38
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

105
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INTERNATIONAL CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1097.3 1038.6 1036.5 1017.1 1133.4 - - - 1189.10
T(%) 10.66 57.54 15.42 3.43 13.34 - - - 8.78
- --------------------------------------------------------------------------------

106
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1097.3 1038.6 1036.5 1017.1 1133.4 - - - 1189.10
C(%) 9.73 3.86 3.65 1.17 13.34 - - - 18.91
- --------------------------------------------------------------------------------

107
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

108
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INCOME EQUITY CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7367
ERV 1225.5 1070.7 1139.0 1120.3 1255.1 1787.4 2237.8 - 3188.2
T(%) 24.84 126.99 68.30 25.27 25.51 21.36 17.48 - 16.31
- --------------------------------------------------------------------------------

109
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
C(%)
- --------------------------------------------------------------------------------
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.67
ERV 1225.5 1070.7 1139.0 1120.3 1255.1 1787.4 2237.8 - 3188.20
C(%) 22.50 7.07 13.90 12.03 25.51 78.74 123.78 - 218.82
- --------------------------------------------------------------------------------

110
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

111
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] GROWTH EQUITY CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1184.40 1050.60 1094.60 1042.60 1184.80 1496.50 1939.60 - 3088.10
T(%) 20.28 78.79 43.13 8.64 18.48 15.76 15.48 - 16.01
- --------------------------------------------------------------------------------

112
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1184.40 1050.60 1094.60 1042.60 1184.80 1496.50 1939.60 - 3088.10
C(%) 48.44 5.06 9.46 4.26 18.48 49.65 93.96 - 208.81
- --------------------------------------------------------------------------------

113
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

114
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] DIVERSITY EQUITY CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1217.50 1062.80 1127.20 1090.70 1227.80 1662.60 2108.50 - 3323.30
T(%) 23.95 104.94 60.81 18.79 22.78 18.45 16.07 - 16.37
- --------------------------------------------------------------------------------

115
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.92
ERV 1217.50 1062.80 1127.20 1090.70 1227.80 1662.60 2108.50 - 3323.30
C(%) 54.75 6.28 12.72 9.07 22.78 66.26 110.85 - 232.33
- --------------------------------------------------------------------------------

116
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

117
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] CONSERVATIVE BALANCED CLASS I

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based
on _______)(i.e., lower of purchase amount or
redemption amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1084.30 1025.10 1058.60 1057.40 1094.90 1271.00 1489.10 - 1941.00
T(%) 9.23 33.97 25.33 11.71 9.49 8.31 8.28 - 9.13
- --------------------------------------------------------------------------------

118
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1084.30 1025.101050.60 1057.401894.90 1271.001489.10 - 1941.00
C(%) 8.43 2.51 5.86 5.74 9.94 27.10 48.91 - 94.10
- --------------------------------------------------------------------------------

119
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

120
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0425-03 VALUEGROWTH STK I SHARES

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.90
ERV 1227.4 1066.10 1140.9 1122.8 1219.8 1518.9 1901.1 N/A 3027.40
T(%) 112.42 68.69 25.83 21.98 14.95 13.71 N/A 13.25
- --------------------------------------------------------------------------------

121
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.9
ERV 1227.4 1066.10 1140.90 1122.8 1219.8 1518.9 1901.1 N/A 3027.4
C(%)
- --------------------------------------------------------------------------------

122
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

123
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] MODERATE BALANCED CLASS I

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1107.20 1032.50 1072.60 1064.60 1118.00 1339.20 1600.10 - 2160.40
T(%) 11.75 45.79 32.04 13.23 11.80 10.22 9.85 - 10.68
- --------------------------------------------------------------------------------

124
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1107.20 1032.50 1072.60 1064.60 1118.00 1339.20 1600.10 - 2160.40
C(%) 10.72 3.25 7.26 6.46 11.80 33.92 60.01 - 116.04
- --------------------------------------------------------------------------------

125
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

126
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] GROWTH BALANCED CLASS I

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1152.40 1045.50 1096.80 1076.70 1163.60 1451.90 1783.50 - 2422.00
T(%) 16.74 68.88 44.29 15.78 16.36 13.22 12.25 - 12.36
- --------------------------------------------------------------------------------

127
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 7.59
ERV 1152.40 1045.50 1096.80 1076.70 1163.60 1451.90 1783.50 - 2422.00
C(%) 15.24 4.55 9.68 7.67 16.36 45.19 78.35 - 142.20
- --------------------------------------------------------------------------------

