PROSPECTUS
OCTOBER 1, 1998
_______________________
MONEY MARKET FUNDS
[LOGO]
[COVER WITH CASH, FEDERAL RESERVE BANK, OFFICE]
_________________________________
CASH INVESTMENT FUND
READY CASH INVESTMENT FUND
U.S. GOVERNMENT FUND
TREASURY PLUS FUND
TREASURY FUND
MUNICIPAL MONEY MARKET FUND
_________________________________
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
NORWEST ADVANTAGE FUNDS
October 1, 1998
CASH INVESTMENT FUND
READY CASH INVESTMENT FUND
U.S. GOVERNMENT FUND
TREASURY PLUS FUND
TREASURY FUND
MUNICIPAL MONEY MARKET FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THESE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE U.S. SECURITIES AND EXCHANGE COMMISSION,
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
1
TABLE OF CONTENTS [COVER GRAPHICS]
OVERVIEW........................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS............................6
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY.......................................12
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES.............13
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
RISK CONSIDERATIONS............................16
COMMON POLICIES................................17
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS........................18
{MANAGEMENT OF THE FUNDS TAB]
HOW TO BUY AND SELL SHARES.....................20
[HOW TO BUY AND SELL SHARES]
DISTRIBUTIONS AND TAX MATTERS..................26
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION...............................28
[OTHER INFORMATION TAB]
<PAGE>
2
OVERVIEW [COINS, FEDERAL RESERVE BANK]
The following is a summary of information about the Funds. Before investing, you
should read the prospectus and consider the discussions under Investment
Objectives and Policies and Risk Considerations.
No single Fund is a complete or balanced investment program, but each can serve
as a part of your overall investment program.
THE FUNDS AT A GLANCE
[FUND ICON]
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
CASH INVESTMENT FUND AND High current income, preservation High-quality money market
READY CASH INVESTMENT FUND of capital, and liquidity. instruments of U.S. and foreign
issuers.
U.S. GOVERNMENT FUND High current income, preservation Securities issued or guaranteed by
of capital, and liquidity. the U.S. Government, its agencies,
and its instrumentalities.
TREASURY PLUS FUND High current income, preservation Securities issued or guaranteed by
of capital, and liquidity. the U.S. Treasury and repurchase
agreements on those obligations.
TREASURY FUND High current income, preservation Securities issued or guaranteed by
of capital, and liquidity. the U.S. Treasury.
MUNICIPAL MONEY MARKET FUND High current tax-exempt income, Municipal securities paying
preservation of capital, and interest exempt from federal
liquidity. income tax.
</TABLE>
CLASSES OF SHARES
This Prospectus offers certain classes of shares of the Funds. Each class is
designed for a different type of investor and may have different fees or
investment minimums.
* All of the Funds, except Ready Cash Investment Fund, offer Institutional
Shares. Institutional Shares are designed for institutional investors.
* Ready Cash Investment Fund and Municipal Money Market Fund offer Investor
Shares. Investor Shares are designed for retail investors.
<PAGE>
3
FUND STRUCTURES
[OVERVIEW TAB]
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in 1 or more other funds identified in this prospectus as Portfolios.
Portfolios do not offer their shares to the public. Except when necessary to
describe a Fund's investment in a Portfolio, this prospectus discusses a Fund's
investments in a Portfolio as if the investments were made directly in
individual securities.
MANAGEMENT OF THE FUNDS
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser of the
Funds and Portfolios. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or
Norwest Bank, provides investment advice to institutions, pension plans, and
other accounts and currently manages more than $29 billion in assets. This
prospectus generally refers to Norwest as the Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative, and
underwriting services to the Funds.
INVESTMENT MINIMUMS
You may purchase or redeem the Funds' shares without sales or other charges.
* Investor Shares require a minimum initial investment of $1,000 and minimum
subsequent investments of $100.
* Institutional Shares require a minimum initial investment of $100,000 and
have no minimum subsequent investment requirement.
EXCHANGES
If you own shares of a Fund, you may exchange them for shares of certain other
Funds. Your exchange rights will vary depending on the class of shares you own.
DISTRIBUTIONS
Each Fund distributes to shareholders its net capital gain, if any, at least
annually. The DISTRIBUTIONS AND TAX MATTERS section discusses how often the
Funds distribute net investment income.
RISK FACTORS
[RISK ICON]
Investment in a Fund is subject to risk. There is the risk that a Fund may not
be able to maintain a stable net asset value of $1.00 per share. The amount and
types of risk vary from Fund to Fund depending on the Adviser's strategy, the
investments that the Fund makes, and prevailing economic conditions over the
period of your investment.
<PAGE>
4
If you invest in a Fund, the income you receive will vary with changes in
interest rates. In addition, the Funds' investments have "credit risk," which is
the risk that an issuer will be unable, or will be perceived to be unable, to
pay the principal and interest on its obligations when due. Some of the Funds
reduce credit risk by investing primarily or exclusively in U.S.
Government securities.
Each Fund has the risk that its Adviser may not be successful in carrying out
its investment strategy, that a portfolio manager may prove difficult to replace
if he or she becomes unavailable to manage the Fund and that the Fund's
particular investment strategy may result in performance that is worse or better
than the performance of the market as a whole.
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you will
bear directly or indirectly when you invest in a Fund. There are no transaction
charges for purchasing, redeeming, or exchanging shares. The Funds do not have
distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1)(5)
(as a percentage of average daily net assets after
applicable expense reimbursements and fee waivers)
<TABLE>
<S> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
--------- --------------
Investment Advisory Other Expenses Investment Other Total Operating
------------------- -------------- ---------- ----- ---------------
Fees(3) Advisory Fees Expenses Expenses
------- ------------- -------- --------
FUNDS
Cash Investment Fund N/A 0.22% 0.22% 0.04% 0.48%(4)
Ready Cash Investment Fund
(Investor Shares) N/A 0.42% 0.33% 0.07% 0.82%(4)
U.S. Government Fund 0.14% 0.36% N/A N/A 0.50%
Treasury Plus Fund(2) 0.20% 0.30% N/A N/A 0.50%
Treasury Fund 0.15% 0.31% N/A N/A 0.46%
Municipal Money Market Fund(3)
Institutional Shares 0.32% 0.13% N/A N/A 0.45%
Investor Shares 0.32% 0.33% N/A N/A 0.65%
</TABLE>
(1) Cash Investment Fund and Ready Cash Investment Fund bear their pro rata
share of the expenses of the Portfolios in which they invest.
(2) The expenses, and any waivers and reimbursements, for Treasury Plus
Fund are estimated.
(3) Absent waivers, Investment Advisory Fees for Municipal Money Market
Fund Investor Shares and Institutional Shares would be 0.34%. Absent
waivers The Portfolio - Investment Advisory Fees for Cash Investment
Fund would be 0.24%.
(4) Norwest and the Funds' Administrator have agreed to waive their fees
in order to maintain Cash Investment Fund's total operating expenses
through May 31, 1999 at 0.48%. Any reduction of those waivers after
May 31, 1999 requires approval by the Fund's Board of Trustees.
Norwest and the Funds' Administrator have agreed to waive their
respective fees or reimburse expenses in order to maintain Ready Cash
Investment Fund's total operating expenses at 0.82%. Any reduction of
those waivers or reimbursements requires Board review.
<PAGE>
5
(5) Absent expense reimbursements and fee waivers, Funds-Other Expenses
and Total Operating Expenses would be: Cash Investment Fund 0.26% and
0.56%, U.S. Government Fund 0.38% and 0.51%, Treasury Plus Fund 0.40%
and 0.60%, Treasury Fund 0.39% and 0.54% and Municipal Money Market
Fund Investor Shares 0.49% and 0.83% and Institutional Shares 0.25%
and 0.59%. Absent expense reimbursements and fee waivers, Portfolios-
Other Expenses would be Cash Investment Fund 0.07%. Except as
otherwise noted, expense reimbursements and fee waivers are voluntary
and may be reduced or eliminated at any time.
[OVERVIEW TAB]
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses you
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 distributions. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN THOSE
SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
HYPOTHETICAL EXPENSE EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------
Cash Investment Fund $5 $15 $27 $60
Ready Cash Investment Fund
Investor Shares 8 26 46 101
U.S. Government Fund 5 16 28 63
Treasury Plus Fund 5 16 28 63
Treasury Fund 5 15 26 58
Municipal Money Market Fund
Investor Shares 5 14 25 57
Institutional Shares 7 21 36 81
</TABLE>
<PAGE>
6
FINANCIAL HIGHLIGHTS [PICTURE OF OFFICE ENVIRONMENT]
The financial highlights table is intended to help you understand each
Fund's financial performance for 10 years or, if shorter, the Fund's
operating history. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned on an investment in a Fund, assuming reinvestment
of all distributions. The information from June 1, 1994 through May 31, 1998
has been audited by KPMG Peat Marwick LLP, independent auditors, whose
report dated July 21, 1998 about a Fund, along with the Fund's financial
statements, are included in the Fund's Annual Report, which is available at
no charge upon request. These financial statements are incorporated by
reference into the SAI. Other independent auditors audited information for
prior periods.
<TABLE>
<S> <C> <C> <C> <C>
Distributions Ending
Beginning Net Net from Net Net Asset
Asset Value Investment Investment Value Per
Per Share Income Income Share
- -----------------------------------------------------------------------------------------------------------
CASH INVESTMENT FUND
Year Ended May 31, 1998 $1.00 $0.053 ($0.053) $1.00
Year Ended May 31, 1997 $1.00 $0.051 ($0.051) $1.00
Year Ended May 31, 1996 $1.00 $0.054 ($0.054) $1.00
Year Ended May 31, 1995 $1.00 $0.049 ($0.049) $1.00
Year Ended May 31, 1994 $1.00 $0.031 ($0.031) $1.00
Year Ended May 31, 1993 $1.00 $0.033 ($0.033) $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.021 ($0.021) $1.00
Year Ended November 30, 1991 $1.00 $0.061 ($0.061) $1.00
Year Ended November 30, 1990 $1.00 $0.079 ($0.079) $1.00
Year Ended November 30, 1989 $1.00 $0.088 ($0.088) $1.00
Year Ended November 30, 1988 $1.00 $0.071 ($0.071) $1.00
- ----------------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(c) Annualized.
</TABLE>
<PAGE>
7
Ratio to Average
Net Assets
- ------------------------------------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return (000's Omitted)
- ------------------------------------------------------------------
5.29%(b) 0.48%(b) 0.57%(b) 5.42% $4,685,818
5.07% 0.48% 0.49% 5.21% $2,147,894
5.36% 0.48% 0.49% 5.50% $1,739,549
4.87% 0.48% 0.50% 4.96% $1,464,304
3.11% 0.49% 0.49% 3.16% $1,381,402
3.29% 0.50% 0.51% 3.36% $1,944,948
4.23%(c) 0.50%(c) 0.56%(c) 4.29%(c) $1,292,196
6.11% 0.51% 0.54% 6.31% $1,004,979
7.92% 0.45% 0.57% 8.22% $747,744
8.81% 0.45% 0.64% 9.22% $662,698
7.00% 0.43% 0.74% 7.32% $316,349
<PAGE>
8
<TABLE>
<S> <C> <C> <C> <C>
Distributions Ending
Beginning Net Net from Net Net Asset
Asset Value Investment Investment Value Per
Per Share Income Income Share
- ------------------------------------------------------------------------------------------------------------
READY CASH INVESTMENT FUND
Investor Shares
Year Ended May 31, 1998 $1.00 $0.050 ($0.050) $1.00
Year Ended May 31, 1997 $1.00 $0.047 ($0.047) $1.00
Year Ended May 31, 1996 $1.00 $0.051 ($0.051) $1.00
Year Ended May 31, 1995 $1.00 $0.045 ($0.045) $1.00
Year Ended May 31, 1994 $1.00 $0.027 ($0.027) $1.00
Year Ended May 31, 1993 $1.00 $0.030 ($0.030) $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 ($0.020) $1.00
Year Ended November 30, 1991 $1.00 $0.058 ($0.058) $1.00
Year Ended November 30, 1990 $1.00 $0.076 ($0.076) $1.00
Year Ended November 30, 1989 $1.00 $0.085 ($0.085) $1.00
January 20, 1988 to November 30, 1988(d) $1.00 $0.059 ($0.059) $1.00
- -----------------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Includes expenses allocated from Portfolio(s) in which the Fund invests.
(c) Annualized.
(d) Commencement of operations; the initial class of shares became Investor
Shares.
</TABLE>
Ratio to Average
Net Assets
- -------------------------------------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return (000's Omitted)
- ------------------------------------------------------------------
4.95%(b) 0.82%(b) 0.82%(b) 5.07% $789,380
4.75% 0.82% 0.83% 4.87% $576,011
5.02% 0.82% 0.87% 5.17% $473,879
4.64% 0.82% 0.91% 4.62% $268,603
2.70% 0.82% 0.92% 2.74% $164,138
3.04% 0.82% 0.94% 3.08% $162,585
4.01%(c) 0.82%(c) 0.93%(c) 4.05%(c) $176,378
5.81% 0.82% 0.96% 5.98% $183,775
7.56% 0.82% 0.97% 7.83% $166,911
8.51% 0.81% 0.99% 8.86% $144,117
7.11%(c) 0.77%(c) 1.13%(c) 6.97%(c) $46,736
<PAGE>
9
<TABLE>
<S> <C> <C> <C> <C>
Distributions Ending
Beginning Net Net from Net Net Asset
Asset Value Investment Investment Value Per
Per Share Income Income Share
- -----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT FUND
Year Ended May 31, 1998 $1.00 $0.051 ($0.051) $1.00
Year Ended May 31, 1997 $1.00 $0.049 ($0.049) $1.00
Year Ended May 31, 1996 $1.00 $0.052 ($0.052) $1.00
Year Ended May 31, 1995 $1.00 $0.047 ($0.047) $1.00
Year Ended May 31, 1994 $1.00 $0.030 ($0.030) $1.00
Year Ended May 31, 1993 $1.00 $0.030 ($0.030) $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 ($0.020) $1.00
Year Ended November 30, 1991 $1.00 $0.058 ($0.058) $1.00
Year Ended November 30, 1990 $1.00 $0.077 ($0.077) $1.00
Year Ended November 30, 1989 $1.00 $0.085 ($0.085) $1.00
Year Ended November 30, 1988 $1.00 $0.069 ($0.069) $1.00
- -----------------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Annualized.
[FINANCIAL HIGHLIGHTS TAB]
</TABLE>
Ratio to Average
Net Assets
------------------------------------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return (000's Omitted)
- -------------------------------------------------------------------
5.08% 0.50% 0.51% 5.20% $2,260,208
4.91% 0.49% 0.49% 5.04% $1,912,574
5.13% 0.50% 0.51% 5.27% $1,649,721
4.68% 0.50% 0.52% 4.81% $1,159,421
3.02% 0.47% 0.53% 3.07% $1,091,141
3.00% 0.45% 0.57% 3.06% $903,274
3.99%(b) 0.45%(b) 0.61%(b) 4.07%(b) $623,685
5.84% 0.45% 0.60% 6.00% $469,487
7.66% 0.45% 0.61% 7.94% $500,794
8.51% 0.45% 0.65% 8.87% $394,137
6.87% 0.42% 0.73% 7.13% $254,104
<PAGE>
10
<TABLE>
<S> <C> <C> <C> <C>
Distributions Ending
Beginning Net Net from Net Net Asset
Asset Value Investment Investment Value Per
Per Share Income Income Share
- -----------------------------------------------------------------------------------------------------------
TREASURY FUND
Year Ended May 31, 1998 $1.00 $0.049 ($0.049) $1.00
Year Ended May 31, 1997 $1.00 $0.047 ($0.047) $1.00
Year Ended May 31, 1996 $1.00 $0.050 ($0.050) $1.00
Year Ended May 31, 1995 $1.00 $0.046 ($0.046) $1.00
Year Ended May 31, 1994 $1.00 $0.028 ($0.028) $1.00
Year Ended May 31, 1993 $1.00 $0.029 ($0.029) $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 ($0.020) $1.00
December 3, 1990(c) to November 30, 1991 $1.00 $0.058 ($0.058) $1.00
- ------------------------------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Annualized.
(c) Commencment of operations.
</TABLE>
Ratio to Average
Net Assets
------------------------------------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return (000's Omitted)
- -------------------------------------------------------------------
4.89% 0.46% 0.54% 5.00% $1,440,515
4.74% 0.46% 0.53% 4.87% $1,003,697
4.91% 0.46% 0.56% 5.04% $802,270
4.62% 0.46% 0.57% 4.65% $661,098
2.81% 0.46% 0.58% 2.83% $526,483
2.93% 0.47% 0.58% 2.98% $384,751
4.01%(b) 0.47%(b) 0.59%(b) 4.07%(b) $374,492
5.62%(b) 0.31%(b) 0.66%(b) 6.02%(b) $354,200
<PAGE>
11
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized Distributions
Beginning Net Net and Unrealized from Net Capital
Asset Value Investment Gain (Loss) Investment Contribution
Per Share Income on Investments Income from Adviser
- ----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
INVESTOR SHARES
Year Ended May 31, 1998 $1.00 $0.031 -- ($0.031) --
Year Ended May 31, 1997 $1.00 $0.030 -- ($0.030) --
Year Ended May 31, 1996 $1.00 $0.033 -- ($0.033) --
Year Ended May 31, 1995 $1.00 $0.031 ($0.004) ($0.031) $0.004
Year Ended May 31, 1994 $1.00 $0.021 -- ($0.021) --
Year Ended May 31, 1993 $1.00 $0.021 -- ($0.021) --
December 1, 1991 to May 31, 1992 $1.00 $0.014 -- ($0.014) --
Year Ended November 30, 1991 $1.00 $0.042 -- ($0.042) --
Year Ended November 30, 1990 $1.00 $0.053 -- ($0.053) --
Year Ended November 30, 1989 $1.00 $0.058 -- ($0.058) --
January 7, 1988(d) to November 30, 1988 $1.00 $0.042 -- ($0.042) --
INSTITUTIONAL SHARES
Year Ended May 31, 1998 $1.00 $0.033 -- ($0.033) --
Year Ended May 31, 1997 $1.00 $0.032 -- ($0.032) --
Year Ended May 31, 1996 $1.00 $0.035 -- ($0.035) --
Year Ended May 31, 1995 $1.00 $0.033 ($0.004) ($0.033) $0.004
August 3, 1993(d)to May 31, 1994 $1.00 $0.019 -- ($0.019) --
- ------------------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) 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.
(c) Annualized.
(d) Commencement of operations; the initial class of shares became Investor
Shares.
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
--------------------------------------------
Ending
Net Asset Net Net Assets at
Value Per Investment Net Gross Total End of Period
Share Income Expenses Expenses(a) Return (000's Omitted)
------------ --------------------------------------------------------------------
$1.00 3.13% 0.65% 0.83% 3.18% $44,070
$1.00 3.01% 0.65% 0.87% 3.08% $54,616
$1.00 3.25% 0.65% 0.88% 3.31% $57,021
$1.00 3.10% 0.65% 0.93% 3.13%(b) $47,424
$1.00 2.03% 0.65% 0.99% 2.09% $33,554
$1.00 2.13% 0.65% 0.97% 2.18% $75,521
$1.00 2.81%(c) 0.63%(c) 0.96%(c) 2.89%(c) $82,678
$1.00 4.10% 0.64% 1.08% 4.26% $66,327
$1.00 5.34% 0.64% 1.16% 5.48% $29,801
$1.00 5.78% 0.62% 1.15% 5.94% $18,639
$1.00 4.64%(c) 0.60%(c) 1.20%(c) 4.76%(c) $8,963
$1.00 3.32% 0.45% 0.59% 3.39% $977,693
$1.00 3.21% 0.45% 0.70% 3.28% $635,655
$1.00 3.41% 0.45% 0.72% 3.52% $592,436
$1.00 3.37% 0.45% 0.74% 3.33%(b) $278,953
$1.00 2.33%(c) 0.45%(c) 0.77%(c) 2.34%(c) $190,356
</TABLE>
<PAGE>
12
- --------------------------------------------------------------------------------
GLOSSARY [COINS, FEDERAL RESERVE BANK]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the discussion
of the Funds' objectives, policies, and risks. Defined terms are capitalized
when used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TERM DEFINITION
- ---- ----------
AMT Alternative minimum tax.
Board The Board of Trustees of Norwest Advantage
Funds.
Municipal Security A debt security 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, with
interest exempt from federal income tax.
NRSRO A nationally recognized statistical rating
organization, such as Standard & Poor's
Corporation, that rates fixed income
securities and money market funds by
relative credit risk.
Related Issuers Issuers of Municipal Securities that
economic, business, or political
developments affect in similar ways.
SEC The U.S. Securities and Exchange Commission.
U.S. Government Security A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies, or its
instrumentalities.
U.S. Treasury Security A security issued or guaranteed by the U.S.
Treasury.
<PAGE>
13
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [COINS, FEDERAL RESERVE BANK]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds.
After each Fund's description, there is a short, alphabetical listing of the
Fund's primary risks. The Risk Considerations section below discusses these
risks.
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
The Funds' investments are made under the requirements of an SEC rule
governing money market funds. Each Fund invests only in high-quality, U.S.
dollar-denominated short-term money market instruments that are determined
by the Adviser, under procedures adopted by the Board, to be eligible for
purchase and to present minimal credit risks. The Funds may invest in
securities with fixed, variable, or floating rates of interest.
High-quality instruments include those that: (1) are rated (or, if unrated,
are issued by an issuer with comparable outstanding short-term debt that is
rated) in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1
NRSRO has issued a rating, by that NRSRO; or (2) are otherwise unrated and
determined by the Adviser to be of comparable quality. Each Fund, other
than Municipal Money Market Fund, invests at least 95% of its total assets
in securities in the highest rating category.
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
CASH INVESTMENT FUND and READY CASH INVESTMENT FUND
INVESTMENT OBJECTIVES
[INVESTMENT ICON]
Each Fund's investment objective is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
CASH INVESTMENT FUND invests equally in 2 Portfolios - Money Market
Portfolio and Prime Money Market Portfolio. Cash Investment Fund, Money
Market Portfolio, and Prime Money Market Portfolio generally have the same
investment objective and investment policies. Because Prime Money Market
Portfolio seeks to maintain a rating within the 2 highest short-term
categories assigned by at least 1 NRSRO, it is more limited in the type and
amount of securities it may purchase.
READY CASH INVESTMENT FUND invests its assets in Prime Money Market
Portfolio. The Fund seeks to maintain a rating within the two highest
categories assigned by an NRSRO.
INVESTMENT POLICIES
The Funds invest in a broad spectrum of high-quality money market
instruments of U.S. and foreign issuers, including U.S. Government
Securities, Municipal Securities, and corporate debt securities.
The Funds 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, U.S. branches and agencies of foreign banks, and
wholly-owned banking-related subsidiaries of foreign banks. The Funds limit
their investments in obligations of financial institutions to institutions
that at the time of investment have total assets in excess of $1 billion,
or the equivalent in other currencies.
<PAGE>
14
Each Fund 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. Neither Fund may invest more than 25% of
its total assets in any other single industry.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Foreign Risk
U.S. GOVERNMENT FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
INVESTMENT POLICIES
The Fund invests primarily in U.S. Government Securities and repurchase
agreements for U.S. Government Securities. Under normal circumstances, the
Fund invests at least 65% of its total assets in these securities. The Fund
may invest in zero coupon U.S. Government Securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk
TREASURY PLUS FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to provide high current income to the
extent consistent with the preservation of capital, and the maintenance of
liquidity.
INVESTMENT POLICIES
Under normal circumstances, the Fund invests at least 80% of its total
assets in U.S. Treasury Securities and in repurchase agreements for U.S.
Treasury Securities. The Fund also may invest in U.S. Government Securities
and in repurchase agreements for U.S. Government Securities. The Fund may
invest in zero coupon securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk
<PAGE>
15
TREASURY FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
INVESTMENT POLICIE
The Fund invests solely in U.S. Treasury Securities, including zero-coupon
securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk
[INVESTMENT OBJECTIVES AND POLICIES TAB]
MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective 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.
INVESTMENT POLICIE
The Fund expects to invest 100% of its assets in Municipal Securities,
including short-term municipal bonds and municipal notes and leases. These
investments may have fixed, variable or floating rates of interest and may
be zero coupon securities. As part of its objective, the Fund normally will
invest at least 80% of its total assets in federally tax-exempt instruments
whose income may be subject to the federal AMT. The Fund may invest up to
20% of its total assets in securities that pay interest income subject to
federal income tax.
The Fund may invest more than 25% but, under normal circumstances, will not
invest more than 35% of its assets in issuers located in a single state. The
Fund may invest more than 25% of its assets in industrial development bonds and
in participation interests in these types of bonds issued by banks.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Geographic Concentration Risk
<PAGE>
16
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [OFFICE]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds. Each
Fund's exposure to these risks depends upon its specific investment profile. The
Fund's description in INVESTMENT OBJECTIVES AND POLICIES lists the Fund's
principal risks.
- --------------------------------------------------------------------------------
CREDIT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise be unable to honor a financial obligation.
- --------------------------------------------------------------------------------
FOREIGN RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital or nationalization, increased
taxation, or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues. Also,
the risk that the price of a foreign issuer's securities may not reflect the
issuer's condition because there is not sufficient publicly available
information about the issues.
- --------------------------------------------------------------------------------
GEOGRAPHIC CONCENTRATION RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset value
more than would be the case if the Fund had made more geographically diverse
investments.
- --------------------------------------------------------------------------------
INTEREST RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that changes in interest rates may affect the value of your investment.
With fixed-rate securities, including Municipal Securities and U.S. Government
Securities, an increase in interest rates typically causes the value of a Fund's
fixed-rate securities to fall, while a decline in interest rates may produce an
increase in the market value of the securities. Because of this risk, an
investment in a Fund that invests in fixed income securities is subject to risk
even if all the fixed income securities in the Fund's portfolio are paid in full
at maturity.
<PAGE>
17
- --------------------------------------------------------------------------------
COMMON POLICIES [CASH]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds'investment objectives
require shareholder approval to amend.
- --------------------------------------------------------------------------------
DOWNGRADED SECURITIES
- --------------------------------------------------------------------------------
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's 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.
- --------------------------------------------------------------------------------
YEAR 2000 AND EURO
- --------------------------------------------------------------------------------
The Funds could be adversely affected if the computer systems used by the
Adviser and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000 and
Euro issues for their computer systems and to obtain reasonable assurances that
comparable steps are being taken by the Funds' other major service providers.
While the Funds do not anticipate any adverse effect on their computer systems
from the Year 2000 and Euro issues, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds.
[RISK CONSIDERATIONS TAB]
COMMON POLICIES TAB]
<PAGE>
18
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [COINS, FEDERAL RESERVE BANK]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each
Fund and each Portfolio. In this capacity, Norwest makes investment
decisions for and administers the Funds' and Portfolios' investment
programs. Norwest Investment Management, Inc.'s, address is NORWEST
CENTER, SIXTH STREET AND MARQUETTE, MINNEAPOLIS, MN 55479.
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Fund's investments.
The year a portfolio manager began managing a Fund's or Portfolio's
portfolio follows the manager's name in parenthesis. The list includes
the investment advisory fees payable to Norwest by the Fund and by any
Portfolios in which it invests. The list states the investment advisory
fees on an annualized basis as a percentage of a Fund's or Portfolio's
average daily net assets. Descriptions of the portfolio managers'
recent experience follow the list of portfolio managers and advisory
fees.
How investment advisory fees are paid depends on whether or not a Fund
invests in Portfolios.
* If a Fund invests directly in a portfolio of securities, Norwest
receives an investment advisory fee directly from the Fund.
* If a Fund invests in one or more Portfolios, Norwest receives an
investment advisory fee from the Portfolio or Portfolios.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991),
and Robert G. Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400
million, and 0.32% - balance.
--------------------------------------------------
--------------------------------------------------
PORTFOLIO: MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991),
and Robert G. Leuty (1998)
ADVISORY FEE: 0.20% - first $300 million; 0.16% - next $400
million, and 0.12% - balance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
READY CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS David D. Sylvester (1987), Laurie R. White
(1991), and Robert G. Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400
million, and 0.32% - balance.
<PAGE>
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT FUND
TREASURY FUND
TREASURY PLUS FUND
PORTFOLIO MANAGERS: David D. Sylvester (1987, 1990, 1998), Laurie R.
White (1991, 1991, 1998) and Robert G. Leuty
(1998)
ADVISORY FEE: For each Fund: 0.20% - first $300 million; 0.16%
- next $400 million; and 0.12% - balance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
PORTFOLIO MANAGER: David D. Sylvester (1995), Laurie R. White
(1998), and Robert G. Leuty (1998).
ADVISORY FEE: 0.35% - first $500 million; 0.325% - next
$500 million; and 0.30% - balance.
PORTFOLIO MANAGERS
ROBERT G. LEUTY, associated with Norwest and its affiliates since 1992. Mr.
Leuty is a senior portfolio manager.
DAVID D. SYLVESTER, associated with Norwest and its affiliates since 1979. Mr.
Sylvester currently is a Managing Director - Reserve Asset Management.
LAURIE R. WHITE, associated with Norwest and its affiliates since 1991. Ms.
White is a Director - Reserve Asset Management.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund that invests in
1 or more Portfolios. Norwest does not receive any compensation under this
arrangement as long as a Fund invests entirely in Portfolios. If a Fund
redeems assets from a Portfolio and invests them directly, Norwest receives
an investment advisory fee from the Fund for the management of those
assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative,
and underwriting services to the Funds. NORWEST BANK acts as the Funds'
transfer agent, distribution disbursing agent, and custodian.
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
20
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [OFFICE]
- --------------------------------------------------------------------------------
You may purchase or sell (redeem) shares at a price equal to their net
asset value next determined after receipt of your purchase order or
redemption request in proper form on "Fund Business Days." Fund Business
Days are all weekdays except generally observed national holidays (New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Funds' transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. Investor Shares require a minimum initial investment of $1,000 and
minimum subsequent investments of $100. Institutional Shares require a
minimum initial investment of $100,000 and have no minimum for subsequent
investments. Your shares become eligible to receive distributions on the
day that your purchase order is received in proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
Your order to purchase shares will not be complete until the Fund receives
immediately available funds. The Funds must receive purchase and redemption
orders before the times indicated below.
<TABLE>
<S> <C> <C>
Times indicated are Eastern Time.
Fund payment
---- order must be -------
------------- must be
received by -------
------------ received by
-----------
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 Plus Fund
5:00 p.m. 5:00 p.m.
Treasury Fund
1:00 p.m. 4:00 p.m.
Municipal Money Market
Fund Noon 4:00 p.m.
</TABLE>
The Funds may advance the time by which purchase or redemption orders and
payments must be received 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 other circumstances affect a Fund's trading hours.
<PAGE>
21
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification number is
correct and that you are not subject to backup withholding. Under certain
circumstances as noted in the account application, the Internal Revenue
Service can require the Funds to withhold 31% of your distributions and
redemptions.
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as addresses). Norwest Advantage Funds may in the future
modify, limit, or terminate any shareholder privilege upon appropriate
notice and may charge a fee for certain shareholder services, although no
such fees are currently contemplated. You may terminate your participation
in any shareholder program by writing to Norwest Advantage Funds.
PURCHASE PROCEDURES
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds 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 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent or the distributor.
[HOW TO BUY AND SELL SHARES TAB]
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
<PAGE>
22
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares 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 receipt by the transfer agent of the redemption order
in proper form (and any supporting documentation that the transfer agent
may require). Redeemed shares are not entitled to receive distributions on
the day on which the redemption is effective.
Redemption orders for shares are accepted up to the times indicated above
for acceptance of purchase orders. As described above, the Funds may
advance the times for receipt of redemption orders.
Normally, redemption proceeds are paid immediately following receipt of a
redemption
<PAGE>
23
order in proper form. In any event, you will be paid within 7 days,
unless:(1) your bank has not cleared the check to purchase the shares
(which may take up to 15 days), (2) the New York Stock Exchange is closed
(or trading is restricted) for any reason other than normal weekend or
holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers. Unless otherwise
indicated, redemption proceeds normally are paid by check mailed to your
record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person, or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations, or other eligible
institutions. The specific institution must be 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.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
with a net asset value of less than $100,000 immediately following any
redemption, in the case of Institutional Shares, and $1,000 immediately
following any redemption, in the case of Investor Shares.
[HOW TO BUY AND SELL SHARES TAB]
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
<PAGE>
24
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signatures guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are transmitted by wire on the Fund Business Day the
transfer agent receives a redemption request in proper form.
EXCHANGES
If you hold Institutional Shares, you may exchange those shares for
Institutional Shares of other Funds offering those shares. If you hold
Investor Shares, you may exchange those shares for Investor Shares of the
Funds offering Investor Shares. You may also exchange your shares for
shares of other funds of Norwest Advantage Funds not offered by this
prospectus. Call or write the transfer agent for both a list of funds that
offer shares exchangeable with those of the Funds and prospectuses of those
funds.
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees charged by, and the limitations (including minimum investment
restrictions) of the Fund into which you are exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a Fund only if that
Fund's shares legally may be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
<PAGE>
25
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered, and your Social Security number, or other taxpayer
identification number.
[HOW TO BUY AND SELL SHARES TAB]
<PAGE>
26
- -------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [CASH]
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly.
Net capital gain, if any, is distributed at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a Fund's
shares in a single account, you can have that Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a fund. All
distributions reinvested in a fund are reinvested at the fund's net asset
value as of the payment date of the distribution.
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable as ordinary income.
Distributions of net capital gain (i.e., the excess of net long-term
capital gain over net short-term capital loss), if any, are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes.
TAX-EXEMPT DISTRIBUTIONS
Generally, you will not be subject to federal income tax on distributions
paid by Municipal Money Market Fund out of tax-exempt interest income
earned by the Fund ("exempt-interest distributions"). If you use, or are
related to someone who uses, facilities financed by private activity bonds
held by the Fund, you may be subject to federal income tax on your pro rata
share of the interest income from those securities and should consult your
tax adviser before purchasing shares. Interest on certain private activity
bonds is treated as an item of tax preference for purposes of the federal
AMT imposed on individuals and corporations. As noted above, Municipal
Money Market Fund may invest a portion of its assets in securities that
generate income that is not exempt from federal income tax. Further,
capital gains, if any, distributed by Municipal Money Market Fund are
subject to tax. In addition,
<PAGE>
27
exempt-interest distributions are included in the "adjusted current
earnings" of corporations for AMT purposes. If you borrow money to purchase
or carry the Fund's shares, the interest on your debt generally is not
deductible for federal income tax purposes.
The federal income tax exemption on distributions of Municipal Securities
interest does not necessarily result in an exemption under the income or
other tax laws of any state or local taxing authority. You 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 you reside. You may, however, be subject to tax on income derived
from the Municipal Securities of other jurisdictions. Consult your tax
adviser concerning the application of state and local taxes to investments
in the Fund that may differ from the federal income tax consequences
described above.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
28
- --------------------------------------------------------------------------------
OTHER INFORMATION [COINS, FEDERAL RESERVE BANK]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines its net asset value on each Fund Business Day by
dividing the value of its 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 determine their net asset
values at the following times:
<TABLE>
<S> <C> <C> <C>
---------------------------------------------------------- ----------------------------------------
Municipal Money Market Fund Noon, Eastern Time
---------------------------------------------------------- ----------------------------------------
---------------------------------------------------------- ----------------------------------------
Treasury Fund 1:00 p.m., Eastern Time
---------------------------------------------------------- ----------------------------------------
---------------------------------------------------------- ----------------------------------------
Cash Investment Fund, Ready Cash 3:00 p.m., Eastern Time
Investment Fund, and U.S. Government
Fund
---------------------------------------------------------- ----------------------------------------
---------------------------------------------------------- ----------------------------------------
Treasury Plus Fund 5:00 p.m., Eastern Time
---------------------------------------------------------- ----------------------------------------
</TABLE>
In order to maintain net asset values per share at $1.00, the Funds (and
Portfolios) value their portfolio securities at amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and then 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 to take any action to prevent any material effect on shareholders.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund
bears its pro rata portion of the expenses of any Portfolio in which it
invests. The Board may redeem a Fund's investment in a Portfolio at any
time. The Fund could then invest directly in portfolio securities or could
re-invest in 1 or more different Portfolios that could have different fees
and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. 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>
29
If you would like more information about the Funds and their investments, you
may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such as
its investments, management, and organization. It is incorporated into this
Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, each Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds, 733 Marquette Avenue, Minneapolis, Minnesota 55479, or by calling 1-800-
338-1348 or 1-612-667-8833.
The Funds' reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
[OTHER INFORMATION TAB]
<PAGE>
<PAGE>
<PAGE>
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
minneapolis/St. Paul 1-612-667-8833
Elsewhere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 Norwest Advantage Funds
10/98 [LOGO[
<PAGE>
- --------------------------------
[COVER] Laptop Computer
PROSPECTUS Cup & Saucer
Open Book
Financial Data
OCTOBER 1, 1998
_____________________
INCOME FUNDS
[LOGO] NORWEST
------------------
ADVANTAGE FUNDS(R)
- ---------------------------------
__________________________________
Stable Income Fund
Intermediate Government Income Fund
Income Fund
Total Return Bond Fund
___________________________________
________________________________________________________________________________
Mutual funds are NOT insured by
the FDIC, Federal Reserve System, May Lose Value No Bank Guarantee
U.S. Government, or any other
government agency.
________________________________________________________________________________
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
INCOME FUNDS
Stable Income Fund
Intermediate Government Income Fund
Income Fund
Total Return Bond Fund
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
No governmental agency, including the u.s. securities and exchange commission,
has approved or disapproved these securities or determined whether or not this
prospectus is accurate or complete. any representation to the contrary is a
criminal offense.
<PAGE>
1
Table of Contents [COVER] Laptop Computer
Cup and Saucer
Financial Data
Overview.............................................................2
[Tab] OVERVIEW
Financial Highlights.................................................7
[Tab} FINANCIAL
HIGHLIGHTS
Glossary........................................................... 16
[Tab] GLOSSARY
[Investment Icon] Investment Objectives and Policies.................. 17
[Tab]INVESTMENT
OBJECTIVES
AND POLICIES
[Risk Icon] Risk Considerations..................................... 21
[Tab] RISK
CONSIDERATIONS
Common Policies ....................................................23
[Tab] COMMON
POLICIES
Management of the Funds.............................................24
[Tab]MANAGEMENT
OF THE FUNDS
Choosing a Share Class..............................................26
[Tab]CHOOSING
A SHARE CLASS
How to Buy and Sell Shares..........................................29
[Tab]HOW TO BUY
AND SELL SHARES
Distributions and Tax Matters.......................................34
[Tab]DISTRIBUTION
AND TAX MATTERS
Other Information...................................................35
[Tab] OTHER
INFORMATION
<PAGE>
2
OVERVIEW
The following is a summary of information about the Funds. Before investing, you
should read the prospectus and consider the discussions under Investment
Objectives and Policies and Risk Considerations.
No single fund is a complete or balanced investment program, but each can
serve as a part of your overall investment program.
- --------------------------------------------------------------------------------
FUNDS AT A GLANC
- --------------------------------------------------------------------------------
[FUND ICON]
The Funds generally seek to preserve capital and provide income.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
Stable Income Fund Maintain safety of principal while Investment grade short-term
providing low volatility total (average maturity of 2-5 years)
return. securities.
Intermediate Government Provide income and safety of Investment grade intermediate-term
Income Fund principal. (average maturity of 3-10 years)
U.S. Government Securities.
Income Fund Total return consistent with Investment grade intermediate term
current income. (average maturity of 3-15 years)
domestic and foreign securities.
Total Return Bond Fund Total return. Broad spectrum of investment grade
securities.
</TABLE>
- --------------------------------------------------------------------------------
CLASSES OF SHARES
- --------------------------------------------------------------------------------
This Prospectus offers 2 classes of shares of the Funds. The classes, which have
different fee structures, are:
* A Shares: offered at their net asset value plus an initial sales charge. A
Shares do not pay distribution or shareholder servicing fees.
* B Shares: offered at their net asset value. B Shares pay distribution and
shareholder servicing fees and convert to A Shares within 7 years after
purchase. If you redeem your B Shares within 4 years of purchase, you may
pay a contingent deferred sales charge. The amount of the charge depends on
the length of time you hold the shares.
- --------------------------------------------------------------------------------
FUND STRUCTURES
- --------------------------------------------------------------------------------
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in other funds identified in this prospectus as Portfolios. The
Portfolios do not offer their shares to the public. Except when necessary to
describe a Fund's investment in a Portfolio, this prospectus discusses a Fund's
investments in a Portfolio as if the investments were made directly in
individual securities.
<PAGE>
3
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
[Tab] OVERVIEW
Norwest Investment Management, Inc. or Norwest is each Fund's and Portfolio's
investment adviser. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or
Norwest Bank, provides investment advice to institutions, pension plans, and
other accounts and currently manages more than $29 billion in assets. An
investment subadviser makes investment decisions for 2 Portfolios under
Norwest's general supervision. This prospectus generally refers to Norwest or
the investment subadviser as an Adviser.
The Forum Financial Group of companies provide management, administrative, and
underwriting services to the Funds.
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS AND RESTRICTIONS
- --------------------------------------------------------------------------------
All Funds except Stable Income Fund require a minimum initial investment of
$1,000. Stable Income Fund requires a minimum initial investment of $5,000. All
of the Funds require minimum subsequent investments of $100. Total Return Bond
Fund is closed to new investors.
- --------------------------------------------------------------------------------
EXCHANGES
- --------------------------------------------------------------------------------
If you own Fund shares you may exchange them for shares of certain other Funds.
Your exchange rights will vary depending on the class of shares you own.
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each Fund distributes to shareholders its net capital gain, if any, at least
annually. The DISTRIBUTIONS AND TAX MATTERS section discusses how often the
Funds distribute net investment income.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets the Fund invests in,
the investments that the Fund makes, and prevailing economic conditions over the
period of your investment.
Every Fund also has the risk that its Adviser may not be successful in carrying
out its investment strategy, that a portfolio manager may prove difficult to
replace if he or she becomes unavailable to manage the Fund, and that the Fund's
particular investment strategy may result in performance that is worse or better
than the performance of the market as a whole. Your investment in a Fund also
will have risk if you do not plan to invest for a period that is long enough to
permit the investment to recover from an adverse market movement.