128
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

129
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] STABLE INCOME CLASS I

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1051.60 1005.60 1020.70 1035.50 1058.30 - - - 1142.90
T(%) 5.64 6.74 8.47 7.16 5.83 - - - 6.70
- --------------------------------------------------------------------------------

130
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.06
ERV 1051.60 1005.60 1020.70 1035.50 1058.30 - - - 1142.90
C(%) 5.16 .56 2.07 3.55 5.83 - - - 14.29
- --------------------------------------------------------------------------------

131
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
505,366.90 52,021.31 9,476,662.32 10.27 5.66
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

132
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] SMALL CAP OPPORTUNITIES CLASS I

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1212.40 1033.10 4084.70 999.40 1267.60 4973.20 - - 2113.30
T(%) 23.38 46.67 38.04 (.11) 26.76 25.40 - - 25.16
- --------------------------------------------------------------------------------

133
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 3.33
ERV 1212.40 1033.10 1084.70 999.40 1267.60 1973.20 - - 2113.30
C(%) 21.24 3.31 8.47 (.06) 26.76 97.32 - - 111.33
- --------------------------------------------------------------------------------

134
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

135
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] DIVERSIFIED BOND I

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1042.30 1015.50 1047.50 1059.20 1051.30 1156.90 1330.30 1974.00 N/A
T(%) 4.62 19.81 20.21 12.08 5.13 4.97 5.87 7.03 N/A
- --------------------------------------------------------------------------------

136
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1042.30 1015.50 1047.50 1059.20 1051.30 1156.90 1330.30 1974.00 N/A
C(%) 4.23 1.55 4.75 5.92 5.13 15.69 33.03 97.40 N/A

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

137
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
984,789.34 104,181.53 6,621,649.78 27.57 5.86
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

138
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] INTERMEDIATE GOVERNMENT INCOME CLASS I

Note: All performance is for the period ended: 11/30/96________________

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
T(%)
- --------------------------------------------------------------------------------
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1043.00 1015.10 1050.60 1060.70 1053.80 1119.00 1320.80 1970.30 N/A
T(%) 4.70 19.32 21.63 12.41 5.38 3.82 5.72 7.01 N/A
- --------------------------------------------------------------------------------

139

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 13.84
ERV 1043.00 1015.10 1050.60 1060.70 1053.80 1119.00 1320.80 1970.30 N/A
C(%) 4.30 1.51 5.06 60.7 5.38 11.90 32.08 97.03 N/A
- --------------------------------------------------------------------------------

140

<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
2,073,159.81 220,717.05 35,505,479.39 11.17 5.67
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

141
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0423 US. GOVERNMENT

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.05
ERV 1045.70 1004.10 1012.30 1024.80 1050.40 1148.30 1225.5 N/A 1640.0
T(%) 5.00 5.05 5.04 5.01 5.04 4.72 4.15 N/A 5.62
- --------------------------------------------------------------------------------

142

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1045.70 1004.10 1012.30 1024.8 1050.4 1148.3 1225.5 N/A 1640.0
C(%) 4357 .41 1.23 2.48 5.04 14.83 22.55 N/A 64.0
- --------------------------------------------------------------------------------

143
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- -------------------------------------------------------------------------------

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

144
<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[U.S GOVERNMENT FUND]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
(365/7)
SEC Formula: Y = [(V1 - V0)/V0]

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account in
the Fund having a balance of one share at the beginning
of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000953151 1 4.97
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

365/7
SEC Formula: EY = (Y + 1) - 1

where: EY = effective annualized yield
Y = annualized yield (see above)

EY(%)
-----------------
5.09
-----------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

TR(%) % OF TF INCOME(%) TEY(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

145
<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

TR(%) % OF TF INCOME(%) TEEY(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account in
the Fund having a balance of one share at the beginning
of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.004060274 1 4.94
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)
365/30
SEC Formula: EY30 = (Y30 + 1) - 1

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

EY30(%)
----------------
5.05
----------------

146
<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

TR(%) % OF TF INCOME(%) TEY30(%)
- --------------------------------------------------------------------------------
N/A
- -------------------------------------------------------------------------------

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

where: TEEY30 = tax equivalent effective 30 day yield
EY30 = effective annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

TR(%) % OF TF INCOME(%) TEEY30(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

147
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0422 TREASURY FUND

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 5.99
ERV 1044.10 1003.90 1012.0 1024.10 1048.50 1141.90 1216.20 N/A 1288.80
T(%) 4.82 4.85 4.89 4.86 4.85 4.52 3.99 N/A 4.32
- --------------------------------------------------------------------------------

148
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1044.10 1003.90 1012.0 1024.10 1048.50 1141.90 1216.20 N/A 1288.80
C(%) 4.41 .39 1.20 2.41 4.85 14.19 21.62 N/A 28.88
- --------------------------------------------------------------------------------

149
<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last day
of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------

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

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------

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

150
<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[TREASURY FUND]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000916712 1 4.78
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
365/7 - 1
SEC Formula: EY = (Y + 1)

where: EY = effective annualized yield
Y = annualized yield (see above)

EY(%)
----------------
4.89
----------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

151
<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

- --------------------------------------------------------------------------------
V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.003912329 1 4.76
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

365/30
SEC Formula: EY30 = (Y30 + 1) - 1

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

EY30(%)
----------------
4.86
----------------

152
<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

153
<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)]0421 CASH INVESTMENTS

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- -------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
T(%)
- -------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 9.14
ERV 1047.6 1004.10 1012.70 1025.60 1052.5 1153.30 1237.10 N/A 1684.0
T(%) 5.20 5.17 5.18 5.18 5.25 4.87 4.35 N/A 5.87
- --------------------------------------------------------------------------------

154
<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

where: C = cumulative total return of the investment
over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment
at the end of the period

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- -------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
C(%)
- -------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1047.60 1004.10 1012.70 1025.60 1052.50 1153.30 1237.1 N/A 1684.0
C(%) 4.76 .41 1.27 2.56 5.25 15.33 23.71 N/A 68.4
- -----------------------------------------------------------------------------

155
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- -------------------------------------------------------------------------------
N/A
- -------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- -------------------------------------------------------------------------------

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

156

<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[CASH INVESTMENT FUND]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000970411 1 5.06
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
365/7 - 1
SEC Formula: EY = (Y + 1)

where: EY = effective annualized yield
Y = annualized yield (see above)

EY(%)
------------
5.19
------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

157

<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.004142466 1 5.04
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)
365/30 - 1
SEC Formula: EY30 = (Y30 + 1)

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

EY30(%)
-----------
5.16
-----------

158

<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

159

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0428-READY CASH INVESTMENT FUND - INVESTOR SHARES

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.87
ERV 1044.5 1003.9 1011.9 1024.0 1049.1 1142.1 1217.4 N/A 1605.8
T(%) 4.86 4.85 4.87 4.85 4.91 4.53 4.01 N/A 5.49
- --------------------------------------------------------------------------------

160

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1044.5 1003.9 1011.9 1024.0 1049.1 1142.10 1217.4 N/A 1605.8
C(%) 4.45 .39 1.19 2.40 4.91 14.21 21.74 N/A 60.58
- --------------------------------------------------------------------------------

161

<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

162

<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[READY CASH INVESTMENT FUND - INVESTOR SHARE]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000912877 1 4.76
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
365/7 - 1
SEC Formula: EY = (Y + 1)

where: EY = effective annualized yield
Y = annualized yield (see above)

EY(%)
-----------
4.87
-----------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

163

<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.00389589 1 4.74
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)
365/30 - 1
SEC Formula: EY30 = (Y30 + 1)

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

EY30(%)
-------------
4.85
-------------

164

<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

165

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0428 READY CASH INVESTMENT FUND - INSTITUTIONAL SHARE

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.87
ERV 1047.7 1004.2 1012.80 1025.7 1052.7 1153.5 1229.5 N/A 1621.7
T(%) 5.21 5.2 5.22 5.20 5.27 4.87 4.22 N/A 5.60
- --------------------------------------------------------------------------------

166

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.87
ERV 1047.7 1004.20 1012.80 1025.7 1052.7 1153.5 1229.5 N/A 1621.70
C(%) 4.77 .42 1.28 2.57 5.27 15.35 22.95 N/A 62.17
- --------------------------------------------------------------------------------

167

<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

168

<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[READY CASH INVESTMENT FUND - INSTITUTIONAL SHARES]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000977660 1 5.0978
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
365/7 - 1
SEC Formula: EY = (Y + 1)

where: EY = effective annualized yield
Y = annualized yield (see above)