If you invest in a Fund, the investment income you receive will vary with
changes in interest rates. In addition, the value of the Fund's investments
generally will fall when interest rates rise and rise when interest rates fall.
When interest rates fall, there is a risk that issuers will prepay fixed rate
securities, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities.
<PAGE>
4
Some of the Funds invest in mortgage- or other asset-backed securities. For
these Funds, a decline in interest rates may result in losses in these
securities' values and a reduction in their yields as the holders of the assets
backing the securities prepay their debts. Rising interest rates may cause the
average maturity of these Funds to rise due to a drop in prepayments. A rise in
average maturity increases a Fund's sensitivity to rising interest rates and
potential for losses in value.
The Funds also have "credit risk," which is the risk that an issuer will be
unable, or will perceived to be unable, to pay the interest or principal on its
securities when due. Funds that invest primarily in securities that are highly
rated by a nationally recognized statistical rating organization, such as
Standard & Poor's Corporation, generally are subject to less credit risk. Funds
that have substantial investments in securities that are not highly rated are
subject to more credit risk.
- --------------------------------------------------------------------------------
EXPENSES OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The following table will assist you in understanding the expenses that you will
bear directly or indirectly when you invest in a Fund.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Intermediate
Government Income Fund,
Stable Income Fund And
Income Fund Total Return Bond Fund
A B A B
Shares Shares Shares Shares
------------ ------------ ------------ -----------
Maximum sales charges imposed on purchases
(as a percentage of public offering price) 1.5% Zero 4.0% Zero
Maximum deferred sales charge
(as a percentage of the lesser of
original purchase price or redemption Zero 1.5%(1) Zero 3.0%(1)
proceeds)
</TABLE>
<PAGE>
5
[Tab] OVERVIEW
ANNUAL FUND OPERATING EXPENSES (6)
(as a percentage of average daily net assets
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Stable Intermediate
Income Fund Government Income Fund
A B A B
Shares Shares Shares Shares
------------ ------------ ----------- ------------
Investment Advisory Fee N/A N/A 0.33% 0.33%
Rule 12b-1 Fees (AFTER FEE WAIVERS)(2) N/A 0.75% N/A 0.75%
Other Expenses (after fee waivers and 0.28% 0.28% 0.35% 0.35%
reimbursements)(5)
Investment Advisory Fee - Portfolio(3) 0.30% 0.30% N/A N/A
Other Expenses - Portfolio
(after fee waivers and reimbursements)(5) 0.07% 0.07% N/A N/A
Total Operating Expenses(5) 0.65% 1.40% 0.68% 1.43%
Income Fund Total Return Bond Fund
A B A B
Shares Shares Shares Shares
------------ ----------- ------------ ------------
Investment Advisory Fee(5) 0.47% 0.47% N/A N/A
Rule 12b-1 Fees (after fee waivers)(2) N/A 0.75% N/A 0.75%
Other Expenses (after fee waivers and 0.28% 0.28% 0.19% 0.19%
reimbursements)(5)
Investment Advisory Fee - Portfolio(3) N/A N/A 0.50% 0.50%
Other Expenses - Portfolio
(after fee waivers and reimbursements)(5) N/A N/A 0.06% 0.06%
Total Operating Expenses(4)(5) 0.75% 1.50% 0.75% 1.50%
</TABLE>
(1) 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 to 0.75% during the second year and zero the following year. The
maximum 3.0% deferred sales charge on B Shares of the other Funds applies
to redemptions during the first year after purchase; the charge declines to
2.0% during the second and third years, 1.0% during the fourth year, and
zero the following year.
(2) Absent waivers, Rule 12b-1 Fees would be 1.00% for B Shares of each Fund.
(3) Investment Advisory Fee-- Portfolio states the investment advisory fees of
the Portfolios in which Stable Income Fund and Total Return Bond Fund
invest.
(4) Norwest and the Fund's Administrator have agreed to waive their fees or
reimburse expenses in order to maintain Total Return Bond Fund's total
operating expenses at or below 0.75% for A Shares and 1.50% for B Shares.
Any reduction of those waivers or reimbursements would require review by
the Funds' Board of Trustees.
(5) Absent fee waivers, Investment Advisory Fee for Income Fund would be 0.50%.
(6) Absent expense reimbursements and fee wiavers, the expenses of A Shares of
Stable Income Fund, Intermediate Government Income Fund, Income Fund, and
Total Return Bond Fund would be: Other Expenses, 0.56%, 0.58%, 0.68%, and
0.74%, respectively; Other Expenses--Portfolio, 0.13%, N/A, N/A, and 0.11%
respectively; and Total Operating Expenses, 0.98%, 0.81%, 1.14%, and 1.31%,
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, 0.94%,
0.52%, 0.69%, and 0.70%, respectively; Other Expenses--Portfolio, 0.13%,
N/A, N/A, and 0.11%, respectively; and Total Operating Expenses, 2.39%,
1.86%, 2.15%, and 2.36%, respectively. Except as otherwise noted, expense
reimbursements and fee waivers are voluntary and may be reduced or
eliminated at any time.
<PAGE>
6
EXAMPLE
The following Hypothetical Expense Example indicates the dollar amount of
expenses that you 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, reinvestment of all distributions, the deduction of the maximum initial
sales charge for A Shares, the deduction of the 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 6 years (4 years in the case of Stable
Income Fund). The example does not represent past or future expenses or return.
Actual expenses and return may be greater or less than those shown in the
example.
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
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 47 61 76 121
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 47 63 80 129
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 47 63 80 129
B Shares
Assuming redemption
at the end of the period 45 67 82 179
Assuming no redemption 15 47 82 179
</TABLE>
<PAGE>
7
[Tab] FINANCIAL
HIGHLIGHTS
Financial Highlights
The financial highlights table is intended to help you understand each Fund's
financial performance for 10 years or, if shorter, the Fund's operating history.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned
on an investment in the Fund, assuming reinvestment of all distributions. The
information from June 1, 1994 through May 31, 1998 has been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated July 21, 1998 about a
Fund, along with the Fund's financial statements, are included in the Fund's
Annual Report, which is available at no charge upon request. These financial
statements are incorporated by reference into the SAI. Other independent
auditors audited information for prior periods.
<PAGE>
8
<TABLE>
<S> <C> <C> <C> <C> <C>
STABLE INCOME FUND
Net Realized
and Distributions Ending
Beginning Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Investment Value Per
Per Share Income on Investments Income Share
- -----------------------------------------------------------------------------------------------------------------
A Shares
Year Ended May 31, 1998 $10.24 $0.58 $0.06 ($0.57) $10.31
Year Ended May 31, 1997 $10.20 $0.58 $0.04 ($0.58) $10.24
May 2, 1996(e) to May 31, 1996 $10.22 $0.02 -- ($0.04) $10.20
B Shares
Year Ended May 31, 1998 $10.24 $0.51 $0.04 ($0.49) $10.30
Year Ended May 31, 1997 $10.20 $0.52 $0.02 ($0.50) $10.24
May 17, 1996(e) to May 31, 1996 $10.23 $0.02 ($0.01) ($0.04) $10.20
- ---------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and/or fee waivers.
(c) Includes expenses allocated from the Portfolios in which the Fund invests.
(d) Reflects the activity of the Portfolio in which the Fund invests.
(e) Commencement of operations.
(f) Annualized.
9
[Tab] FINANCIAL
HIGHLIGHTS
RATIO TO AVERAGE
NET ASSETS
--------------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- --------------------------------------------------------------------------------
5.74%(c) 0.65%(c) 0.91%(c) 6.38% 37.45%(d) $8,561
5.69% 0.65% 0.87% 6.24% 41.30% $12,451
5.77%(f) 0.70%(f) 2.22%(f) 0.23% 109.95% $16,256
4.94%(c) 1.40%(c) 2.31%(c) 5.50% 37.45%(d) $1,817
4.96% 1.39% 2.89% 5.43% 41.30% $1,056
5.02%(f) 1.42%(f) 3.07%(f) 0.12% 109.95% $867
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
INTERMEDIATE GOVERNMENT INCOME FUND
Net Realized
and Distributions Ending
Beginning Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Investment Value Per
Per Share Income on Investments Income Share
- --------------------------------------------------------------------------------------------------------------------
A Shares
Year Ended May 31, 1998 $10.84 $0.77 $0.31 ($0.70) $11.22
Year Ended May 31, 1997 $10.89 $0.73 ($0.05) ($0.73) $10.84
May 2, 1996(c) to May 31, 1996 $10.89 $0.03 -- ($0.03) $10.89
B Shares
Year Ended May 31, 1998 $10.83 $0.69 $0.31 ($0.62) $11.21
Year Ended May 31, 1997 $10.89 $0.64 ($0.05) ($0.65) $10.83
May 17, 1996(c) to May 31, 1996 $10.97 $0.03 ($0.08) ($0.03) $10.89
- ----------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Commencment of operations.
(d) Annualized.
</TABLE>
11
[Tab] FINANCIAL
HIGHLIGHTS
RATIO TO AVERAGE NET ASSETS
-----------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -------------------------------------------------------------------------------
6.35% 0.68% 0.86% 10.19% 96.76% $14,325
6.58% 0.68% 0.80% 6.36% 183.05% $13,038
7.32%(d) 0.75%(d) 1.74%(d) 0.26% 74.64% $16,562
5.60% 1.43% 1.85% 9.38% 96.76% $8,277
5.80% 1.42% 1.85% 5.51% 183.05% $8,970
5.56%(d) 1.35%(d) 2.65%(d) (0.49%) 74.64% $10,682
<PAGE>
12
INCOME FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ------------------------------------------------------------------------------------------------------------------------------
A Shares
Year Ended May 31, 1998 $9.27 $0.61 $0.52 ($0.61) -- $9.79
Year Ended May 31, 1997 $9.27 $0.62 -- ($0.62) -- $9.27
Year Ended May 31, 1996 $9.63 $0.61 ($0.36) ($0.61) -- $9.27
Year Ended May 31, 1995 $9.52 $0.65 $0.11 ($0.65) -- $9.63
Year Ended May 31, 1994 $10.61 $0.70 ($0.83) ($0.70) ($0.26) $9.52
Year Ended May 31, 1993 $10.52 $0.77 $0.39 ($0.77) ($0.30) $10.61
Year Ended May 31, 1992 $10.23 $0.82 $0.53 ($0.82) ($0.24) $10.52
Year Ended May 31, 1991 $9.94 $0.89 $0.29 ($0.89) -- $10.23
Year Ended May 31, 1990 $10.00 $0.90 ($0.06) ($0.90) -- $9.94
Year Ended May 31, 1989 $9.95 $0.79 $0.05 ($0.79) -- $10.00
B Shares
Year Ended May 31, 1998 $9.26 $0.54 $0.51 ($0.54) -- $9.77
Year Ended May 31, 1997 $9.26 $0.55 -- ($0.55) -- $9.26
Year Ended May 31, 1996 $9.61 $0.54 ($0.35) ($0.54) -- $9.26
Year Ended May 31, 1995 $9.51 $0.58 $0.10 ($0.58) -- $9.61
August 5, 1993(c) to May 31, 1994 $10.67 $0.50 ($0.90) ($0.50) ($0.26) $9.51
- ---------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and/or fee waivers.
(c) Commencement of operations; the original class of shares became A Shares.
(d) Annualized.
13
[Tab] FINANCIAL
HIGHLIGHTS
RATIO TO AVERAGE NET ASSETS
----------------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- --------------------------------------------------------------------------------
6.29% 0.75% 1.14% 12.47% 167.09% $7,661
6.59% 0.75% 1.17% 6.79% 231.00% $5,142
6.33% 0.75% 1.16% 2.58% 270.17% $5,521
7.02% 0.75% 1.24% 8.49% 98.83% $6,231
6.72% 0.60% 1.16% (1.58%) 26.67% $6,177
7.18% 0.60% 1.10% 11.46% 87.98% $85,252
7.80% 0.31% 1.08% 13.58% 84.24% $63,973
8.82% 0.16% 1.11% 12.38% 61.33% $50,138
8.98% 0.19% 1.13% 8.71% 43.81% $37,932
8.62% 0.07% 1.10% 8.78% 48.08% $27,939
5.54% 1.50% 2.19% 11.52% 167.09% $4,855
5.87% 1.50% 2.25% 6.03% 231.00% $3,349
5.57% 1.50% 2.27% 1.92% 270.17% $3,292
6.24% 1.50% 2.21% 7.57% 98.83% $3,296
5.82%(d) 1.33%(d) 2.08%(d) (4.82%)(d) 26.67% $2,605
<PAGE>
14
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN BOND FUND
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -------------------------------------------------------------------------------------------------------------------------------
A Shares
Year Ended May 31, 1998 $9.40 $0.59 $0.28 ($0.59) ($0.05) $9.63
Year Ended May 31, 1997 $9.40 $0.60 $0.03 ($0.60) ($0.03) $9.40
Year Ended May 31, 1996 $9.73 $0.64 ($0.31) ($0.64) ($0.02) $9.40
Year Ended May 31, 1995 $9.54 $0.67 $0.19 ($0.67) -- $9.73
December 31, 1993(e) to May 31, 1994 $10.00 $0.27 ($0.46) ($0.27) -- $9.54
B Shares
Year Ended May 31, 1998 $9.42 $0.52 $0.28 ($0.52) ($0.05) $9.65
Year Ended May 31, 1997 $9.40 $0.53 $0.05 ($0.53) ($0.03) $9.42
Year Ended May 31, 1996 $9.73 $0.57 ($0.31) ($0.57) ($0.02) $9.40
Year Ended May 31, 1995 $9.54 $0.59 $0.19 ($0.59) -- $9.73
December 31, 1993(e) to May 31, 1994 $10.00 $0.24 ($0.46) ($0.24) -- $9.54
- --------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Includes expenses allocated from the Portfolio in which the Fund invests.
(d) Reflects the activity of the Portfolio in which the Fund invests.
(e) Commencement of operations.
(f) Annualized.
15
[Tab] FINANCIAL
HIGHLIGHTS
RATIO TO AVERAGE NET ASSETS
--------------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -----------------------------------------------------------------------------
6.14%(c) 0.75%(c) 1.13%(c) 9.46% 134.56%(d) $3,030
6.37% 0.75% 1.31% 6.84% 55.07% $3,086
6.48% 0.76% 1.57% 3.41% 77.49% $2,010
6.94% 0.64% 2.38% 9.42% 35.19% $599
6.04%(f) 0.37%(f) 13.29%(f) (4.64%)(f) 37.50% $150
5.37%(c) 1.50%(c) 2.22%(c) 8.64% 134.56%(d) $2,648
5.61% 1.49% 2.37% 6.27% 55.07% $2,254
5.75% 1.51% 2.48% 2.63% 77.49% $2,098
6.17% 1.41% 3.09% 8.59% 35.19% $919
5.40%(f) 1.11%(f) 8.29%(f) (5.23%)(f) 37.50% $186
<PAGE>
16 [PICTURE OF COFFEE CUP, SPOON, HAND AND OPEN BOOK]
GLOSSARY
This Glossary of frequently used terms will help you understand the discussion
of the Funds' objectives, policies, and risks. Defined terms are capitalized
when used in this prospectus.
________________________________________________________________________________
TERM DEFINITION
- --------------------------------------------------------------------------------
AMT Alternative minimum tax.
Board The Board of Trustees of Norwest Advantage Funds.
CDSC Contingent deferred sales charge.
Duration A measure of a debt security's average life that reflects
the present value of the security's cash flow. Prices of
securities with longer durations generally are more
volatile.
Fundamental Requiring shareholder approval to change.
Investment Grade Rated at the time of purchase in 1 of the 4 highest
long-term or 2 highest short-term ratings categories by an
NRSRO or unrated and determined by the Adviser to be of
comparable quality.
NRSRO A nationally recognized statistical rating organization,
such as S&P, that rates fixed income securities and
preferred stock by relative credit risk.
Non-Investment Neither rated at the time of purchase in 1 of the 4 highest
Grade long-term or 2 highest short-term ratings categories by an
NRSRO nor unrated and determined by the Adviser to be of
comparable quality.
SAI Statement of Additional Information.
SEC The U.S. Securities and Exchange Commission.
STRIPS Separately traded principal or 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 program.
U.S. Government A security issued or guaranteed as to principal and interest
Security by the U.S. Government, its agencies or its
instrumentalities.
________________________________________________________________________________
<PAGE>
17
[PICTURE OF FINANCIAL DATA]
[Tab INVESTMENT
OBJECTIVES AND
POLICIES]
[Tab GLOSSARY]
Investment Objectives and Policies
This section discusses the investment objectives and policies of the Funds. All
of the Funds invest at least 65% of their total assets in fixed income
securities. After each Fund's description, there is a short, alphabetical
listing of the Fund's primary risks. The RISK CONSIDERATIONS section below
discusses these risks.
- --------------------------------------------------------------------------------
STABLE INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to maintain safety of principal while
providing low volatility total return.
[INVESTMENT ICON]
INVESTMENT POLICIES
The Fund invests primarily in short-term Investment Grade securities. The Fund
invests in a diversified portfolio of fixed and variable rate U.S.
dollar-denominated fixed income securities of a broad spectrum of U.S. and
foreign issuers, including U.S. Government Securities and the debt securities of
financial institutions, corporations, and others.
The Fund normally limits its investments in:
* mortgage-backed securities to not more than 65% of its total assets;
* other types of asset-backed securities to not more than 25% of its total
assets;
* mortgage-backed securities that are not U.S. Government Securities to not
more than 25% of its total assets; and
* U.S. Government Securities to not more than 50% of its total assets.
The Fund may not invest more than 30% 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% of its
total assets in the securities of any other issuer.
The Fund only purchases Investment Grade securities. The Fund invests in debt
obligations with maturities (or average life in the case of mortgage-backed and
similar securities) ranging from overnight to 12 years and seeks to maintain an
average dollar-weighted portfolio maturity of between 2 and 5 years.
The Fund may use options, swap agreements, interest rate caps, floors, and
collars, and futures contracts to manage risk. The Fund also may use options to
enhance return.
________________________________________________________________________________
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
________________________________________________________________________________
<PAGE>
18
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide income and
safety of principal by investing primarily in U.S. Government Securities.
[INVESTMENT ICON]
INVESTMENT POLICIES
The Fund invests primarily in fixed and variable rate U.S. Government
Securities. Under normal circumstances, the Fund intends to invest at least 65%
of its assets in U.S. Government Securities and may invest up to 35% 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 and uses mortgage-backed securities to enhance yield.
The Fund limits its investments in:
* mortgage-backed securities to not more than 50% of its total assets;
* other types of asset-backed securities to not more than 25% of its total
assets; and
* zero-coupon securities, except in STRIPS, to not more than 10% of its total
assets.
As part of its mortgage-backed securities investments, the Fund may enter into
Dollar Rolls. The Fund may not invest more than 25% of its total assets in
securities issued or guaranteed by any single agency or instrumentality of the
U.S.
Government, except the U.S. Treasury. The Fund may enter into short sales.
The Fund will purchase only securities that are rated, at the time of purchase,
within the 2 highest rating categories assigned by an NRSRO, or which are
unrated and determined by the Adviser to be of comparable quality.
The Fund will invest primarily in debt obligations with maturities (or average
life in the case of mortgage-backed and similar securities) ranging from
overnight to 30 years. Under normal circumstances, the Fund's portfolio
securities will have an average dollar-weighted maturity of between 3 and 10
years and a Duration of between 70% and 130% of the Duration of a 5 year
Treasury Note.
The Fund may use options, swap agreements, interest rate caps, floors, and
collars, and futures contracts to manage risk. The Fund also may use options to
enhance return.
________________________________________________________________________________
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Market Risk Prepayment Risk
________________________________________________________________________________
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide total return consistent with
current income.
[INVESTMENT ICON]
<PAGE>
19
[Tab INVESTMENT
OBJECTIVES AND
POLICIES]
INVESTMENT POLICIES
The Fund invests in a diversified portfolio of fixed and variable rate fixed
income securities issued by domestic and foreign issuers. The Fund invests in a
broad spectrum of U.S. issuers, including U.S. Government Securities, mortgage-
and other asset-backed securities, and the debt securities of financial
institutions, corporations, and others. The Adviser attempts to increase the
Fund's performance by applying various fixed income management techniques. The
Adviser combines these techniques 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 Duration of the Lipper
Corporate A-Rated Debt Average.
The Fund normally invests at least 30% of its total assets in U.S. Government
Securities. The Fund limits its investments in mortgage-backed securities to not
more than 50% of its total assets and its investments in other asset-backed
securities to not more than 25% of its total assets.
The Fund may invest up to 70% 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. The Fund also may invest in zero
coupon securities and enter into dollar rolls.
The Fund may invest in debt securities registered and sold in the United States
by foreign issuers and debt securities sold outside the United States by foreign
or U.S. issuers. The Fund restricts its purchases of debt securities to those
denominated and payable in U. S. dollars.
Normally, the Fund will invest at least 80% of its total assets in Investment
Grade securities. The Fund may invest up to 20% of its total assets in
Non-Investment Grade securities rated, at the time of purchase, in the fifth
highest long-term rating category assigned by an NRSRO or unrated and determined
by the Adviser to be of comparable quality.
The Fund invests primarily in securities with maturities (or average life in the
case of mortgage-backed and similar securities) ranging from overnight to 40
years. It is anticipated that the Fund's portfolio 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.
________________________________________________________________________________
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
________________________________________________________________________________
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek total return.
[INVESTMENT ICON]
<PAGE>
20
INVESTMENT POLICIES
The Fund invests in a broad range of fixed income instruments in order to create
a strategically diversified portfolio of fixed income investments. These
investments include corporate bonds, mortgage- and other asset-backed
securities, U.S. Government Securities, preferred stock, convertible bonds, and
foreign bonds.
The Adviser focuses on relative value as opposed to predicting the direction of
interest rates. In general, the Fund seeks higher current income instruments
such as corporate bonds and mortgage-and other asset-backed securities in order
to enhance returns. The Adviser believes that this exposure enhances performance
in varying economic and interest rate cycles and avoids excessive risk
concentrations. The Adviser's investment process involves rigorous evaluation of
each security, including identifying and valuing cash flows, embedded options,
credit quality, structure, liquidity, marketability, current versus historical
trading relationships, supply and demand for the instrument, and expected
returns in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment process
against the Fund's objective and purchases those securities that are consistent
with the Fund's investment objective.
The Fund particularly seeks strategic diversification. The Fund will not
invest more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate market.
The Fund may invest in U.S. Government Securities without restriction. The Fund
generally will not invest more than 5% of its total assets in the corporate
bonds of any single issuer.
The Fund will invest 65% of its total assets in fixed-income securities rated,
at the time of purchase, within the 3 highest rating categories assigned by at
least 1 NRSRO, or which are unrated and determined by the Adviser to be of
comparable quality. The Fund may invest up to 20% of its total assets in
Non-Investment Grade securities.
The average maturity of the Fund will vary between 5 and 15 years. In the case
of mortgage-backed and similar securities, the Fund uses the security's average
life in calculating the Fund's average maturity. The Fund's Duration normally
will vary between 3 and 8 years.
The Fund may use options, swap agreements, interest rate caps, floors, and
collars, and futures contracts to manage risk. The Fund also may use options to
enhance return.
________________________________________________________________________________
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
________________________________________________________________________________
<PAGE>
21
[Tab RISK CONSIDERATIONS
[PICTURE OF LAP TOP COMPUTER, COFFEE CUP, AND OPEN BOOK]
5. RISK CONSIDERATIONS
This section describes the principal risks that may apply to the Funds. Each
Fund's exposure to these risks depends upon its specific investment profile. The
Fund's description in INVESTMENT OBJECTIVES AND POLICIES lists the Fund's
principal risks.
<PAGE>
- --------------------------------------------------------------------------------
CREDIT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise be unable to honor a financial obligation. This risk is
greater for Non-Investment Grade securities.
- --------------------------------------------------------------------------------
FOREIGN RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls, or other
limitations on repatriation of foreign capital or nationalization, increased
taxation, or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues. This
risk may be greater for investments in emerging or developing markets.
- --------------------------------------------------------------------------------
INTEREST RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that changes in interest rates may affect the value of your investment.
With fixed-rate securities, including U.S. Government Securities, an increase in
interest rates typically causes the value of the Fund's fixed-rate securities to
fall, while a decline in interest rates may produce an increase in the market
value of the securities. Because of this risk, an investment in a Fund is
subject to risk even if all the fixed-income securities in the Fund's portfolio
are paid in full at maturity. Changes in interest rates will affect the value of
longer-term fixed-income securities more than shorter-term securities.
- --------------------------------------------------------------------------------
LEVERAGE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that some transactions may multiply smaller market movements into large
changes in a Fund's net asset value. This risk may occur when a Fund borrows
money or enters into transactions that have a similar economic effect, such as
short sales or forward commitment transactions. This risk also may occur when a
Fund makes investments in derivatives, such as options or futures contracts.
- --------------------------------------------------------------------------------
MARKET RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as the
bond markets fluctuate generally. Market risk may affect a single issuer,
industry, or section of the economy or may affect the market as a whole.
<PAGE>
22
- --------------------------------------------------------------------------------
PREPAYMENT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates than
the prepaid securities. For a Fund investing in mortgage- and other asset-backed
securities, this is also the risk that a decline in interest rates may result in
holders of the assets backing the securities to prepay their debts, resulting in
potential losses in these securities' values and yield. Alternatively, rising
interest rates may reduce the amount of prepayments on the assets backing these
securities, causing the Fund's average maturity to rise and increasing the
Fund's sensitivity to rising interest rates and potential for losses in value.
<PAGE>
23
[PICTURE OF COFFEE CUP, SPOON, HAND, AND LAP TOP COMPUTER]
COMMON POLICIES
Except as otherwise indicated, investment policies of the Funds may be changed
by the Board without shareholder approval. The Funds' investment objectives are
Fundamental.
- --------------------------------------------------------------------------------
VOTING ISSUES
- --------------------------------------------------------------------------------
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that shareholders of
Funds with comparatively high net asset values will have a comparatively smaller
impact on the outcome of votes by all of the funds than do shareholders of Funds
with lower net asset values.
- --------------------------------------------------------------------------------
DOWNGRADED SECURITIES
- --------------------------------------------------------------------------------
Each Fund may retain a security whose rating has been lowered (or a security of
comparable quality to a security whose rating has been lowered) below the Fund's
lowest permissible rating category if the Fund's 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
- --------------------------------------------------------------------------------
To respond to adverse market, economic, political, or other conditions, each
Fund may assume a temporary defensive position and invest without limit in cash
or cash equivalents. When a Fund makes temporary defensive investments, it may
not pursue its investment objective and is likely that its shareholders may be
subject to Federal and applicable state income taxes on a greater portion of the
fund's income distribution.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
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. Higher portfolio turnover rates may result in increased brokerage costs
and a possible increase in short-term capital gains or losses. The FINANCIAL
HIGHLIGHTS table lists the Funds' portfolio turnover rate.
- --------------------------------------------------------------------------------
YEAR 2000 AND EURO
- --------------------------------------------------------------------------------
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000 and
Euro issues for their computer systems and to obtain reasonable assurances that
comparable steps are being taken by the Funds' other major service providers.
While the Funds do not anticipate any adverse effect on their computer systems
from the Year 2000 and Euro issues, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds.
<PAGE>
24
[PICTURE OF FINANCIAL DATA]
Management of the Funds
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
Norwest Investment Management, Inc. is the investment adviser for each Fund and
each Portfolio. In this capacity, Norwest makes investment decisions for and
administers the Funds' and Portfolios' investment programs. Norwest Investment
Management, Inc.'s address is Norwest Center, Sixth Street and Marquette,
Minneapolis, MN 55479.
Norwest, Stable Income Portfolio and Strategic Value Bond Portfolio have
retained Galliard Capital Management, Inc. or Galliard as an investment
subadviser to make investment decisions for and administer the investment
programs of those Portfolios. Norwest decides which portion of the Portfolios'
assets Galliard should manage and supervises Galliard's performance of its
duties. Galliard is an investment advisory subsidiary of Norwest Bank which
provides investment advisory services to bank and thrift institutions, pension
and profit sharing plans, trusts and charitable organizations, and corporate and
other business entities. Galliard Capital Management, Inc.'s address is 800
Lasalle Ave. Suite 2060, Minneapolis, MN 55479.
Listed below, for each Fund, are the portfolio managers primarily responsible
for the day-to-day management of the Fund's investments. The year a portfolio
manager began managing a Fund's portfolio follows the manager's name in
parenthesis. The list includes the investment advisory fees payable to Norwest
by the Fund or the Portfolio in which it invests. The list states the investment
advisory fees on an annualized basis as a percentage of a Fund's or Portfolio's
average daily net assets. Descriptions of the portfolio managers' recent
experience follow the list of portfolio managers and advisory fees.
How investment advisory fees are paid depends on whether or not a Fund invests
in a Portfolio.
* If a Fund invests directly in a portfolio of securities, Norwest receives
an investment advisory fee directly from the Fund.
* If a Fund invests in a Portfolio, Norwest receives an investment advisory
fee from the Portfolio.
Norwest (and not the Funds or Portfolios) pays the subadviser's investment
subadvisory fee. The investment subadvisory fee does not increase the amount of
the investment advisory fees paid to Norwest by the Funds or Portfolios.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STABLE INCOME FUND
Portfolio: Stable Income Portfolio
Subadviser: Galliard
Portfolio Manager: Karl P. Tourville (1994) and John Huber (1998).
Advisory Fee: 0.30%
________________________________________________________________________________
<PAGE>
25
[Tab MANAGEMENT OF THE FUNDS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
Portfolio Manager: Marjorie H. Grace, CFA (1995).
Advisory Fee: 0.33%
INCOME FUND
Portfolio Manager: Marjorie H. Grace, CFA (1996).
Advisory Fee: 0.50%
TOTAL RETURN BOND FUND
Portfolio: Strategic Value Bond Portfolio
Subadviser: Galliard
Portfolio Managers: Richard Merriam, CFA (1997), John Huber (1998),
and David Yim (1998)
Advisory Fee: 0.50%
________________________________________________________________________________
PORTFOLIO MANAGERS
Marjorie H. Grace, associated with Norwest or its affiliates since 1992. Ms.
Grace is a Director, Taxable Fixed Income of Norwest.
John Huber, associated with Norwest or its affiliates since 1990. Mr. Huber has
been a portfolio manager and Corporate Trading Specialist at Galliard since 1995
and has been in investment management since 1990.
Richard Merriam, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is responsible
for investment process and strategy. Mr. Merriam was previously Chief Investment
Officer of Insight Investment Management.
Karl P. Tourville, associated with Norwest or its affiliates since 1986. Mr.
Tourville has been a managing partner of Galliard since 1995.
David Yim, associated with Norwest or its affiliates since 1995. Mr. Yim has
been a portfolio manager and Credit Research Specialist of Galliard since 1995
and previously worked for American Express Financial Advisors as a Research
Analyst.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund that invests in a
Portfolio. Norwest does not receive any compensation under this arrangement as
long as a Fund invests entirely in a Portfolio. If a Fund redeems assets from a
Portfolio and invests them directly, Norwest receives an investment advisory fee
from the Fund for the management of those assets.
- --------------------------------------------------------------------------------
OTHER FUND SERVICES
- --------------------------------------------------------------------------------
The Forum Financial Group of companies provide managerial, administrative, and
underwriting services to the Funds. Norwest Bank acts as the Funds' transfer
agent, distribution disbursing agent, and custodian.
<PAGE>
26
[PICTURE OF LAP TOP COMPUTER AND CUP AND SAUCER]
CHOOSING A SHARE CLASS
Sales charges and fees vary considerably between a Fund's A Shares and B Shares.
After a set number of years, B Shares, which have higher fees, convert to A
Shares, which have lower fees. Consider the differences in the classes' fee
structures carefully before choosing which class to purchase. In particular,
consider how long you intend to invest in the Fund and whether during that
period the accumulated fees and applicable CDSCs on B Shares would be less than
the initial sales charge on A Shares. Also, consider whether you might qualify
for a reduced sales charge on A Shares and whether any difference in total
expenses between classes would be offset by A Shares' higher yield. The SAI has
more information about ways to qualify for reduced sales charges and how reduced
sales charge alternatives operate.
- --------------------------------------------------------------------------------
A SHARES
- --------------------------------------------------------------------------------
The Funds offer A Shares at their next-determined net asset value plus the
following initial sales charge (no sales charge applies to reinvestments of
distributions):
<TABLE>
<S> <C> <C> <C>
STABLE INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sales Charge
As A Percentage Of*.
Amount Of Purchase Offering Price+ Net Amount Invested
Less than $50,000........................... 1.50% 1.52%
$50,000 to $99,999.......................... 1.00% 1.01%
$100,000 to $499,000........................ 0.75% 0.76%
$500,000 to $999,000........................ 0.50% 0.50%
$1,000,000 and over....................... None None
*Rounded to the nearest one-hundredth percent.
+The amount of the initial sales charge is included in the offering price.
________________________________________________________________________________
INTERMEDIATE GOVERNMENT INCOME FUND,
INCOME FUND, AND TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sales Charge
As A Percentage Of*
Amount Of Purchase Offering Price+ Net Amount Invested
Less than $50,000........................... 4.00% 4.17%
$50,000 to $99,999.......................... 3.50% 3.63%
$100,000 to $249,000........................ 3.00% 3.09%
$250,000 to $499,999.............................. 2.50% 2.56%
$500,000 to $999,000............................. 2.00% 2.04%
over $1,000,000 ................................... None None
*Rounded to the nearest one-hundredth percent.
+The amount of the initial sales charge is included in the offering price.
</TABLE>
________________________________________________________________________________
<PAGE>
27
[Tab CHOOSING A SHARE CLASS]
If you redeem A Shares purchased with a reduced sales charge, the Funds may
impose a charge on the redemption depending on how long you have held the
shares.
- --------------------------------------------------------------------------------
B SHARES
- --------------------------------------------------------------------------------
The Funds offer B Shares at their net asset value per share. The Funds' B Shares
have distribution and shareholder servicing fees of 1.00% of the average daily
net assets of the class under a Rule 12b-1 distribution plan. Because
distribution fees are paid out of the Funds' assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost more than
paying a front-end sales charge.
CONTINGENT DEFERRED SALES CHARGE
If you redeem B Shares within 4 years of purchase (2 years in the case of the
Stable Income Fund), there will be a CDSC on the redemption in the amount
indicated below. The amount of the CDSC will vary depending on the number of
years between the payment for the purchase of the shares and their redemption.
You will pay the CDSC on the lesser of the cost of the B Shares redeemed and
their net asset value upon redemption. The Funds do not impose a CDSC on B
Shares purchased through reinvestments of dividends and distributions.
Charge For Stable Income Fund
Year Since Purchase
First................................................ 1.50%
Second............................................... 0.75%
Third and subsequent................................. None
Charge For Intermediate
Government
Year Since Purchase Income Fund, Income Fund,
And Total Return Bond Fund
First................................................ 3.0%
Second............................................... 2.0%
Third................................................ 2.0%
Fourth............................................... 1.0%
Fifth................................................ None
Sixth................................................ None
The Funds will redeem shares in the manner that results in the imposition of the
lowest CDSC. The Funds will automatically redeem shares first from any A Shares
of the Fund, second from B Shares of the Fund acquired pursuant to reinvestment
of distributions, third from B Shares of the Fund held for more than 4 years (2
years in the case of the Stable Income Fund), and fourth from the longest-
outstanding B Shares of the Fund held for less than 4 years (2 years in the case
of the Stable Income Fund).
<PAGE>
28
CONVERSION FEATURE
B Shares will automatically convert to A Shares 6 years (4 years in the case of
Stable Income Fund) from the end of the calendar month in which the Fund
accepted your purchase. 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, the Funds will consider B Shares
purchased through the reinvestment of dividends and distributions to be held in
a separate sub-account. Each time any B Shares in your account (other than those
in the sub-account) convert, a corresponding pro rata portion of the shares in
the sub-account will also convert. The Funds may suspend the conversion feature
in the future; in that event, B Shares might continue to pay their distribution
fee indefinitely.
<PAGE>
29
[PICTURE OF LAP TOP COMPUTER, COFFEE CUP, HAND, AND OPEN BOOK]
[Tab HOW TO BUY AND SELL SHARES]
HOW to BUY and SELL SHARES
You may purchase Fund shares on "Fund Business Days" at their net asset value
next determined after receipt of your purchase order in proper form plus, in the
case of A Shares, any applicable sales charge. Fund Business Days are all
weekdays except generally observed national holidays (New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving, and Christmas) and Good Friday.
- --------------------------------------------------------------------------------
GENERAL PURCHASE INFORMATION
- --------------------------------------------------------------------------------
You may purchase shares directly or through a financial institution. The Funds'
transfer agent processes all transactions in Fund shares.
All of the Funds except Stable Income Fund require a minimum initial investment
of $1,000. Stable Income Fund requires a minimum initial investment of $5,000.
All of the Funds require minimum subsequent investments of $100. Your shares
become eligible to receive distributions the Fund Business Day after your
purchase order is received in proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
- --------------------------------------------------------------------------------
PURCHASE PROCEDURES
- --------------------------------------------------------------------------------
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at the
following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying that
your Social Security number or other taxpayer identification 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.
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.
<PAGE>
30
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on your
account (such as addresses). Norwest Advantage Funds may in the future modify,
limit or terminate any shareholder privilege upon appropriate notice and may
charge a fee for certain shareholder services, although no such fees are
currently contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
- --------------------------------------------------------------------------------
PURCHASES BY MAIL
- --------------------------------------------------------------------------------
You may send a check or money order along with a completed account application
to Norwest Advantage Funds 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 2 business days after receipt of the check. Checks drawn on some
non-member banks may take longer. If your check does not clear, the purchase
order will be canceled and you will be liable for any losses or fees incurred by
Norwest Advantage Funds, the transfer agent or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts, you
must write a check or purchase a money order payable to Norwest Advantage Funds
or endorse a check made out to you to Norwest Advantage Funds. For corporation,
partnership, trust, 401(k) plan, or other non-individual type accounts, make the
check used to purchase shares payable to Norwest Advantage Funds. No other
methods of payment by check will be accepted for these types of accounts.
- --------------------------------------------------------------------------------
PURCHASES BY BANK WIRE
- --------------------------------------------------------------------------------
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial investment
in a Fund by bank wire. Then instruct your bank to wire your money immediately
to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge for
transmitting the money by wire. The Funds do not charge for the receipt of wire
transfers. The Funds treat payment by bank wire as a federal funds payment when
received.
- --------------------------------------------------------------------------------
PURCHASES THROUGH FINANCIAL INSTITUTIONS
- --------------------------------------------------------------------------------
You may purchase and redeem shares through certain broker-dealers, banks, and
other financial institutions. When you purchase a Fund's shares through a
financial institution, the shares may be held in your name or in the name of the
financial institution. Subject to your institution's procedures, you may have
Fund shares held in the name of your financial institution transferred into your
name. If your shares are held in the name of your financial institution, you
must contact the financial institution on matters involving your shares. Your
financial institution may charge you for purchasing, redeeming, or exchanging
shares.
<PAGE>
31
[Tab HOW TO BUY AND SELL SHARES]
SUBSEQUENT PURCHASES OF SHARES
You may make subsequent purchases by mailing a check, by sending a bank wire, or
through a financial institution as indicated above. All payments should clearly
indicate your name and account number.
- --------------------------------------------------------------------------------
GENERAL REDEMPTION INFORMATION
- --------------------------------------------------------------------------------
You may redeem Fund shares as of the next determination of the Fund's net asset
value following receipt by the transfer agent of your redemption order in proper
form subject to, in the case of B Shares, a CDSC imposed on most redemptions
made within 4 years of purchase (two in the case of Stable Income Fund).
Redeemed shares are not entitled to receive distributions after the day on which
the redemption is effective.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7 days,
unless: (1) your bank has not cleared the check to purchase the shares (which
may take up to 15 days); (2) the New York Stock Exchange is closed (or trading
is restricted) for any reason other than normal weekend or holiday closings; (3)
there is an emergency in which it is not practical for the Fund to sell its
portfolio securities or for the Fund to determine its net asset value; or (4)
the SEC deems it inappropriate for redemption proceeds to be paid. You can avoid
the delay of waiting for your bank to clear your check by paying for shares with
wire transfers. Unless otherwise indicated, redemption proceeds normally are
paid by check mailed to your record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to change
your record name; (3) modification of a designated bank account for wire
redemptions; (4) instruction regarding an Automatic Investment Plan or Automatic
Withdrawal Plan; (5) distribution elections; (6) election of telephone
redemption privileges; (7) election of exchange or other privileges in
connection with your account; (8) written instruction to redeem shares whose
value exceeds $50,000; (9) redemption in an account when the account address has
changed within the last 30 days; (10) redemption when the proceeds are deposited
in a Norwest Advantage Funds account under a different account registration; and
(11) the payment of redemption proceeds to any address, person, or account for
which there are not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities exchanges,
credit unions, savings associations, or other eligible institutions. The
specific institution providing the guarantee must be 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.
The Funds and the transfer agent will use reasonable procedures to verify that
telephone requests are genuine, including recording telephone instructions and
sending written confirmations of the transactions. Such procedures are necessary
because the Funds and transfer agent could be liable for losses due to
unauthorized or fraudulent telephone instructions. You should verify the
accuracy of a telephone instruction as soon as you receive the confirmation
statement. Telephone redemption and exchanges may be difficult to implement in
times of drastic economic or market changes. If you cannot reach the transfer
agent by telephone, you may mail or hand-deliver requests to the transfer agent.
<PAGE>
32
Because of the cost of maintaining smaller accounts, Norwest Advantage Funds may
redeem, upon not less than 60 days' written notice, any account with a net asset
value of less than $1,000 ($5,000 in the case of Stable Income Fund) immediately
following any redemption.