EY(%)
-----------
5.23
-----------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

169

<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.004178301 1 5.0836
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)
365/30 - 1
SEC Formula: EY30 = (Y30 + 1)

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

EY30(%)
------------
5.20
------------

170

<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

171

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0428 READY CASH INVESTMENT FUND - EXCHANGE SHARES

Note: All performance is for the period ended: 11/30/96
--------

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.56
ERV 1037.3 1003.3 1010.0 1020.2 1041.2 N/A N/A N/A 1107.3
T(%) 4.06 4.09 4.06 4.12 N/A N/A N/A 4.07
- --------------------------------------------------------------------------------

172

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 2.56
ERV 1037.3 1003.30 1010.0 1020.20 1041.2 N/A N/A N/A 1107.30
C(%) 3.73 .33 1.00 2.02 4.12 N/A N/A N/A 10.37
- --------------------------------------------------------------------------------

173

<PAGE>

3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
6
SEC Formula: Y = 2{[(a - b)/(cd) + 1] - 1]}

where: Y = 30 day yield
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

a($) b($) c d($) Y(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: TEY = Y/(1 - TR)

where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate

TR(%) TEY(%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

174

<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[READY CASH INVESTMENT FUND - EXCHANGE SHARES]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000978082 1 5.10
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

365/7
SEC Formula: EY = (Y + 1) - 1

where: EY = effective annualized yield
Y = annualized yield (see above)

-------------------------
EY(%)
-------------------------
5.23
-------------------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

175

<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1 5.08
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

365/30
SEC Formula: EY30 = (Y30 + 1) - 1

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

-------------------------
EY30(%)
-------------------------
5.20
-------------------------

176

<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY30(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY30(%)
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------

177

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0424 MUNICIPAL MONEY MARKET FUND - INVESTOR SHARES

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

- --------------------------------------------------------------------------------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- --------------------------------------------------------------------------------
N(YR) 1/12 1/4 1/2 1 3 5 10
- --------------------------------------------------------------------------------
ERV
- --------------------------------------------------------------------------------
S
- --------------------------------------------------------------------------------
R
- --------------------------------------------------------------------------------
T(%)
- --------------------------------------------------------------------------------

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

- --------------------------------------------------------------------------------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- --------------------------------------------------------------------------------
N(YR) 1/12 1/4 1/2 1 3 5 10 8.90
- --------------------------------------------------------------------------------
ERV 1028 1002.5 1007.5 1015.1 1031.2 1092.9 1144 .5 N/A 1390
0 0 3
- --------------------------------------------------------------------------------
T(%) 3.06 3.04 .3.07 3.03 3.12 3.01 2.74 N/A 3.77
- --------------------------------------------------------------------------------

178

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- --------------------------------------------------------------------------------
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV
S
R
C(%)
- --------------------------------------------------------------------------------

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 7028.00 1002.50 1007.60 1015.10 1031.2 1092.9 1144.5 N/A 1,390.03
C(%) 2.80 .25 .76 1.51 3.12 9.29 14.45 N/A 39.03
- --------------------------------------------------------------------------------

179
<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[MUNICIPAL MONEY MARKET FUND - INVESTOR SHARES]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.000586849 1 3.06
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

365/7
SEC Formula: EY = (Y + 1) - 1

where: EY = effective annualized yield
Y = annualized yield (see above)

-------------------------
EY(%)
-------------------------
3.10
-------------------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY(%)
- --------------------------------------------------------------------------------
39.6 100.% 5.07
- --------------------------------------------------------------------------------

180

<PAGE>

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield
EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY(%)
- --------------------------------------------------------------------------------
39.6 10% 5.13
- --------------------------------------------------------------------------------

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.002466247 1 3.0006
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

365/30
SEC Formula: EY30 = (Y30 + 1) - 1

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

-------------------------
EY30(%)
-------------------------
3.04
-------------------------

181

<PAGE>

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY30(%)
- --------------------------------------------------------------------------------
39.6 100% 4.97
- --------------------------------------------------------------------------------

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY30(%)
- --------------------------------------------------------------------------------
39.6 100% 5.03%
- --------------------------------------------------------------------------------

182

<PAGE>

EXHIBIT 16

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
[FUND(CLASS)] 0424-MUNICIPAL MONEY MARKET FUND - INSTITUTIONAL SHARES