- --------------------------------------------------------------------------------
REDEMPTION PROCEDURES
- --------------------------------------------------------------------------------
If you have invested directly in a Fund you may redeem your shares as described
below. If you have invested through a financial institution you may redeem
shares through the financial institution. If you wish to redeem shares by
telephone or receive redemption proceeds by bank wire you should complete the
appropriate sections of the account application. These privileges may not be
available until several weeks after the application is received. You may not
redeem shares by telephone if you have certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all requests and
endorse all certificates with signature guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares by
telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and providing
your shareholder account number, the exact name in which the shares are
registered, and your Social Security number or other taxpayer identification
number. Norwest Advantage Funds will mail a check to your record address or, if
you have chosen wire redemption privileges, wire the proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a bank
account you have designated in writing. You must have chosen the telephone
redemption privilege to request bank redemptions by telephone. Redemption
proceeds are wired on the Fund Business Day after the transfer agent receives a
redemption request in proper form.
- --------------------------------------------------------------------------------
EXCHANGES
- --------------------------------------------------------------------------------
You may exchange A Shares and B Shares for A Shares and B Shares, respectively,
of the Funds and of other funds of Norwest Advantage Funds that offer those
classes of shares. You may also exchange A Shares and B Shares for some classes
of certain money market funds of Norwest Advantage Funds. Call or write the
transfer agent for both a list of funds that offer shares exchangeable with
those of the Funds and prospectuses of those funds.
<PAGE>
33
[Tab HOW TO BUY AND SELL SHARES]
The Funds do not charge for exchanges, and there is currently no limit on the
number of exchanges you may make. The Funds, however, may limit your ability to
exchange shares if you exchange too often. Exchanges are subject to the fees
(other than CDSCs) charged by, and the limitations (including minimum investment
restrictions) of, the Fund into which you are exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you wish to
exchange shares into an account registered differently or with different
shareholder privileges. You may exchange into a Fund only if that Fund's shares
may legally be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a purchase
of shares. The Funds may amend or terminate exchange procedures on 60 days'
notice.
SALES CHARGES
Some exchanges of A Shares may require a sales charge in addition to the sales
charge you paid to purchase the shares. If you exchange into a fund that imposes
an initial sales charge greater than the sales charge you paid, you must pay the
difference between the sales charge of the fund you are exchanging into and your
Fund. For example, if you paid a 2% initial sales charge on a purchase of shares
and then exchanged those shares for shares of another fund with a 3% initial
sales charge, you would pay an additional 1% sales charge on the exchange. The
Funds deem A Shares acquired through the reinvestment of distributions to have
been acquired with a sales charge equal to the maximum sales charge of the Fund.
You may exchange B Shares without paying a CDSC. If you redeem shares you
received in an exchange, the CDSC will be calculated as if you never exchanged
the B Shares you originally purchased. B Shares acquired through an exchange
will convert to A Shares when the B Shares originally purchased would convert to
A Shares.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign all
written requests and endorse all certificates with signature guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone exchange by
calling the transfer agent at 1-800-338-1348 or 1-612-667-8833 and giving your
account number, the exact name in which the shares are registered and your
Social Security number or other taxpayer identification number.
<PAGE>
34
[PICTURE OF FINANCIAL DATA]
Distributions and Tax Matters
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Stable Income Fund, Intermediate Government Income Fund, and Total Return Bond
Fund declare and distribute net investment income monthly. Income Fund declares
distributions of net investment income daily and pays those distributions
monthly. Each Fund's net capital gain, if any, is distributed at least annually.
Distributions on B Shares will be lower than those on A Shares per share because
of the distribution and other fees applicable to B Shares.
You have 3 choices for receiving distributions: the Reinvestment Option, the
Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are automatically
invested in additional shares of that Fund. You are automatically assigned this
option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a Fund's
shares in a single account, you can have that Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax purposes
whether received in cash or reinvested in shares of a fund. All distributions
reinvested in a fund are reinvested at the fund's net asset value as of the
payment date of the distribution.
- --------------------------------------------------------------------------------
TAX MATTERS
- --------------------------------------------------------------------------------
The Funds are managed so that they do not owe federal income or excise tax.
Distributions paid by a Fund out of its net investment income (including net
short-term capital gain) are taxable as ordinary income. Distributions of net
capital gain (i.e., the excess of net long-term capital gain over net short-term
capital loss) are taxable as long-term capital gain, regardless of how long a
shareholder has held shares in the Fund. Distributions of net capital gain may
be taxable at different rates depending on the length of time the Fund holds its
assets. If shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions (other than distributions of net investment income of Income Fund)
reduce the net asset value of the Fund paying the distribution by the amount of
the distribution. Furthermore, a distribution made shortly after you purchase
shares, although in effect a return of capital to you, is taxable.
If a Fund receives investment income from sources within foreign countries, that
income may be subject to foreign income or other taxes.
<PAGE>
35
[PICTURE OF LAP TOP, COFFEE CUP AND SAUCER, AND OPEN BOOK]
Other Information
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund determines net asset value at 4:00 p.m., Eastern Time on each Fund
Business Day by dividing the value of its 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 value portfolio
securities at current market value if market quotations are readily available.
If market quotations are not readily available, the Funds value securities at
fair value as determined by or pursuant to procedures adopted by the Board.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however, may
not take place on all Fund Business Days or may take place on days that are not
Fund Business Days. The determination of the prices of foreign securities may be
based on the latest market quotations for the securities. If events occur that
affect the securities' value after the close of the markets on which the
securities trade, the Funds may make an adjustment to the value of the
securities for purposes of determining net asset value.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
- --------------------------------------------------------------------------------
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund bears
its pro rata share of the expenses of any Portfolio in which it invests. The
Board may redeem a Fund's investment in a Portfolio at any time. The Fund could
then invest directly in individual securities or could re-invest in 1 or more
different Portfolios that could have different fees and expenses. A Fund might
redeem, for example, if other investors had sufficient voting power to change
the investment objectives or policies of the Portfolio in a manner detrimental
to the Fund.
- --------------------------------------------------------------------------------
BROKER-DEALER REALLOWANCES
- --------------------------------------------------------------------------------
The Funds' distributor may pay a "broker-dealer's" reallowance to certain
financial intermediaries purchasing shares as principal or agent. Normally, the
distributor will reallow the amounts indicated below, although it may at times
reallow the entire sales charge. The distributor also may make additional
payments to certain intermediaries out of its own resources of up to 0.75%
(0.50% in the case of Stable Income Fund) of the net asset value of Fund shares
purchased. Norwest Advantage Funds may change the amount of the reallowance.
In addition, at its own expense, the distributor may provide compensation,
including financial assistance, to financial intermediaries in connection with
their conferences, employee sales or training programs, public seminars,
advertising campaigns, or other special events. The distributor may, for
example, compensate the intermediaries with travel arrangements and lodging,
tickets for entertainment events, and merchandise. The distributor may make this
compensation available only to intermediaries that have sold or are expected to
sell significant amounts of Fund shares or who charge an asset based fee,
whether or not they have a fiduciary relationship with their clients.
[Tab OTHER INFORMATION]
[Tab DISTRIBUTIONS AND TAX MATTERS]
<PAGE>
36
STABLE INCOME FUND
Amount Of Purchase Broker-dealers' Reallowance As A Percentage
Of Offering Price
Less than $50,000........................... 1.35%
$50,000 to $99,999.......................... 0.90%
$100,000 to $499,000........................ 0.70%
$500,000 to $999,000........................ 0.45%
$1,000,000 and over......................... None
INTERMEDIATE GOVERNMENT INCOME FUND,
INCOME FUND, AND TOTAL RETURN BOND FUND
Amount Of Purchase Broker-dealers' Reallowance As A
Percentage Of Offering Price
Less than $50,000........................... 3.50%
$50,000 to $99,999.......................... 3.00%
$100,000 to $249,000........................ 2.50%
$250,000 to $499,999........................ 2.25%
$500,000 to $999,000........................ 1.75%
$1,000,000 to $2,499,999.................... 0.75%
$2,500,000 to $4,999,999.................... 0.50%
Over $5,000,000............................. 0.25%
No one has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI, and the
Funds' official sales literature. Any such information or representations must
not be relied upon as having been authorized by the Funds. 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>
37
If you would like more information about the Funds and their investments, you
may want to read the following documents:
Statement Of Additional Information. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such as
its investments, management, and organization. It is incorporated into this
Prospectus by reference.
Annual And Semi-annual Reports. Additional Information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, the Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report and semi-annual report by
contacting your investment representatiave or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479 or by calling 1-800-
338-1348 or 1-612-667-8833.
The Funds' reports and statement of additional information are available from
the Securities and Exchange Commission in Washington, D.C. You may obtain copies
of these documents, upon payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington D.C. 20549-6009. Please call
1-800-SEC-0330 for information about the operation of the SEC's public reference
room. The Fund's reports and other information are also available on the SEC's
Web Site at http:// www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
[Tab OTHER INFORMATION]
PROSPECTUS
OCTOBER 1, 1998
________________________________
TAX-FREE
INCOME FUNDS
[LOGO]
[COVER WITH PC, CALCULATOR, CONSTRUCTION SITE]
_________________________________
TAX-FREE INCOME FUND
COLORADO TAX-FREE FUND
MINNESOTA TAX-FREE FUND
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
P R O S P E C T U S
OCTOBER 1, 1998
TAX-FREE INCOME FUND
COLORADO TAX-FREE FUND
MINNESOTA TAX-FREE FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE U.S. SECURITIES AND EXCHANGE COMMISSION,
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
1
TABLE OF CONTENTS [COVER GRAPHICS]
OVERVIEW...................................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS......................................6
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY...................................................12
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES.........................13
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
RISK CONSIDERATIONS........................................16
[RISK CONSIDERATIONS TAB]
COMMON POLICIES........................................... 18
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS....................................19
[MANAGEMENT OF THE FUNDS TAB]
CHOOSING A SHARE CLASS.....................................20
[CHOOSING A SHARE CLASS TAB]
HOW TO BUY AND SELL SHARES.................................22
[HOW TO BUY AND SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS...............................27
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION.......................................... 29
[OTHER INFORMATION TAB]
<PAGE>
2
- --------------------------------------------------------------------------------
OVERVIEW [KEYBOARD]
- --------------------------------------------------------------------------------
The following is a summary of information about the Funds. Before
investing, you should read the prospectus and consider the discussions
under Investment Objectives and Policies and Risk Considerations.
No single Fund is a complete or balanced investment program, but each can
serve as a part of your overall investment program.
THE FUNDS AT A GLANCE
[FUND ICON]
The Funds generally seek current income exempt from federal or state income
taxes.
------------------------------------------------------------------------
------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
TAX-FREE INCOME FUND Current income exempt from Investment grade (average maturity
federal income taxes. of 10-20+ years) municipal
securities.
COLORADO TAX-FREE FUND A high-level of current income Investment grade (average maturity
exempt from both federal of 10-20+ years) Colorado
(including the AMT) and Colorado municipal securities.
income taxes consistent with the
preservation of capital.
MINNESOTA TAX-FREE FUND A high-level of current income Investment grade (average maturity
exempt from both federal and of 10-20+ years) Minnesota
Minnesota income taxes (including municipal securities.
the AMT) consistent with the
preservation of capital.
</TABLE>
CLASSES OF SHARES
This Prospectus offers 2 classes of shares of the Funds. The classes, which have
different fee structures, are:
* A Shares: offered at their net asset value plus an initial sales charge. A
Shares do not pay distribution or shareholder servicing fees.
* B Shares: offered at their net asset value. B Shares pay distribution and
shareholder servicing fees and convert to A Shares 6 years after purchase.
If you redeem your B Shares within 4 years of purchase, you may pay a
contingent deferred sales charge. The amount of the charge depends on the
length of time you hold the shares.
<PAGE>
3
MANAGEMENT OF THE FUNDS
[OVERVIEW TAB]
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is each Fund's investment
adviser. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest
Bank, provides investment advice to institutions, pension plans, and other
accounts, and currently manages more than $29 billion in assets.
The FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
The Funds require a minimum initial investment of $1,000 and minimum
subsequent investments of $100. Colorado Tax-Free Fund offers shares only
to residents of Colorado. Minnesota Tax-Free Fund offers shares only to
residents of Minnesota.
EXCHANGES
If you own shares of a Fund, you may exchange them for shares of certain
other funds. Your exchange rights will vary depending on the class of
shares you own.
DISTRIBUTIONS
Each Fund distributes to shareholders its net capital gain, if any, at
least annually. The DISTRIBUTIONS AND TAX MATTERS section discusses how
often the Funds distribute net investment income.
RISK FACTORS
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets in which the Fund
invests, the investments that the Fund makes, and prevailing economic
conditions over the period of your investment.
The investment income you receive from a Fund will vary with changes in
interest rates. In addition, the value of the Fund's investments generally
will fall when interest rates rise and rise when interest rates fall. When
interest rates fall, there is a risk that issuers will prepay fixed rate
securities, forcing the Fund to invest in securities with lower interest
rates than the prepaid securities.
In addition, the Funds' investments have "credit risk," which is the risk
that an issuer will be unable, or will be perceived to be unable, to pay
the principal and interest on its obligations when due. Funds that invest
primarily in securities that are highly rated by a nationally recognized
statistical rating organization, such as Standard & Poor's Corporation,
generally have less credit risk. Funds that have substantial investments in
securities that are not highly rated are subject to more credit risk.
<PAGE>
4
The Funds that invest primarily in the debt securities of the government
and municipalities of a single state are more exposed to adverse economic
developments and other risks affecting that state than the Fund that
invests in a number of different states. Also, these single state Funds may
invest in fewer issuers than the other Fund; a decline in the value of a
Fund's investment in an issuer could therefore have a more significant
effect on the Fund's shares.
Each Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund,
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you
will bear directly or indirectly when you invest in a Fund.
SHAREHOLDER TRANSACTION EXPENSES
(applicable to each Fund)
<TABLE>
<S> <C> <C>
A B
SHARES SHARES
- ---------------------------------------------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 4.0% Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase
price or redemption proceeds) Zero 3.0%(1)
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
TAX-FREE INCOME FUND
A B
Shares Shares
------------ ------------
Investment Advisory Fee (2) 0.34% 0.34%
Rule 12b-1 Fees (after fee waivers)(3) N/A 0.75%
Other Expenses (after fee waivers and 0.26% 0.26%
reimbursements)
Total Operating Expenses(4) 0.60% 1.35%
COLORADO TAX-FREE FUND MINNESOTA TAX-FREE FUND
A B A B
Shares Shares Shares Shares
------------ ------------ ------------ ------------
Investment Advisory Fee (2) 0.29% 0.29% 0.23% 0.23%
Rule 12b-1 Fees (after fee waivers)(3) N/A 0.75% N/A 0.75%
Other Expenses (after fee waivers and 0.31% 0.31% 0.37% 0.37%
reimbursements)
Total Operating Expenses(4) 0.60% 1.35% 0.60% 1.35%
</TABLE>
<PAGE>
5
[OVERVIEW TAB]
(1) The maximum 3.0% CDSC on B Shares of a Fund applies to redemptions during
the first year after purchase; the CDSC declines to 2.0% for redemptions
during the second and third years, 1.0% for redemptions during the fourth
year, and 0% the following year.
(2) Absent waivers, Investment Advisory Fee would be 0.50% for each Fund.
(3) Absent waivers, Rule 12b-1 Fees would be 1.00% for B Shares of each Fund.
(4) Absent 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, 0.49%, 0.54%, and 0.57%, respectively; and Total
Operating Expenses, 0.99%, 1.04%, and 1.07%, respectively. Absent 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, 0.55%, 0.54%, and 0.57%, respectively; and Total Operating
Expenses, 2.05%, 2.04%, and 2.07%, respectively. 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 you 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, reinvestment of all distributions, the deduction of the
maximum initial sales charge for A Shares, the deduction of the 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 6 years.
THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR RETURN. ACTUAL
EXPENSES AND RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------- ---------------- ----------------- ----------------
TAX-FREE INCOME FUND
A Shares $46 $58 $72 $112
B Shares
Assuming redemption at the end of the 44 63 74 162
period
Assuming no redemption 14 43 74 162
COLORADO TAX-FREE FUND
A Shares 46 58 72 112
B Shares
Assuming redemption at the end of the 44 63 74 162
period
Assuming no redemption 14 43 74 162
MINNESOTA TAX-FREE FUND
A Shares 46 58 72 112
B Shares
Assuming redemption at the end of the 44 63 74 162
period
Assuming no redemption 14 43 74 162
</TABLE>
<PAGE>
6
FINANCIAL HIGHLIGHTS [CONSTRUCTION SITE]
The financial highlights table is intended to help you understand each Fund's
financial performance for the Fund's operating history. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
the Fund, assuming reinvestment of all distributions. The information from June
1, 1994 through May 31, 1998 has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report dated July 21, 1998 about a Fund, along with
the Fund's financial statements, are included in the Fund's Annual Report, which
is available at no charge upon request. These financial statements are
incorporated by reference into the SAI. Other independent auditors audited
information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-FREE INCOME FUND
A SHARES
Year Ended May 31, 1998 $10.05 $0.53 $0.49 ($0.53) -- $10.54
Year Ended May 31, 1997 $9.78 $0.54 $0.27 ($0.54) -- $10.05
Year Ended May 31, 1996 $9.82 $0.55 ($0.04) ($0.55) -- $9.78
Year Ended May 31, 1995 $9.60 $0.55 $0.22 ($0.55) -- $9.82
Year Ended May 31, 1994 $10.06 $0.58 ($0.39) ($0.58) ($0.07) $9.60
Year Ended May 31, 1993 $9.98 $0.66 $0.11 ($0.66) ($0.03) $10.06
Year Ended May 31, 1992 $9.95 $0.70 $0.04 ($0.70) ($0.01) $9.98
Year Ended May 31, 1991 $9.78 $0.70 $0.17 ($0.70) -- $9.95
August 1, 1989(c) to May 31, 1990 $10.00 $0.57 ($0.22) ($0.57) -- $9.78
B SHARES
Year Ended May 31, 1998 $10.05 $0.46 $0.48 ($0.45) -- $10.54
Year Ended May 31, 1997 $9.78 $0.46 $0.27 ($0.46) -- $10.05
Year Ended May 31, 1996 $9.82 $0.48 ($0.04) ($0.48) -- $9.78
Year Ended May 31, 1995 $9.60 $0.48 $0.22 ($0.48) -- $9.82
August 6, 1993(c) to May 31, 1994 $10.17 $0.39 ($0.50) ($0.39) ($0.07) $9.60
- ----------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursement and fee waivers.
(c) The Fund commenced operations on August 1, 1989; the original class of
shares subsequently became A Shares. The Fund commenced offering B Shares
on August 6, 1993.
(d) Annualized.
<PAGE>
7
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
- ------------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -------------------------------------------------------------------------------
5.09% 0.60% 0.99% 10.33% 142.81% $35,121
5.41% 0.50% 1.06% 8.43% 152.33% $29,217
5.54% 0.40% 1.06% 5.29% 126.20% $33,914
5.87% 0.60% 1.12% 8.42% 130.90% $30,786
5.77% 0.60% 1.14% 1.74% 116.54% $34,426
6.47% 0.60% 1.12% 7.86% 42.81% $109,983
7.03% 0.34% 1.14% 7.65% 73.66% $56,250
7.09% 0.14% 1.08% 9.16% 101.11% $35,215
6.96%(d) 0.03%(d) 0.97%(d) 4.34%(d) 41.16% $17,439
4.31% 1.35% 2.05% 9.52% 142.81% $11,070
4.64% 1.26% 2.15% 7.63% 152.33% $7,329
4.77% 1.14% 2.21% 4.50% 126.20% $5,897
5.05% 1.35% 2.21% 7.61% 130.90% $3,729
4.76%(d) 1.31%(d) 2.24%(d) (0.98%) 116.54% $2,674
<PAGE>
8
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ----------------------------------------------------------------------------------------------------------------------------------
Colorado Tax-Free Fund
A SHARES
Year Ended May 31, 1998 $10.22 $0.53 $0.47 ($0.53) -- $10.69
Year Ended May 31, 1997 $9.89 $0.54 $0.33 ($0.54) -- $10.22
Year Ended May 31, 1996 $9.90 $0.53 ($0.01) ($0.53) -- $9.89
Year Ended May 31, 1995 $9.69 $0.48 $0.21 ($0.48) -- $9.90
Year Ended May 31, 1994(c) $10.00 $0.51 ($0.30) ($0.51) ($0.01) $9.69
B SHARES
Year Ended May 31, 1998 $10.23 $0.45 $0.48 ($0.45) -- $10.71
Year Ended May 31, 1997 $9.90 $0.47 $0.33 ($0.47) -- $10.23
Year Ended May 31, 1996 $9.91 $0.46 ($0.01) ($0.46) -- $9.90
Year Ended May 31, 1995 $9.70 $0.41 $0.21 ($0.41) -- $9.91
August 6, 1993(c) to May 31, 1994 $10.04 $0.35 ($0.33) ($0.35) ($0.01) $9.70
- ----------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursement and fee waivers.
(c) The Fund commenced operations on June 1, 1993; the original class of shares
subsequently became A Shares. The Fund commenced offering B Shares on
August 2, 1993.
(d) Annualized.
</TABLE>
<PAGE>
9
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
- ------------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -------------------------------------------------------------------------------
5.00% 0.60% 1.04% 9.96% 69.87% $34,254
5.36% 0.45% 1.14% 9.00% 129.26% $27,806
5.30% 0.30% 1.13% 5.35% 171.41% $26,991
5.10% 0.30% 1.15% 7.47% 47.88% $25,997
4.94% 0.07% 1.23% 2.02% 40.92% $31,724
4.24% 1.35% 2.04% 9.25% 69.87% $9,156
4.60% 1.20% 2.15% 8.19% 129.26% $7,218
4.64% 1.05% 2.16% 4.56% 171.41% $6,400
4.32% 1.05% 2.16% 6.67% 47.88% $5,198
4.08%(d) 0.85%(d) 2.24%(d) 0.27% 40.92% $4,494
<PAGE>
10
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
A SHARES
Year Ended May 31, 1998 $10.57 $0.53 $0.48 ($0.53) -- $11.05
Year Ended May 31, 1997 $10.30 $0.54 $0.27 ($0.54) -- $10.57
Year Ended May 31, 1996 $10.45 $0.56 ($0.15) ($0.56) -- $10.30
Year Ended May 31, 1995 $10.15 $0.53 $0.30 ($0.53) -- $10.45
Year Ended May 31, 1994 $10.65 $0.53 ($0.31) ($0.53) ($0.19) $10.15
Year Ended May 31, 1993 $10.27 $0.55 $0.39 ($0.55) ($0.01) $10.65
December 1, 1991 to May 31, 1992 $10.20 $0.30 $0.11 ($0.30) ($0.04) $10.27
Year Ended November 30, 1991 $10.15 $0.61 $0.12 ($0.61) ($0.07) $10.20
Year Ended November 30, 1990 $10.14 $0.62 $0.02 ($0.62) ($0.01) $10.15
Year Ended November 30, 1989 $9.78 $0.62 $0.36 ($0.62) -- $10.14
January 12, 1988(d) to November 30, 1988 $10.00 $0.55 ($0.22) ($0.55) -- $9.78
B SHARES
Year Ended May 31, 1998 $10.57 $0.45 $0.48 ($0.45) -- $11.05
Year Ended May 31, 1997 $10.30 $0.46 $0.27 ($0.46) -- $10.57
Year Ended May 31, 1996 $10.44 $0.48 ($0.14) ($0.48) -- $10.30
Year Ended May 31, 1995 $10.15 $0.45 $0.29 ($0.45) -- $10.44
August 6, 1993(d) to May 31, 1994 $10.77 $0.35 ($0.43) ($0.35) ($0.19) $10.15
- --------------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not reflect the effects of sales charges. Total Return
would have been lower absent expense reimbursement and fee waivers.
(c) Annualized.
(d) Commencement of operations; the original class of shares became A shares.
<PAGE>
11
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
-----------------------------------
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- --------------------------------------------------------------------------------
4.83% 0.60% 1.07% 9.71% 68.27% $33,597
5.11% 0.60% 1.21% 7.98% 96.68% $25,739
5.26% 0.48% 1.26% 3.97% 77.10% $26,610
5.25% 0.49% 1.61% 8.55% 139.33% $15,559
4.92% 0.61% 1.52% 1.94% 84.23% $10,008
5.13% 0.75% 1.79% 9.35% 44.29% $10,852
5.86%(c) 0.90%(c) 2.38%(c) 8.10%(c) 6.70% $4,896
6.01% 0.90% 2.63% 7.40% 37.32% $4,575
6.21% 0.90% 2.37% 6.50% 30.86% $4,243
6.21% 0.90% 1.70% 10.30% 26.31% $5,309
6.51%(c) 0.76%(c) 1.47%(c) 4.03%(c) 32.34% $5,904
4.07% 1.35% 2.08% 8.89% 68.27% $16,549
4.35% 1.34% 2.21% 7.18% 96.68% $11,128
4.51% 1.23% 2.29% 3.28% 77.10% $8,825
4.52% 1.21% 2.62% 7.63% 139.33% $5,090
3.99%(c) 1.31%(c) 2.45%(c) (0.58%) 84.23% $2,485
<PAGE>
12
- --------------------------------------------------------------------------------
GLOSSARY [PC DRIVER]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Term Definition
- ---- ----------
AMT Alternative minimum tax.
BOARD The Board of Trustees of Norwest Advantage
Funds.
CDSC Contingent deferred sales charge.
FUNDAMENTAL Requiring shareholder approval to change.
INVESTMENT GRADE Rated at the time of purchase in 1 of the 4
highest long-term or 2 highest short-
term ratings categories by an NRSRO or
unrated and determined by the Adviser to be
of comparable quality.
MUNICIPAL SECURITY A debt security 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, with interest exempt from
federal income tax.
NRSRO A nationally recognized statistical rating
organization, such as Standard & Poor's
Corporation, that rates fixed-income
securities by relative credit risk.
NON-INVESTMENT GRADE Neither rated at the time of purchase in 1 of
the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO
nor unrated and determined by the Adviser to
be of comparable quality.
NON-INVESTMENT GRADE Rated below Investment Grade.
RELATED ISSUERS Issuers of Municipal Securities that
economic, business, or political
developments affect in similar ways.
SEC The U.S. Securities and Exchange Commission.
<PAGE>
13
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [KEYBOARD]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds.
After each Fund's description, there is a short, alphabetical listing of
the Fund's primary risks. The Risk Considerations section discusses these
risks.
Each Fund invests at least 80% of its total assets in Municipal Securities
paying interest that is exempt from federal income tax. In order to respond
to business and financial conditions, each Fund may invest up to 20% of its
total assets in securities paying taxable interest income or securities
paying interest income that may be a preference item for purposes of the
federal AMT. In addition, each Fund may hold a portion of its assets in
cash and cash-equivalent securities pending investment in Municipal
Securities, to meet requests for redemptions or to assume a temporary
defensive position.
TAX-FREE INCOME FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to produce current income exempt from
federal income taxes.
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
INVESTMENT POLICIES
The Fund invests primarily in a portfolio of Investment Grade Municipal
Securities. As a Fundamental investment policy, the Fund will invest at
least 80% of its total assets in Municipal Securities paying interest
exempt from federal income taxes, including the federal AMT.
The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years, but will vary depending on market conditions. 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. The Fund emphasizes investments in Municipal Securities with
interest income rather than stability of the Fund's net asset value.
Under normal circumstances, the Fund will not invest more than 25% of its
total assets in issuers located in the same state or in securities of
Related Issuers.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Market Risk
Prepayment Risk
<PAGE>
14
COLORADO TAX-FREE FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to provide shareholders with a high
level of current income exempt from both federal (including the AMT) and
Colorado state income taxes consistent with the preservation of capital.
The Fund offers shares only to residents of Colorado.
INVESTMENT POLICIES
The Fund normally invests substantially all its assets in Investment Grade
Municipal Securities issued by (1) the state of Colorado and its
subdivisions, authorities, instrumentalities, and corporations, and (2)
territories and possessions of the United States ("Colorado Municipal
Securities"). As a Fundamental policy, the Fund will invest at least 80% of
its total assets in Municipal Securities paying interest exempt from both
federal (including the AMT) and Colorado state income taxes. The Fund
invests in securities of a comparatively small number of issuers. The Fund
will not invest more than 25% of its total assets in securities of Related
Issuers or in securities of any 1 issuer except the U.S. Government.
The yields of Colorado Municipal Securities depend on, among other things,
conditions in the Colorado Municipal Securities market and fixed-income
markets generally, the size of a particular offering, the maturity of the
securities, and the rating of the issue. In some cases, Colorado issues may
have yields that are slightly less than the yields of Municipal Securities
of issuers located in other states because of the favorable Colorado state
tax exemption on Colorado issues.
The Adviser expects that the Fund's average portfolio maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may
reach or exceed 20 years in the future. Depending on market conditions, the
Fund's average dollar-weighted maturity could be higher or lower. The Fund
emphasizes investments in Municipal Securities paying interest income
rather than maintaining the Fund's stability of net asset value. The Fund
also attempts to limit net asset value fluctuations.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
<PAGE>
15
MINNESOTA TAX-FREE FUND
INVESTMENT OBJECTIVE
[INVESTMENT ICON]
The Fund's investment objective is to provide shareholders with a high
level of current income exempt from both federal and Minnesota state income
taxes (including the AMT) without assuming undue risk. The Fund offers
shares only to residents of Minnesota.
INVESTMENT POLICIES
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Fund normally invests substantially all (and always at least 75% of)
its assets in Investment Grade Municipal Securities issued by (1) the state
of Minnesota and its subdivisions, authorities, instrumentalities, and
corporations and (2) territories and possessions of the United States
("Minnesota Municipal Securities"). As a Fundamental policy, the Fund will
invest at least 80% of its total assets in securities paying interest
exempt from both federal and Minnesota state income taxes (including the
AMT). The Fund may invest in securities of a comparatively small number of
issuers. The Fund will not invest more than 25% of its total assets in
securities of Related Issuers or in securities of any 1 issuer except the
U.S. Government.
The yields of Minnesota Municipal Securities depend on, among other things,
conditions in the Minnesota Municipal Securities market and fixed-income
markets generally, the maturity of the securities, 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 Securities
of issuers located in other states because of the favorable Minnesota state
tax exemption on Minnesota issues.
There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. The Adviser expects that the Fund's average dollar-weighted
maturity normally will be greater than 10 years. The Fund's average
portfolio maturity may reach or exceed 20 years in the future. Depending on
market conditions, the Fund's average dollar-weighted maturity could be
higher or lower.
The Fund emphasizes investments in Municipal Securities paying interest
income rather than maintaining the Fund's stability of net asset value.
The Fund may invest up to 25% of its total assets in Non-Investment Grade
Municipal Securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
<PAGE>
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [CONSTRUCTION SITE]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds. Each
Fund's exposure to these risks depends upon its specific investment profile. The
Fund's description in Investment Objectives and Policies lists the Funds'
principal risks.
- --------------------------------------------------------------------------------
CREDIT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
- --------------------------------------------------------------------------------
DIVERSIFICATION RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that investment in a comparatively small number of issuers will
increase the potential adverse effects of a decline in the value of a
Fund's investment in a single issuer.
- --------------------------------------------------------------------------------
GEOGRAPHIC CONCENTRATION RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
- --------------------------------------------------------------------------------
INTEREST RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including Municipal Securities, an
increase in interest rates typically causes the value of a Fund's
fixed-rate securities to fall, while a decline in interest rates may
produce an increase in the market value of the securities. Because of this
risk, an investment in a Fund is subject to risk even if all the
fixed-income securities in the Fund's portfolio are paid in full at
maturity. Changes in interest rates will affect the value of longer-term
fixed-income securities more than shorter-term securities.
- --------------------------------------------------------------------------------
LEVERAGE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as forward commitment transactions.
<PAGE>
17
- --------------------------------------------------------------------------------
MARKET RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as
the bond markets fluctuate generally. Market risk may affect a single
issuer, industry, or section of the economy or may affect the market as a
whole.
- --------------------------------------------------------------------------------
PREPAYMENT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities.
[RISK CONSIDERATIONS TAB]
<PAGE>
18
- --------------------------------------------------------------------------------
COMMON POLICIES [PC DRIVER]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
- --------------------------------------------------------------------------------
VOTING ISSUES
- --------------------------------------------------------------------------------
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that
shareholders of Funds will have a comparatively smaller impact on the
outcome of votes by all of the funds with comparitively high net asset
values than do shareholders of funds with lower net asset values.
- --------------------------------------------------------------------------------
DOWNGRADED SECURITIES
- --------------------------------------------------------------------------------
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's 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
- --------------------------------------------------------------------------------
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash or cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective and is likely that
its shareholders may be subject to federal and applicable state income
taxes on a greater portion of the Fund's income distributions.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
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. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. The FINANCIAL HIGHLIGHTS table lists the Funds' portfolio turnover
rate.
- --------------------------------------------------------------------------------
YEAR 2000 AND EURO
- --------------------------------------------------------------------------------
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers to the Funds do not properly process
and calculate date-related information and data from and after January 1,
2000 or information regarding the new common currency of the European
Union. The Year 2000 and Euro issues also may adversely affect the Funds'
investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
<PAGE>
19
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [KEYBOARD]
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each
Fund. In this capacity, Norwest makes investment decisions for and
administers the Funds' investment programs. Norwest Investment Management,
Inc.'s address is Norwest Center, Sixth Street and Marquette, Minneapolis,
MN 55479.
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Fund's investments. The
year a portfolio manager began managing a Fund's portfolio follows the
manager's name in parenthesis. The list states the investment advisory fees
payable to Norwest by the Fund on an annualized basis as a percentage of a
Fund's average daily net assets. Descriptions of the portfolio managers'
recent experience follow the list of portfolio managers and advisory fees.
<PAGE>
TAX-FREE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE INCOME FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1993).
ADVISORY FEE: 0.50%
COLORADO TAX-FREE FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1993).
ADVISORY FEE: 0.50% - first $300 million; 0.46% - next
$400 million; and 0.42% - balance.
MINNESOTA TAX-FREE FUND
PORTFOLIO MANAGER: Patricia D. Hovanetz, CFA (1991).
ADVISORY FEE: 0.50% - first $300 million; 0.46% - next
$400 million; and 0.42% - balance.
[COMMON POLICIES TAB]
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO MANAGERS
PATRICIA D. HOVANETZ, associated with Norwest or its affiliates since 1966. Ms.
Hovanetz is a Director-Tax-Exempt Fixed-Income of Norwest and has been
associated with Norwest or Norwest Bank for more than 25 years in capacities
related to municipal bond investments.
WILLIAM T. JACKSON, associated with Norwest or its affiliates since 1993. Mr.
Jackson is a Managing Director, Tax-Exempt Fixed Income.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative, and
underwriting services to the Funds. NORWEST BANK acts as the Funds' transfer
agent, distribution disbursing agent, and custodian.
<PAGE>
20
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS [CONSTRUCTION SITE]
- --------------------------------------------------------------------------------
Sales charges and fees vary considerably between a Fund's A Shares and B
Shares. After 6 years, B Shares, which have higher fees, convert to A
Shares, which have lower fees. Consider the differences in the classes' fee
structures carefully before choosing which class to purchase. In
particular, consider how long you intend to invest in the Fund and whether
during that period the accumulated fees and applicable CDSCs on B Shares
would be less than the initial sales charge on A Shares. Also, consider
whether you might qualify for a reduced sales charge on A Shares and
whether any difference in total expenses between classes would be offset by
A Shares' higher yield. The SAI has more information about ways to qualify
for reduced sales charges and how reduced sales charge alternatives
operate.
A SHARES
The Funds offer A Shares at their next-determined net asset value plus the
following initial sales charge (no sales charge applies to reinvestments of
distributions):
<TABLE>
<S> <C> <C>
SALES CHARGE AS A PERCENTAGE OF*
AMOUNT OF PURCHASE OFFERING PRICE+ NET AMOUNT INVESTED
Less than $50,000........................... 4.00% 4.17%
$50,000 to $99,999.......................... 3.50% 3.63%
$100,000 to $249,000........................ 3.00% 3.09%
$250,000 to $499,999........................ 2.50% 2.56%
$500,000 to $999,000........................ 2.00% 2.04%
over $1,000,000............................. None None
*Rounded to the nearest one-hundredth percent.
+The amount of the initial sales charge is
included in the offering price.
</TABLE>
If you redeem A Shares purchased with a reduced sales charge, the Funds may
impose a charge on the redemption depending on how long you have held the
shares.
B SHARES
The Funds offer B Shares at their net asset value per share. The Funds' B Shares
have distribution and shareholder servicing fees of 1.00% of the average daily
net assets of the class under a Rule 12b-1 distribution plan. Because
distribution fees are paid out of the Funds' assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost more than
paying a front-end sales charge.
<PAGE>
21
CONTINGENT DEFERRED SALES CHARGE
If you redeem B Shares within 4 years of purchase, there will be a CDSC on
the redemption in the amount indicated below. The amount of the CDSC will
vary depending on the number of years between the payment for the purchase
of the shares and their redemption. You will pay the CDSC on the lesser of
the cost of the B Shares redeemed and their net asset value upon
redemption. The Funds do not impose a CDSC on B Shares purchased through
reinvestments of distributions.
CHARGE FOR EACH FUND
YEAR SINCE PURCHASE
First................................................ 3.0%
Second............................................... 2.0%
Third................................................ 2.0%
Fourth............................................... 1.0%
Fifth................................................ None
Sixth................................................ None
The Funds will redeem shares in the manner that results in the imposition
of the lowest CDSC. The Funds will automatically redeem shares first from
any A Shares of the Fund, second from B Shares of the Fund acquired
pursuant to reinvestment of distributions, third from B Shares of the Fund
held for more than 4 years, and fourth from the longest outstanding B
Shares of the Fund held for less than 4 years.
CONVERSION FEATURE
B Shares will automatically convert to A Shares 6 years from the end of the
calendar month in which the Fund accepted your purchase. 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, the Funds will consider B Shares purchased through
the reinvestment of distributions to be held in a separate sub-account.
Each time any B Shares in your account (other than those in the
sub-account) convert, a corresponding pro rata portion of the shares in the
sub-account will also convert. The Funds may suspend the conversion feature
in the future; in that event, B Shares might continue to pay their
distribution fee indefinitely.
[CHOOSING A SHARE CLASS TAB]
<PAGE>
22
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [PC DRIVER]
- --------------------------------------------------------------------------------
You may purchase Fund shares on "Fund Business Days" at their net asset
value next determined after receipt of your purchase order in proper form
plus, in the case of A Shares, any applicable sales charge. Fund Business
Days are all weekdays except generally observed national holidays (New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Funds' transfer agent processes all transactions in Fund shares.
The Funds require a minimum initial investment of $1,000 and minimum
subsequent investments of $100. Your shares become eligible to receive
distributions the Fund Business Day after your purchase order is received
in proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification 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.
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as
<PAGE>
23
addresses). Norwest Advantage Funds may in the future modify, limit, or
terminate any shareholder privilege upon appropriate notice and may charge
a fee for certain shareholder services, although no such fees are currently
contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds 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 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent, or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds, or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan, or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
[HOW TO BUY AND SELL SHARES TAB]
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
<PAGE>
24
SUBSEQUENT PURCHASES OF SHARES
You may make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares as of the next determination of the Fund's net
asset value following receipt by the transfer agent of your redemption
order in proper form subject to, in the case of B Shares, a CDSC imposed on
most redemptions made within 4 years of purchase. Redeemed shares are not
entitled to receive distributions after the day on which the redemption is
effective.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days); (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers. Unless otherwise
indicated, redemption proceeds normally are paid by check mailed to your
record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person, or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations, or other eligible
institutions. The specific institution providing the guarantee must be
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.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
<PAGE>
25
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
with a net asset value of less than $1,000 immediately following any
redemption.
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signature guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered, and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are wired on the Fund Business Day after the transfer
agent receives a redemption request in proper form.
EXCHANGES
[HOW TO BUY AND SELL SHARES TAB]
You may exchange A Shares and B Shares for A Shares and B Shares,
respectively, of the Funds and of other funds of Norwest Advantage Funds
that offer those classes of shares. You may also exchange A Shares and B
Shares for some classes of certain money market funds of Norwest Advantage
Funds. Call or write the transfer agent for both a list of funds that offer
shares exchangeable with those of the Funds and for prospectuses of those
funds.
<PAGE>
26
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees (other than CDSCs) charged by, and the limitations (including
minimum investment restrictions) of, the fund into which you are
exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a fund only if that
fund's shares legally may be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
SALES CHARGES
Some exchanges of A Shares may require a sales charge in addition to the
sales charge you paid to purchase the shares. If you exchange into a fund
that imposes an initial sales charge greater than the sales charge you
paid, you must pay the difference between the sales charge of the fund you
are exchanging into and your Fund. For example, if you paid a 2% initial
sales charge on a purchase of shares and then exchanged those shares for
shares of another fund with a 3% initial sales charge, you would pay an
additional 1% sales charge on the exchange. The Funds deem A Shares
acquired through the reinvestment of distributions to have been acquired
with a sales charge equal to the maximum sales charge of the Fund.
You may exchange B Shares without paying a CDSC. If you redeem shares you
received in an exchange, the CDSC will be calculated as if you never
exchanged the B Shares you originally purchased. B Shares acquired through
an exchange will convert to A Shares when the B Shares originally purchased
would convert to A Shares.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered, and your Social Security number or other taxpayer
identification number.
<PAGE>
27
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [KEYBOARD]
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly.
Each Fund's net capital gain, if any, is distributed at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a Fund's
shares in a single account, you can have that Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a Fund. All
distributions reinvested in a Fund are reinvested at the Fund's net asset
value as of the payment date of the distribution.
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise tax.
Generally, you will not be subject to federal income tax on distributions
paid by a Fund out of tax-exempt interest income earned by the Fund
("exempt-interest distributions"). If you use, or are related to someone
who uses, facilities financed by private activity securities held by a
Fund, you may be subject to federal income tax on your pro rata share of
the interest income from those securities and should consult your tax
adviser before purchasing shares. Interest on certain private activity
bonds is treated as an item of tax preference for purpose of the federal
AMT imposed on individuals and corporations. In addition, exempt-interest
distributions are included in the "adjusted current earnings" of
corporations for AMT purposes.
As noted above, the Funds may invest a portion of their assets in
securities that generate income that is not exempt from federal income tax.
Further, capital gains, if any, distributed by the Funds are subject to
tax. Distributions of net capital gain (i.e., the excess of net long-term
capital gain over net short-term capital loss) are taxable as long-term
capital gain. Distributions of net capital gain may be taxable at different
rates depending on the length of time the Fund holds its assets.
Distributions paid by a Fund out of its interest income that is not
tax-exempt and its net short-term capital gain are taxable as ordinary
income. Distributions reduce the net asset value of a Fund by the amount of
the distribution paid by the Fund. Further, a distribution made shortly
after you purchase shares, although in effect a return of capital to you,
is taxable. If shares are sold at a loss after being held for 6 months or
less, the loss will be disallowed to the
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
28
extent of any exempt-interest dividends received on those shares and then
treated as long-term capital loss to the extent of any distribution of net
capital gain received on those shares. If you borrow money to purchase or
carry shares of a Fund, the interest on your debt generally is not
deductible for federal income tax purposes.
TAX-FREE INCOME FUND. The federal income tax exemption on exempt-interest
distributions does not necessarily result in an exemption under the income
or other tax laws of any state or local taxing authority. You 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 you reside. You may, however, be subject to tax on income derived
from the Municipal Securities of other jurisdictions. Consult your tax
adviser concerning the application of state and local taxes to investments
in the Fund that may differ from the federal income tax consequences
described above.
COLORADO TAX-FREE FUND. It is anticipated that substantially all of the
exempt- interest distributions paid by the Fund to individuals will be
exempt from Colorado personal income tax. 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 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 AMT. Because the Fund may, except as indicated, purchase only
Colorado Municipal Securities, none of the exempt- interest distributions
paid by the Fund will be subject to Colorado income tax.
MINNESOTA TAX-FREE FUND. It is anticipated that substantially all of the
exempt- interest distributions 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 distributions paid by the Fund must be derived from
Minnesota Municipal Securities in order for any portion of the
exempt-interest distributions paid by the Fund to be exempt from the
Minnesota personal income tax. Exempt-interest distributions paid by the
Fund to shareholders that are corporations are subject to Minnesota
franchise tax.
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. This 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 AMT on resident individuals is based in part on their income
for purposes of the federal AMT. Accordingly, individual shareholders of
the Fund may be subject to the Minnesota AMT on exempt-interest
distributions paid by the Fund which are attributable to interest received
by the Fund on certain private activity securities, even though those
distributions are exempt from the regular Minnesota personal income tax.
<PAGE>
29
- --------------------------------------------------------------------------------
OTHER INFORMATION [CONSTRUCTION SITE]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines net asset value at 4:00 p.m.Eastern Time, on each Fund
Business Day by dividing the value of its 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 value
portfolio securities at current market value if market quotations are
readily available. If market quotations are not readily available, the
Funds value securities at fair value as determined by or pursuant to
procedures adopted by the Board.
INVESTING IN THE FUNDS
The Funds currently invest directly in portfolio securities. Each Fund,
however, may in the future invest in 1 or more other funds as opposed to
investing directly in portfolio securities.
BROKER-DEALER REALLOWANCES
The Funds' distributor may pay a "broker-dealer's" reallowance to certain
financial intermediaries purchasing shares as principal or agent. Normally,
the distributor will reallow the amounts indicated below, although it may
at times reallow the entire sales charge. The distributor also may make
additional payments to certain intermediaries out of its own resources of
up to 0.75% of the net asset value of Fund shares purchased. Norwest
Advantage Funds may change the amount of the reallowance.
In addition, at its own expense, the distributor may provide compensation,
including financial assistance, to financial intermediaries in connection
with their conferences, employee sales or training programs, public
seminars, advertising campaigns, or other special events. The distributor
may, for example, compensate the intermediaries with travel arrangements
and lodging, tickets for entertainment events, and merchandise. The
distributor may make this compensation available only to intermediaries
that have sold or are expected to sell significant amounts of Fund shares
or who charge an asset based fee, whether or not they have a fiduciary
relationship with their clients.
AMOUNT OF PURCHASE BROKER-DEALERS' REALLOWANCE AS A
PERCENTAGE OF OFFERING PRICE
Less than $50,000........................... 3.50%
$50,000 to $99,999.......................... 3.00%
$100,000 to $249,000........................ 2.50%
$250,000 to $499,999........................ 2.25%
$500,000 to $999,000........................ 1.75%
$1,000,000 to $2,499,999.................... 0.75%
$2,500,000 to $4,999,999.................... 0.50%
Over $5,000,000............................. 0.25%
[OTHER INFORMATION TAB]
<PAGE>
30
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI, AND THE
FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. 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.
If you would like more information about the Funds and their investments, you
may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such as
its investments, management, and organization. It is incorporated into this
Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, the Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479 or by calling 1-800-
338-1348 or 1-612-667-8833.
The Funds' reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
<PAGE>
<PAGE>
Norweest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhwere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 NORWEST ADVANTAGE FUNDS
10/98 [LOGO]
<PAGE>
PROSPECTUS
OCTOBER 1, 1988
______________________________
STOCK FUNDS
[LOGO]
[COVER WITH WALL STREET JOURNAL, PCS]
_________________________________
GROWTH BALANCED FUND
INCOME EQUITY FUND
VALUGROWTH SM STOCK FUND
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
LARGE COMPANY GROWTH FUND
DIVERSIFIED SMALL CAP FUND
SMALL COMPANY STOCK FUND
SMALL CAP OPPORTUNITIES FUND
INTERNATIONAL FUND
_________________________________
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
STOCK FUNDS
GROWTH BALANCED FUND
INCOME EQUITY FUND
VALUGROWTH (SM) STOCK FUND
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
LARGE COMPANY GROWTH FUND
DIVERSIFIED SMALL CAP FUND
SMALL COMPANY STOCK FUND
SMALL CAP OPPORTUNITIES FUND
INTERNATIONAL FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, or ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE SECURITIES AND EXCHANGE COMMISSION, HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1
TABLE OF CONTENTS
OVERVIEW ....................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS ........................10
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY.....................................20
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES ..........21
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
RISK CONSIDERATIONS..........................37
[RISK CONSIDERATIONS TAB]
COMMON POLICIES..............................39
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS .....................40
[MANAGEMENT OF THE FUNDS TAB]
CHOOSING A SHARE CLASS ......................49
[CHOOSING A SHARE CLASS TAB]
HOW TO BUY AND SELL SHARES ..................52
[HOW TO BUY SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS .............. 57
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION ...........................59
[OTHER INFORMATION TAB]
<PAGE>
2
- --------------------------------------------------------------------------------
OVERVIEW [[OFFICE, WALL STREET JOURNAL]
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE
INVESTING, YOU SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS
UNDER INVESTMENT OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN
SERVE AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
THE FUNDS AT A GLANCE
[FUND ICON]
Growth Balanced Fund seeks a combination of current income and capital
appreciation. The other Funds seek capital growth or high capital return.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND OBJECTIVE PRIMARY INVESTMENTS
GROWTH BALANCED FUND Combination of current income and 15%-55% fixed income investments
capital appreciation. and 45%-85% equity investments
INCOME EQUITY FUND Long-term capital appreciation Common stock of large high
consistent with above-average quality domestic companies.
dividend income.
VALUGROWTH STOCK FUND Long-term capital appreciation. Stock of medium- and large-
capitalization companies that
have above average growth
characteristics and that appear
to be undervalued.
DIVERSIFIED EQUITY FUND Long-term capital appreciation Diversified investments in 5
while moderating annual return different equity investment
volatility. styles.
GROWTH EQUITY FUND Long-term capital appreciation Diversified investments in 3
while moderating annual return different equity investment
volatility. styles.
LARGE COMPANY GROWTH FUND Long-term capital appreciation. Stock of large high-quality
domestic companies with superior
growth potential.
DIVERSIFIED SMALL CAP FUND Long-term capital appreciation Diversified investments in 5
while moderating annual return different small company equity
volatility. investment styles.
SMALL COMPANY STOCK FUND Long-term capital appreciation. Stock of small and medium sized
domestic companies.
SMALL CAP OPPORTUNITIES FUND Long-term capital appreciation. Equity securities of small
domestic companies.
INTERNATIONAL FUND Long-term capital appreciation. Stock of high-quality companies
based outside of the United
States.
</TABLE>
<PAGE>
3
CLASSES OF SHARES
This Prospectus offers 3 classes of shares. Each class has a different fee
structure. All of the Funds offer A Shares and B Shares. Growth Balanced
Fund, Income Equity Fund, Diversified Equity Fund, and Growth Equity Fund
also offer C Shares. A Shares of Growth Balanced Fund, Large Company Growth
Fund, and Diversified Small Cap Fund are not available until October 6,
1998.
[OVERVIEW TAB]
* A Shares are generally offered at their net asset value plus an initial
sales charge. Certain Funds' A Shares may have distribution or shareholder
servicing fees.
* B Shares are offered at their net asset value. B Shares have distribution
and shareholder servicing fees and convert to A Shares within 7 years after
purchase. If you redeem your B Shares within 6 years of purchase, you pay a
contingent deferred sales charge. The amount of the charge depends on the
length of time you hold the shares.
* C Shares are offered at their net asset value. C Shares have distribution
fees. If you redeem your C Shares within a year of purchase, you pay a
contingent deferred sales charge.
FUND STRUCTURES
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in 1 or more other funds identified in this prospectus as
Portfolios. The Portfolios do not offer their shares to the public. Except
when necessary to describe a Fund's investment in a Portfolio, this
prospectus discusses a Fund's investments in a Portfolio as if the
investments were made directly in individual securities.
MANAGEMENT OF THE FUNDS
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and all but 3 of the Portfolios. Norwest, a subsidiary
of Norwest Bank Minnesota, N.A. or Norwest Bank, provides investment advice
to institutions, pension plans, and other accounts and currently manages
more than $28 billion in assets. SCHRODER CAPITAL MANAGEMENT INTERNATIONAL
INC. or SCHRODER is the investment adviser for 3 Portfolios: Schroder U.S.
Smaller Companies Portfolio, International Portfolio, and Schroder EM Core
Portfolio. Schroder specializes in providing international investment
advice. INVESTMENT SUBADVISERS make investment decisions for certain Funds
and Portfolios under Norwest's general supervision. This prospectus
generally refers to Norwest, Schroder or a subadviser as an Adviser.
THE FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
The Funds require minimum initial investments of $1,000 and minimum subsequent
investments of $100. Small Cap Opportunities Fund is closed to new investors.
<PAGE>
4
EXCHANGES
If you own Fund shares, you may exchange them for shares of certain other
funds. Your exchange rights will vary depending on the class of shares you
own.
DISTRIBUTIONS
Each Fund distributes to shareholders its net capital gain, if any, at
least annually. The Distributions and Tax Matters section discusses how
often the Funds distribute net investment income.
RISK FACTORS
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets the Fund invests
in, the investments that the Fund makes, and prevailing economic conditions
over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund,
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
The Funds are subject to "market risk," which is the general risk that the
value of a Fund's investments may decline if the stock markets perform
poorly. There also is a risk that a Fund's investments will underperform
either the securities markets generally or particular segments of the
securities markets.
Funds that invest in smaller issuers or foreign issuers are riskier than
other Funds. Investments in smaller issuers are subject to greater market
volatility because securities of smaller issuers may not trade as often or
be as widely owned as the securities of larger issuers. Investments in
foreign issuers are subject to the risks of foreign political and economic
instability and changes in foreign exchange rates. Foreign investments also
are subject to government actions, including exchange controls and limits
on repayments of foreign investments. Foreign governments may nationalize,
tax, or confiscate investors' assets.
Growth Balanced Fund divides its investments between fixed income
securities and equity securities in varying proportions, with an emphasis
on equity securities. An investment in the Fund will be subject both to the
risks of fixed income securities and to the risks of equity securities.
The investment income you receive from Growth Balanced Fund will vary with
changes in interest rates. The value of the Fund's fixed income investments
generally will fall when interest rates rise and rise when interest rates
fall. The Fund's fixed income investments also are subject to "credit
risk," which is the risk that an issuer will be unable, or will be
perceived to be unable, to pay the interest and principal on its
obligations when due.
<PAGE>
5
When interest rates fall, there is a risk that issuers will prepay fixed
rate securities, forcing the Fund to invest in securities with lower
interest rates than the prepaid securities. The Fund also may invest in
mortgage- or other asset-backed securities. A decline in interest rates may
result in losses in these securities' values and a reduction in their
yields as the holders of the assets backing the securities prepay their
debts. Rising interest rates may cause the average maturity of this Fund to
rise due to a drop in prepayments. A rise in average maturity or duration
increases the Fund's sensitivity to rising interest rates and potential for
losses in value.
[OVERVIEW TAB]
In addition, the Adviser may vary, within a fixed range, the allocations of
Growth Balanced Fund's assets into each type of investment. There is a risk
that the allocations selected by the Adviser will not achieve the Fund's
objective as effectively as other possible allocations.
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you
will bear directly and indirectly when you invest in a Fund.
Shareholder Transaction Expenses
(applicable to each Fund)
<TABLE>
<S> <C> <C> <C>
A B C
Shares Shares Shares
- ----------------------------------------------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of public offering price) 5.5% Zero Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase Zero 4.0%(1) 1.0%(2)
price or redemption proceeds)
</TABLE>
ANNUAL FUND OPERATING EXPENSE(7)
(as a percentage of average daily net assets)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
GROWTH INCOME
BALANCED FUND(3)(6) EQUITY FUND
A B C A B C
Shares Shares Shares Shares Shares Shares
--------- --------- ---------- --------- ---------- ----------
Investment Advisory Fee (4) 0.13% 0.13% 0.13% N/A N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) 0.10% 0.75% 0.75% N/A 0.75% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.41% 0.29% 0.29% 0.33% 0.33% 0.33%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios 0.45% 0.45% 0.45% .050% 0.50% 0.50%
Other Expenses - Portfolios 0.06% 0.06% 0.06% 0.02% 0.02% 0.02%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.15% 1.68% 1.68% 0.85% 1.60% 1.60%
</TABLE>
<PAGE>
6
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
VALUGROWTH DIVERSIFIED
STOCK FUND EQUITY FUND(6)
A B A B C
Shares Shares Shares Shares Shares
--------------- -------------- --------- ---------- ----------
Investment Advisory Fee (4) 0.78% 0.78% 0.16% 0.16% 0.16%
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% N/A 0.75% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.22% 0.22% 0.29% 0.29% 0.29%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) N/A N/A 0.49% 0.49% 0.49%
Other Expenses - Portfolios N/A N/A 0.06% 0.06% 0.06%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.00% 1.75% 1.00% 1.75% 1.75%
GROWTH LARGE COMPANY
EQUITY FUND(6) GROWTH FUND(3)
A B C A B
Shares Shares Shares Shares Shares
--------- --------- ---------- ---------------- --------------
Investment Advisory Fee (4) 0.22% 0.22% 0.22% N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% 0.75% 0.10% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.26% 0.26% 0.26% 0.43% 0.33%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) 0.67% 0.67% 0.67% 0.65% 0.65%
Other Expenses - Portfolios 0.10% 0.10% 0.10% 0.02% 0.02%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.25% 2.00% 2.00% 1.20% 1.75%
DIVERSIFIED SMALL SMALL COMPANY
CAP FUND STOCK FUND(6)
A B A B
Shares Shares Shares Shares
--------------- -------------- ---------------- --------------
Investment Advisory Fee (4) 0.00% 0.00% N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) 0.10% 0.75% N/A 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.37% 0.27% 0.25% 0.25%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) 0.83% 0.83% 0.90% 0.90%
Other Expenses - Portfolios 0.10% 0.10% 0.05% 0.05%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.40% 1.95% 1.20% 1.95%
</TABLE>
<PAGE>
7
[OVERVIEW TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SMALL CAP INTERNATIONAL FUND
OPPORTUNITIES FUND
A B A B
Shares Shares Shares Shares
--------------- -------------- ---------------- --------------
Investment Advisory Fee (4) N/A N/A 0.25% 0.25%
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% N/A 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.50% 0.50% 0.56% 0.56%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolio(4) 0.60% 0.60% 0.42% 0.42%
Other Expenses - Portfolios 0.15% 0.15% 0.27% 0.27%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.25% 2.00% 1.50% 2.25%
</TABLE>
(1) The maximum 4.0% deferred sales charge on B Shares applies to redemptions
during the first year after purchase; the charge declines to 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.
(2) The 1.0% deferred sales charge on C Shares applies only to redemptions
during the first year after purchase.
(3) The expenses, and any fee waivers and reimbursements, for Growth Balanced
Fund, Large Company Growth Fund, Diversified Small Cap Fund, and C shares
of Income Equity Fund, Diversified Equity Fund and Growth Equity Fund are
estimated.
(4) For Growth Balanced Fund, Diversified Equity Fund, Growth Equity Fund
Diversified Small Cap Fund, and International Fund Investment Advisory Fee
reflects an asset allocation fee, which absent fee waivers, would be 0.25%.
Investment Advisory Fee - Portfolios states the investment advisory fees of
any Portfolios in which a Fund invests. Absent fee waivers, Investment
Advisory Fee - Portfolios for International Fund would be 0.47% and for
Growth Equity Fund 0.68%.
(5) Absent fee waivers, Rule 12b-1 Fees would be 1.00% for B Shares.
(6) Norwest and the Fund's Administrator have agreed to waive fees and
reimburse expenses to maintain Small Company Stock Fund's total operating
expenses at or below 1.20% for A Shares and 1.95% for B Shares. Any
reduction of those waivers or reimbursements requires review by the Funds'
Board of Trustees. Norwest and the Fund's Administrator have agreed to
waive their fees through May 31, 1999 to ensure that the combined
investment advisory, administrative and management services fees borne by
Growth Balanced Fund, Diversified Equity Fund, and Growth Equity Fund do
not exceed 0.68%, 0.75%, and 1.00% respectively. Any reduction of those
waivers after May 31, 1999 requires Board approval.
(7) Absent estimated expense reimbursements and fee waivers, Other Expenses,
Other Expenses-Portfolios, and Total Operating Expenses of A Shares would
be: Growth Balanced Fund 0.47%, 0.12%, and 1.39%, Income Equity Fund 0.39%,
0.07, and 0.96%, ValuGrowth Stock Fund 0.47%, N/A, and 1.25%, Diversified
Equity Fund 0.39%, 0.11% and, 1.24%, Growth Equity Fund 0.40%, 0.15%, and
1.48%, Large Company Growth Fund 0.49%, 0.08%, and 1.32%, Diversified Small
Cap Fund 1.61%, 0.15%, and 2.94%, Small Company Stock Fund 0.47%, 0.11%,
and 1.48%, Small Cap Opportunities Fund 1.03%, 0.15%, and 1.78%, and
International Fund 0.83%, 0.31%, and 1.86%. Absent expense reimbursements
and fee waivers, Other Expenses, Other Expenses-Portfolio(s) and Total
Operating Expenses of B Shares would be: Growth Balanced Fund 0.33%, 0.12%,
and 2.15%, Income Equity Fund 0.39%, 0.07%, and 1.96%, ValuGrowth Stock
Fund 0.53%, N/A, and 2.31%, Diversified Equity Fund 0.39%, 0.11%, and
2.24%, Growth Equity Fund 0.43%, 0.15%, and 2.51%, Large Company Growth
Fund 0.35%, 0.08%, and 2.08%, Diversified Small Cap Fund 1.47%, 0.15%, and
3.70%, Small Company Stock Fund 0.52%, 0.11%, and 2.53%, Small Cap
Opportunities Fund 1.30%, 0.15%, and 3.05%, and International Fund 0.92%,
0.31%, and 2.95%. Absent estimated expense reimbursements and fee waivers,
Other Expenses, Other Expenses-Portfolio(s) and Total Operating Expenses of
C Shares would be: Growth Balanced Fund 0.33%, 0.12%, and 1.90%, Income
Equity Fund 0.39%, 0.07%, and 1.71%, Diversified Equity Fund 0.39%, 0.11%,
and 1.99%, and Growth Equity Fund 0.43%, 0.15%, and 2.26%. Except as
otherwise noted, expense reimbursements and fee waivers are voluntary and
may be reduced or eliminated at any time.
<PAGE>
8
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses
you 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, reinvestment of all distributions, the deduction of the maximum
initial sales charge for A Shares and C Shares, the deduction of the
contingent deferred sales charge for B Shares and C Shares applicable to a
redemption at the end of the period and the conversion of B Shares to A
Shares at the end of 7 years. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN
THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Balanced Fund
A Shares $64 $83 $104 $163
B Shares
Assuming redemption
at the end of the period 57 83 111 199
Assuming no redemption 17 53 91 199
C Shares
Assuming redemption
at the end of the period 27 53 91 199
Assuming no redemption 17 53 91 199
Income Equity Fund
A Shares 63 81 100 154
B Shares
Assuming redemption
at the end of the period 56 80 107 190
Assuming no redemption 16 50 87 190
C Shares
Assuming redemption
at the end of the period 26 50 87 190
Assuming no redemption 16 50 87 190
ValuGrowth Stock Fund
A Shares 65 85 107 171
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
Diversified Equity Fund
A Shares 65 85 107 171
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
C Shares
Assuming redemption
at the end of the period 28 55 95 206
Assuming no redemption 18 55 95 206
</TABLE>
<PAGE>
9
[OVERVIEW TAB]
<TABLE>
<S> <C> <C> <C> <C>
Growth Equity Fund
A Shares 67 92 120 198
B Shares
Assuming redemption
at the end of the period 60 93 128 233
Assuming no redemption 20 63 108 233
C Shares
Assuming redemption
at the end of the period 30 63 108 233
Assuming no redemption 20 63 108 233
Small Company Stock Fund
A Shares 67 91 117 192
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 67 93 120 198
B Shares
Assuming redemption
at the end of the period 60 93 128 233
Assuming no redemption 20 63 108 233
Large Company Growth Fund
A Shares 67 91 117 192
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
Diversified Small Cap Fund
A Shares 67 91 117 192
B Shares
Assuming redemption
at the end of the period 60 91 125 227
Assuming no redemption 20 61 105 227
International Fund
A Shares 69 100 132 224
B Shares
Assuming redemption
at the end of the period 63 100 140 258
Assuming no redemption 23 70 120 258
</TABLE>
<PAGE>
10
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS [PC MONITORS]
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each
Fund's financial performance for 10 years or, if shorter, the Fund's
operating history. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that
an investor would have earned on an investment in a Fund, assuming
reinvestment of all distributions. The information from June 1, 1994
through May 31, 1998 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report dated July 21, 1998 about a Fund, along with the
Fund's financial statements, are included in the Fund's Annual Report,
which is available at no charge upon request. These financial statements
are incorporated by reference into the SAI. Other independent auditors
audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME EQUITY FUND
A SHARES
Year Ended May 31, 1998 $33.16 $0.52 $8.77 ($0.54) ($0.72) $41.19
Year Ended May 31, 1997 $27.56 $0.57 $5.54 ($0.51) -- $33.16
May 2, 1996 to May 31, 1996(f) $26.94 $0.07 $0.55 -- -- $27.56
B SHARES
Year Ended May 31, 1998 $33.09 $0.24 $8.75 ($0.24) ($0.72) $41.12
Year Ended May 31, 1997 $27.54 $0.36 $5.52 ($0.33) -- $33.09
May 2, 1996 to May 31, 1996(f) $26.94 $0.02 $0.58 -- -- $27.54
- ----------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate 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.
(d) Includes expenses allocated from the Portfolio in which the Fund invests.
(e) Reflects the activity of the Portfolio in which the Fund invests.
(f) Commencement of operations.
(g) Annualized.
<PAGE>
11
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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(b) Rate Rate (c) (000's Omitted)
- -----------------------------------------------------------------------------------------------
1.44%(d) 0.85%(d) 0.91%(d) 28.64% 3.46%(e) 0.0585(e) $75,144
1.95% 0.85% 0.93% 22.40% 4.76% $0.0792 $43,708
3.69%(g) 0.91%(g) 1.91%(g) 2.30% 0.69% $0.0942 $31,448
0.69%(d) 1.60%(d) 1.91%(d) 27.67% 3.46%(e) 0.0585(e) $67,385
1.24% 1.59% 1.96% 21.48% 4.76% $0.0792 $33,626
1.72%(g) 2.63%(g) 2.92%(g) 2.23% 0.69% $0.0942 $17,318
</TABLE>
<PAGE>
12
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Unrealized from Net from Net Net Asset
Net
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -----------------------------------------------------------------------------------------------------------------------
VALUGROWTH STOCK FUND
A SHARES
Year Ended May 31, 1998 $25.06 $0.13 $4.69 ($0.16) ($3.54) $26.18
Year Ended May 31, 1997 $22.63 $0.17 $4.80 ($0.13) ($2.41) $25.06
Year Ended May 31, 1996 $18.82 $0.13 $3.93 ($0.13) ($0.12) $22.63
Year Ended May 31, 1995 $17.17 $0.17 $1.66 ($0.18) -- $18.82
Year Ended May 31, 1994 $17.27 $0.10 $0.19 ($0.17) ($0.22) $17.17
Year Ended May 31, 1993 $16.30 $0.17 $1.34 ($0.17) ($0.37) $17.27
December 1, 1991 to May 31, 1992 $14.48 $0.09 $1.83 ($0.10) -- $16.30
Year Ended November 30, 1991 $11.67 $0.18 $2.82 ($0.19) -- $14.48
Year Ended November 30, 1990 $12.67 $0.21 ($0.55) ($0.21) ($0.45) $11.67
Year Ended November 30, 1989 $10.03 $0.18 $2.61 ($0.15) -- $12.67
January 8, 1988(e) to November 30, 1988 $10.00 $0.15 $0.03 ($0.15) -- $10.03
B SHARES
Year Ended May 31, 1998 $24.55 ($0.02) $4.56 ($0.03) ($3.54) $25.52
Year Ended May 31, 1997 $22.28 $0.01 $4.68 ($0.01) ($2.41) $24.55
Year Ended May 31, 1996 $18.65 ($0.02) $3.87 ($0.10) ($0.12) $22.28
Year Ended May 31, 1995 $17.10 $0.07 $1.61 ($0.13) -- $18.65
August 5, 1993 to May 31, 1994(e) $17.12 $0.07 $0.23 ($0.10) ($0.22) $17.10
- -----------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate 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.
(d) Annualized.
(e) Commencement of operations; the original class of shares became A Shares.
<PAGE>
13
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C>
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(b) Rate Rate (c) (000's Omitted)
- -------------------------------------------------------------------------------------------
0.56% 1.00% 1.26% 21.15% 74.25% $0.0588 $27,771
0.70% 1.01% 1.39% 23.32% 75.50% $0.0781 $18,830
0.63% 1.20% 1.42% 21.69% 105.43% $0.0603 $15,232
1.01% 1.20% 1.43% 10.72% 63.82% -- $12,138
1.06% 1.20% 1.43% 1.68% 86.07% -- $12,922
1.02% 1.20% 1.42% 9.32% 57.34% -- $109,669
1.34%(d) 1.19%(d) 1.64%(d) 26.46%(d) 29.50% -- $68,659
1.57% 1.19% 4.33% 25.84% 31.17% -- $4,853
1.88% 1.20% 11.73% (2.91%) 38.67% -- $750
1.58% 1.20% 8.38% 28.00% 65.89% -- $411
1.84%(d) 1.19%(d) 2.50%(d) 2.04%(d) 30.90% -- $281
(0.19%) 1.75% 2.31% 20.30% 74.25% $0.0588 $8,943
(0.07%) 1.76% 2.48% 22.33% 75.50% $0.0781 $6,591
(0.12%) 1.96% 2.54% 20.79% 105.43% $0.0603 $5,130
0.28% 1.95% 2.51% 9.88% 63.82% -- $3,569
0.25%(d) 1.95%(d) 2.55%(d) 2.36%(d) 86.07% -- $2,218
</TABLE>
<PAGE>
14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Realized
Beginning and Dividends Distributions Ending
Net Net Unrealized from Net from Net Net Asset Net
Asset Value Investment Gain (Loss) Investment Realized Value Per Investment
Per Share Income on Investments Income Gain Share Income(a)
- -------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED EQUITY FUND
A SHARES
Year Ended May 31, 1998 $36.51 $0.16 $8.99 ($0.27) ($2.33) $43.06 0.60%
Year Ended May 31, 1997 $30.56 $0.20 $6.10 ($0.16) ($0.19) $36.51 0.81%
May 2, 1996 to May 31, 1996(e) $29.89 $0.02 $0.65 -- -- $30.56 1.88%(f)
B SHARES
Year Ended May 31, 1998 $36.31 ($0.06) $8.85 ($0.08) ($2.33) $42.69 (0.15%)
Year Ended May 31, 1997 $30.54 $0.03 $6.00 ($0.07) ($0.19) $36.31 0.09%
May 6, 1996 to May 31, 1996(e) $29.41 $0.02 $1.11 -- -- $30.54 1.24%(f)
- -------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers
(d) Average Commission Rate 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 Funds financials statements.
(e) Commencement of operations.
(f) Annualized.
(g) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
Ratio to Average
Net Assets
- ---------------------------------------
Portfolio Average Net Assets at
Net Gross Total Turnover Commission End of Period
Expenses(a) Expenses(a)(b) Return(c) Rate Rate (d) (000's Omitted)
- --------------------------------------------------------------------------------
1.00% 1.20% 26.08% N/A(g) N/A(g) $56,350
1.02% 1.40% 20.75% 48.08% $0.0626 $25,271
1.52%(f) 4.06%(f) 2.24% 5.76% $0.0671 $2,699
1.75% 2.19% 25.13% N/A(g) N/A(g) $81,548
1.76% 2.41% 19.86% 48.08% $0.0626 $33,870
2.37%(f) 4.95%(f) 3.84% 5.76% $0.0671 $2,447
<PAGE>
15
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
Beginning and Dividends Distributions Ending
Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- --------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND
A SHARES
Year Ended May 31, 1998 $32.49 ($0.06) $6.88 ($0.04) ($3.54) $35.73
Year Ended May 31, 1997 $29.08 ($0.02) $4.06 ($0.04) ($0.59) $32.49
May 2, 1996 to May 31, 1996(e) $28.50 -- $0.58 -- -- $29.08
B SHARES
Year Ended May 31, 1998 $32.28 ($0.23) $6.72 -- ($3.54) $35.23
Year Ended May 31, 1997 $29.07 ($0.13) $3.93 -- ($0.59) $32.28
May 6, 1996 to May 31, 1996(e) $28.18 -- $0.89 -- -- $29.07
- -------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(d) Average Commission Rate 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 funds financials statements.
(e) Commencement of operations.
(f) Annualized.
(g) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
<TABLE>
<S> <C> <C> <C>
Ratio to Average
Net Assets
- -------------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income Expenses(a) Expenses(a)(b) Return(c) Rate Rate(d) (000's Omitted)
(Loss)(a)
- ------------------------------------------------------------------------------------------------
(0.11%) 1.25% 1.42% 22.55% N/A(g) N/A(g) $21,567
(0.12%) 1.30% 1.95% 14.11% 9.06% $0.0565 $14,146
0.34%(f) 2.08%(f) 6.40%(f) 2.04% 7.39% $0.0617 $3,338
(0.85%) 2.00% 2.45% 21.63% N/A(g) N/A(g) $16,615
(0.82%) 2.04% 3.02% 13.28% 9.06% $0.0565 $8,713
(0.40%)(f) 2.92%(f) 7.44%(f) 3.16% 7.39% $0.0617 $703
</TABLE>
<PAGE>
16
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Return Unrealized from Net from Net Net Asset
Net
Asset Value Investment of Gain (Loss) Investment Realized Value Per
Per Share Income Capital on Investments Income Gain Share
- ---------------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY STOCK FUND
A SHARES
Year Ended May 31, 1998 $13.95 ($0.07) ($0.07) $1.09 -- ($2.90) $12.00
Year Ended May 31, 1997 $14.02 ($0.04) -- $0.88 -- ($0.91) $13.95
Year Ended May 31, 1996 $10.64 $0.01 -- $3.93 ($0.03) ($0.53) $14.02
Year Ended May 31, 1995 $9.84 $0.12 -- $0.87 ($0.11) ($0.08) $10.64
December 31, 1993 to May 31, 1994(f) $10.00 $0.07 -- ($0.15) ($0.08) -- $9.84
B SHARES
Year Ended May 31, 1998 $13.63 ($0.11) ($0.07) $1.01 -- ($2.90) $11.56
Year Ended May 31, 1997 $13.83 ($0.11) -- $0.82 -- ($0.91) $13.63
Year Ended May 31, 1996 $10.56 ($0.08) -- $3.90 ($0.02) ($0.53) $13.83
Year Ended May 31, 1995 $9.82 $0.07 -- $0.84 ($0.09) ($0.08) $10.56
December 31, 1993 to May 31, 1994(f) $10.00 $0.06 -- ($0.17) ($0.07) -- $9.82
- -----------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate 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 funds financials statements.
(d) Includes expenses allocated from the Portfolio in which the Fund invests.
(e) Reflects the activity of the Portfolio in which the Fund invests.
(f) Commencement of operations.
(g) Annualized.
<TABLE>
<S> <C> <C> <C>
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(b) Rate Rate(c) (000's Omitted)
(Loss)
- ------------------------------------------------------------------------------------------------
(0.50%) 1.20%(d) 1.42%(d) 8.07% 166.16(e) $0.0616(e) $8,426
(0.38%) 1.19% 1.67% 6.34% 210.19% $0.0774 $7,355
0.03% 1.21% 1.87% 38.22% 134.53% $0.0555 $5,426
1.14% 0.53% 2.32% 10.19% 68.09% - $1,540
1.95%(g) 0.22% 10.66%(g) (1.98%)(g) 14.98% - $265
(1.26%)(d) 1.95%(d) 2.47%(d) 7.29% 166.16%(e) $0.0616(e) $5,799
(1.13%) 1.94% 2.73% 5.46% 210.19% $0.0774 $5,125
(0.74%) 1.96% 2.96% 37.32% 134.53% $0.0555 $4,125
0.38% 1.27% 3.56% 9.31% 68.09% - $963
1.27(g) 0.98%(g) 20.87%(g) (2.77%)(g) 14.98% - $195
</TABLE>
<PAGE>
17
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
and Distributions Ending
Beginning Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Realized Value Per
Per Share Income on Investments Gain Share
- ---------------------------------------------------------------------------------------------------------
SMALL CAP OPPORTUNITIES FUND
A SHARES
Year Ended May 31, 1998 $19.83 ($0.07) $4.37 ($0.53) $23.60
October 9, 1996(f)to May 31, 1997 $17.39 ($0.01) $2.46 ($0.01) $19.83
B SHARES
Year Ended May 31, 1998 $19.75 ($0.05) $4.15 ($0.53) $23.32
November 8, 1996(f) to May 31, 1997 $17.41 ($0.05) $2.40 ($0.01) $19.75
- ---------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses from the Portfolioin which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the
effects of sales charges. Total Return would have been lower absent expense
reimbursements and fee waivers.
(d) Reflects the activity of the Portfolio in which the Fund invests.
(e) Average Commission Rate represents theaverage 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.
(f) Commencement of operations.
(g) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
------------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income (Loss)(a) Expenses(a) Expenses(a)(b)Return(c) Rate(d) Rate(d)(e) (000's Omitted)
- -----------------------------------------------------------------------------------------------
(0.43%) 1.27% 1.86% 21.97% 54.98% $0.0582 $6,870
(0.18%)(g) 1.25%(g) 10.51%(g) 11.37% 34.45% $0.0584 $522
(1.21%) 2.02% 3.05% 21.03% 54.98% $0.0582 $6,140
(0.99%)(g) 2.06%(g) 27.27%(g) 13.53% 34.45% $0.0584 $158
</TABLE>
<PAGE>
18
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
Beginning and Dividends Ending
Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Investment Value Per
Per Share Income on Income Share
Investments
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL FUND
A SHARES
Year Ended May 31, 1998 $21.66 $0.03 $2.35 ($0.20) $23.84
Year Ended May 31, 1997 $19.82 $0.10 $1.94 ($0.20) $21.66
November 1, 1995 to May 31, 1996 $17.97 $0.35 $1.83 ($0.33) $19.82
April 1, 1995 to October 31, 1995(g) $16.50 $0.01 $1.46 -- $17.97
B SHARES
Year Ended May 31, 1998 $21.55 ($0.09) $2.31 ($0.07) $23.70
Year Ended May 31, 1997 $19.71 ($0.06) $1.93 ($0.03) $21.55
November 1, 1995 to May 31, 1996 $17.91 $0.25 $1.83 ($0.28) $19.71
May 12, 1995(g)to October 31, 1995 $17.20 $0.01 $0.70 -- $17.91
- ----------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(d) Average Commission Rate 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.
(e) Reflects the activity of the Portfolios in which the Fund invests.
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
<PAGE>
19
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
----------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(a) Expenses(a) Expenses(a)(b) Return(c) Rate Rate(d) (000's Omitted)
- ---------------------------------------------------------------------------------------------
0.44% 1.47% 1.72% 11.20% N/A(h) N/A(h) $3,342
0.42% 1.43% 1.72% 10.33% 48.23%(e) 0.0202(e) $2,240
0.92%(f) 1.50%(f) 2.51%(f) 12.31% 14.12%(e) 0.0325(e) $1,080
0.26%(f) 1.32%(f) 20.95%(f) 8.91% 29.41% (e) -- $216
(0.29%) 2.22% 2.81% 10.39% N/A(h) N/A(h) $2,245
(0.34%) 2.18% 2.76% 9.44% 48.23%(e) 0.0202(e) $1,667
(0.02%)(f) 2.25%(f) 3.11%(f) 11.79% 14.12%(e) 0.0325(e) $995
0.17%(f) 1.27%(f) 14.57%(f) 4.30% 29.41%(e) -- $395
</TABLE>
<PAGE>
20
- --------------------------------------------------------------------------------
GLOSSARY [PC MONITORS]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
Term Definition
- ---- ----------
Board The Board of Trustees of Norwest Advantage Funds.
CDSC Contingent deferred sales charge.
Duration A measure of a debt security's average life that reflects
the present value of the security's cash flow. The prices of
securities with longer Durations generally are more
volatile.
Fundamental Requiring shareholder approval.
Investment Grade Rated at the time of purchase in 1 of the 4 highest
long-term or 2 highest short-term ratings categories by an
NRSRO or unrated and determined by the Adviser to be
comparable quality.
Market The total market value of a company's outstanding common
Capitalization stock.
NRSRO A nationally recognized statistical rating organization,
such as S&P, that rates fixed income securities and
preferred stock by relative credit risk.
Non-Investment Not Investment Grade.
Grade
Russell 1000(R) An index of large- and medium- capitalization companies.
Index
Russell 2000(R) An index of smaller capitalization companies with a broader
Index base of companies than the S&P 600 Small Cap Index.
S&P Standard & Poor's Corporation.
S&P 500 Index Standard & Poor's 500 Composite Stock Price Index, an index
of large capitalization companies.
S&P 600 Small Cap Standard & Poor's Small Cap 600 Composite Stock Price
Index Index(C), an index of small capitalization companies.
SEC The U.S. Securities and Exchange Commission.
U.S. Government A security issued or guaranteed as to principal and interest
Security by the U.S. Government, its agencies or its
instrumentalities.
<PAGE>
21
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds
and the Portfolios. After each Fund's description, there is a short,
alphabetical listing of the Fund's primary risks. The RISK CONSIDERATIONS
section below discusses these risks.
THE FUNDS
GROWTH BALANCED FUND
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversified
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund currently invests in 14 Portfolios.
The Fund invests the equity portion of its portfolio in the 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 Fund invests the fixed income portion of
its portfolio in Positive Return Bond Portfolio, Strategic Value Bond
Portfolio, and Managed Fixed Income Portfolio. 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 Fund's investments.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range Of
Investment Style Allocation Investment
---------------- ---------- ----------
DIVERSIFIED EQUITY FUND STYLE 65% 45% - 85%
INDEX PORTFOLIO 16.3% 11.3% - 21.3%
INCOME EQUITY PORTFOLIO 16.3% 11.3% - 21.3%
LARGE COMPANY STYLE 16.3% 11.3% - 21.3%
LARGE COMPANY GROWTH PORTFOLIO 13.0% 9.0% - 17.0%
DISCIPLINED GROWTH PORTFOLIO 3.3% 2.3% - 4.3%
DIVERSIFIED SMALL CAP STYLE 6.5% 4.5% - 8.5%
SMALL CAP INDEX PORTFOLIO 1.3% 0.9% - 1.7%
SMALL COMPANY GROWTH PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY VALUE PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY STOCK PORTFOLIO 1.0% 0.7% - 1.4%
SMALL CAP VALUE PORTFOLIO 1.0% 075% - 1.4%
INTERNATIONAL STYLE 9.8% 6.8% - 12.8%
INTERNATIONAL PORTFOLIO 9.3% 5.4% - 12.8%
SCHRODER EM CORE PORTFOLIO 0.5% 0% - 2.6%
</TABLE>
<PAGE>
22
<TABLE>
<S> <C> <C>
GROWTH BALANCED FUND (CONTINUED)
current range of
investment style allocation investment
---------------- ---------- ----------
DIVERSIFIED BOND FUND STYLE 35% 15% - 55%
MANAGED FIXED INCOME PORTFOLIO 17.5% 7.5% - 27.5%
STRATEGIC VALUE BOND PORTFOLIO 5.8% 2.5% - 9.2%
POSITIVE RETURN BOND PORTFOLIO 11.7% 5% - 18.3%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of the Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
As market or other conditions change, the Adviser may attempt to enhance
the Fund's returns by changing the percentage of Fund assets invested in
fixed income and equity securities. The Fund also may invest in more or
fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of percentage changes. When the Adviser believes that a
change in the current allocation percentages is desirable, it will sell and
purchase securities to effect the change. When the Adviser believes that a
change will be temporary (generally, 3 years or less), it may effect the
change by using futures contracts.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
INCOME EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation consistent with above-average dividend
income.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have above-average return
potential based on current market valuations. The Fund primarily emphasizes
investments in securities of companies with above-average dividend income.