Note: All performance is for the period ended: 11/30/96

1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)

1 - n
SEC Formula: T = {{[((ERV/P) - 1)(1 - S) - S](1 - R) - R} + 1}

where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial payment at
the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated based on
_______)(i.e., lower of purchase amount or redemption
amount)

a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10 8.90
ERV 1029.90 1002.60 1008.1 1016.1 1033.3 1099.5 1152 N/A 1399.50
T(%) 3.25 3.28 3.24 3.33 3.21 2.87 N/A 3.85
- --------------------------------------------------------------------------------

183

<PAGE>

2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)

n
Formula: C = {{[(T + 1) - 1 - R]/(1 - R)} + S}/(1 - S)

a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum
sales/purchase/redemption charges)

b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of
sales/purchase/redemption charges)

CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- --------------------------------------------------------------------------------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
n(YR) 1/12 1/4 1/2 1 3 5 10
ERV 1029.90 1002.60 1008.1 1016.10 1033.30 1099.5 1152.0 N/A 1399.50
C(%) 2.99 .26 .81 1.61 3.33 9.95 15.20 N/A 39.95
- --------------------------------------------------------------------------------

184

<PAGE>

SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
(MONEY MARKET FUNDS)
[MUNICIPAL MONEY MARKET FUND - INSTITUTIONAL SHARES]

1. 7 DAY ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

SEC Formula: Y = [(V1 - V0)/V0](365/7)

where: Y = annualized yield
V0 = the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the
beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y(%)
- --------------------------------------------------------------------------------
1.00625205 1 3.26
- --------------------------------------------------------------------------------

2. 7 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)

365/7
SEC Formula: EY = (Y + 1) - 1

where: EY = effective annualized yield
Y = annualized yield (see above)

------------------------------
EY(%)
------------------------------
3.31
------------------------------

3. 7 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO SEC STANDARDIZED
FORMULA)

SEC Formula: TEY = [Y/(1 - TR)](% of TF Income)

where: TEY = tax equivalent annualized yield
Y = annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY(%)
- --------------------------------------------------------------------------------
39.6 100% 5.40
- --------------------------------------------------------------------------------

4. 7 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO SEC
STANDARDIZED FORMULA)

SEC Formula: TEEY = [EY/(1 - TR)](% of TF Income)

where: TEEY = tax equivalent effective yield

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EY = effective annualized yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY(%)
- --------------------------------------------------------------------------------
39.6 100% 5.48
- --------------------------------------------------------------------------------

5. 30 DAY ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

SEC Formula: Y30 = [(V1 - V0)/V0](365/30)

where: Y30 = annualized 30 day yield

V0 = the value of a hypothetical pre-existing account in the Fund
having a balance of one share at the beginning of the period
V1 = the value of such an account at the end of the
stated period

- --------------------------------------------------------------------------------
V1($) V0($) Y30(%)
- --------------------------------------------------------------------------------
1.002630137 1 3.20
- --------------------------------------------------------------------------------

6. 30 DAY EFFECTIVE ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED FORMULA)

365/30
SEC Formula: EY30 = (Y30 + 1) - 1

where: EY30 = effective annualized 30 day yield
Y30 = annualized 30 day yield (see above)

-------------------------
EY30(%)
-------------------------
3.25
-------------------------

7. 30 DAY TAX-EQUIVALENT ANNUALIZED YIELD (PURSUANT TO NON-STANDARDIZED
FORMULA)

SEC Formula: TEY30 = [Y30/(1 - TR)](% of TF Income)

where: TEY30 = tax equivalent annualized 30 day yield
Y30 = annualized 30 day yield (see above)
TR = assumed applicable tax rate
% of TF Income = percentage of tax free income for the
period

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEY30(%)
- --------------------------------------------------------------------------------
39.6 100% 5.30
- --------------------------------------------------------------------------------

8. 30 DAY TAX-EQUIVALENT EFFECTIVE ANNUALIZED YIELD (PURSUANT TO
NON-STANDARDIZED FORMULA)

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SEC Formula: TEEY30 = [EY30/(1 - TR)](% of TF Income)

- --------------------------------------------------------------------------------
TR(%) % OF TF INCOME(%) TEEY30(%)
- --------------------------------------------------------------------------------
39.6 100% 5.38%
- --------------------------------------------------------------------------------

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