In selecting securities for the Fund, the Adviser uses various valuation
measures, including above-average dividend yields and below industry
average price-to-earnings, price-to-book, and price-to-sales ratios. The
Adviser considers large companies to be those whose Market Capitalization
is greater than the median of the Russell 1000 Index.
The Fund may invest in preferred stock, convertible securities, and
securities of foreign companies. The Fund will not normally invest more
than 10% of its total assets in the securities of a single issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
<PAGE>
23
VALUGROWTH STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation.
INVESTMENT POLICIES. The Fund invests primarily in medium- and
large-capitalization companies that, in the view of the Adviser, possess
above average growth characteristics, and appear to be undervalued. The
Adviser considers medium-capitalization companies to be those whose Market
Capitalization is in the range of $500 million to $8 billion. The Adviser
considers large companies to be those whose Market Capitalization is
greater than the median of the Russell 1000 Index.
The Fund seeks to identify and invest in those companies with earnings and
dividends that the Adviser believes will grow faster than both inflation
and the economy in general. The Fund invests in companies with growth
potential that, in the opinion of the Adviser, has not yet been fully
reflected in the market price of the companies' shares. In seeking these
investments, the Adviser relies primarily on a company-by-company analysis
(rather than on a broader analysis of industry or economic sector trends.
The Adviser 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, the Adviser applies a number of valuation measures to
determine the relative attractiveness of each company and selects those
companies whose shares are most attractively priced.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Fund may invest in companies that the Adviser considers to be "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 form a comparatively small portion of the Fund's portfolio.
The Fund may invest up to 20% of its total assets in securities of foreign
companies. The Fund also may write covered call options and purchase call
options on equity securities to manage risk or enhance returns.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in a single investment
style. The Fund currently invests in 11 Portfolios.
<PAGE>
24
The Fund's investments combine 5 different equity investment styles - an
index style, an income equity style, a large company style, a diversified
small cap style, and an international style. The Fund allocates the assets
dedicated to large company investments to 2 Portfolios, the assets
allocated to small company investments to 5 Portfolios and the assets
dedicated to international investments to 2 Portfolios. Because Diversified
Equity Fund blends 5 equity investment styles, it is anticipated that its
price and return volatility will be less than that of Growth Equity Fund,
which blends 3 equity investment styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Style Current Range of
----------------- Allocation Investment
------------ ------------
INDEX PORTFOLIO 25% 23.5% - 26.5%
INCOME EQUITY PORTFOLIO 25% 23.5% - 26.5%
LARGE COMPANY STYLE 25% 23.5% - 26.5%
LARGE COMPANY GROWTH PORTFOLIO 20% 18.5% - 21.5%
DISCIPLINED GROWTH PORTFOLIO 5% 3.5% - 6.5%
DIVERSIFIED SMALL CAP STYLE 10% 8.5% - 11.5%
SMALL CAP INDEX PORTFOLIO 2.0% 0.5% - 3.5%
SMALL COMPANY GROWTH PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY VALUE PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY STOCK PORTFOLIO 1.6% 0.1% - 3.1%
SMALL CAP VALUE PORTFOLIO 1.6% 0.1% - 3.1%
INTERNATIONAL STYLE 15% 13.5% - 16.5%
INTERNATIONAL PORTFOLIO 14.3% 10.8% - 16.5%
SCHRODER EM CORE PORTFOLIO 0.8% 0% - 3.3%
-----------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market value. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
<PAGE>
25
GROWTH EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a high
level of long-term capital appreciation with moderate annual return
volatility by diversifying its investments among different equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to reduce the volatility and risk of investing in a single equity style.
The Fund currently invests in 8 Portfolios.
The Fund's investments combine 3 different equity styles - a large company
growth style, a diversified small cap style and an international style. The
Fund allocates the assets dedicated to small company investments to 5
Portfolios and the assets dedicated to international investments to 2
Portfolios. It is anticipated that the Fund's price and return volatility
will be somewhat greater than those of Diversified Equity Fund, which
blends 5 equity styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
current range of
investment style allocation investment
---------------- ---------- ----------
LARGE COMPANY GROWTH PORTFOLIO 35% 33% - 37%
DIVERSIFIED SMALL CAP STYLE 35% 33% - 37%
SMALL CAP INDEX PORTFOLIO 7.0% 5.0% - 9.0%
SMALL COMPANY GROWTH PORTFOLIO 8.4% 8.5% - 12.5%
SMALL COMPANY VALUE PORTFOLIO 8.4% 8.5% - 12.5%
SMALL COMPANY STOCK PORTFOLIO 5.6% 3.6% - 7.6%
SMALL CAP VALUE PORTFOLIO 5.6% 3.6% - 7.6%
INTERNATIONAL STYLE 30% 28% - 32%
INTERNATIONAL PORTFOLIO 28.5% 22.4% - 32.0%
SCHRODER EM CORE PORTFOLIO 1.5% 0% - 6.4%
---------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
<PAGE>
26
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
LARGE COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing primarily in large,
high-quality domestic companies that the Adviser believes have superior
growth potential.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have superior growth potential.
The Adviser considers large companies to be those whose Market
Capitalization is greater than the median of the Russell 1000 Index. In
selecting securities for the Fund, the Adviser seeks issuers whose stock is
attractively valued with fundamental characteristics that are significantly
better than the market average and support internal earnings growth
capability. The Fund may invest in the securities of companies whose growth
potential is, in the Adviser's opinion, generally unrecognized or
misperceived by the market.
The Fund may invest up to 20% of its total assets in the securities of
foreign companies and may hedge against currency risk by using foreign
currency forward contracts. The Fund may not invest more than 10% of its
total assets in the securities of a single issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED SMALL CAP FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments across different small capitalization equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in small capitalization
equity securities. The Fund invests in several different small
capitalization equity styles in order to reduce the risk of price and
return volatility associated with reliance on a single investment style.
The Fund currently invests in 5 Portfolios.
<PAGE>
27
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range of
Investment Style Allocation Investment
---------------- ---------- ----------
SMALL CAP INDEX PORTFOLIO 20% 18.5% - 21.5%
SMALL COMPANY GROWTH PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY VALUE PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY STOCK PORTFOLIO 16% 14.5% - 17.5%
SMALL CAP VALUE PORTFOLIO 16% 14.5% - 17.5%
------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
SMALL COMPANY STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small- and medium-size domestic companies that have Market Capitalizations
well below that of the average company in the S&P 500 Index. The Adviser
considers small companies to be those companies whose Market
Capitalizations are less than the largest stock in the Russell 2000 Index.
The Adviser considers medium companies to be those whose Market
Capitalizations range from $500 million to $8 billion.
In selecting securities for the Fund, the Adviser seeks securities with
significant price appreciation potential and attempts to identify companies
that show above-average growth, as compared to long-term overall market
growth. The Fund invests in companies that 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 the Adviser, may result in
an enhanced entrepreneurial spirit and greater focus. The Adviser believes
that such companies may develop into significant business enterprises and
that an investment in these companies offers a greater opportunity for
capital appreciation than an investment in larger, more established
companies.
<PAGE>
28
The Fund may invest up to 20% of its total assets in the securities of
foreign companies. The Fund may also write covered call options and
purchase call options on equity securities to manage risk or enhance
returns.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL CAP OPPORTUNITIES FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide capital
appreciation. Current income will be incidental to the objective of capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in equity securities of
U.S. companies that, at the time of purchase, have Market Capitalizations
of $1.5 billion or less.
The Adviser attempts to identify securities of companies that it believes
can generate above-average earnings growth and sell at favorable prices in
relation to book values and earnings. The Adviser's assessment of a
company's management's competence will be an important consideration. These
criteria are not rigid and the Fund may make other investments to achieve
its objective.
The Fund will invest principally in equity securities, including common
stocks, securities convertible into common stocks, or, subject to special
limitations, rights or warrants to subscribe for or purchase common stocks.
The Fund also may invest to a limited degree in non-convertible debt
securities and preferred stocks.
The Fund may use options and futures contracts to manage risk. The Fund
also may use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
INTERNATIONAL FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing directly or indirectly in
high-quality companies based outside the United States.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in international
securities. The Fund's investment portfolio combines 2 different investment
styles - an international equity investment style and an international
emerging markets investment style. The Fund invests in 2 Portfolios.
<PAGE>
29
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range of
Investment Style Allocation Investment
INTERNATIONAL PORTFOLIO 95% 80% - 100%
SCHRODER EM CORE PORTFOLIO 5% 0% - 20%
----------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
- --------------------------------------------------------------------------------
DESCRIPTIONS OF PORTFOLIOS
- --------------------------------------------------------------------------------
POSITIVE RETURN BOND PORTFOLIO
The Portfolio seeks positive total return each calendar year regardless of
general bond market performance by investing in a portfolio of U.S.
Government Securities and corporate fixed income securities. The
Portfolio's assets are divided into 2 components, short bonds with
maturities (or average life) of 2 years or less and long bonds with
maturities of 25 years or more. Shifts between short bonds and long bonds
are made based on movement in the prices of bonds rather than on the
Adviser's forecast of interest rates. During periods of falling prices
(generally, increasing interest rate environments) long bonds are sold to
protect capital and limit losses. Conversely, when bond prices rise, long
bonds are purchased. The average dollar-weighted maturity of the Portfolio
will vary between 1 and 30 years.
Under normal circumstances, the Portfolio invests at least 50% of its net
assets in U.S. Government Securities, including U.S. Treasury Securities.
The Portfolio only purchases securities that are rated, at the time of
purchase, within 1 of the 2 highest long-term rating categories assigned by
an NRSRO or that are unrated and determined by the Adviser to be of
comparable quality. The Portfolio may invest up to 25% of its assets in
securities rated in the second highest rating category. The Portfolio does
not invest more than 25% of its total assets in zero-coupon securities,
securities with variable or floating rates of interest or asset-backed
securities.
<PAGE>
30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk
Market Risk Leverage Risk
MANAGED FIXED INCOME PORTFOLIO
The Portfolio seeks consistent fixed income returns by investing primarily
in Investment Grade intermediate-term securities. The Portfolio invests in
a diversified portfolio of fixed and variable rate U.S. dollar-denominated,
fixed income securities of a broad spectrum of U.S. and foreign issuers,
including U.S. Government Securities and the debt securities of financial
institutions, corporations, and others. The Adviser emphasizes the use of
intermediate maturity securities to lessen Duration and employs low risk
yield enhancement techniques to enhance return over a complete economic or
interest rate cycle. The Adviser considers intermediate-term securities to
be those with maturities of between 2 and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to
not more than 65% of its total assets and its investment in other
asset-backed securities to not more than 25% of its net assets. In
addition, the Portfolio may not invest more than 30% of its total assets in
the securities issued or guaranteed by any single agency or instrumentality
of the U.S. Government, except the U.S. Treasury.
The Portfolio only purchases Investment Grade securities. The Portfolio
normally will have an average dollar-weighted portfolio maturity of between
3 and 12 years and a Duration of between 2 and 6 years.
The Portfolio also may invest up to 10% of its total assets in securities
issued or guaranteed by foreign governments the Adviser deems stable, or
their subdivisioins, agencies, or instrumentalities; loan or security
participations; securities of supranational organizations; and municipal
securities.
The Portfolio may use options, swap agreements, interest rate caps, floors,
and collars and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
STRATEGIC VALUE BOND PORTFOLIO
The Portfolio seeks total return by investing primarily in income producing
securities. The Portfolio invests in a broad range of fixed income
instruments in order to create a strategically diversified portfolio of
fixed income investments.
<PAGE>
31
These investments include corporate bonds, mortgage- and other asset-backed
securities, U.S. Government Securities, preferred stock, convertible bonds
and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Portfolio seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current versus historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Portfolio's objective and purchases those securities
that are consistent with the Portfolio's investment objective.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio particularly seeks strategic diversification. The Portfolio
will not invest more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate market.
The Portfolio may invest in U.S. Government Securities without restriction.
The Portfolio generally will not invest more than 5% of its total assets in
the corporate bonds of any single issuer.
The Portfolio will invest 65% of its total assets in fixed-income
securities rated, at the time of purchase, within the 3 highest rating
categories assigned by at least 1 NRSRO, or which are unrated and
determined by the Adviser to be of comparable quality. The Portfolio may
invest up to 20% of its total assets in Non-Investment Grade securities.
The average maturity of the Portfolio will vary between 5 and 15 years. In
the case of mortgage-backed and similar securities, the Portfolio uses the
security's average life in calculating the Portfolio's average maturity.
The Portfolio's Duration normally will vary between 3 and 8 years.
The Portfolio may use options, swap agreements, interest rate caps, floors,
and collars and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
32
INDEX PORTFOLIO
The Portfolio is designed to replicate the return of the S&P 500 Index with
minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio holds stocks representing 100% of the
capitalization-weighted market values of the S&P 500 Index. The Adviser
generally executes portfolio transactions for the Portfolio only to
replicate the composition of the S&P 500 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 to facilitate payment of the Portfolio's expenses or
redemptions and may invest in index futures contracts to a limited extent.
For these and other reasons, the Portfolio's performance can be expected to
approximate but not equal the S&P 500 Index.
The S&P 500 Index tracks the total return performance of 500 common stocks
which are chosen for inclusion in the S&P 500 Index by S&P on a statistical
basis. 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 S&P 500 Index is weighted by its market
value. Because of the market-value weighting, the 50 largest companies in
the S&P 500 Index currently account for approximately 47% of its value. The
S&P 500 Index emphasizes large capitalizations and, typically, companies
included in the S&P 500 Index are the largest and most dominant firms in
their respective industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 500 Index is a good investment, is accurate or
complete, or will track general stock market performance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Index Risk
INCOME EQUITY PORTFOLIO
The Income Equity Fund section of this prospectus describes this Portfolio.
LARGE COMPANY GROWTH PORTFOLIO
The Large Company Growth Fund section of this prospectus describes this
Portfolio.
DISCIPLINED GROWTH PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
larger companies. The Portfolio seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Portfolio invests
in companies with average Market Capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level
of corporate earnings that exceed the level expected by investors. In
seeking these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider,
<PAGE>
33
among other factors, changes of earnings estimates by investment analysts,
the recent trend of company earnings reports, and an analysis of the
fundamental business outlook for the company. The Adviser uses a variety of
valuation measures to determine whether or not the share price already
reflects any positive fundamentals identified by the Adviser. In addition
to approximately equal weighting of portfolio securities, the Adviser
attempts to constrain the variability of the investment returns by
employing risk control screens for price volatility, financial quality, and
valuation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk
[INVESTMENT OBJECTIVES AND POLICIES TAB]
SMALL CAP INDEX PORTFOLIO
The Portfolio seeks to replicate the return of the S&P Small Cap 600 Index
with minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio will hold stocks representing 100% of the
capitalization-weighted market values of the S&P 600 Small Cap Index. The
Adviser generally executes portfolio transactions only to replicate the
composition of the S&P 600 Small Cap Index, to invest cash received from
portfolio security dividends or investments in the Portfolio, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal that of the S&P
600 Small Cap Index.
The S&P 600 Small Cap Index tracks the total return performance of 600
common stocks which are chosen for inclusion in the S&P 600 Small Cap Index
by S&P on a statistical basis. The 600 securities, most of which trade on
the New York Stock Exchange, represent 4% of the total market value of all
U.S. common stocks. Each stock in the S&P 600 Small Cap Index is weighted
by its market value. The S&P 600 Small Cap Index emphasizes smaller
capitalizations and typically, companies included in the S&P 600 Small Cap
Index may not be the largest nor most dominant firms in their respective
industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 600 Small Cap Index is a good investment, is accurate
or complete, or will track general stock market performance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Index Risk
SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Fund section of this prospectus describes this
Portfolio.
<PAGE>
34
SMALL COMPANY GROWTH PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
in smaller domestic companies. The Portfolio invests primarily in the
common stock of small and medium-sized domestic companies that are either
growing rapidly or completing a period of significant change. Small
companies are those companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index.
In selecting securities for the Portfolio, the Adviser seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by
undergoing a dramatic change. These changes may involve a sharp increase in
earnings, the hiring of new management, or measures taken to close the gap
between share price, and takeover/asset value.
The Portfolio will invest up to 10% of its total assets in securities of
foreign companies. The Portfolio will not invest more than 5% of its total
assets in the securities of a single issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL COMPANY VALUE PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
primarily in smaller companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index or approximately $1.4 billion. The
Adviser focuses on securities that are conservatively valued in the
marketplace relative to the stock of comparable companies, determined by
price/earnings ratios, cash flows, or other measures. Value investing
provides investors with a less aggressive way to take advantage of growth
opportunities of small companies. Value investing may reduce downside risk
and offer potential for capital appreciation as a stock gains favor among
other investors and its stock price rises.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
SMALL CAP VALUE PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
smaller companies. The Portfolio will normally invest substantially all of
its assets in securities of companies with Market Capitalizations that
reflect the Market Capitalization of companies included in the Russell 2000
Index. The Portfolio seeks higher growth rates and greater long-term
returns by investing primarily in the common stock of smaller
<PAGE>
35
companies that the Adviser believes to be undervalued and likely to report
a level of corporate earnings exceeding the level expected by investors.
The Adviser values companies based upon both the price-to-earnings ratio of
the company, and a comparison of the public market value of the company to
a proprietary model that values the company in the private market. In
seeking companies that will report a level of earnings exceeding that
expected by investors, the Adviser uses both quantitative and fundamental
analysis. Among other factors, the Adviser considers changes of earnings
estimates by investment analysts, the recent trend of company earnings
reports and the fundamental business outlook for the company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
INTERNATIONAL PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks to provide long-term capital appreciation by investing
directly or indirectly in high-quality companies based outside the United
States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio also may invest in the securities of domestic closed-end
investment companies that invest primarily in foreign securities and may
invest in debt securities of foreign governments or their political
subdivisions, agencies, or instrumentalities, of supranational
organizations, and of foreign corporations. The Portfolio's investments are
generally diversified among securities of issuers in foreign countries
including, but not limited to, Japan, Germany, the United Kingdom, France,
the Netherlands, Hong Kong, Singapore, and Australia. In general, the
Portfolio will invest only in securities of companies and governments in
countries that the Adviser, in its judgment, considers both politically and
economically stable. The Fund may invest more than 25% of its total assets
in investments in a particular country, region or type of investment.
The Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk
<PAGE>
36
SCHRODER EM CORE PORTFOLIO
The Portfolio seeks to achieve long-term capital appreciation through
direct or indirect investment in equity and debt securities of companies in
emerging market countries in regions such as Southeast Asia, Latin America,
and Eastern and Southern Europe. Current income is incidental to the
Portfolio's objective.
The Portfolio may invest, under normal market conditions, at least 65% of
its total assets in emerging market equity and debt securities, including
convertible securities and stock rights and warrants.
The Adviser considers "emerging market" countries generally to be all those
countries not included in the Morgan Stanley Capital International World
Index ("MSCI World") of major world economies. If the Adviser determines
that the economy of a MSCI World-listed country is an emerging market
economy, the Adviser may include such country in the emerging market
category. The Portfolio will not necessarily seek to diversify investments
on a geographic basis and may invest more than 25% of its total assets in
issuers located in a single country.
The Fund may invest up to 35% of its total assets in Non-Investment Grade
fixed income securities. The Fund may enter into foreign exchange
contracts, including forward contracts, in anticipation of its currency
requirements and to protect against possible adverse movements in foreign
exchange rates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
37
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [PC MONITORS]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds. Each
Fund's exposure to these risks depends upon its specific investment profile. The
Fund's description in Investment Objectives and Policies lists the Fund's
principal risks.
CREDIT RISK
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
CURRENCY RATE RISK
[RISK ICON]
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments.
FOREIGN INVESTMENT RISK
[RISK ICON]
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization,
increased taxation or confiscation of investors' assets. Also, the risk
that the price of a foreign issuer's securities may not reflect the
issuer's condition because there is not sufficient publicly available
information about the issues. This risk may be greater for investments in
issuers in emerging or developing markets.
[RISK CONSIDERATIONS TAB]
GEOGRAPHIC CONCENTRATION RISK
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
INDEX RISK
[RISK ICON]
The risk that a Fund designed to replicate the performance of an index of
securities will replicate the performance of the index during adverse
market conditions because the portfolio manager is not permitted to take a
temporary defensive position or otherwise vary the Fund's investments to
respond to the adverse market conditions.
INTEREST RATE RISK
[RISK ICON]
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a
Fund's securities to fall, while a decline in interest rates may produce an
increase in the market value of the securities. Because of this risk, an
investment in a Fund that invests in fixed income securities is subject to
risk even if all the fixed income securities in the Fund's portfolio are
paid in full at maturity. Changes in interest rates will affect the value
of longer-term fixed income securities more than shorter-term securities.
<PAGE>
38
LEVERAGE RISK
[RISK ICON]
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
MARKET RISK
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry, or section of the economy or may affect the market
as a whole.
PREPAYMENT RISK
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
SMALL COMPANY RISK
[RISK ICON]
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
39
- --------------------------------------------------------------------------------
COMMON POLICIES [PC MONITORS]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Fund's investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
VOTING ISSUES
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that
shareholders of Funds with comparatively high net asset values will have a
comparatively smaller impact on the outcome of votes by all of the Funds
than do shareholders of Funds with comparatively low net asset values.
DOWNGRADED SECURITIES
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's 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
[COMMON POLICIES TAB]
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective and is likely that
its shareholders may be subject to federal and applicable state incoome
taxes on a greater portion of the fund's income distributions.
PORTFOLIO TURNOVER
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. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. The FINANCIAL HIGHLIGHTS table lists the Funds' portfolio turnover
rate.
YEAR 2000 AND EURO
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
<PAGE>
40
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio except the Portfolios advised by Schroder. In this
capacity, Norwest makes investment decisions for and administers the Funds'
and Portfolios' investment programs. Norwest Investment Management, Inc.'s
address is Norwest Center, Sixth Street and Marquette, Minneapolis, MN
55479.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. is the investment adviser
for the Schroder U.S. Smaller Companies Portfolio, International Portfolio,
and Schroder EM Core Portfolio. In this capacity, Schroder makes investment
decisions for and administers those Portfolios' investment programs.
Schroder Capital Management International Inc.'s address is 787 Seventh
Avenue, 34th Floor, New York, NY 10019.
Norwest and certain of the Funds and the Portfolios have retained
investment subadvisers to make investment decisions for and administer the
investment programs of those Funds and Portfolios. Norwest decides which
portion of the assets of a Fund or Portfolio the subadviser should manage
and supervises the subadvisers' performance of their duties. The
subadvisers are:
CRESTONE CAPITAL MANAGEMENT, INC. or CRESTONE, AN INVESTMENT ADVISORY
SUBSIDIARY OF NORWEST BANK, PROVIDES INVESTMENT ADVICE REGARDING COMPANIES
WITH SMALL MARKET CAPITALIZATION TO VARIOUS CLIENTS, INCLUDING
INSTITUTIONAL INVESTORS. Crestone Capital Management, Inc.'s address is
7720 East Bellview Avenue, Suite 220, Englewood, CO 80111.
GALLIARD CAPITAL MANAGEMENT, INC. OR GALLIARD, an investment Advisory
subsidiary of Norwest Bank, provides investment advisory services to bank
and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations, and corporate and other business entities.
Galliard Capital Management, Ins.'s address is 800 Lasalle Avenue, Suite
2060, Minneapolis, MN 55479.
PEREGRINE CAPITAL MANAGEMENT, INC. or PEREGRINE, an investment advisory
subsidiary of Norwest Bank, provides investment advisory services to
corporate and public pension plans; profit sharing plans;
savings-investment plans, and 401(K) Plans. Peregrine Capital Management
Inc.'s address is Lasalle Plaza, 800 Lasalle Avenue., Suite 1850,
Minneapolis, MN 55402.
SMITH ASSET MANAGEMENT GROUP, L.P. OR SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies, and
high net worth individuals using a disciplined equity style. Smith Asset
Management Group, L.P.'S Address is 300 Crescent Court, Suite 750, Dallas,
TX 75201.
<PAGE>
41
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments. The
year a portfolio manager began managing a Fund or Portfolio follows the
manager's name in parenthesis. The list includes the investment advisory
fees payable to Norwest or Schroder by the Fund and by any Portfolios in
which it invests. The list states the investment advisory fees on an
annualized basis as a percentage of a Fund's or Portfolio's average daily
net assets. Descriptions of the portfolio managers' recent experience
follow the list of portfolio managers and advisory fees.
How investment advisory fees are paid depends on whether or not a Fund invests
in Portfolios.
* If a Fund invests directly in a portfolio of securities, Norwest receives
an investment advisory fee directly from the Fund.
* If a Fund invests in a single Portfolio, Norwest or Schroder receives an
investment advisory fee from the Portfolio.
* If a Fund invests in more than 1 Portfolio, Norwest or Schroder receives an
investment advisory fee from each of those Portfolios. In addition, Norwest
receives a fee from each Fund for the "asset allocation services" of
determining the Funds' investments in the Portfolios and how much of the
Fund's assets to invest in each Portfolio.
If a Fund invests in more than 1 Portfolio, the total amount of the investment
advisory fee paid to Norwest or Schroder as a result of the Fund's investments
varies depending on how much of the Fund's assets are invested in and the
investment advisory fee payable to each Portfolio.
Norwest (and not the Funds or Portfolios) pays the subadvisers' investment
subadvisory fees. The investment subadvisory fees do not increase the amount of
the investment advisory fees paid to Norwest by the Funds or Portfolios.
[MANAGEMENT OF THE FUNDS TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GROWTH BALANCED FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns (1998).
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998).
ADVISORY FEE: 0.50%
<PAGE>
42
GROWTH BALANCED FUND - CONTINUED
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998).
ADVISORY FEE: 0.35%
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996).
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994).
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998).
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998).
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998).
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997).
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993).
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
<PAGE>
43
<TABLE>
<S> <C> <C>
INCOME EQUITY FUND
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary J.Dunn (1994).
ADVISORY FEE: 0.50%.
VALUGROWTH STOCK FUND
PORTFOLIO MANAGER: David S. Lunt, CFA (1996)
ADVISORY FEE: 0.80% - first $300 million; 0.76% - next $400 million; 0.72% -
remaining.
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INDEX PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGER: David L. Roberts, CFA (1994)and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY) AND
SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio 0.95%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
44
<TABLE>
<S> <C> <C>
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND - CONTINUED
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
LARGE COMPANY GROWTH FUND
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGER: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
DIVERSIFIED SMALL CAP FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993).
ADVISORY FEE: 0.90%.
</TABLE>
<PAGE>
45
<TABLE>
<S> <C> <C>
DIVERSIFIED SMALL CAP FUND - CONTINUED
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio: 0.95%
SMALL COMPANY STOCK FUND
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
SMALL CAP OPPORTUNITIES FUND
PORTFOLIO: SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Ira Unschuld (1998)
ADVISORY FEE: 0.60%
INTERNATIONAL FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: John A. Troiano (1997) Heather Crighton (1997) and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
46
PORTFOLIO MANAGERS
Norwest Portfolio Managers:
PATRICIA BURNS, associated with Norwest of its affiliates since 1983. Ms.
BUrns is a Senior Vice President of Peregrine and has been a portfolio
manager at Peregrine for more than ten years.
TASSO H. COIN, JR., associated with Norwest or its affiliates since 1995.
Mr. Coin has been a Senior Vice President of Peregrine since 1995. From
1992 to 1995, Mr. Coin was a research officer at Lord Asset Management.
JOHN S. DALE, associated with Norwest or its affiliates since 1968. Mr.
Dale is a Senior Vice President of Peregrine.
GARY J. DUNN, associated with Norwest or its affiliates since 1979. Mr.
Dunn is a Director of Institutional Investments of Norwest.
WILLIAM D. GIESE, associated with Norwest or its affiliates since 1982. Mr.
Giese is a Senior Vice President of Peregrine, has been a portfolio manager
at Peregrine for more than ten years, and has more than 20 years'
experience in fixed income securities management.
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr. Huber
has been a Portfolio Manager and Corporate Trading Specialist at Galliard
since 1995 and has been in investment management since 1990.
DAVID S. LUNT, associated with Norwest or its affiliates since 1992. Mr.
Lunt is a Managing Director, Equities of Norwest.
KIRK MCCOWN, associated with Norwest or its affiliates since 1993. Mr.
McCown is the founder, President and a Director of Crestone.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was previously
Chief Investment Officer of Insight Investment Management.
ROBERT B. MERSKY, associated wtih Norwest or its affiliates since 1968. Mr.
Mersky is the President of Peregrine.
AJAY MIRZA, associated with Norwest or its affiliates since 1995. Mr. Mirza
has been a Portfolio Manager and Mortgage Specialist with Galliard since
1995. Before joining Galliard, Mr. Mirza was a research analyst at Insight
Investment Management and at Lehman Brothers.
GARY E. NUSSBAUM, associated with Norwest or its affiliates since 1990. Mr.
Nussbaum is a Senior Vice President of Peregrine.
DOUGLAS G. PUGH, associated with Norwest or its affiliates since 1997. Mr.
Pugh is a Senior Vice President of Peregrine. Before joining Peregrine, Mr.
Pugh was a senior equity analyst and portfolio manager for Advantus Capital
Management and an analyst with Kemper Corporation.
<PAGE>
47
DAVID L. ROBERTS, associated with Norwest or its affiliates since 1972. Mr.
Roberts is a Managing Director, Equities of Norwest.
STEPHEN S. SMITH, associated with Norwest or its affiliates sine 1997. Mr.
Smith has been a Chief Investment Officer and principal of the Smith Group
since 1995. Mr. Smith previously served as senior portfolio manager with
NationsBank and in several capacities with AIM Management Company's Summit
Fund.
DAVID D. SYLVESTER, associated with Norwest or its affiliates since 1979.
Mr. Sylvester currently is a Managing Director - Reserve Asset Management.
PAUL E. VON KUSTER, associated with Norwest or its affiliates since 1972.
Mr. Von Kuster is a Senior Vice President of Peregrine.
LAURIE R. WHITE, associated with Norwest or its affiliates since 1991. Ms.
White is a Director-Reserve Asset Management.
DAVID YIM, associated wtih Norwest or its affiliates since 1995. Mr. Yim
has been a Portfolio Manager and Credit Research Specialist of Galliard
since 1995 and previously worked for American Express Financial Advisors as
a Research Analyst.
Schroders Portfolio Managers:
MARK BRIDGEMAN, associated with Schroders or its affiliates since 1990. Mr.
Bridgeman is a Vice President of Schroders.
HEATHER CRIGHTON, associated with Schroders or its affiliates since 1992.
Ms Crighton is a Vice President of Schroders.
MICHAEL PERELSTEIN, associated with Schroders or its affiliates since 1997.
Mr. Perelstein has been a Senior Vice President of Schroders since January
1997. Previously Mr. Perelstein was a Managing Director at MacKay Shields.
JOHN A. TROIANO, associated with Schroders or its affiliates since 1981.
Mr. Troiano has been Chief Executive Officer of Schorders since April 1,
1997 and a Managing Director of Schroders since October 1995.
IRA UNSCHULD, associated with Schroders or its affiliates since 1990. Mr.
Unschuld is a Group Vice President.
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
48
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund that invests in
1 or more Portfolios. Norwest does not receive any compensation under this
arrangement as long as a Fund invests entirely in Portfolios. If a Fund
redeems assets from a Portfolio and invests them directly, Norwest receives
an investment advisory fee from the Fund for the management of those
assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative,
and underwriting services to the Funds. NORWEST BANK acts as the Funds'
transfer agent, dividend disbursing agent, and custodian.
<PAGE>
49
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS [PC MONITORS]
- --------------------------------------------------------------------------------
Sales charges and fees vary considerably between a Fund's classes. Consider
the differences in the classes' fee structures carefully before choosing
which class to purchase. In particular, consider how long you intend to
invest in the Fund and whether during that period it would be more
advantageous to invest in a class with an initial sales charge and
comparatively low expenses, a class with no sales charge but with a CDSC
and distribution and shareholder servicing fees or a class with a
comparatively low initial sales charge, a comparatively low CDSC, and a
distribution fee. Also, consider whether you might qualify for a reduced
sales charge on A Shares and whether any difference in total expenses
between classes would be offset by A Shares' higher yield. The SAI has more
information about ways to qualify for reduced sales charges and how reduced
sales charge alternatives operate.
A SHARES
The Funds offers A Shares at their next-determined net asset value plus the
following initial sales charge (no sales charge applies to reinvestments of
distributions):
<TABLE>
<S> <C> <C> <C>
SALES CHARGE
AS A PERCENTAGE OF*
AMOUNT OF PURCHASE OFFERING PRICE+ NET ASSET VALUE
Less than $50,000............... 5.50% 5.76%
$50,000 to $99,999.............. 4.50% 4.71%
$100,000 to $249,000............ 3.50% 3.63%
$250,000 to $499,000............ 2.50% 2.56%
$500,000 to $999,000............ 2.00% 2.04%
Over $1,000,000................. 0.00% 0.00%
*Rounded to the nearest one-hundredth percent.
+The amount of the initial sales charge is included in the offering price.
</TABLE>
If you redeem A Shares purchased with a reduced sales charge, the Funds may
impose a charge on the redemption depending on how long you have held the
shares.
A Shares for Growth Balanced Fund, Large Company Growth Fund, and
Diversified Small Cap Fund have disbribtuion fees of 0.10% under a Rule
12b-1 distribution plan. Because distribution fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the
cost of your investment.
[CHOOSING A SHARE CLASS TAB]
B SHARES
The Funds offer B Shares at their net asset value per share. B Shares have
distribution and shareholder servicing fees of 1.00% of the average daily
net assets of the class under a Rule 12b-1 distribution plan. Because
distribution fees are paid out of the Funds' assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
more than paying a front-end sales charge.
<PAGE>
50
CONTINGENT DEFERRED SALES CHARGE
If you redeem B Shares within 6 years of purchase, there will be a CDSC on
the redemption in the amount indicated below. The amount of the CDSC will
vary depending on the number of years between the payment for the purchase
of the shares and their redemption. You will pay the CDSC on the lesser of
the cost of the B Shares redeemed and their net asset value upon
redemption. The Funds do not impose a CDSC on B Shares purchased through
reinvestments of distributions.
<TABLE>
<S> <C> <C>
YEAR SINCE PURCHASE CHARGE FOR EACH FUND
4.0%
First.................................................
3.0%
Second................................................
3.0%
Third.................................................
2.0%
Fourth................................................
2.0%
Fifth.................................................
1.0%
Sixth.................................................
None
Seventh...............................................
</TABLE>
The Funds will redeem shares in the manner that results in the imposition
of the lowest CDSC. The Funds will automatically redeem shares first from
any A Shares of the Fund, second from B Shares and C Shares of the Fund
acquired pursuant to reinvestment of distributions, third from B Shares and
C Shares of the Fund held for more than 6 years or 1 year, fourth from B
Shares held for 5 years and C Shares held for less than 1 year, and fifth
from the longest outstanding B Shares of the Fund held for less than 5
years.
CONVERSION FEATURE
B Shares will automatically convert to A Shares 6 years from the end of the
calendar month in which the Fund accepted your purchase. 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, the Funds will consider B Shares purchased through
the reinvestment of distributions to be held in a separate sub-account.
Each time any B Shares in your account (other than those in the
sub-account) convert, a corresponding pro rata portion of the shares in the
sub-account will also convert. The Funds may suspend the conversion feature
in the future; in that event, B Shares might continue to pay their
distribution fee indefinitely.
C SHARES
The Funds offer C Shares at their next-determined net asset value. There is
no sales charge on reinvestments of distributions. C Shares have
distribution fees of 0.75% of the average daily net assets of the class
under a Rule 12b-1 distribution plan. Because distribution fees are paid
out of the Funds' assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost more than paying a
front-end sales charge.
<PAGE>
51
CONTINGENT DEFERRED SALES CHARGE
If you redeem C Shares within a year of purchase, there will be a 1.0% CDSC
on the redemption. You will pay the CDSC on the lesser of the cost of the C
Shares redeemed and their net asset value upon redemption. The Funds do not
impose a CDSC on C Shares purchased through reinvestments of distributions.
The Funds will redeem shares in the manner that results in the imposition
of the lowest CDSC. The Funds will automatically redeem shares first from
any A Shares of the Fund, second from B Shares and C Shares of the Fund
acquired pursuant to reinvestment of distributions, third from B Shares and
C Shares of the Fund held for more than 6 years or 1 year, fourth from B
Shares held for 5 years and C Shares held for less than 1 year, and fifth
from the longest outstanding B Shares of the Fund held for less than 5
years.
[CHOOSING A SHARE CLASS TAB]
<PAGE>
52
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [PC MONITORS]
- --------------------------------------------------------------------------------
You may purchase Fund shares on "Fund Business Days" at their net asset
value next determined after receipt of your purchase order in proper form
plus, in the case of A Shares and C Shares, any applicable sales charge.
Fund Business Days are all weekdays except generally observed national
holidays (New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas) and
Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Fund's transfer agent processes all transactions in Fund shares.
All of the Funds require a minimum initial investment of $1,000 and minimum
subsequent investments of $100. The Funds may waive their investment
minimums. Your shares become eligible to receive distributions the Fund
Business Day after your purchase order is received in proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification 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.
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as
<PAGE>
53
addresses). Norwest Advantage Funds may in the future modify, limit or
terminate any shareholder privilege upon appropriate notice and may charge
a fee for certain shareholder services, although no such fees are currently
contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds 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 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
[HOW TO BUY AND SELL SHARES TAB]
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
<PAGE>
54
SUBSEQUENT PURCHASES OF SHARES
You may make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem a Fund's shares as of the next determination of the Fund's
net asset value following receipt by the transfer agent of your redemption
order in proper form subject to, in the case of B Shares and C Shares, a
CDSC imposed on most redemptions made within 6 years or 1 year of purchase.
Redeemed shares are not entitled to receive distributions after the day on
which the redemption is effective.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days), (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings, (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value, or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers. Unless otherwise
indicated, redemption proceeds normally are paid by check mailed to your
record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person, or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations, or other eligible
institutions. The specific institution providing the guarantee must be
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.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
<PAGE>
55
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
with a net asset value of less than $1,000 immediately following any
redemption.
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signature guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered, and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are wired on the Fund Business Day after the transfer
agent receives a redemption request in proper form.
[HOW TO BUY AND SELL SHARES TAB]
EXCHANGES
You may exchange A Shares and B Shares for A Shares and B Shares,
respectively, of the Funds and of other funds of Norwest Advantage Funds
that offer those classes of shares. You may exchange C Shares of a Fund for
C Shares of the other Funds. You may also exchange your shares for some
classes of certain money market funds of Norwest Advantage Funds. Call or
write the transfer agent for both a list of funds that offer shares
exchangeable with those of the Funds and for prospectuses of those funds.
<PAGE>
56
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees (other than CDSCs) charged by, and the limitations (including
minimum investment restrictions) of, the fund into which you are
exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a fund only if that
fund's shares may legally be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
SALES CHARGES
Some exchanges of A Shares may require a sales charge in addition to the
sales charge you paid to purchase the shares. If you exchange into a fund
that imposes an initial sales charge greater than the sales charge you
paid, you must pay the difference between the sales charge of the fund you
are exchanging into and your Fund. For example, if you paid a 2% initial
sales charge on a purchase of shares and then exchanged those shares for
shares of another fund with a 3% initial sales charge, you would pay an
additional 1% sales charge on the exchange. The Funds deem A Shares
acquired through the reinvestment of distributions to have been acquired
with a sales charge equal to the maximum sales charge of the Fund.
You may exchange B Shares and C Shares without paying a CDSC. If you redeem
B Shares or C Shares you received in an exchange, the CDSC will be
calculated as if you never exchanged the shares you originally purchased. B
Shares acquired through an exchange will convert to A Shares when the B
Shares originally purchased would convert to A Shares.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered and your Social Security number or other taxpayer identification
number.
<PAGE>
57
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
DISTRIBUTIONS
The Funds declare and pay distributions of net investment income as
follows:
Declared and paid quarterly: Income Equity Fund, ValuGrowth Stock
Fund, and Small Company Stock Fund.
Declared and paid annually Each other Fund.
Each Fund distributes net capital gain, if any, at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a
Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another fund of Norwest
Advantage Funds. Call or write the transfer agent for more information
about the Directed Dividend Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a fund. All
distributions reinvested in a fund are reinvested at the fund's net asset
value as of the payment date of the distribution
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions reduce the net asset value of the Fund paying the
distribution by the amount of the distribution. Furthermore, a distribution
made shortly after you purchase shares, although in effect a return of
capital to you, is taxable.
[DISTRIBUTIONS AND TAX MATTERSTAB]
<PAGE>
58
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. International
Fund intends, 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 and Schroder EM Core Portfolio. If you own shares
of International Fund, you will be notified of your share of those foreign
taxes and will be required to treat the amount of the foreign taxes as
additional income. In that event, you may be entitled to claim a credit or
deduction for those taxes on your federal tax return.
<PAGE>
59
- --------------------------------------------------------------------------------
OTHER INFORMATION [PC MONITORS]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines its net asset value at 4:00 p.m., Eastern Time on each
Fund Business Day by dividing the value of its 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 value
portfolio securities at current market value if market quotations are
readily available. If market quotations are not readily available, the
Funds value those securities at fair value as determined by or under
procedures adopted by the Board.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies 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.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund
bears its pro rata share of the expenses of any Portfolio in which it
invests. The Board may redeem a Fund's investment in a Portfolio at any
time. The Fund could then invest directly in portfolio securities or could
re-invest in 1 or more different Portfolios that could have different fees
and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
BROKER-DEALER REALLOWANCES
The Funds' distributor may pay a "broker-dealer's" reallowance to certain
financial intermediaries purchasing shares as principal or agent. Normally,
the distributor will reallow the amounts indicated below, although it may
at times reallow the entire sales charge. The distributor also may make
additional payments to certain intermediaries out of its own resources of
up to 1.00% of the net asset value of Fund shares purchased. Norwest
Advantage Funds may change the amount of the reallowance.
In addition, at its own expense, the distributor may provide compensation,
including financial assistance, to financial intermediaries in connection
with their conferences, employee sales or training programs, public
seminars, advertising campaigns or other special events. The distributor
may, for example, compensate the intermediaries with
[OTHER INFORMATION TAB]
<PAGE>
60
travel arrangements and lodging, tickets for entertainment events, and
merchandise. The distributor may make this compensation available only to
intermediaries that have sold or are expected to sell significant amounts
of Fund shares or who charge an asset based fee, whether or not they have a
fiduciary relationship with their clients.
Amount of Purchase Broker-Dealers' Reallowance
as a Percentage of Offering
Price
Less than $50,000............... 5.00%
$50,000 to $99,999.............. 4.00%
$100,000 to $249,000............ 3.00%
$250,000 to $499,000............ 2.25%
$500,000 to $999,000............ 1.80%
$1,000,000 to 2,499,999......... 1.00%
$2,500,000 to 4,999,999......... 0.50%
Over $5,000,000................. 0.25%
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI, AND
THE FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUNDS. 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.
If you would like more information about the Funds and their investments,
you may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such
as its investments, management, and organization. It is incorporated into
this Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about each Fund's
investments is available in its annual and semi-annual reports to
shareholders. In the annual report, each Fund's portfolio manager discusses
the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual
report by contacting your investment representative or by contacting
Norwest Advantage Funds, 733 Marquette Avenue, Minneapolis, Minnesota 55479
or by calling 1-800-338-1348 or 1-612-667-8833.
The Funds' reports and statement of additional information are available
from the Securities and Exchange Commission in Washington, D.C. You may
obtain copies of these documents, upon payment of a duplicating fee, by
writing the Public Reference Section of the SEC, Washington D.C.
20549-6009. Please call 1-800-SEC-0330 for information about the operation
of the SEC's public reference room. The Fund's reports and other
information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhwere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 NORWEST ADVANTAGE FUNDS
10/98 [LOGO]
<PAGE>
NORWEST ADVANTAGE FUNDS
SMALL COMPANY GROWTH FUND
PROSPECTUS
October 1, 1998
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR
ANY OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN THE FUND.
No governmental agency, including the U.S. Securities and Exchange Commission,
has approved or disapproved these securities or determined whether or not this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
<PAGE>
TABLE OF CONTENTS PAGE
1. OVERVIEW.................................................................
2. FINANCIAL HIGHLIGHTS.....................................................
3. GLOSSARY.................................................................
4. INVESTMENT OBJECTIVE AND POLICIES........................................
5. MANAGEMENT OF THE FUND...................................................
6. PURCHASES AND REDEMPTIONS OF SHARES......................................
7. DISTRIBUTIONS AND TAX MATTERS............................................
8. OTHER INFORMATION........................................................
2
<PAGE>
1. Overview
The following is a summary of information about the Fund. Before investing, you
should read the prospectus and consider the discussion under Investment
Objectives, Policies and Risks.
The Fund is not a complete or balanced investment program, but can serve as a
part of your overall investment program.
THE FUND AT A GLANCE
OBJECTIVE PRIMARY INVESTMENTS
Long-term capital appreciation. Stock of small and medium sized
domestic companies.
CLASSES OF SHARES
This Prospectus offers I Shares of the Fund. I Shares are designed for certain
clients of bank trust departments, trust companies and investment advisers.
FUND STRUCTURES
The Fund invests in another fund identified in this prospectus as a Portfolio.
Except when necessary to describe the Fund's investment in the Portfolio, this
prospectus discusses the Fund's investments in the Portfolio as if the
investments were made directly in portfolio securities.
MANAGEMENT OF THE FUND
Norwest Investment Management, Inc. or Norwest is the investment adviser for the
Portfolio. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest
Bank, provides investment advice to institutions, pension plans and other
accounts and currently manages more than $29 billion in assets. An investment
subadviser makes investment decisions for the Portfolio under Norwest's general
supervision. This prospectus generally refers to Norwest or the subadviser as an
Adviser.
The Forum Financial Group of companies provide management, administrative and
underwriting services to the Fund.
3
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
You may purchase or redeem shares without sales or other charges. I Shares
require a minimum initial investment of $1,000 and minimum subsequent
investments of $100. The Fund is closed to new investors.
EXCHANGES
If you own shares of the Fund, you may exchange them for shares of certain other
funds.
DISTRIBUTIONS
The Fund distributes its net capital gain, if any, to shareholders at least
annually. The Fund distributes its net investment income annually.
RISK FACTORS
Investments in the Fund are subject to risk and may decline in value. The Fund
has the risk that its Adviser may not be successful in carrying out its
investment strategy, that a portfolio manager may prove difficult to replace if
he becomes unavailable to manage the Fund and that the Fund's particular
investment strategy may result in performance that is worse or better than the
performance of the market as a whole. Your investment in the Fund also will have
risk if you do not plan to invest for a period that is long enough to permit the
investment to recover from an adverse market movement.
The Fund is subject to "market risk," which is the general risk that the value
of the Fund's investments may decline if the stock markets perform poorly. There
also is a risk that the Fund's investments will underperform either the
securities markets generally or particular segments of the securities markets.
The Fund is riskier than other equity funds because it invests in smaller and
foreign issuers. Investments in smaller issuers are subject to greater changes
in value because securities of smaller issuers may not trade as often or be as
widely owned as the securities of larger issuers. Investments in foreign issuers
are subject to the risks of foreign political and economic instability and
changes in foreign exchange rates. Foreign investments also are subject to
government actions, including exchange controls and limits on repayments of
foreign investments. Foreign governments may nationalize, tax or confiscate
investors' assets.
4
<PAGE>
EXPENSES OF INVESTING IN THE FUND
The following table will assist you in understanding the expenses that you will
bear directly or indirectly when you invest in the Fund. There are no
transaction charges for purchasing, redeeming or exchanging shares. The Fund
does not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1) (2)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)
investment total
advisory fee(3) other expenses operating
expenses
0.90% 0.35% 1.25%
(1) The Fund bears its pro rata share of the expenses of the Portfolio.
(2) Absent expense reimbursements and fee waivers the Fund's expenses would
be: Other Expenses, 0.33%; and Total Operating Expenses, 1.31%. Expense
reimbursements and fee waivers are voluntary and may be reduced or
eliminated at any time.
(3) Investment Advisory Fees reflects the investment advisory fee incurred
by the Portfolio.
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses you
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 distributions. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN THOSE
SHOWN IN THE EXAMPLE.
1 year 3 years 5 years 10 years
$13 $40 $69 $151
5
<PAGE>
2. FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance over the Fund's operating history. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
the Fund, assuming reinvestment of all distributions. The information from June
1, 1994 through May 31, 1998 has been audited by KPMG Peat Marwick LLP,
independent auditors, whose reports dated July 21, 1998 about the Fund, along
with the Fund's financial statements, are included in the Fund's Annual Report,
which is available at no charge upon request. These financial statements are
incorporated by reference into the SAI. Other independent auditors audited
information for prior periods.
<TABLE>
<S> <C> <C> <C> <C>
June 1, 1997 to June 1, 1996 November 1, November 11,
Small Company Growth Fund May 31, to May 31, 1995 to May 31, 1994 to Oct.
1998 1997 1996 31,
1995
----------------- ---------------- ----------------- ----------------
Net Asset Value, Beginning of Period $31.08 $33.00 $29.99 $21.88
Investment Operations
Net Investment Income (Loss) ($0.23) ($0.18) ($0.07) ($0.11)
Net Realized and Unrealized Gain
(Loss) on $6.88 $1.83 $5.94 $8.22
Investments
Distributions From:
Net Investment Gain (Loss) ($4.04) ($3.57) ($2.86) --
Net Asset Value, End of Period $33.69 $31.08 $33.00 $29.99
Total Return(c) 22.38% 5.65% 21.43% 37.07%
Ratio/Supplementary Data
Net Assets at End of Period (000's $748,269 $447,580 $378,546 $278,058
omitted)
Ratios to Average Net Assets:
Net Expenses (including reimbursements
and/or fee waivers) (d) 1.25%(e) 1.24% 1.25% 1.25%
Gross Expenses (b)(d) 1.26%(e) 1.29% 1.29% 1.35%
Net investment income (loss) including
reimbursement/waiver of fees (d) (0.71%) (0.41%) (0.47%)
(0.73%)(e)
Average Commission Rate (g) $0.0567 $0.0565 $0.0583 N/A
Portfolio Turnover Rate 123.36%(f) 124.03% 62.06% 106.55%
</TABLE>
6
<PAGE>
3. GLOSSARY
This Glossary of frequently used terms will help you understand the discussion
of the Fund's objectives, policies and risks. Defined terms are capitalized when
used in this prospectus.
<TABLE>
<S> <C>
Term Definition
Board The Board of Trustees of Norwest Advantage Funds.
Market Capitalization The total market value of a company's outstanding common stock.
Russell 2000(R) Index An index of smaller capitalization companies.
</TABLE>
4. INVESTMENT OBJECTIVES, POLICIES AND RISKS
SMALL COMPANY GROWTH FUND
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide long-term
capital appreciation by investing in smaller domestic companies.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of small and
medium-sized domestic companies that are either growing rapidly or completing a
period of significant change. Small companies are those companies whose Market
Capitalization is less than the largest stock in the Russell 2000 Index. The
Fund considers smaller companies to be those with Market Capitalizations less
than $1 billion at the time of purchase.
In selecting securities for the Fund, the Adviser seeks to identify companies
that are rapidly growing (usually with relatively short operating histories) or
that are emerging from a period of investor neglect by undergoing a dramatic
change. These changes may involve a sharp increase in earnings, the hiring of
new management or measures taken to close the gap between share price and
takeover/asset value.
The Fund will invest up to 10% of its total assets in securities of foreign
companies. The Fund will not invest more than 10% of its total assets in the
securities of a single issuer.
The Fund has the following types of risks, which are listed in alphabetical
order:
CURRENCY RATE RISK. The risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect a Fund's investments.
7
<PAGE>
FOREIGN RISK. The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues.
MARKET RISK. The risk that the market value of a Fund's investments will
fluctuate as the stock and bond markets fluctuate generally. Market risk may
affect a single issuer, industry or section of the economy or may affect the
market as a whole.
4. SMALL COMPANY RISK. The risk that investments in smaller companies may be
more volatile than investments in larger companies. Smaller companies may
have higher failure rates than larger companies. A small company's
securities may be hard to sell because the trading volume of the securities
of smaller companies is normally lower than that of larger companies. Short
term changes in the demand for the securities of smaller companies may have
a disproportionate effect on their market price, tending to make prices of
these securities fall more in response to selling pressure.
8
<PAGE>
5. MANAGEMENT OF THE FUND
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for the Portfolio.
In this capacity, Norwest makes investment decisions for and administers the
Portfolio's investment programs. Norwest receives an investment advisory fee
from the Portfolio equal to 0.90% of the Portfolio's average daily net assets.
NORWEST INVESTMENT MANAGEMENT, INC., NORWEST CENTER, SIXTH STREET AND MARQUETTE,
MINNEAPOLIS, MN 55479.
Norwest and the Portfolio have retained PEREGRINE CAPITAL MANAGEMENT, INC. or
PEREGRINE to make investment decisions for and administer the investment program
of the Portfolio. Peregrine, an investment advisory subsidiary of Norwest Bank,
provides investment advisory services to corporate and public pension plans,
profit sharing plans, savings-investment plans and 401(k) plans. Norwest decides
which portion of the assets of the Portfolio Peregrine should manage and
supervises Peregrine's performance of its duties. Norwest (and not the
Portfolio) pays Peregrine's investment subadvisory fee. The investment
subadvisory fee does not increase the amount of the investment advisory fee paid
to Norwest by the Portfolio. PEREGRINE CAPITAL MANAGEMENT, INC., LASALLE PLAZA,
800 LASALLE AVENUE., SUITE 1850, MINNEAPOLIS, MN 55402.
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA
(1998) are primarily responsible for the day-to-day management of the Fund's
investments. Mr. Mersky, the President of Peregrine, has been associated with
Norwest or its affiliates since 1968. Mr. von Kuster, a Senior Vice President of
Peregrine, has been associated with Norwest or its affiliates since 1972.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by the Fund. Norwest does not
receive any compensation under this arrangement as long as the Fund invests
entirely in the Portfolio. If the Fund redeems assets from the Portfolio and
invests them directly, Norwest receives an investment advisory fee from the Fund
for the management of those assets. Norwest and the Fund have also retained
Peregrine as a dormant subadviser.
9
<PAGE>
The FORUM FINANCIAL GROUP of companies provide managerial, administrative and
underwriting services to the Fund. NORWEST BANK acts as the Fund's transfer
agent, dividend disbursing agent and custodian.
5. PURCHASES AND REDEMPTIONS OF SHARES
You may purchase or redeem shares at a price equal to their net asset value next
determined after receipt of your purchase order or redemption request in proper
form on "Fund Business Days." Fund Business Days are all weekdays except
generally observed national holidays (New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The Fund's
transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption charge. I
Shares require a minimum initial investment of $1,000 and minimum subsequent
investments of $100. Your Fund shares become eligible to receive distributions
the Fund Business Day after your purchase order is received in proper form.
The Fund reserves the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
PURCHASE PROCEDURES
PURCHASING SHARES DIRECTLY
You may obtain an account application by writing Norwest Advantage Funds at the
following address:
Norwest Advantage Funds
Small Company Growth Fund
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040
When you sign an application for a new Fund account, you are certifying that
your Social Security number or other taxpayer identification 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 Fund
to withhold 31% of your distributions and redemptions.
10
<PAGE>
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on your
account (such as addresses). Norwest Advantage Funds may in the future modify,
limit or terminate any shareholder privilege upon appropriate notice and may
charge a fee for certain shareholder services, although no such fees are
currently contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL. You may send a check or money order along with a completed
account application to Norwest Advantage Funds 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 2 business days after receipt of
the check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable for
any losses or fees incurred by Norwest Advantage Funds, the transfer agent or
the Fund's distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts, you
must write a check or purchase a money order payable to Norwest Advantage Funds
or endorse a check made out to you to Norwest Advantage Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, make the
check used to purchase shares payable to Norwest Advantage Funds. No other
methods of payment by check will be accepted for these types of accounts.
PURCHASES BY BANK WIRE You must first telephone the Fund's transfer agent at
1-612-667-8833 or 1-800-338-1348 to obtain an account number before making an
initial investment in the Fund by bank wire. Then instruct your bank to wire
your money immediately to:
Norwest Bank Minnesota, N.A.
A091 000 019
For Credit to: Norwest Advantage Funds 0844-131
Re: Small Company Growth Fund, I Shares
Account No.:
Account Name:
Complete and mail the account application promptly. Your bank may charge for
transmitting the money by wire. The Fund does not charge for the receipt of wire
transfers. The Fund treats payment by bank wire as a federal funds payment when
received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. When you purchase the Fund's shares through a
financial institution, the shares may be held in your name or in the name of the
financial institution. Subject to your institution's
11
<PAGE>
procedures, you may have Fund shares held in the name of your financial
institution transferred into your name. If your shares are held in the name of
your financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you for
purchasing, redeeming or exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a bank wire or
through a financial institution as indicated above. All payments should clearly
indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares 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 receipt by the transfer agent of the redemption order in proper
form (and any supporting documentation that the transfer agent may require).
Redeemed shares are not entitled to receive distributions after the day on which
the redemption is effective.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7 days,
unless (1) your bank has not cleared the check to purchase the shares (which may
take up to 15 days), (2) the New York Stock Exchange is closed (or trading is
restricted) for any reason other than normal weekend or holiday closings, (3)
there is an emergency in which it is not practical for the Fund to sell its
portfolio securities or for the Fund to determine its net asset value or (4) the
Securities and Exchange Commission deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to clear
your check by paying for shares with wire transfers. Unless otherwise indicated,
redemption proceeds normally are paid by check mailed to your record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to change
your record name; (3) modification of a designated bank account for wire
redemptions; (4) instruction regarding an Automatic Investment Plan or Automatic
Withdrawal Plan; (5) distribution elections; (6) election of telephone
redemption privileges; (7) election of exchange or other privileges in
connection with your account; (8) written instruction to redeem shares whose
value exceeds $50,000; (9) redemption in an account when the account address has
changed within the last 30 days; (10) redemption when the proceeds are deposited
in a Norwest Advantage Funds account under a different account registration; and
(11) the payment of redemption proceeds to any address, person or account for
which there are not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities exchanges,
credit unions, savings associations or other eligible institutions. The specific
institution must be acceptable to the transfer agent. Whenever a
12
<PAGE>
signature guarantee is required, the signature of each person required to sign
for the account must be guaranteed.
The Fund and the transfer agent will use reasonable procedures to verify that
telephone requests are genuine, including recording telephone instructions and
sending written confirmations of the transactions. Such procedures are necessary
because the Fund and transfer agent could be liable for losses due to
unauthorized or fraudulent telephone instructions. You should verify the
accuracy of a telephone instruction as soon as you receive the confirmation
statement. Telephone redemption and exchanges may be difficult to implement in
times of drastic economic or market changes. If you cannot reach the transfer
agent by telephone, you may mail or hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, Norwest Advantage Funds may
redeem, upon not less than 60 days' written notice, any account with a net asset
value of less than $100,000 immediately following any redemption.
REDEMPTION PROCEDURES
If you have invested directly in the Fund you may redeem your shares as
described below. If you have invested through a financial institution you may
redeem shares through the financial institution. If you wish to redeem shares by
telephone or receive redemption proceeds by bank wire you should complete the
appropriate sections of the account application. These privileges may not be
available until several weeks after the application is received. You may not
redeem shares by telephone if you have certificates for those shares.
REDEMPTION BY MAIL. You may redeem shares by sending a written request to the
transfer agent accompanied by any share certificate you have been issued. Sign
all requests and endorse all certificates with signatures guaranteed.
REDEMPTION BY TELEPHONE. If you have elected telephone redemption privileges,
you may redeem shares by telephoning the transfer agent at 1-800-338-1348 or
1-612-667-8833 and providing your shareholder account number, the exact name in
which the shares are registered and your Social Security number or other
taxpayer identification number. Norwest Advantage Funds will mail a check to
your record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE. If you have elected wire redemption privileges, you may
request the Fund to transmit redemption proceeds of more than $5,000 by federal
funds wire to a bank account you have designated in writing. You must have
chosen the telephone redemption privilege to request bank wire redemptions by
telephone. Redemption proceeds are transmitted by wire on the Fund Business Day
after the transfer agent receives a redemption request in proper form.
EXCHANGES
You may exchange your shares for shares of other funds of Norwest Advantage
Funds. Call or write the transfer agent for more information.
13
<PAGE>
The Fund does not charge for exchanges, and there is currently no limit on the
number of exchanges you may make. The Fund, however, may limit your ability to
exchange shares if you exchange too often. Exchanges are subject to the fees
charged by, and the limitations (including minimum investment restrictions) of
the fund into which you are exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you wish to
exchange shares into an account registered differently or with different
shareholder privileges. You may exchange into a fund only if that fund's shares
may legally be sold in your state of residence.
The Fund and federal tax law treat an exchange as a redemption and a purchase of
shares. The Fund may amend or terminate exchange procedures on 60 days' notice.
EXCHANGES BY MAIL. You may make an exchange by sending a written request to the
transfer agent accompanied by any share certificates for the shares to be
exchanged. Sign all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE. If you have telephone exchange privileges, you may make
a telephone exchange by calling the transfer agent at 1-800-338-1348 or
1-612-667-8833 and giving your account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number.
14
<PAGE>
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
The Fund declares and pays distributions of net investment income annually. The
Fund distributes net capital gain, if any, to shareholders at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option, the
Cash Option and the Directed Dividend Option.
o Under the Reinvestment Option, all distributions of the Fund are
automatically invested in additional shares of the Fund. You are
automatically assigned this option unless you select another option.
o Under the Cash Option, you are paid all distributions in cash.
o Under the Directed Dividend Option, if you own $10,000 or more of the
Fund's shares in a single account, you can have the Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax purposes
whether received in cash or reinvested in shares of a fund. All distributions
reinvested in a fund are reinvested at the fund's net asset value as of the
payment date of the distribution.
TAX MATTERS
The Fund is managed so that it does not owe federal income or excise taxes.
Distributions paid by the Fund out of its net investment income (including net
short-term capital gain) are taxable to shareholders as ordinary income.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gain,
regardless of how long a shareholder has held shares in the Fund. Distributions
of net capital gain may be taxable at different rates depending on the length of
time the Fund holds its assets. If shares are sold at a loss after being held
for 6 months or less, the loss will be treated as long-term capital loss to the
extent of any distribution of net capital gain received on those shares.
Distributions reduce the net asset value of the Fund by the amount of the
distribution. Furthermore, a distribution made shortly after you purchase
shares, although in effect a return of capital to you, is taxable. The income
from the Fund's foreign investments may be subject to foreign income or other
taxes.
7. OTHER INFORMATION
15
<PAGE>
INVESTMENT POLICIES
Except as otherwise indicated, the Board may change the Fund's investment
policies without shareholder approval. The Fund's investment objective requires
shareholder approval to amend.
VOTING MATTERS
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that shareholders of
the Fund may have a comparatively smaller impact on the outcome of votes by all
of the funds in the fund complex than do shareholders of funds with lower net
asset values.
TEMPORARY DEFENSIVE POSITION
To respond to adverse market, economic, political, or other conditions, each
Fund may assume a temporary defensive position and invest without limit in cash
and cash equivalents. When a Fund makes temporary defensive investments, it may
not pursue its investment objective.
PORTFOLIO TRANSACTIONS
From time to time, the Fund may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues or
markets. Higher portfolio turnover rates may result in increased brokerage costs
and a possible increase in short-term capital gains or losses. The Financial
Highlights table lists the Fund's portfolio turnover.
YEAR 2000 AND EURO
The Fund could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Fund do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Fund's investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
issue for their computer systems and to obtain reasonable assurances that
comparable steps are being taken by the Fund's other major service providers.
While the Fund does not anticipate any adverse effect on their computer systems
from the Year 2000 and Euro issues, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Fund.
DETERMINATION OF NET ASSET VALUE
16
<PAGE>
The Fund determines its net asset value at 4:00 p.m. on each Fund Business Day
by dividing the value of its 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 values portfolio securities at current market value if market
quotations are readily available. If market quotations are not readily
available, the Fund values those securities at fair value as determined by or
pursuant to procedures adopted by the Board.
European, Far Eastern and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however, may
not take place on all Fund Business Days or may take place on days that are not
Fund Business Days. The determination of the prices of foreign securities may be
based on the latest market quotations for the securities. If events occur that
affect the securities' value after the close of the markets on which they trade,
the Fund may make an adjustment to the value of the securities for purposes of
determining net asset value.
For purposes of determining net asset value, the Fund converts all assets and
liabilities denominated in foreign currencies 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.
PORTFOLIOS
The Fund bears its pro rata portion of the expenses of the Portfolio. The Board
of Trustees may redeem the Fund's investment in the Portfolio at any time. The
Fund could then invest directly in portfolio securities or could re-invest in 1
or more different Portfolios that could have different fees and expenses. The
Fund might redeem, for example, if other investors had sufficient voting power
to change the investment objectives or policies of the Portfolio in a manner
detrimental to the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUND'S OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. 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.
17
<PAGE>
If you would like more information about the Fund and its investments, you may
want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. The Fund's statement of additional
information, or "SAI," contains detailed information about the Fund, such as its
investments, management and organization. It is incorporated into this
prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about the Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, the Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479 or by calling
1-800-338-1348 or 1-612-667-8833.
The Fund's reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Fund is 811-4881.
18
<PAGE>
PROSPECTUS MONEY MARKET FUNDS
________________________________________
OCTOBER 1, 1998 Cash Investment Fund
Ready Cash Investment Fund
_________________________ U.S. Government Fund
Treasury Plus Fund
INSTITUTIONAL FUNDS Treasury Fund
Municipal Money Market Fund
[LOGO] FIXED INCOME FUNDS
________________________________________
Stable Income Fund
Limited Term Government Income Fund
Intermediate Government Income Fund
Diversified Bond Fund
Income Fund
Total Return Bond Fund
Strategic Income Fund
TAX-FREE FIXED INCOME FUNDS
________________________________________
Limited Term Tax-Free Fund
Tax-Free Income Fund
Colorado Tax-Free Fund
Minnesota Intermediate Tax-Free Fund
Minnesota Tax-Free Fund
BALANCED FUNDS
________________________________________
Moderate Balanced Fund
Growth Balanced Fund
Aggressive Balanced-Equity Fund
[COVER WITH PEOPLE, PCS AND PRINTOUT]
EQUITY FUNDS
________________________________________
Index Fund
Index Equity Fund
ValueGrowth SM Stock Fund
Diversified Equity Fund
Growth Equity Fund
Large Company Growth Fund
Diversified Small Cap Fund
Small Company Stock Fund
Small Cap Opportunities Fund
Small Company Growth Fund
International Fund
PERFORMA FUNDS
________________________________________
Performa Strategic Value Bond Fund
Performa Disciplined Growth Fund
Performa Small Cap Value Fund
Performa Global Growth Fund
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
This Prospectus describes the shares of a broad spectrum of mutual funds offered
by Norwest Advantage Funds:
* 6 MONEY MARKET FUNDS - Cash Investment Fund, Ready Cash Investment
Fund, U.S. Government Fund, Treasury Plus Fund, Treasury Fund, and
Municipal Money Market Fund.
* 7 FIXED INCOME FUNDS - Stable Income Fund, Limited Term Government
Income Fund, Intermediate Government Income Fund, Diversified Bond
Fund, Income Fund, Total Return Bond Fund, and Strategic Income Fund.
* 5 TAX-FREE FIXED INCOME FUNDS - Limited Term Tax-Free Fund, Tax-Free
Income Fund, Colorado Tax-Free Fund, Minnesota Intermediate Tax-Free
Fund, and Minnesota Tax-Free Fund.
* 3 BALANCED FUNDS - Moderate Balanced Fund, Growth Balanced Fund, and
Aggressive Balanced-Equity Fund.
* 11 EQUITY FUNDS - Index Fund, Income Equity Fund, ValuGrowth (SM)
Stock Fund, Diversified Equity Fund, Growth Equity Fund, Large Company
Growth Fund, Diversified Small Cap Fund, Small Company Stock Fund,
Small Cap Opportunities Fund, Small Company Growth Fund, and
International Fund.
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
ALTHOUGH THE MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THESE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE U.S. SECURITIES AND EXCHANGE COMMISSION,
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
TABLE OF CONTENTS
[SAME PICTURE AS COVER]
OVERVIEW .............................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS ................................12
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY ............................................26
[GLOSSARY TAB]
[INVESTMENT INVESTMENT OBJECTIVES AND POLICIES ..................27
ICON]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK RISK CONSIDERATIONS .................................56
ICON]
[RISK CONSIDERATIONS TAB]
COMMON POLICIES .....................................58
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS .............................60
[MANAGEMENT OF THE FUNDS TAB]
HOW TO BUY AND SELL SHARES ..........................73
[HOW TO BUY AND SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS .......................79
[DISTRIBUTIONS ANT TAX MATTERS TAB]
OTHER INFORMATION ...................................82
[OTHER INFORMATION TAB]
<PAGE>
- --------------------------------------------------------------------------------
1. OVERVIEW [OVER PRINTOUT]
- --------------------------------------------------------------------------------
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE INVESTING, YOU
SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS UNDER INVESTMENT
OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN SERVE
AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
THE FUNDS AT A GLANCE
[MONEY MARKET FUNDS ICON]
The MONEY MARKET FUNDS seek high current income consistent with the preservation
of capital and the maintenance of liquidity.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
CASH INVESTMENT FUND and High current income, High-quality money
READY CASH INVESTMENT preservation of capital and market instruments of U.S. and
FUND liquidity foreign issuers.
U.S. GOVERNMENT FUND High current income, Securities issued or
preservation of capital and guaranteed by the U.S. Government,
liquidity its agencies, and its
instrumentalities.
TREASURY PLUS FUND High current income, Securities issued or
preservation of capital and guaranteed by the U.S. Treasury
liquidity and repurchase agreements on those
obligations.
TREASURY FUND High current income, Securities issued or
preservation of capital, and guaranteed by the U.S. Treasury.
liquidity
MUNICIPAL MONEY MARKET High current tax-exempt Tax-exempt municipal
FUND income, preservation of capital, securities.
and liquidity
<PAGE>
</TABLE>
[FIXED INCOME FUNDS ICON]
The FIXED INCOME FUNDS generally seek to provide income and preserve
capital.
[OVERVIEW TAB]
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
STABLE INCOME FUND Maintain safety of Investment grade
principal while providing short-term (average maturity
low volatility total return 2-5 years) securities.
LIMITED TERM GOVERNMENT Provide income and safety Investment grade
INCOME FUND of principal. short-term (average maturity of
1-5 years) U.S. Government
securities.
INTERMEDIATE GOVERNMENT Provide income and safety Investment grade
INCOME FUND of principal. intermediate-term (average
maturity of 3-10 years) U.S.
Government securities.
DIVERSIFIED BOND FUND Total return by Diversifies investments
diversifying its among 3 different
investments among fixed income styles.
different fixed income
investment styles.
INCOME FUND Total return consistent Primarily investment grade
with current income. intermediate term (average
maturity of 3-15 years) domestic
and foreign securities.
TOTAL RETURN BOND FUND Total return. Broad spectrum of primarily
investment grade securities.
STRATEGIC INCOME FUND Combination of current 70%-90% fixed income
income and capital appreciation. investments
10%-30% equity investments.
</TABLE>
<PAGE>
[TAX FREE INCOME FUNDS ICON]
The TAX-FREE FIXED INCOME FUNDS generally seek current income exempt from
federal or state income taxes.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
LIMITED TERM TAX-FREE Current income exempt Investment grade
FUND from federal income taxes. short-term (average maturity of
1-5 years) municipal securities.
TAX-FREE INCOME FUND Current income exempt Investment grade
from federal income taxes. (average maturity of 10-20 years)
municipal securities.
COLORADO TAX-FREE FUND A high-level of current income Investment grade (average
exempt from both federal maturity of 10-20+ years)
(including the AMT) and Colorado municipal securities.
Colorado income taxes
consistent with the
preservation of capital.
MINNESOTA INTERMEDIATE A high-level of current income Investment grade intermediate
TAX FREE FUND exempt from both federal and term (average maturity of 5-10
Minnesota income taxes years) Minnesota municipal
(including the AMT) securities.
consistent with the
preservation of capital.
MINNESOTA TAX-FREE FUND A high-level of current income Investment grade (average
exempt from both federal and maturity of 10-20+ years)
Minnisota income taxes Minnesota municipal
(including the AMT) securities.
consistent with the
preservation of capital.
</TABLE>
[BALANCED FUNDS ICON]
The BALANCED FUNDS generally seek a combination of current income and
capital appreciation.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
MODERATE BALANCED FUND Combination of current 45%-75% fixed income
income and capital appreciation. investments
25%-55% equity
investments.
GROWTH BALANCED FUND Combination of current 15%-55% fixed income
income and capital appreciation. investments
45%-85% equity
investments.
AGGRESSIVE BALANCED-EQUITY Combination of current 0%-40% fixed income
FUND income and capital appreciation. investments
60%-100% equity
investments.
<PAGE>
[EQUITY FUNDS ICON]
[OVERVIEW TAB]
The EQUITY FUNDS generally seek growth of capital.
FUND OBJECTIVE PRIMARY INVESTMENTS
INDEX FUND Replicate the return Common stock of the
of the S&P 500 Composite Stock 500 companies in the S&P 500
Price Index. Composite Stock Price Index.
INCOME EQUITY FUND Long-term capital Common stock of large high
appreciation consistent with quality domestic companies.
above-average dividend
income.
VALUEGROWTH STOCK FUND Long-term capital Common stock of medium-and
appreciation. large-capitalization
companies that have above
average growth
characteristics and that
appear to be undervalued.
DIVERSIFIED EQUITY FUND Long-term capital Diversified investments in 5
appreciation while different equity investment
moderating annual return styles.
volatility.
GROWTH EQUITY FUND Long-term capital Diversified investments in 3
appreciation while different equity investment
moderating annual return styles.
volatility.
LARGE COMPANY GROWTH Long-term capital Common stock of large
FUND appreciation. high-quality domestic
companies with superior
growth potential.
DIVERSIFIED SMALL CAP Long-term capital Diversified investments in 5
FUND appreciation while different small company
moderating annual return equity investment styles.
volatility.
SMALL COMPANY STOCK Long-term capital Common stock of small and
FUND appreciation. medium sized domestic
companies.
SMALL CAP OPPORTUNITIES Long-term capital Equity securities of small
FUND appreciation. domestic companies.
SMALL COMPANY GROWTH Long-term capital Common stock of small and
FUND appreciation. medium sized domestic
companies.
INTERNATIONAL FUND Long-term capital Common stock of high-
appreciation. quality companies based
outside of the United States.
</TABLE>
<PAGE>
CLASSES OF SHARES
This Prospectus offers certain classes of shares of the Funds. Each class is
designed for a different type of investor and may have different fees or
investment minimums.
* All Money Market Funds, except Ready Cash Investment Fund, offer
Institutional Shares. Institutional Shares are designed for institutional
investors.
* Ready Cash Investment Fund and Municipal Money Market Fund offer Investor
Shares. Investor Shares are designed for retail investors.
* All Funds, other than Money Market Funds, offer I Shares. I Shares are
designed for clients of investment advisers and bank trust departments,
trust companies and their affiliates, including broker-dealers if the Fund
does not offer other classes of shares.
FUND STRUCTURES
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in 1 or more other funds identified in this prospectus as
Portfolios. Portfolios do not offer their shares to the public. Except when
necessary to describe a Fund's investment in a Portfolio, this prospectus
discusses a Fund's investments in a Portfolio as if the investments were
made directly in individual securities.
MANAGEMENT OF THE FUNDS
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and all but 3 of the Portfolios. Norwest, a subsidiary
of Norwest Bank Minnesota, N.A. or Norwest Bank, provides investment advice
to institutions, pension plans, and other accounts and currently manages
more than $29 billion in assets.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. or SCHRODER is the
investment adviser for 3 Portfolios: Schroder U.S. Smaller Companies
Portfolio, Schroder EM Core Portfolio, and International Portfolio.
Schroder specializes in providing international investment advice.
INVESTMENT SUBADVISERS make investment decisions for certain Funds and
Portfolios under Norwest's general supervision. This prospectus generally
refers to Norwest, Schroder, or a subadviser as an Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
Shares may be purchased or redeemed without sales or other charges.
* I Shares and Investor Shares require a minimum initial investment
of $1,000 and a minimum subsequent investment of $100.
* Institutional Shares require a minimum initial investment of
$100,000 and have no minimum subsequent investment requirement.
<PAGE>
Total Return Bond Fund, Small Company Growth Fund, and Small Cap
Opportunities Fund are closed to new investors. Only residents of Colorado
may purchase shares of Colorado Tax-Free Fund. Only residents of Minnesota
may purchase shares of Minnesota Intermediate Tax-Free Fund and Minnesota
Tax-Free Fund.
[OVERVIEW TAB]
EXCHANGES
If you own Fund shares you may exchange them for shares of certain other Funds.
Your exchange rights will vary depending on the class of shares you own.
DISTRIBUTIONS
The DISTRIBUTIONS AND TAX MATTERS section discusses how often the Funds
distribute net investment income. Each Fund distributes to shareholders its
net capital gain, if any, at least annually.
RISK FACTORS
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets in which the Fund
invests, the investments that the Fund makes, and prevailing economic
conditions over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
MONEY MARKET FUNDS:
[MONEY MARKET FUNDS ICON]
If you invest in a Money Market Fund, the income you receive from the Fund
will vary with changes in interest rates. In addition, the Funds'
investments have "credit risk," which is the risk that an issuer will be
unable, or will be perceived to be unable, to pay the interest or principal
on its obligations when due. Some of the Money Market Funds reduce credit
risk by investing primarily or exclusively in U.S. Government securities.
The Money Market Funds also have the risk that they may not be able to
maintain a stable net asset value of $1.00 per share.
<PAGE>
FIXED INCOME FUNDS AND TAX-FREE FIXED INCOME FUNDS:
[FIXED INCOME FUNDS ICON]
TAX-FREE FUNDS ICON]
If you invest in a Fixed Income Fund or a Tax-Free Fixed Income Fund, the
investment income you receive from the Fund will vary with changes in
interest rates. In addition, the value of the Fund's investments generally
will fall when interest rates rise and rise when interest rates fall. When
interest rates fall, there is a risk that issuers will prepay fixed rate
securities, forcing the Fund to invest in securities with lower interest
rates than the prepaid securities.
Some of the Fixed Income Funds invest in mortgage- or other asset-backed
securities. For these Funds, a decline in interest rates may result in
losses in these securities' values and a reduction in their yields as the
holders of the assets backing the securities prepay their debts. Rising
interest rates may cause the average maturity of these Funds to rise due to
a drop in prepayments. A rise in average maturity increases a Fund's
sensitivity to rising interest rates and potential for losses in value.
The Fixed Income Funds and Tax-Free Fixed Income Funds also are subject to
credit risk. Funds that invest primarily in debt securities that are highly
rated by a nationally recognized statistical rating organization, such as
Standard & Poor's Corporation, generally have less credit risk. Funds that
have substantial investments in securities that are not highly rated are
subject to more credit risk.
Some of the Tax-Free Fixed Income Funds invest primarily in debt securities
of the government and municipalities of a single state. Because these Funds
limit their investments to a single state, adverse economic developments
and other factors affecting that state could have a more significant effect
on the Funds' returns. In addition, these Funds may invest in fewer issuers
than the other Funds. A decline in the value of a Fund's investment in an
issuer could therefore have a more significant effect on the value of the
Fund's shares.
BALANCED FUNDS AND STRATEGIC INCOME FUND:
[BALANCED FUNDS ICON]
These Funds divide their investments between fixed income securities and
equity securities in varying proportions, depending on the Fund's
investment policies. As a result, an investment in these Funds will be
subject both to the risks of fixed income securities and to the risks of
equity securities. In addition, the Adviser may vary, within a fixed range,
the allocations of the Fund's assets into each type of investment. There is
a risk that the allocations selected by the Adviser will not achieve the
Fund's objective as effectively as other possible allocations.
EQUITY FUNDS:
[EQUITY FUNDS ICON]
The Equity Funds are subject to "market risk," which is the general risk
that the value of a Fund's investments may decline if the stock markets
perform poorly. There also is a risk that a Fund's investments will
underperform either the securities markets generally or particular segments
of the securities markets.
Equity Funds that invest in smaller issuers or foreign issuers are riskier
than other Equity Funds. Investments in smaller issuers are subject to
greater changes in value because securities of smaller issuers may not
trade as often or be as widely owned as the securities of larger issuers.
Investments in foreign issuers are subject to the risks of foreign
<PAGE>
political and economic instability and changes in foreign currency exchange
rates. Foreign investments also are subject to government actions,
including exchange controls and limits on repayments of foreign
investments. Foreign governments may nationalize, tax, or confiscate
investors' assets.
[OVERVIEW TAB]
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you
will bear directly or indirectly when you invest in a Fund. There are no
transaction charges for purchasing, redeeming, or exchanging shares. The
Funds do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1)(5)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees Expenses Expenses
MONEY MARKET FUNDS
Cash Investment Fund N/A 0.22% 0.22% 0.04% 0.48%(4)
Ready Cash Investment Fund (Investor Shares) N/A 0.42% 0.33% 0.07% 0.82%(4)
U.S. Government Fund 0.14% 0.36% N/A N/A 0.50%
Treasury Plus Fund(3) 0.20% 0.30% N/A N/A 0.50%
Treasury Fund 0.15% 0.31% N/A N/A 0.46%
Municipal Money Market Fund
Institutional Shares 0.32% 0.13% N/A N/A 0.45%
Investor Shares 0.32% 0.33% N/A N/A 0.65%
FIXED INCOME FUNDS (I SHARES)
Stable Income Fund N/A 0.28% 0.30% 0.07% 0.65%
Limited Term Government Income Fund 0.33% 0.35% N/A N/A 0.68%
Intermediate Government Income Fund 0.33% 0.35% N/A N/A 0.68%
Diversified Bond Fund 0.00% 0.27% 0.37% 0.06% 0.70%(4)
Income Fund 0.47% 0.28% N/A N/A 0.75%
Total Return Bond Fund N/A 0.19% 0.50% 0.06% 0.75%(4)
Strategic Income Fund 0.09% 0.29% 0.36% 0.06% 0.80%(4)
TAX-FREE FIXED INCOME FUNDS (I SHARES)
Limited Term Tax-Free Fund 0.31% 0.34% N/A N/A 0.65%
Tax-Free Income Fund 0.34% 0.26% N/A N/A 0.60%
Colorado Tax-Free Fund 0.29% 0.31% N/A N/A 0.60%
Minnesota Intermediate Tax-Free Fund 0.25% 0.35% N/A N/A 0.60%
Minnesota Tax-Free Fund 0.23% 0.37% N/A N/A 0.60%
</TABLE>
<PAGE>
ANNUAL FUND OPERATING EXPENSES(1)(5) (continued)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees Expenses Expenses
BALANCED FUNDS (I SHARES)
Moderate Balanced Fund 0.12% 0.29% 0.41% 0.06% 0.88%(4)
Growth Balanced Fund 0.13% 0.29% 0.45% 0.06% 0.93%(4)
Aggressive Balanced-Equity Fund 0.00% 0.47% 0.46% 0.07% 1.00%
EQUITY FUNDS (I SHARES)
Index Fund N/A 0.06% 0.15% 0.04% 0.25%
Income Equity Fund N/A 0.33% 0.50% 0.02% 0.85%
ValuGrowth Stock Fund 0.78% 0.22% N/A N/A 1.00%
Diversified Equity Fund 0.16% 0.29% 0.49% 0.06% 1.00%(4)
Growth Equity Fund 0.22% 0.26% 0.67% 0.10% 1.25%(4)
Large Company Growth Fund N/A 0.33% 0.65% 0.02% 1.00%
Diversified Small Cap Fund 0.00% 0.27% 0.84% 0.09% 1.20%
Small Company Stock Fund N/A 0.25% 0.90% 0.05% 1.20%(4)
Small Cap Opportunities Fund N/A 0.50% 0.60% 0.15% 1.25%
Small Company Growth Fund N/A 0.32% 0.90% 0.03% 1.25%
International Fund 0.25% 0.56% 0.42% 0.27% 1.50%
</TABLE>
(1) Each Fund bears its pro rata portion of the expenses of any Portfolio
in which it invests.
(2) For Diversified Bond Fund, Strategic Income Fund, each Balanced Fund,
Diversified Equity Fund, Growth Equity Fund, Diversified Small Cap
Fund, and International Fund, Funds - Investment Advisory Fees reflect
an asset allocation fee, which absent fee waivers, would be 0.25%.
Absent fee waivers, The Funds - Investment Advisory Fees for Municipal
Money Market Fund Institutional Shares and Investor Shares, Income
Fund, Limited Term Tax-Free Fund, Tax-Free Income Fund, Colorado
Tax-Free Fund, Minnesota Tax-Free Fund, would be 0.34%, 0.34%, 0.50%,
0.50%, 0.50%, 0.50%, and 0.50%. Absent fee waivers , The Portfolios -
Investment Advisory Fees would be 0.47%.
(3) The expenses, and any fee waivers and reimbursements, for Treasury
Plus Fund are estimated.
(4) Norwest and the Fund's Administrator have agreed to waive their fees in
order to maintain Cash Investment Fund's total combined operating
expenses through May 31, 1999 at 0.48%. Any reduction of those waivers
after May 31, 1999 requires approval by the Fund's Board of Trustees.
Norwest and the Funds' Administrator have agreed to waive fees and
reimburse expenses to maintain Ready Cash Investment Fund's, Total
Return Bond Fund's, and Small Company Stock Fund's total operating
expenses at or below 0.82%; 0.75%, and 1.20%, respectively. Any
reduction of those waivers or reimbursements requires Board review.
Norwest and the Funds' Administrator have agreed to waive their fees
through May 31, 1999, to ensure that the investment advisory,
administrative, and management services fees borne by Diversified Bond
Fund, Strategic Income Fund, Moderate Balanced Fund, Growth Balanced
Fund, Diversified Equity Fund, and Growth Equity Fund do not exceed, in
the aggregate, 0.45%, 0.55%, 0.63%, 0.68%, 0.75%, and 1.00%,
respectively. Any reduction of those waivers after May 31, 1999
requires Board approval.
(5) Absent expense reimbursements and fee waivers, Funds - Other Expenses
and Total Operating Expenses would be: Cash Investment Fund 0.26% and
0.56%, Ready Cash Investment Fund 0.42% and 0.82%, U.S. Government
Fund 0.38% and 0.52%, Treasury Plus Fund 0.40% and 0.60%, Treasury
Fund 0.39% and 0.54%, Municipal Money Market Fund Institutional Shares
0.25% and 0.59%, and Investor Shares 0.49% and 0.83%, Stable Income
Fund 0.38% and 0.81%, Limited Term Government Income Fund 0.56% and
0.89%, Intermediate Government Income Fund 0.39% and 0.72%,
Diversified Bond Fund 0.35% and 1.09%, Income Fund 0.42% and 0.92%,
Total Return Bond Fund 0.37% and 0.98%, Strategic Income Fund 0.36%
and 1.08%, Limited Term Tax-Free Fund 0.53% and 1.03%, Tax-Free Income
Fund 0.42% and 0.92%, Colorado Tax-Free Fund 0.51% and 1.01%,
Minnesota Intermediate Tax-Free Fund 0.47% and 0.72%, Minnesota
Tax-Free Fund 0.54% and 1.04%, Moderate Balanced Fund 0.33% and 1.11%,
Growth Balanced Fund 0.33% and 1.15%, Aggressive Balanced-Equity Fund
1.51% and 2.35%, Index Fund 0.33% and 0.57%, Income Equity Fund 0.34%
and 0.91%, ValuGrowth Stock Fund 0.42% and 1.20%, Diversified Equity
Fund 0.32% and 1.17%, Growth Equity Fund 0.33% and 1.41%, Large
Company Growth Fund 0.35% and 1.08%, Diversified Small Cap Fund 1.47%
and 2.70%, Small Company Stock Fund 0.36% and 1.37%, Small Cap
Opportunities Fund 0.63% and 1.38%, Small Company Growth Fund 0.33%
and 1.31%, and International Fund 0.63% and 1.66%. Absent expense
reimbursements and fee waivers, The Portfolios -- Other Expenses would
be: Cash Investment Fund 0.07%, Stable Income Fund 0.13%, Diversified
Bond Fund 0.12%, Total Return Bond Fund 0.11%, Strategic Income Fund
0.11%, Moderate Balanced Fund 0.12%, Growth Balanced Fund 0.12%,
Aggressive Balanced-Equity Fund 0.12%, Index Fund 0.09%, Income Equity
Fund 0.07%, Diversified Equity Fund 0.11%, Growth Equity Fund 0.15%,
Large Company Growth Fund 0.08%, Diversified Small Cap Fund 0.15%,
Small Company Stock Fund 0.11%, Small Cap Opportunities Fund 0.15%,
Small Company Growth Fund 0.08%, and International Fund 0.31%. Except
as otherwise noted, expense reimbursements and fee waivers are
voluntary and may be reduced or eliminated at any time.
<PAGE>
[OVERVIEW TAB]
EXAMPLE
The following hypothetical example indicates the dollar amount of
expenses you would pay, assuming a $1,000 investment in a Fund's
shares, the expenses listed in Annual Fund Operating Expenses table, a
5% annual return, and reinvestment of all distributions. THE EXAMPLE
DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES
AND RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
------ ------- ------- --------
MONEY MARKET FUNDS
Cash Investment Fund $5 $15 $27 $60
Ready Cash Investment Fund (Investor Shares) 8 26 46 101
U.S. Government Fund 5 16 28 63
Treasury Plus 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
Limited Term Government Income Fund 7 22 38 85
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
Strategic Income Fund 8 26 44 99
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 Intermediate Tax-Free Fund 6 19 33 75
Minnesota Tax-Free Fund 6 19 33 75
BALANCED FUNDS (I SHARES)
Moderate Balanced Fund 9 28 49 108
Growth Balanced Fund 9 30 51 114
Aggressive Balanced-Equity Fund 10 32 55 122
EQUITY FUNDS (I SHARES)
Index Fund 3 8 14 32
Income Equity Fund 9 27 47 105
ValuGrowth Stock Fund 10 32 55 122
Diversified Equity Fund 10 32 55 122
Growth Equity Fund 13 40 69 151
Large Company Growth Fund 10 32 55 122
Diversified Small Cap Fund 12 38 66 145
Small Company Stock Fund 12 38 66 145
Small Cap Opportunities Fund 13 40 69 151
Small Company Growth Fund 13 40 69 151
International Fund 15 47 82 179
</TABLE>
<PAGE>
2. FINANCIAL HIGHLIGHTS
[SPREADSHEETS]
The financial highlights table is intended to help you understand each Fund's
financial performance for 10 years or, if shorter, the Fund's operating history.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned
on an investment in a Fund, assuming reinvestment of all distributions. The
information from June 1, 1994 through May 31, 1998, has been audited by KPMG
Peat Marwick LLP, independent auditors, whose reports dated July 21, 1998 about
a Fund, along with the Fund's financial statements, are included in the Fund's
Annual Report, which is available at no charge upon request. These financial
statements are incorporated by reference into the SAI. Other independent
auditors audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Capital Ending
[MONEY MARKET FUNDS ICON] Beginning Net Net Unrealized from Net Contribution Net Asset
THE MONEY MARKET FUNDS Asset Value Investment Gain (Loss) Investment From Value Per
Per Share Income on Investments Income Adviser Share
- ----------------------------------------------------------------------------------------------------------------------------------
CASH INVESTMENT FUND
Year Ended May 31, 1998 $1.00 $0.053 -- ($0.053) -- $1.00
Year Ended May 31, 1997 $1.00 $0.051 -- ($0.051) -- $1.00
Year Ended May 31, 1996 $1.00 $0.054 -- ($0.054) -- $1.00
Year Ended May 31, 1995 $1.00 $0.049 -- ($0.049) -- $1.00
Year Ended May 31, 1994 $1.00 $0.031 -- ($0.031) -- $1.00
Year Ended May 31, 1993 $1.00 $0.033 -- ($0.033) -- $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.021 -- ($0.021) -- $1.00
Year Ended November 30, 1991 $1.00 $0.061 -- ($0.061) -- $1.00
Year Ended November 30, 1990 $1.00 $0.079 -- ($0.079) -- $1.00
Year Ended November 30, 1989 $1.00 $0.088 -- ($0.088) -- $1.00
Year Ended November 30, 1988 $1.00 $0.071 -- ($0.071) -- $1.00
READY CASH INVESTMENT FUND- INVESTOR SHARES
Year Ended May 31, 1998 $1.00 $0.050 -- ($0.050) -- $1.00
Year Ended May 31, 1997 $1.00 $0.047 -- ($0.047) -- $1.00
Year Ended May 31, 1996 $1.00 $0.051 -- ($0.051) -- $1.00
Year Ended May 31, 1995 $1.00 $0.045 -- ($0.045) -- $1.00
Year Ended May 31, 1994 $1.00 $0.027 -- ($0.027) -- $1.00
Year Ended May 31, 1993 $1.00 $0.030 -- ($0.030) -- $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) -- $1.00
Year Ended November 30, 1991 $1.00 $0.058 -- ($0.058) -- $1.00
Year Ended November 30, 1990 $1.00 $0.076 -- ($0.076) -- $1.00
Year Ended November 30, 1989 $1.00 $0.085 -- ($0.085) -- $1.00
January 20, 1988(d) to November 30, 1988 $1.00 $0.059 -- ($0.059) -- $1.00
</TABLE>
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average Net Assets
---------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return(b) (000's Omitted)
- ------------------------------------------------------------------
5.29%(c) 0.48%(c) 0.57% (c) 5.42% $4,685,818
5.07% 0.48% 0.49% 5.21% $2,147,894
5.36% 0.48% 0.49% 5.50% $1,739,549
4.87% 0.48% 0.50% 4.96% $1,464,304
3.11% 0.49% 0.49% 3.16% $1,381,402
3.29% 0.50%(c) 0.51% 3.36% $1,944,948
4.23%(c) 0.50% 0.56% 4.29%(c) $1,292,196
6.11% 0.51% 0.54% 6.31% $1,004,979
7.92% 0.45% 0.57% 8.22% $747,744
8.81% 0.45% 0.64% 9.22% $662,698
7.00% 0.43% 0.74% 7.32% $316,349
4.95%(c) 0.82%(c) 0.82%(c) 5.07% $789,380
4.75% 0.82% 0.83% 4.87% $576,011
5.02% 0.82% 0.87% 5.17% $473,879
4.64% 0.82% 0.91% 4.62% $268,603
2.70% 0.82% 0.92% 2.74% $164,138
3.04% 0.82% 0.94% 3.08% $162,585
4.01%(c) 0.82%(c) 0.93%(c) 4.05% $176,378
5.81% 0.82% 0.96% 5.98% $183,775
7.56% 0.82% 0.97% 7.83% $166,911
8.51% 0.81% 0.99% 8.86% $144,117
7.11%(c) 0.77%(c) 1.13%(c) 6.97%(c) $46,736
<PAGE>
[MONEY MARKET FUNDS ICON]
MONEY MARKET FUNDS - I SHARES (continued)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Distributions Capital Ending
Beginning Net Net Unrealized from Net Contribution Net Asset
Asset Value Investment Gain (Loss) Investment From Value Per
Per Share Income on Investments Income Adviser Share
U.S. GOVERNMENT FUND
Year Ended May 31, 1998 $1.00 $0.051 -- ($0.051) -- $1.00
Year Ended May 31, 1997 $1.00 $0.049 -- ($0.049) -- $1.00
Year Ended May 31, 1996 $1.00 $0.052 -- ($0.052) -- $1.00
Year Ended May 31, 1995 $1.00 $0.047 -- ($0.047) -- $1.00
Year Ended May 31, 1994 $1.00 $0.030 -- ($0.030) -- $1.00
Year Ended May 31, 1993 $1.00 $0.030 -- ($0.030) -- $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) -- $1.00
Year Ended November 30, 1991 $1.00 $0.058 -- ($0.058) -- $1.00
Year Ended November 30, 1990 $1.00 $0.077 -- ($0.077) -- $1.00
Year Ended November 30, 1989 $1.00 $0.085 -- ($0.085) -- $1.00
Year Ended November 30, 1988 $1.00 $0.069 -- ($0.069) -- $1.00
TREASURY FUND
Year Ended May 31, 1998 $1.00 $0.049 -- ($0.049) -- $1.00
Year Ended May 31, 1997 $1.00 $0.047 -- ($0.047) -- $1.00
Year Ended May 31, 1996 $1.00 $0.050 -- ($0.050) -- $1.00
Year Ended May 31, 1995 $1.00 $0.046 -- ($0.046) -- $1.00
Year Ended May 31, 1994 $1.00 $0.028 -- ($0.028) -- $1.00
Year Ended May 31, 1993 $1.00 $0.029 -- ($0.029) -- $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) -- $1.00
December 3, 1990(d) to November 30, 1991 $1.00 $0.058 -- ($0.058) -- $1.00
MUNICIPAL MONEY MARKET FUND
Investor Shares
Year Ended May 31, 1998 $1.00 $0.031 -- ($0.031) -- $1.00
Year Ended May 31, 1997 $1.00 $0.030 -- ($0.030) -- $1.00
Year Ended May 31, 1996 $1.00 $0.033 -- ($0.033) -- $1.00
Year Ended May 31, 1995 $1.00 $0.031 ($0.004) ($0.031) $0.004 $1.00
Year Ended May 31, 1994 $1.00 $0.021 -- ($0.021) -- $1.00
Year Ended May 31, 1993 $1.00 $0.021 -- ($0.021) -- $1.00
December 1, 1991 to May 31, 1992 $1.00 $0.014 -- ($0.014) -- $1.00
Year Ended November 30, 1991 $1.00 $0.042 -- ($0.042) -- $1.00
Year Ended November 30, 1990 $1.00 $0.053 -- ($0.053) -- $1.00
Year Ended November 30, 1989 $1.00 $0.058 -- ($0.058) -- $1.00
January 7, 1988(d) to November 30, 1988 $1.00 $0.042 -- ($0.042) -- $1.00
INSTITUTIONAL SHARES
Year Ended May 31, 1998 $1.00 $0.033 -- ($0.033) -- $1.00
Year Ended May 31, 1997 $1.00 $0.032 -- ($0.032) -- $1.00
Year Ended May 31, 1996 $1.00 $0.035 -- ($0.035) -- $1.00
Year Ended May 31, 1995 $1.00 $0.033 ($0.004) ($0.033) $0.004 $1.00
August 3, 1993(d) to May 31, 1994 $1.00 $0.019 -- ($0.019) -- $1.00
- -------------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers
(c) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(d) Annualized.
(e) Commencement of operations; Municipal Money Market Fund's initial class
became Investor Shares
(f) 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.
[FINANCIAL HIGHTLIGHTS TAB]
Ratio to Average Net Assets
---------------------------------------
Net Net Assets at
Investment Net Gross Total End of Period
Income Expenses Expenses(a) Return(b) (000's Omitted)
- ------------------------------------------------------------------
5.08% 0.50% 0.51% 5.20% $2,260,208
4.91% 0.49% 0.49% 5.04% $1,912,574
5.13% 0.50% 0.51% 5.27% $1,649,721
4.68% 0.50% 0.52% 4.81% $1,159,421
3.02% 0.47% 0.53% 3.07% $1,091,141
3.00% 0.45% 0.57% 3.06% $903,274
3.99%(c) 0.45%(c) 0.61%(c) 4.07%(c) $623,685
5.84% 0.45% 0.60% 6.00% $469,487
7.66% 0.45% 0.61% 7.94% $500,794
8.51% 0.45% 0.65% 8.87% $394,137
6.87% 0.42% 0.73% 7.13% $254,104
4.89% 0.46% 0.54% 5.00% $1,440,515
4.74% 0.46% 0.53% 4.87% $1,003,697
4.91% 0.46% 0.56% 5.04% $802,270
4.62% 0.46% 0.57% 4.65% $661,098
2.81% 0.46% 0.58% 2.83% $526,483
2.93% 0.47% 0.58% 2.98% $384,751
4.01%(c) 0.47%(c) 0.59%(c) 4.07%(c) $374,492
5.62%(c) 0.31%(c) 0.66%(c) 6.02%(c) $354,200
3.13% 0.65% 0.83% 3.18% $44,070
3.01% 0.65% 0.87% 3.08% $54,616
3.25% 0.65% 0.88% 3.31% $57,021
3.10% 0.65% 0.93% 3.13%(e) $47,424
2.03% 0.65% 0.99% 2.09% $33,554
2.13% 0.65% 0.97% 2.18% $75,521
2.81%(c) 0.63%(c) 0.96%(c) 2.89%(c) $82,678
4.10% 0.64% 1.08% 4.26% $66,327
5.34% 0.64% 1.16% 5.48% $29,801
5.78% 0.62% 1.15% 5.94% $18,639
4.64%(c) 0.60%(c) 1.20%(c) 4.76%(c) $8,963
3.32% 0.45% 0.59% 3.39% $977,693
3.21% 0.45% 0.70% 3.28% $635,655
3.41% 0.45% 0.72% 3.52% $592,436
3.37% 0.45% 0.74% 3.33%(e) $278,953
2.33%(c) 0.45%(c) 0.77%(c) 2.34%(c) $190,356
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FIXED INCOME FUNDS ICON]
Net Realized
and Distributions Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
FIXED INCOME FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ----------------------------------------------------------------------------------------------------------------------------
STABLE INCOME FUND
Year Ended May 31, 1998 $10.24 $0.58 $0.05 ($0.57) -- $10.30
Year Ended May 31, 1997 $10.20 $0.58 $0.04 ($0.58) -- $10.24
November 1, 1995 to May 31, 1996 $10.72 $0.28 $0.03 ($0.77) ($0.06) $10.20
November 11, 1994(e) to October 31, 1995 $10.00 $0.50 $0.22 -- -- $10.72
LIMITED TERM GOVERNMENT INCOME FUND
October 1, 1997(e) to May 31, 1998 $10.00 $0.38 ($0.11) ($0.38) ($0.01) $9.88
INTERMEDIATE GOVERNMENT INCOME FUND
Year Ended May 31, 1998 $10.84 $0.71 $0.37 ($0.70) -- $11.22
Year Ended May 31, 1997 $10.89 $0.72 ($0.04) ($0.73) -- $10.84
November 1, 1995 to May 31, 1996 $12.40 $0.40 $0.53 ($1.32) ($1.12) $10.89
November 11, 1994(e) to October 31, $11.11 $0.93 $0.36 -- -- $12.40
1995(g)
DIVERSIFIED BOND FUND
Year Ended May 31, 1998 $25.60 $1.61 $1.51 ($1.66) ($0.03) $27.03
Year Ended May 31, 1997 $26.03 $1.59 $0.01 ($1.69) ($0.34) $25.60
November 1, 1995 to May 31, 1996 $27.92 $1.07 ($0.99) ($1.67) ($0.30) $26.03
November 11, 1994(e) to October 31, 1995 $25.08 $1.65 $1.19 -- -- $27.92
INCOME FUND
Year Ended May 31, 1998 $9.27 $0.61 $0.51 ($0.61) -- $9.78
Year Ended May 31, 1997 $9.26 $0.62 $0.01 ($0.62) -- $9.27
Year Ended May 31, 1996 $9.62 $0.61 ($0.36) ($0.61) -- $9.26
Year Ended May 31, 1995 $9.51 $0.65 $0.11 ($0.65) -- $9.62
August 2, 1993(e) to May 31, 1994 $10.68 $0.58 ($0.91) ($0.58) ($0.26) $9.51
TOTAL RETURN BOND FUND
Year Ended May 31, 1998 $9.41 $0.59 $0.28 ($0.59) ($0.05) $9.64
Year Ended May 31, 1997 $9.40 $0.60 $0.04 ($0.60) ($0.03) $9.41
Year Ended May 31, 1996 $9.73 $0.64 ($0.31) ($0.64) ($0.02) $9.40
Year Ended May 31, 1995 $9.54 $0.67 $0.19 ($0.67) -- $9.73
December 31, 1993(e) to May 31, 1994 $10.00 $0.27 ($0.46) ($0.27) -- $9.54
- -------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(d) Reflects the activity of the Portfolio(s) in which the Fund invests.
(e) Commencement of operations.
(f) Annualized.
(g) Adjusted for a five to one stock split.
(h) Portfolio Turnover Rate is not applicable as the Fund invested in more
than one Porfolio.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
--------------------------------------- [FINANCIAL HIGHLIGHTS TAB]
Net Portfolio Net Assets at
Investment Net Gross Total Turnover End of Period
Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -------------------------------------------------------------------------------------
5.69%(c) 0.65%(c) 0.76%(c) 6.28% 37.45%(d) $144,215
5.73% 0.65% 0.79% 6.24% 41.30% $111,030
5.74%(e) 0.65%(e) 0.92%(e) 2.97% 109.95% $83,404
5.91%(e) 0.65%(e) 0.98%(e) 7.20% 115.85% $48,087
5.78%(e)(f) 0.40%(e)(f) 0.89%(e)(f) 4.42% 99.49% $66,113
6.35% 0.68% 0.72% 10.19% 96.76% $400,346
6.57% 0.68% 0.72% 6.36% 183.05% $371,278
6.71%(f) 0.71%(f) 1.17%(f) 0.60% 74.64% $399,324
7.79%(f) 0.68%(f) 0.93%(f) 11.58% 240.90% $50,213
5.98%(c) 0.70%(c) 1.02%(c) 12.39% N/A(h) $134,831
6.19% 0.70% 0.77% 6.23% 57.19% $162,310
6.78%(f) 0.70%(f) 0.77%(f) 0.22% 118.92% $167,159
5.87%(f) 0.67%(f) 0.82%(f) 11.32% 58.90% $171,453
6.32% 0.75% 0.95% 12.35% 167.09% $290,566
6.59% 0.75% 1.02% 6.90% 231.00% $258,207
6.30% 0.75% 1.06% 2.58% 270.17% $271,157
7.02% 0.75% 1.06% 8.49% 98.83% $109,994
6.75%(f) 0.61%(f) 1.09%(f) (4.04%)(f) 26.67% $93,665
6.14%(c) 0.75%(c) 0.86%(c) 9.45% 134.56%(d) $109,084
6.36% 0.75% 1.05% 6.95% 55.07% $125,437
6.57% 0.75% 1.07% 3.41% 77.49% $120,767
7.04% 0.71% 1.17% 9.43% 35.19% $96,199
6.81%(f) 0.46%(f) 2.10%(f) (4.62%)(f) 37.50% $11,694
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
[TAX-FREE FUNDS ICON]
Net Realized
and Disbritutions Distributions Ending
TAX-FREE FIXED Beginning Net Net Unrealized from Net from Net Net Asset Net
INCOME FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized Value Per Investment
Per Share Income on Investments Income Gain Share Income
- ------------------------------------------------------------------------------------------------------------------------------------
LIMITED TERM TAX-FREE FUND
Year Ended May 31, 1998 $10.39 $0.47 $0.21 ($0.47) ($0.01) $10.59 4.47%
October 1, 1996(c) to May 31, 1997 $10.00 $0.31 $0.39 ($0.31) -- $10.39 4.45%(d)
TAX-FREE INCOME FUND
Year Ended May 31, 1998 $10.06 $0.53 $0.48 ($0.53) -- $10.54 5.09%
Year Ended May 31, 1997 $9.78 $0.54 $0.28 ($0.54) -- $10.06 5.40%
Year Ended May 31, 1996 $9.82 $0.55 ($0.04) ($0.55) -- $9.78 5.57%
Year Ended May 31, 1995 $9.60 $0.55 $0.22 ($0.55) -- $9.82 5.84%
August 2, 1993(c) to May 31, 1994 $10.14 $0.47 ($0.47) ($0.47) ($0.07) $9.60 5.71%(d)
COLORADO TAX-FREE FUND
Year Ended May 31, 1998 $10.22 $0.53 $0.47 ($0.53) -- $10.69 5.01%
Year Ended May 31, 1997 $9.89 $0.54 $0.33 ($0.54) -- $10.22 5.35%
Year Ended May 31, 1996 $9.90 $0.53 ($0.01) ($0.53) -- $9.89 5.30%
Year Ended May 31, 1995 $9.69 $0.48 $0.21 ($0.48) -- $9.90 5.08%
August 23, 1993(c) to May 31, 1994 $10.22 $0.39 ($0.52) ($0.39) ($0.01) $9.69 5.03%(d)
MINNESOTA INTERMEDIATE TAX-FREE FUND
October 1, 1997(c) to May 31, 1998 $10.00 $0.33 $0.03 ($0.33) -- $10.03 5.02%(d)
MINNESOTA TAX-FREE FUND
Year Ended May 31, 1998 $10.57 $0.53 $0.48 ($0.53) -- $11.05 4.84%
Year Ended May 31, 1997 $10.30 $0.54 $0.27 ($0.54) -- $10.57 5.12%
Year Ended May 31, 1996 $10.45 $0.56 ($0.15) ($0.56) -- $10.30 5.24%
Year Ended May 31, 1995 $10.16 $0.53 $0.29 ($0.53) -- $10.45 5.29%
August 2, 1993(c) to May 31, 1994 $10.74 $0.43 ($0.39) ($0.43) ($0.19) $10.16 4.90%(d)
- ------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Commencement of operations.
(d) Annualized.
</TABLE>
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
-------------------------------------
Portfolio Net Assets at
Net Gross Total Turnover End of Period
Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -------------------------------------------------------------------
0.65% 1.03% 6.70% 46.06% $54,602
0.65%(d) 1.27%(d) 6.99% 16.39% $40,990
0.60% 0.92% 10.22% 142.81% $286,734
0.50% 1.03% 8.54% 152.33% $259,861
0.32% 1.06% 5.29% 126.20% $276,159
0.60% 1.05% 8.42% 130.90% $94,454
0.60%(d) 1.10%(d) (0.21%)(d) 116.54% $102,084
0.60% 1.01% 9.97% 69.87% $32,342
0.45% 1.13% 9.00% 129.26% $25,917
0.30% 1.13% 5.35% 171.41% $24,074
0.30% 1.16% 7.47% 47.88% $24,539
0.11%(d) 1.21%(d) 0.90%(d) 40.92% $15,153
0.60%(d) 0.72%(d) 3.61% 15.13% $209,685
0.60% 1.04% 9.71% 68.27% $20,736
0.60% 1.23% 7.98% 96.68% $11,135
0.51% 1.30% 3.97% 77.10% $3,988
0.48% 1.58% 8.44% 139.33% $1,799
0.61%(d) 1.54%(d) 0.29%(d) 84.23% $872
<PAGE>
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
BALANCED FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND(E)
Year Ended May 31, 1998 $18.47 $0.79 $1.75 ($0.86) ($0.59) $19.56
Year Ended May 31, 1997 $18.12 $0.97 $0.71 ($0.95) ($0.38) $18.47
November 1, 1995 to May 31, 1996 $18.21 $0.48 $0.42 ($0.76) ($0.23) $18.12
November 11, 1994(g) to October 31, 1995 $16.19 $0.75 $1.27 -- -- $18.21
MODERATE BALANCED FUND
Year Ended May 31, 1998 $21.59 $0.80 $2.72 ($0.86) ($1.27) $22.98
Year Ended May 31, 1997 $20.27 $0.77 $1.60 ($0.76) ($0.29) $21.59
November 1, 1995 to May 31, 1996 $19.84 $0.46 $0.89 ($0.66) ($0.26) $20.27
November 11, 1994(g) to October 31, 1995 $17.25 $0.65 $1.94 -- -- $19.84
GROWTH BALANCED FUND
Year Ended May 31, 1998 $24.77 $0.58 $4.52 ($0.60) ($1.21) $28.06
Year Ended May 31, 1997 $22.83 $0.62 $2.86 ($0.63) ($0.91) $24.77
November 1, 1995 to May 31, 1996 $21.25 $0.31 $1.95 ($0.51) ($0.17) $22.83
November 11, 1994(g) to October 31, 1995 $17.95 $0.47 $2.83 -- -- $21.25
AGGRESSIVE BALANCED-EQUITY FUND
December 2, 1997(g) to May 31, 1998 $10.00 $0.06 $0.99 ($0.01) -- $11.04
- -----------------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund
invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return would have been lower absent expense reimbursements and/or fee
waivers.
(d) Represents the average commission per share paid to brokers on the purchase
or sale of portfolio securities. Prior to 1996, this data wasnot reported
in mutual fund financial statements.
(e) Prior to October 1, 1997, Strategic Income Fund was named Conservative
Balanced Fund.
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested exclusively in more than one Portfolio.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
- --------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(a) Expenses(a) Expenses(a)(b) Return(c) Rate Rate (d) (000's Omitted)
- -------------------------------------------------------------------------------------------
4.47% 0.80% 1.03% 14.13% N/A(h) N/A(h) $235,254
4.38% 0.81% 0.98% 9.58% 72.03% $0.0720 $128,777
4.65%(f) 0.82% 0.97%(f) 5.14% 56.47% $0.0648 $146,950
4.67%(f) 0.82%(f) 1.03% 12.48% 65.53% N/A $136,710
3.57% 0.88% 1.05% 17.04% N/A(h) N/A(h) $464,384
3.70% 0.88% 1.04% 12.04% 45.33% $0.0684 $418,680
3.95%(f) 0.90%(f) 1.04%(f) 7.03% 52.71% $0.0658 $398,005
3.76%(f) 0.92%(f) 1.11%(f) 15.01% 62.08% N/A $373,998
2.38% 0.93% 1.09% 21.40% N/A(h) N/A(h) $665,758
2.47% 0.94% 1.16% 15.81% 24.33% $0.0676 $503,382
2.66%(f) 0.98%(f) 1.16%(f) 10.87% 38.78% $0.0696 $484,641
2.63%(f) 0.99%(f) 1.23%(f) 18.38% 41.04% N/A $374,892
1.58%(f) 1.00%(f) 2.29%(f) 10.55% N/A(h) N/A(h) $8,872
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
[EQUITY FUNDS ICON]
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Return Net Asset
EQUITY FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized of Value Per
Per Share Income (Loss) on Investments Income Gain Capital Share
- --------------------------------------------------------------------------------------------------------------------------------
INDEX FUND
Year Ended May 31, 1998 $39.49 $0.58 $10.74 ($0.65) ($3.80) -- $46.36
Year Ended May 31, 1997 $31.49 $0.49 $8.50 ($0.48) ($0.51) -- $39.49
November 1, 1995 to May 31, 1996 $27.67 $0.36 $4.08 ($0.43) ($0.19) -- $31.49
November 11, 1994(g) to October 31, $21.80 $0.45 $5.42 -- -- -- $27.67
1995
INCOME EQUITY FUND
Year Ended May 31, 1998 $33.16 $0.52 $8.76 ($0.54) ($0.72) -- $41.18
Year Ended May 31, 1997 $27.56 $0.56 $5.55 ($0.51) -- -- $33.16
November 1, 1995 to May 31, 1996 $24.02 $0.29 $4.02 ($0.69) ($0.08) -- $27.56
November 11, 1994(g) to October 31, $18.90 $0.46 $4.66 -- -- -- $24.02
1995
VALUGROWTH STOCK FUND
Year Ended May 31, 1998 $25.03 $0.06 $4.76 ($0.16) ($3.54) -- $26.15
Year Ended May 31, 1997 $22.61 $0.16 $4.80 ($0.13) ($2.41) -- $25.03
Year Ended May 31, 1996 $18.80 $0.14 $3.91 ($0.12) ($0.12) -- $22.61
Year Ended May 31, 1995 $17.16 $0.18 $1.64 ($0.18) -- -- $18.80
August 2, 1993(g) to May 31, 1994 $16.91 $0.13 $0.46 ($0.12) ($0.22) -- $17.16
DIVERSIFIED EQUITY FUND
Year Ended May 31, 1998 $36.50 $0.22 $8.94 ($0.27) ($2.33) -- $43.06
Year Ended May 31, 1997 $30.55 $0.25 $6.05 ($0.16) ($0.19) -- $36.50
November 1, 1995 to May 31, 1996 $27.53 $0.16 $4.25 ($0.42) ($0.97) -- $30.55
November 11, 1994(g) to October 31, $22.21 $0.22 $5.10 -- -- -- $27.53
1995
GROWTH EQUITY FUND
Year Ended May 31, 1998 $32.48 ($0.04) $6.86 ($0.04) ($3.54) -- $35.72
Year Ended May 31, 1997 $29.08 ($0.02) $4.05 ($0.04) ($0.59) -- $32.48
November 1, 1995 to May 31, 1996 $26.97 -- $4.09 ($0.12) ($1.86) -- $29.08
November 11, 1994(g) to October 31, $22.28 ($0.02) $4.71 -- -- -- $26.97
1995
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
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(b) Rate Rate (c) (000's Omitted)
- -------------------------------------------------------------------------------------------
1.53%(d) 0.25%(d) 0.58%(d) 30.32% 6.68%(e) 0.0339(e) $784,205
2.10% 0.25% 0.56% 29.02% 24.17% $0.0417 $513,134
2.25%(f) 0.31%(f) 0.57%(f) 16.27% 9.12% $0.0517 $249,644
2.12%(f) 0.50%(f) 0.64%(f) 26.93% 14.48% N/A $186,197
1.43%(d) 0.85%(d) 0.86%(d) 28.61% 3.46%(e) 0.0585(e) $1,214,385
1.97% 0.85% 0.90% 22.40% 4.76% $0.0792 $425,197
2.72%(f) 0.86%(f) 1.13%(f) 18.14% 0.69% $0.0942 $230,831
2.51%(f) 0.85%(f) 1.12%(f) 27.09% 7.03% N/A $49,000
0.53% 1.00% 1.20% 21.18% 74.25% $0.0588 $609,056
0.67% 1.01% 1.33% 23.30% 75.50% $0.0781 $180,204
0.62% 1.20% 1.32% 21.72% 105.43% $0.0603 $156,553
1.02% 1.20% 1.33% 10.67% 63.82% N/A $136,589
0.92%(f) 1.20%(f) 1.39%(f) 2.99%(f) 86.07% N/A $113,061
0.60%(d) 1.00%(d) 1.13%(d) 26.12% N/A(e) N/A(e) $1,520,343
0.79%(d) 1.02%(d) 1.31%(d) 20.76% 48.08% $0.0626 $1,212,565
1.00%(d)(f) 1.06%(d)(f) 1.30%(d)(f) 16.38% 5.76% $0.0671 $907,223
1.01%(d)(f) 1.09%(d)(f) 1.37%(d)(f) 23.95% 10.33% N/A $711,111
(0.11%)(d) 1.25%(d) 1.35%(d) 22.52% N/A(e) N/A(e) $1,033,251
(0.09%)(d) 1.30%(d) 1.84%(d) 14.11% 9.06% $0.0565 $895,420
0.01%(d)(f) 1.35%(d)(f) 1.85%(d)(f) 15.83% 7.39% $0.0617 $735,728
(0.11%)(d)(f)1.38%(d)(f) 1.92%(d)(f) 21.10% 8.90% N/A $564,004
</TABLE>
<PAGE>
[EQUITY FUNDS ICON]
EQUITY FUNDS - I SHARES (continued)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Return Net Asset
Asset Value Investment Gain (Loss) Investment Realized of Value Per
Per Share Income (Loss) on Investments Income Gain Capital Share
- --------------------------------------------------------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND
Year Ended May 31, 1998 $32.63 ($0.11) $10.20 -- ($2.78) -- $39.94
Year Ended May 31, 1997 $26.97 ($0.03) $5.91 -- ($0.22) -- $32.63
November 1, 1995 to May 31, 1996 $23.59 ($0.04) $3.64 -- ($0.22) -- $26.97
November 11, 1994(g) to October 31, $18.50 ($0.05) $5.14 -- -- -- $23.59
1995
DIVERSIFIED SMALL CAP FUND
December 31, 1997(g) to May 31, 1998 $10.00 -- $0.52 -- -- -- $10.52
SMALL COMPANY STOCK FUND
Year Ended May 31, 1998 $13.88 ($0.09) $1.11 -- ($2.90) ($0.07) $11.93
Year Ended May 31, 1997 $13.96 ($0.04) $0.87 -- ($0.91) -- $13.88
Year Ended May 31, 1996 $10.59 $0.01 $3.93 ($0.03) ($0.54) -- $13.96
Year Ended May 31, 1995 $9.80 $0.12 $0.87 ($0.12) ($0.08) -- $10.59
December 31, 1993(g) to May 31, 1994 $10.00 $0.08 ($0.20) ($0.08) -- -- $9.80
SMALL CAP OPPORTUNITIES FUND
Year Ended May 31, 1998 $19.84 ($0.06) $4.36 -- ($0.53) -- $23.61
August 15, 1996 to(g) May 31, 1997 $16.26 ($0.01) $3.60 -- ($0.01) -- $19.84
SMALL COMPANY GROWTH FUND
Year Ended May 31, 1998 $31.08 ($0.23) $6.88 -- ($4.04) -- $33.69
Year Ended May 31, 1997 $33.00 ($0.18) $1.83 -- ($3.57) -- $31.08
November 1, 1995 to May 31, 1996 $29.99 ($0.07) $5.94 -- ($2.86) -- $33.00
November 11, 1994(g) to October 31, $21.88 ($0.11) $8.22 -- -- -- $29.99
1995
INTERNATIONAL FUND
Year Ended May 31, 1998 $21.67 $0.09 $2.29 ($0.20) -- -- $23.85
Year Ended May 31, 1997 $19.84 $0.09 $1.94 ($0.20) -- -- $21.67
November 1, 1995 to May 31, 1996 $17.99 $0.14 $2.04 ($0.33) -- -- $19.84
November 11, 1994(g) to October 31, $17.28 $0.09 $0.62 -- -- -- $17.99
1995
- -----------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers and expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Average Commission Rate 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.
(d) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(e) Reflects the activity of the Portfolio(s) in which the Fund invests.
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable
as the Fund invested in more than one Portfolio.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
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(b) Rate Rate (c) (000's Omitted)
- -------------------------------------------------------------------------------------------
(0.36%)(d) 1.00%(d) 1.03%(d) 32.29% 13.03%(e) 0.0552(e) $232,499
(0.18%) 0.99% 1.09% 21.93% 24.37% $0.0564 $131,768
(0.30%)(f) 1.00%(f) 1.13%(f) 15.40% 16.93% $0.0616 $82,114
(0.23%)(f) 1.00%(f) 1.20%(f) 27.51% 31.60% N/A $63,567
(0.25%)(d)(f)1.21%(d)(f) 2.65%(d)(f) 5.20% N/A(h) N/A(h) $12,551
(0.53%)(d) 1.20%(d) 1.32%(d) 8.12% 166.16%(e) 0.0616(e) $112,713
(0.38%) 1.19% 1.56% 6.30% 210.19% $0.0774 $161,995
0.05% 1.21% 1.60% 38.30% 134.53% $0.0555 $125,986
1.14% 0.52% 1.82% 10.13% 68.09% N/A $54,240
2.03%(f) 0.20%(f) 4.33%(f) (2.93%)(f) 14.98% N/A $9,251
(0.40%)(d) 1.25%(d) 1.38%(d) 21.95% 54.98%(e) 0.0582(e) $284,828
(0.16%)(d)(f)1.25%(d)(f) 1.89%(d)(f) 11.42% 34.45%(e) $0.0584 $77,174
(0.73%)(d) 1.25%(d) 1.26%(d) 22.38% 123.36%(e) 0.0567(e) $748,269
(0.71%) 1.24% 1.29% 5.65% 124.03% $0.0565 $447,580
(0.41%)(f) 1.25%(f) 1.29%(f) 21.43% 62.06% $0.0583 $378,546
(0.47%)(f) 1.25%(f) 1.35%(f) 37.07% 106.55% N/A $278,058
0.45%(d) 1.47%(d) 1.50%(d) 11.19% N/A(h) N/A(h) $279,667
0.40%(d) 1.43%(d) 1.44%(d) 10.27% 48.23%(e) $0.0202(e) $228,552
0.60%(d)(f) 1.50%(d)(f) 1.52%(d)(f) 12.31% 14.12%(e) $0.0325(e) $143,643
0.54%(d)(f) 1.50%(d)(f) 1.66%(d)(f) 4.11% 29.41%(e) N/A $91,401
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
3. GLOSSARY [PICTURE OF PCS]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
Term Definition
- ---- ----------
AMT Alternative minimum tax.
Board The Board of Trustees of Norwest Advantage
Funds.
Dollar Roll A transaction in which a Fund sells
fixed income securities and commits to
purchase similar, but not identical,
securities at a later date from the same
party.
Duration A measure of a debt security's average life
that reflects the present value of
the security's cash flow. Prices of
securities with longer durations generally
are more volatile.
Fundamental Requiring shareholder approval to change.
Investment Grade Rated at the time of purchase in 1 of
the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO or
unrated and determined by the Adviser to be
of comparable quality.
Market Capitalization The total market value of a company's
outstanding common stock.
Municipal Security A debt security 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, with interest exempt from
federal income tax.
NRSRO A nationally recognized statistical rating
organization, such as S&P, that rates fixed-
income securities and preferred stock by
relative credit risk. NRSROs also rate money
market mutual funds.
Non-Investment Grade Neither rated at the time of purchase in 1
of the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO
nor unrated and determined by the Adviser to
be of comparable quality.
Related Issuers Issuers of Municipal Securities that
economic, business, or political
developments affect in similar ways.
Russell 1000(R) Index An index of large- and medium-capitalization
companies.
Russell 2000(R) Index An index of smaller capitalization
companies with a broader base of companies
than the S&P 600 Small Cap Index.
S&P Standard & Poor's Corporation.
S&P 500 Index Standard & Poor's 500 Composite Stock
Price Index, an index of large
capitalization companies.
S&P 600 Small Cap Index Standard & Poor's Small Cap 600 Composite
Stock Price Index, an index of small
capitalization companies.
SAI Statement of Additional Information.
SEC The U.S. Securities and Exchange Commission.
STRIPS Separately traded principal or 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 program.
U.S. Government Security A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies, or its
instrumentalities.
U.S. Treasury Security A security issued or guaranteed by the U.S.
Treasury.
<PAGE>
- --------------------------------------------------------------------------------
4. INVESTMENT OBJECTIVES AND POLICIES [SPREADSHEET]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds
and the Portfolios. After each Fund's description, there is a short,
alphabetical listing of the Fund's primary risks. The Risk Considerations
section discusses these risks.
[MONEY MARKET FUNDS ICON]
MONEY MARKET FUNDS
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Money Market Funds' investments are made under the requirements of an
SEC rule governing the investments that money market funds may make. Each
Fund invests only in high-quality, U.S. dollar-denominated short-term money
market instruments that are determined by the Adviser, under procedures
adopted by the Board, to be eligible for purchase and to present minimal
credit risks. The Funds may invest in securities with fixed, variable, or
floating rates of interest.
High-quality instruments include those that: (1) are rated (or, if unrated,
are issued by an issuer with comparable outstanding short-term debt that is
rated) in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1
NRSRO has issued a rating, by that NRSRO; or (2) are otherwise unrated and
determined by the Adviser to be of comparable quality. Each Fund, other
than Municipal Money Market Fund, invests at least 95% of its total assets
in securities in the highest rating category.
CASH INVESTMENT FUND and READY CASH INVESTMENT FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVES. Each Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
CASH INVESTMENT FUND invests equally in 2 Portfolios - Money Market
Portfolio and Prime Money Market Portfolio. Cash Investment Fund,
Money Market Portfolio, and Prime Money Market Portfolio generally
have the same investment objective and investment policies. Because
Prime Money Market Portfolio seeks to maintain a rating within the 2
highest short-term categories assigned by at least 1 NRSRO, it is more
limited in the type and amount of securities it may purchase.
READY CASH INVESTMENT FUND invests its assets in Prime Money Market
Portfolio. The Fund seeks to maintain a rating within the 2 highest
short-term categories assigned by at least 1 NRSRO.
INVESTMENT POLICIES. The Funds invest in a broad spectrum of high-quality
money market instruments of U.S. and foreign issuers, including U.S.
Government Securities, Municipal Securities, and corporate debt securities.
The Funds 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, U.S. branches and agencies of foreign banks, and
wholly owned banking-related subsidiaries of foreign banks. The Funds limit
their investments in obligations of financial institutions to institutions
that at the time of investment have total assets in excess of $1 billion,
or the equivalent in other currencies.
<PAGE>
Each Fund 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. Neither Fund may invest more than 25% of
its total assets in any other single industry.
[RISK ICON]
Credit Risk Interest Rate Risk Foreign risk
U.S. GOVERNMENT FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. The Fund invests primarily in U.S. Government
Securities and repurchase agreements for U.S. Government Securities. Under
normal circumstances, the Fund invests at least 65% of its total assets in
these securities. The Fund also may invest in zero coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
TREASURY PLUS FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. Under normal circumstances, the Fund invests at least
80% of its total assets in U.S. Treasury Securities and in repurchase
agreements for U.S. Treasury Securities. The Fund also may invest in U.S.
Government Securities and in repurchase agreements for U.S. Government
Securities. The Fund may invest in zero coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
<PAGE>
TREASURY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. The Fund invests solely in U.S. Treasury Securities,
including zero-coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
MUNICIPAL MONEY MARKET FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective 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.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
INVESTMENT POLICIES. The Fund expects to invest 100% of its assets in
Municipal Securities, including short-term municipal bonds and municipal
notes, and leases. These investments may have fixed, variable, or floating
rates of interest and may be zero-coupon securities. As part of its
objective, the Fund normally will invest at least 80% of its total assets
in federally tax-exempt instruments whose income may be subject to the
federal AMT. The Fund may invest up to 20% of its total assets in
securities that pay interest income subject to federal income tax.
The Fund may invest more than 25% but, under normal circumstances, will not
invest more than 35% of its assets in issuers located in a single state.
The Fund may invest more than 25% of its assets in industrial development
bonds and in participation interests in these types of bonds issued by
banks.
[RISK ICON]
Credit Risk Interest Rate Risk Geographic Concentration Risk
FIXED INCOME FUNDS
STABLE INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to maintain safety
of principal while providing low volatility total return.
INVESTMENT POLICIES. The Fund invests primarily in short-term Investment
Grade securities. The Fund invests in a diversified portfolio of fixed and
variable rate U.S. dollar-denominated fixed income securities of a broad
spectrum of U.S. and foreign issuers, including U.S. Government Securities
and the debt securities of financial institutions, corporations, and
others.
<PAGE>
The Fund normally limits its investments in:
* mortgage-backed securities to not more than 65% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets;
* mortgage-backed securities that are not U.S. Government Securities to
not more than 25% of its total assets; and
* U.S. Government Securities to not more than 50% of its total assets.
The Fund may not invest more than 30% 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% of
its total assets in the securities of any other issuer.
The Fund only purchases Investment Grade securities. The Fund invests in
debt obligations with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 12 years
and seeks to maintain an average dollar-weighted portfolio maturity of
between 2 and 5 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
LIMITED TERM GOVERNMENT INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide income
and safety of principal by investing primarily in U.S. Government
Securities.
INVESTMENT POLICIES. The Fund invests primarily in fixed and variable rate
U.S. Government Securities. The Fund normally invests at least 65% of its
total assets in U.S. Government Securities and may invest up to 35% of its
total assets in other fixed income securities. The Fund emphasizes the use
of short maturity securities to lessen interest rate risk and uses
mortgage-backed securities to enhance yield.
The Fund limits its investments in:
* mortgage-backed securities to not more than 50% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets; and
* zero-coupon securities, except in STRIPS, to not more than 10% of its
total assets.
<PAGE>
In addition, the Fund may not invest more than 25% of its total assets in
securities issued or guaranteed by any single agency or instrumentality of
the U.S. Government, except the U.S. Treasury. The Fund may enter into
short sales.
The Fund will only purchase securities that are rated, at the time of
purchase, within the 2 highest rating categories assigned by an NRSRO, or
which are unrated and determined by the Adviser to be of comparable
quality.
The Fund will invest primarily in debt obligations with maturities (or
average life in the case of mortgage-backed and similar securities) ranging
from overnight to ten years. Under normal circumstances, the Fund's
portfolio of securities will have an average dollar-weighted maturity of
between 1 and 5 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
INTERMEDIATE GOVERNMENT INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide income
and safety of principal by investing primarily in U.S. Government
Securities.
INVESTMENT POLICIES. The Fund invests primarily in fixed and variable rate
U.S. Government Securities. Under normal circumstances, the Fund intends to
invest at least 65% of its assets in U.S. Government Securities and may
invest up to 35% 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 and uses mortgage-backed securities
to enhance yield.
The Fund limits its investments in:
* mortgage-backed securities to not more than 50% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets; and
* zero-coupon securities, except in STRIPS, to not more than 10% of its
total assets.
As part of its mortgage-backed securities investments, the Fund may enter
into Dollar Rolls. The Fund may not invest more than 25% of its total
assets in securities issued or guaranteed by any single agency or
instrumentality of the U.S. Government, except the U.S. Treasury. The Fund
may enter into short sales.
The Fund will purchase only securities that are rated, at the time of
purchase, within the 2 highest rating categories assigned by an NRSRO, or
which are unrated and determined by the Adviser to be of comparable
quality.
<PAGE>
The Fund will invest primarily in debt obligations with maturities (or
average life in the case of mortgage-backed and similar securities) ranging
from overnight to 30 years. Under normal circumstances, the Fund's
portfolio securities will have an average dollar-weighted maturity of
between 3 and 10 years and a duration of between 70% and 130% of the
Duration of a 5 year Treasury Note.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
DIVERSIFIED BOND FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide total
return by diversifying its investments among different fixed income
investment styles.
INVESTMENT POLICIES. The Fund uses 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 the different fixed
income investment styles of 3 Portfolios - Managed Fixed Income style,
Strategic Value Bond style, and Positive Return style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
0 current range of
allocation investment
----------- -----------
Managed Fixed Income Portfolio 50.0% 45% - 55%
Strategic Value Bond Portfolio 16.7% 11.7% - 21.7%
Positive Return Portfolio 33.3% 28.3% - 38.3%
--------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions periodically to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide total
return consistent with current income.
INVESTMENT POLICIES. The Fund invests in a diversified portfolio of fixed
and variable rate fixed income securities issued by domestic and foreign
issuers. The Fund invests in a broad spectrum of U.S. issuers, including
U.S. Government Securities, mortgage- and other asset-backed securities,
and the debt securities of financial institutions, corporations, and
others. The Adviser attempts to increase the Fund's performance by applying
various fixed income management techniques. The Adviser combines these
techniques 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 Duration of the Lipper Corporate
A-Rated Debt Average.
The Fund normally invests at least 30% of its total assets in U.S.
Government Securities. The Fund limits its investments in mortgage-backed
securities to not more than 50% of its total assets and its investments in
other asset-backed securities to not more than 25% of its total assets.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Fund may invest up to 70% 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. The Fund also may invest
in zero coupon securities and enter into Dollar Rolls.
The Fund may invest in debt securities registered and sold in the United
States by foreign issuers and debt securities sold outside the United
States by foreign or U.S. issuers. The Fund restricts its purchases of debt
securities to those denominated and payable in U. S. dollars.
Normally, the Fund will invest at least 80% of its total assets in
Investment Grade securities. The Fund may invest up to 20% of its total
assets in Non-Investment Grade securities rated, at the time of purchase,
in the fifth highest long-term rating category assigned by an NRSRO or
unrated and determined by the Adviser to be of comparable quality.
The Fund invests primarily in securities with maturities (or average life
in the case of mortgage-backed and similar securities) ranging from
overnight to 40 years. It is anticipated that the Fund's portfolio 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.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
TOTAL RETURN BOND FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek total
return.
INVESTMENT POLICIES. The Fund invests in a broad range of fixed-income
instruments in order to create a strategically diversified portfolio of
fixed-income investments. These investments include corporate bonds,
mortgage- and other asset-backed securities, U.S. Government Securities,
preferred stock, convertible bonds, and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Fund seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current versus historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Fund's objective and purchases those securities that
are consistent with the Fund's investment objective.
The Fund particularly seeks strategic diversification. The Fund will not invest
more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate market.
The Fund may invest in U.S. Government Securities without restriction. The
Fund generally will not invest more than 5% of its total assets in the
corporate bonds of any single issuer.
The Fund will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the 3 highest rating categories
assigned by at least 1 NRSRO, or which are unrated and determined by the
Adviser to be of comparable quality. The Fund may invest up to 20% of its
total assets in Non-Investment Grade securities.
The average maturity of the Fund will vary between 5 and 15 years. In the
case of mortgage-backed and similar securities, the Fund uses the
security's average life in calculating the Fund's average maturity. The
Fund's Duration normally will vary between 3 and 8 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in bonds, other fixed-income investments, and stocks.
INVESTMENT POLICIES. The Fund is designed for investors seeking to invest
in fixed income securities with limited exposure to equity securities. The
Fund emphasizes safety of principal. The Fund currently invests in 16
Portfolios.
The Fund invests the fixed income portion of its portfolio in: the same 3
Portfolios as Diversified Bond Fund; in Stable Income Portfolio; and Money
Market Portfolio. 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 Fund's
investments. The equity portion of the Fund's portfolio uses the 5
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.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
<TABLE>
<S> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED BOND FUND STYLE 55% 45% - 65%
POSITIVE RETURN BOND PORTFOLIO 15% - 21.7%
18.3%
STRATEGIC VALUE BOND PORTFOLIO 7.5% - 10.8%
9.2%
MANAGED FIXED INCOME PORTFOLIO 22.5% - 32.5%
27.5%
STABLE INCOME PORTFOLIO 15% 15%
MONEY MARKET PORTFOLIO 10% 10%
DIVERSIFIED EQUITY FUND STYLE 20% 10% - 30%
INDEX PORTFOLIO 2.5% - 7.5%
5%
INCOME EQUITY PORTFOLIO 2.5% - 7.5%
5%
LARGE COMPANY STYLE 2.5% - 7.5%
5%
LARGE COMPANY GROWTH PORTFOLIO 2% - 6%
4%
DISCIPLINED GROWTH PORTFOLIO 0.5% - 1.5%
1%
DIVERSIFIED SMALL CAP STYLE 1% - 3%
2.0%
SMALL CAP INDEX PORTFOLIO 0.2% - 0.6%
0.4%
SMALL COMPANY GROWTH PORTFOLIO 0.2% - 0.7%
0.5%
SMALL COMPANY VALUE PORTFOLIO 0.2% - 0.7%
0.5%
SMALL COMPANY STOCK PORTFOLIO 0.25% - 0.5%
0.3%
SMALL CAP VALUE PORTFOLIO 0.2% - 0.5%
0.3%
INTERNATIONAL STYLE 1.5% - 4.5%
3.0%
INTERNATIONAL PORTFOLIO 1.2% - 4.5%
2.9%
SCHRODER EM CORE PORTFOLIO 0% - 0.9%
0.2%
-------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of the Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
<PAGE>
As market or other conditions change, the Adviser may attempt to enhance
the Fund's returns by changing the percentage of Fund assets invested in
fixed income and equity securities. The Fund may also invest in more or
fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of changes. When the Adviser believes that a change in
the current allocation percentages is desirable, it will sell and purchase
securities to effect the change. When the Adviser believes that a change
will be temporary (generally, 3 years or less), it may effect the change by
using futures contracts.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
TAX-FREE FIXED INCOME FUNDS
[TAX-FREE INCOME FUNDS ICON]
[INVESTMENT ICON]
Each Tax-Free Fixed Income Fund invests at least 80% of its total assets in
Municipal Securities paying interest that is exempt from federal income
tax. In order to respond to business and financial conditions, each Fund
may invest up to 20% of its total assets in securities paying taxable
interest income or securities paying interest income that may be a
preference item for purposes of the federal AMT. In addition, each Fund may
hold a portion of its assets in cash and cash-equivalent securities pending
investment in Municipal Securities, to meet requests for redemptions or to
assume a temporary defensive position.
LIMITED TERM TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to produce current
income exempt from federal income taxes.
INVESTMENT POLICIES. The Fund normally invests substantially all its assets
in Investment Grade Municipal Securities. As a Fundamental investment
policy, the Fund will invest at least 80% of its total assets in securities
paying interest exempt from federal income taxes. The Fund invests
primarily in securities that do not pay interest that is treated as a
preference item for individuals for purposes of the federal AMT.
The average dollar-weighted maturity of the Fund's assets normally will be
between 1 and 5 years, but will vary depending on anticipated market
conditions. The Fund emphasizes investment in Municipal Securities with
interest income rather than maintaining stability of the Fund's net asset
value.
The Fund normally will not invest more than 25% of its total assets in
securities of issuers located in the same state or in Related Issuers.
[RISK ICON]
Credit Risk Interest Rate Risk Market Risk
Prepayment Risk
<PAGE>
TAX-FREE INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to produce current
income exempt from federal income taxes.
INVESTMENT POLICIES. The Fund invests primarily in a portfolio of
Investment Grade Municipal Securities. As a Fundamental investment policy,
the Fund will invest at least 80% of its total assets in Municipal
Securities paying interest exempt from federal income taxes, including the
federal AMT.
The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years, but will vary depending on market conditions. 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. The Fund emphasizes investments in Municipal Securities with
interest income rather than stability of the Fund's net asset value.
Under normal circumstances, the Fund will not invest more than 25% of its
total assets in issuers located in the same state or in securities of
Related Issuers.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Interest Rate Risk Market Risk
Prepayment Risk
COLORADO TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
shareholders with a high level of current income exempt from both federal
(including the AMT) and Colorado state income taxes consistent with the
preservation of capital. The Fund offers shares only to residents of
Colorado.
INVESTMENT POLICIES. The Fund normally invests substantially all its assets
in Investment Grade Municipal Securities issued by (1) the state of
Colorado and its subdivisions, authorities, instrumentalities, and
corporations and (2) territories and possessions of the United States
("Colorado Municipal Securities"). As a Fundamental policy, the Fund will
invest at least 80% of its total assets in Municipal Securities paying
interest exempt from both federal and Colorado state income taxes
(including the AMT). The Fund invests in securities of a comparatively
small number of issuers. The Fund will not invest more than 25% of its
total assets in securities of Related Issuers or in securities of any 1
issuer except the U.S. Government.
The yields of Colorado Municipal Securities depend on, among other things,
conditions in the Colorado Municipal Securities market and fixed income
markets generally, the size of a particular offering, the maturity of the
securities and the rating of the issue. In some cases, Colorado issues may
have yields that are slightly less than the yields of Municipal Securities
of issuers located in other states because of the favorable effect of the
Colorado state tax exemption on Colorado issues.
<PAGE>
The Adviser expects that the Fund's average portfolio maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may
reach or exceed 20 years in the future. Depending on market conditions, the
Fund's average dollar-weighted maturity could be higher or lower. The Fund
emphasizes investments in Municipal Securities paying interest income
rather than maintaining the Fund's stability of net asset value. The Fund
also attempts to limit net asset value fluctuations.
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk \Market Risk
Prepayment Risk
MINNESOTA INTERMEDIATE TAX-FREE FUND and MINNESOTA TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. Each Fund's investment objective is to provide
shareholders with a high level of current income exempt from both federal
and Minnesota state income taxes (including the AMT) without assuming undue
risk. The Funds offer shares only to residents of Minnesota.
INVESTMENT POLICIES. The Funds normally invest substantially all (and
always at least 75% of) their assets in Investment Grade Municipal
Securities issued by (1) the state of Minnesota and its subdivisions,
authorities, instrumentalities, and corporations and (2) territories and
possessions of the United States ("Minnesota Municipal Securities"). As a
Fundamental policy, the Funds will invest at least 80% of their total
assets in securities paying interest exempt from both federal and Minnesota
state income taxes (including the AMT). The Funds may invest in securities
of a comparatively small number of issuers. Neither Fund will invest more
than 25% of its total assets in securities of Related Issuers or in
securities of any 1 issuer except the U.S. Government.
The yields of Minnesota Municipal Securities depend on, among other things,
conditions in the Minnesota Municipal Securities market and fixed income
markets generally, the maturity of the securities, 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 Securities
of issuers located in other states because of the favorable effect of the
Minnesota state tax exemption on Minnesota issues.
Minnesota Intermediate Tax-Free Fund's average dollar-weighted maturity
normally will be between 5 and 10 years, but will vary depending on
anticipated market conditions.
There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. The Adviser expects that the Fund's average dollar-weighted
maturity normally will be greater than 10 years. The Fund's average
portfolio maturity may reach or exceed 20 years in the future. Depending on
market conditions, the Fund's average dollar-weighted maturity could be
higher or lower. The Funds emphasize investments in Municipal Securities
paying interest income rather than maintaining the Fund's stability of net
asset value.
<PAGE>
The Funds may invest up to 25% of their total assets in Non-Investment
Grade Municipal Securities rated in the fifth highest long-term rating
category assigned by an NRSRO or unrated and determined by the Adviser to
be of comparable quality.
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
BALANCED FUNDS
[BALANCED FUNDS ICON]
Each Balanced Fund invests in a balanced portfolio of fixed income and
equity securities. Moderate Balanced Fund has the smallest investment in
equity securities and is the most conservative Balanced Fund. Aggressive
Balanced-Equity Fund has the largest investment in equity securities and is
the most aggressive Balanced Fund.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The equity portion of each Balanced Fund's portfolio uses the 5 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 3 or 4 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.
The percentage of a Balanced Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
As market or other conditions change, the Adviser may attempt to enhance
the returns of a Balanced Fund by changing the percentage of Fund assets
invested in fixed income and equity securities. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of percentage changes. When the Adviser believes that a
change in the current allocation percentages is desirable, it will sell and
purchase securities to effect the change. When the Adviser believes that a
change will be temporary (generally, 3 years or less), it may effect the
change by using futures contracts.
MODERATE BALANCED FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks, bonds, and other fixed income investments.
INVESTMENT POLICIES. The Fund is designed for investors seeking roughly
equivalent exposures to fixed income securities and equity securities. The
Fund's portfolio is more evenly balanced between fixed income and equity
securities than the other Balanced Funds. The Fund currently invests in 15
Portfolios.
<PAGE>
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund and in Stable Income Portfolio. This
allocation is intended to reduce the risk of relying on a single fixed
income investment style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- ----------
DIVERSIFIED BOND FUND STYLE 30% - 60%
45%
POSITIVE RETURN BOND PORTFOLIO 10% - 20%
15%
STRATEGIC VALUE BOND PORTFOLIO 5% - 10%
7.5%
MANAGED FIXED INCOME PORTFOLIO 15% - 30%
22.5%
STABLE INCOME PORTFOLIO 15%
15%
DIVERSIFIED EQUITY FUND STYLE 25% - 55%
40%
INDEX PORTFOLIO 6.3% - 13.8%
10%
INCOME EQUITY PORTFOLIO 6.3% - 13.8%
10%
LARGE COMPANY STYLE 6.3% - 13.8%
10%
LARGE COMPANY GROWTH PORTFOLIO 5.0% - 11.0%
8%
DISCIPLINED GROWTH PORTFOLIO 1.25% - 2.75%
2%
DIVERSIFIED SMALL CAP STYLE 2.5% - 5.5%
4%
SMALL CAP INDEX PORTFOLIO 0.5% - 1.1%
0.8%
SMALL COMPANY GROWTH PORTFOLIO 0.6% - 1.3%
1.0%
SMALL COMPANY VALUE PORTFOLIO 0.6% - 1.3%
1.0%
SMALL COMPANY STOCK PORTFOLIO 0.4% - 0.9%
0.6%
SMALL CAP VALUE PORTFOLIO 0.4% - 0.9%
0.6%
INTERNATIONAL STYLE 3.8% - 8.3%
6%
INTERNATIONAL PORTFOLIO 3.0% - 8.3%
5.7%
SCHRODER EM CORE PORTFOLIO 0% - 1.7%
0.3%
-------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
<PAGE>
GROWTH BALANCED FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund currently invests in 14 Portfolios.
<PAGE>
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund. This allocation is intended to reduce
the risk of relying on a single fixed income investment style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED EQUITY FUND STYLE 45% - 85%
65%
INDEX PORTFOLIO 11.3% - 21.3%
16.3%
INCOME EQUITY PORTFOLIO 11.3% - 21.3%
16.3%
LARGE COMPANY STYLE 11.3% - 21.3%
16.3%
LARGE COMPANY GROWTH PORTFOLIO 9.0% - 17.0%
13.0%
DISCIPLINED GROWTH PORTFOLIO 2.3% - 4.3%
3.3%
DIVERSIFIED SMALL CAP STYLE 4.5% - 8.5%
6.5%
SMALL CAP INDEX PORTFOLIO 0.9% - 1.7%
1.3%
SMALL COMPANY GROWTH PORTFOLIO 1.1% - 2%
1.6%
SMALL COMPANY VALUE PORTFOLIO 1.1% - 2%
1.6%
SMALL COMPANY STOCK PORTFOLIO 0.7% - 1.4%
1.0%
SMALL CAP VALUE PORTFOLIO 0.8% - 1.4%
1.0%
INTERNATIONAL STYLE 6.8% - 12.8%
9.8%
INTERNATIONAL PORTFOLIO 5.4% - 12.8%
9.3%
SCHRODER EM CORE PORTFOLIO 0% - 2.6%
0.5%
DIVERSIFIED BOND FUND STYLE 15% - 55%
35%
MANAGED FIXED INCOME PORTFOLIO 7.5% - 27.5%
17.5%
STRATEGIC VALUE BOND PORTFOLIO 2.5% - 9.2%
5.8%
POSITIVE RETURN BOND PORTFOLIO 5% - 18.3%
11.7%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Reverage Risk Market Risk
Prepayment Risk Small Company Risk
</TABLE>
AGGRESSIVE BALANCED-EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund has the largest equity securities position of the Balanced Funds.
The Fund currently invests in 14 Portfolios.
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund. This allocation is intended to reduce
the risk of relying on a single fixed income investment style.
<PAGE>
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED EQUITY FUND STYLE 60% - 100%
80%
INDEX PORTFOLIO 15% - 25%
20%
INCOME EQUITY PORTFOLIO 15% - 25%
20%
LARGE COMPANY STYLE 15% - 25%
20%
LARGE COMPANY GROWTH PORTFOLIO 12% - 20%
16%
DISCIPLINED GROWTH PORTFOLIO 3% - 5%
4%
DIVERSIFIED SMALL CAP STYLE 6% - 10%
8%
SMALL CAP INDEX PORTFOLIO 1.2% - 2%
1.6%
SMALL COMPANY GROWTH PORTFOLIO 1.4% - 2.4%
1.9%
SMALL COMPANY VALUE PORTFOLIO 1.4% - 2.4%
1.9%
SMALL COMPANY STOCK PORTFOLIO 1% - 1.6%
1.3%
SMALL CAP VALUE PORTFOLIO 1% - 1.6%
1.3%
INTERNATIONAL STYLE 9% - 15%
12%
INTERNATIONAL PORTFOLIO 7.2% - 15%
11.4%
SCHRODER EM CORE PORTFOLIO 0% - 3%
0.6%
DIVERSIFIED BOND FUND STYLE 0% - 40%
20.0%
MANAGED FIXED INCOME PORTFOLIO 0% - 20%
10.0%
STRATEGIC VALUE BOND PORTFOLIO 0% - 6.7%
3.3%
POSITIVE RETURN BOND PORTFOLIO 0% - 13.3%
6.7%
----------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
[EQUITY FUNDS ICON]
EQUITY FUNDS
INDEX FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to replicate the
return of the S&P 500 Index.
INVESTMENT POLICIES. The Fund is designed to replicate the return of the
S&P 500 Index with minimum tracking error and to minimize transaction
costs. Under normal circumstances, the Fund holds stocks representing 100%
of the capitalization-weighted market values of the S&P 500 Index. The
Adviser generally executes portfolio transactions for the Fund only to
replicate the composition of the S&P 500 Index, to invest cash received
from portfolio security dividends or investments in the Fund, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts to a limited
<PAGE>
extent. For these and other reasons, the Fund's performance can be expected
to approximate but not equal the S&P 500 Index.
The S&P 500 Index tracks the total return performance of 500 common stocks
which are chosen for inclusion in the S&P 500 Index by S&P on a statistical
basis. 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 S&P 500 Index is weighted by its market
value. Because of the market-value weighting, the 50 largest companies in
the S&P 500 Index currently account for approximately 47% of its value. The
S&P 500 Index emphasizes large capitalizations and, typically, companies
included in the S&P 500 Index are the largest and most dominant firms in
their respective industries.
S&P does not sponsor, sell, promote, or endorse the Fund. S&P does not
warrant that the S&P 500 Index is a good investment, is accurate or
complete, or will track general stock market performance.
[INVESTMENT POLICIES AND OBJECTIVES TAB]
[RISK ICON]
Market Risk Index Risk
INCOME EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation consistent with above-average dividend
income.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have above-average return
potential based on current market valuations. The Fund primarily emphasizes
investments in securities of companies with above-average dividend income.
In selecting securities for the Fund, the Adviser uses various valuation
measures, including above-average dividend yields and below industry
average price-to-earnings, price-to-book and price-to-sales ratios. The
Adviser considers large companies to be those whose market capitalization
is greater than the median of the Russell 1000 Index.
The Fund may invest in preferred stock, convertible securities, and
securities of foreign companies. The Fund will not normally invest more
than 10% of its total assets in the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
<PAGE>
VALUGROWTH STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation.
INVESTMENT POLICIES. The Fund invests primarily in medium- and
large-capitalization companies that, in the view of the Adviser, possess
above average growth characteristics and appear to be undervalued. The
Adviser considers medium-capitalization companies to be those whose Market
Capitalization is in the range of $500 million to $8 billion. The Adviser
considers large companies to be those whose Market Capitalization is
greater than the median of the Russell 1000 Index.
The Fund seeks to identify and invest in those companies with earnings and
dividends that the Adviser believes will grow faster than both inflation
and the economy in general. The Fund invests in companies with growth
potential that, in the opinion of the Adviser, has not yet been fully
reflected in the market price of the companies' shares. In seeking these
investments, the Adviser relies primarily on a company-by-company analysis
(rather than on a broader analysis of industry or economic sector trends).
The Adviser 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,
the maintenance of a relatively high rate of return on invested capital,
and shareholder's equity. Once companies are identified as possible
investments, the Adviser 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 may invest in companies that the Adviser considers to be "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 form a comparatively small portion of the Fund's portfolio.
The Fund may invest up to 20% of its total assets in securities of foreign
companies. The Fund also may write covered call options and purchase call
options on equity securities to manage risk or enhance returns.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in a single investment
style. The Fund currently invests in 11 Portfolios.
<PAGE>
The Fund's investments combine 5 different equity investment styles - an
index style, an income equity style, a large company style, a diversified
small cap style, and an international style. The Fund allocates the assets
dedicated to large company investments to 2 Portfolios, the assets
allocated to small company investments to 5 Portfolios, and the assets
dedicated to international investments to 2 Portfolios. Because Diversified
Equity Fund blends 5 equity investment styles, it is anticipated that its
price and return volatility will be less than that of Growth Equity Fund,
which blends 3 equity investment styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
----------------- ---------- ----------
INDEX PORTFOLIO 23.5% - 26.5%
25%
INCOME EQUITY PORTFOLIO 23.5% - 26.5%
25%
LARGE COMPANY STYLE 23.5% - 26.5%
25%
LARGE COMPANY GROWTH PORTFOLIO 18.5% - 21.5%
20%
DISCIPLINED GROWTH PORTFOLIO 3.5% - 6.5%
5%
DIVERSIFIED SMALL CAP STYLE 8.5% - 11.5%
10%
SMALL CAP INDEX PORTFOLIO 0.5% - 3.5%
2.0%
SMALL COMPANY GROWTH PORTFOLIO 0.9% - 3.9%
2.4%
SMALL COMPANY VALUE PORTFOLIO 0.9% - 3.9%
2.4%
SMALL COMPANY STOCK PORTFOLIO 0.1% - 3.1%
1.6%
SMALL CAP VALUE PORTFOLIO 0.1% - 3.1%
1.6%
INTERNATIONAL STYLE 13.5% - 16.5%
15%
INTERNATIONAL PORTFOLIO 10.8% - 16.5%
14.3%
SCHRODER EM CORE PORTFOLIO 0% - 3.3%
0.8%
----------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
</TABLE>
100%
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market value. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
GROWTH EQUITY FUND
[INVESTMENT OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a high level
of long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed to
reduce the volatility and risk of investing in a single equity style. The Fund
currently invests in 8 Portfolios.
<PAGE>
The Fund's investments combine 3 different equity styles - a large company
growth style, a diversified small cap style, and an international style. The
Fund allocates the assets dedicated to small company investments to 5 Portfolios
and the assets dedicated to international investments to 2 Portfolios. It is
anticipated that the Fund's price and return volatility will be somewhat greater
than those of Diversified Equity Fund, which blends 5 equity styles.
ALLOCATION. The current allocations and ranges of investments by the Fund in
each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE LOCATION INVESTMENT
---------------- -------- ----------
LARGE COMPANY GROWTH PORTFOLIO 35% 33% - 37%
DIVERSIFIED SMALL CAP STYLE 35% 33% - 37%
SMALL CAP INDEX PORTFOLIO 5.0% - 9.0%
7.0%
SMALL COMPANY GROWTH PORTFOLIO 8.5% - 12.5%
8.4%
SMALL COMPANY VALUE PORTFOLIO 8.5% - 12.5%
8.4%
SMALL COMPANY STOCK PORTFOLIO 3.6% - 7.6%
5.6%
SMALL CAP VALUE PORTFOLIO 3.6% - 7.6%
5.6%
INTERNATIONAL STYLE 30% 28% - 32%
INTERNATIONAL PORTFOLIO 22.4% - 32.0%
28.5%
SCHRODER EM CORE PORTFOLIO 0% - 6.4%
1.5%
---------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
LARGE COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing primarily in large,
high-quality domestic companies that the Adviser believes have superior
growth potential.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have superior growth potential.
The Adviser considers large companies to be those whose Market
Capitalization is greater than the median of the Russell 1000 Index. In
selecting securities for the Fund, the Adviser seeks issuers whose stock is
attractively valued with fundamental characteristics that are significantly
better than the market average and support internal earnings growth
capability. The Fund may invest in the securities of companies whose growth
potential is, in the Adviser's opinion, generally unrecognized or
misperceived by the market.
<PAGE>
The Fund may invest up to 20% of its total assets in the securities of
foreign companies and may hedge against currency risk by using foreign
currency forward contracts. The Fund may not invest more than 10% of its
total assets in the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED SMALL CAP FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments across different small capitalization equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in small capitalization
equity securities. The Fund invests in several different small
capitalization equity styles in order to reduce the risk of price and
return volatility associated with reliance on a single investment style.
The Fund currently invests in 5 Portfolios.
[[INVESTMENT OBJECTIVES AND POLICIES TAB]
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- ----------
SMALL CAP INDEX PORTFOLIO 18.5% - 21.5%
20%
SMALL COMPANY GROWTH PORTFOLIO 22.5% - 25.5%
24%
SMALL COMPANY VALUE PORTFOLIO 22.5% - 25.5%
24%
SMALL COMPANY STOCK PORTFOLIO 14.5% - 17.5%
16%
SMALL CAP VALUE PORTFOLIO 14.5% - 17.5%
16%
------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
<PAGE>
SMALL COMPANY STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small- and medium-size domestic companies that have Market Capitalizations
well below that of the average company in the S&P 500 Index. The Adviser
considers small companies to be those companies whose Market
Capitalizations are less than the largest stock in the Russell 2000 Index.
The Adviser considers medium companies to be those whose Market
Capitalizations range from $500 million to $8 billion.
In selecting securities for the Fund, the Adviser seeks securities with
significant price appreciation potential and attempts to identify companies
that show above-average growth, as compared to long-term overall market
growth. The Fund invests in companies that 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 the Adviser, may result in
an enhanced entrepreneurial spirit and greater focus. The Adviser believes
that such companies may develop into significant business enterprises and
that an investment in these companies offers a greater opportunity for
capital appreciation than an investment in larger, more established
companies.
The Fund may invest up to 20% of its total assets in the securities of
foreign companies. The Fund may write covered call options and purchase
call options on equity securities to manage risk or enhance returns.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL CAP OPPORTUNITIES FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in equity securities of
U.S. companies that, at the time of purchase, have Market Capitalizations
of $1.5 billion or less.
The Adviser attempts to identify securities of companies that it believes
can generate above-average earnings growth and sell at favorable prices in
relation to book values and earnings. The Adviser's assessment of a
company's management's competence will be an important consideration. These
criteria are not rigid and the Fund may make other investments to achieve
its objective.
The Fund will invest principally in equity securities, including common
stocks, securities convertible into common stocks or, subject to special
limitations, rights or warrants to subscribe for or purchase common stocks.
The Fund also may invest to a limited degree in non-convertible debt
securities and preferred stocks.
<PAGE>
The Fund may use options and futures contracts to manage risk. The Fund
also may use options to enhance return.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
SMALL COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing in smaller domestic companies.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small and medium-sized domestic companies that are either growing rapidly
or completing a period of significant change. Small companies are those
companies whose Market Capitalization is less than the largest stock in the
Russell 2000 Index.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
In selecting securities for the Fund, the Adviser seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by
undergoing a dramatic change. These changes may involve a sharp increase in
earnings, the hiring of new management or measures taken to close the gap
between share price and takeover/asset value.
The Fund will invest up to 10% of its total assets in securities of foreign
companies. The Fund will not invest more than 10% of its total assets in
the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
INTERNATIONAL FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing directly or indirectly in
high-quality companies based outside the United States.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in international
securities. The Fund's investment portfolio combines 2 different investment
styles - an international equity investment style and an international
emerging markets investment style. The Fund invests in 2 Portfolios.
<PAGE>
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- -----------
INTERNATIONAL PORTFOLIO 95% 80% - 100%
SCHRODER EM CORE PORTFOLIO 5% 0% - 20%
----------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
DESCRIPTIONS OF PORTFOLIOS
MONEY MARKET PORTFOLIO and PRIME MONEY MARKET PORTFOLIO
The Cash Investment Fund and Ready Cash Investment Fund section of this
prospectus describes these Portfolios.
POSITIVE RETURN BOND PORTFOLIO
The Portfolio seeks to produce a positive total return each calendar year
regardless of general bond market performance by investing in a portfolio
of U.S. Government Securities and corporate fixed income securities. The
Portfolio's assets are divided into 2 components, short bonds with
maturities (or average life) of 2 years or less and long bonds with
maturities of 25 years or more. Shifts between short bonds and long bonds
are made based on movement in the prices of bonds rather than on the
Adviser's forecast of interest rates. During periods of falling prices
(generally, increasing interest rate environments) long bonds are sold to
protect capital and limit losses. Conversely, when bond prices rise, long
bonds are purchased. The average dollar-weighted maturity of the Portfolio
will vary between 1 and 30 years.
Under normal circumstances, the Portfolio invests at least 50% of its net
assets in U.S. Government Securities, including U.S. Treasury Securities.
The Portfolio only purchases securities that are rated, at the time of
purchase, within 1 of the 2 highest long-term rating categories assigned by
an NRSRO or that are unrated and determined by the
<PAGE>
Adviser to be of comparable quality. The Portfolio may invest up to 25% of
its assets in securities rated in the second highest rating category. The
Portfolio does not invest more than 25% of its total assets in zero-coupon
securities, securities with variable or floating rates of interest, or
asset-backed securities.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
STABLE INCOME PORTFOLIO
The Stable Income Fund section of this prospectus describes this Portfolio.
MANAGED FIXED INCOME PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks consistent fixed income returns by investing primarily
in Investment Grade intermediate-term securities. The Portfolio invests in
a diversified portfolio of fixed and variable rate U.S. dollar-denominated,
fixed income securities of a broad spectrum of U.S. and foreign issuers,
including U.S. Government Securities, and the debt securities of financial
institutions, corporations, and others. The Adviser emphasizes the use of
intermediate maturity securities to lessen Duration and employs low risk
yield enhancement techniques to enhance return over a complete economic or
interest rate cycle. The Adviser considers intermediate-term securities to
be those with maturities of between 2 and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to
not more than 65% of its total assets and its investment in other
asset-backed securities to not more than 25% of its net assets. In
addition, the Portfolio may not invest more than 30% of its total assets in
the securities issued or guaranteed by any single agency or instrumentality
of the U.S. Government, except the U.S. Treasury.
The Portfolio only purchases Investment Grade securities. The Portfolio
normally will have an average dollar-weighted portfolio maturity of between
3 and 12 years and a Duration of between 2 and 6 years.
The Portfolio also may invest up to 10% of its total assets in securities
issued or guaranteed by foreign governments the Adviser deems stable, or
their subdivisioins, agencies, or instrumentalities; loan or security
participations; securities of supranational organizations; and Municipal
Securities.
The Portfolio may use options, swap agreements, interest rate caps, floors
and collars, and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
STRATEGIC VALUE BOND PORTFOLIO
The Total Return Bond Fund section of this prospectus describes this
Portfolio. Total Return Bond Fund invests all its assets in this Portfolio.
The only difference between the Fund and the Portfolio is that the
Portfolio's investment objective is to seek total return by investing
primarily in income producing securities.
INDEX PORTFOLIO
The Index Fund section of this prospectus describes this Portfolio.
INCOME EQUITY PORTFOLIO
The Income Equity Fund section of this prospectus describes this Portfolio.
LARGE COMPANY GROWTH PORTFOLIO
The Large Company Growth Fund section of this prospectus describes this
Portfolio.
DISCIPLINED GROWTH PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
larger companies. The Portfolio seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Portfolio invests
in companies with average Market Capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level
of corporate earnings that exceed the level expected by investors. In
seeking these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider, among other factors, changes of
earnings estimates by investment analysts, the recent trend of company
earnings reports, and an analysis of the fundamental business outlook for
the company. The Adviser uses a variety of valuation measures to determine
whether or not the share price already reflects any positive fundamentals
identified by the Adviser. In addition to approximately equal weighting of
portfolio securities, the Adviser attempts to constrain the variability of
the investment returns by employing risk control screens for price
volatility, financial quality, and valuation.
[RISK ICON
Market Risk
<PAGE>
SMALL CAP INDEX PORTFOLIO
The Portfolio seeks to replicate the return of the S&P 600 Small Cap Index
with minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio will hold stocks representing 100% of the
capitalization-weighted market values of the S&P 600 Small Cap Index. The
Adviser generally executes portfolio transactions only to replicate the
composition of the S&P 600 Small Cap Index, to invest cash received from
portfolio security dividends or investments in the Portfolio, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal that of the S&P
600 Small Cap Index.
The S&P 600 Small Cap Index tracks the total return performance of 600
common stocks which are chosen for inclusion in the S&P 600 Small Cap Index
by S&P on a statistical basis. The 600 securities, most of which trade on
the New York Stock Exchange, represent 4% of the total market value of all
U.S. common stocks. Each stock in the S&P 600 Small Cap Index is weighted
by its market value. The S&P 600 Small Cap Index emphasizes smaller
capitalizations and typically, companies included in the S&P 600 Small Cap
Index may not be the largest nor most dominant firms in their respective
industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 600 Small Cap Index is a good investment, is accurate
or complete, or will track general stock market performance.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Leverage Risk Market Risk Index Risk
Small Company Risk
SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Fund section of this prospectus describes this
Portfolio.
SMALL COMPANY GROWTH PORTFOLIO
The Small Company Growth Fund section of this prospectus describes this
Portfolio.
SMALL COMPANY VALUE PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
primarily in smaller companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index. The Adviser focuses on securities
that are conservatively valued in the marketplace relative to the stock of
comparable companies, determined by price/earnings ratios, cash flows, or
other measures. Value investing provides investors with a less aggressive
way to take advantage of growth
<PAGE>
opportunities of small companies. Value investing may reduce downside risk
and offer potential for capital appreciation as a stock gains favor among
other investors and its stock price rises.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
Small Company Risk
SMALL CAP VALUE PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
smaller companies. The Portfolio will normally invest substantially all of
its assets in securities of companies with Market Capitalizations that
reflect the Market Capitalization of companies included in the Russell 2000
Index. The Portfolio seeks higher growth rates and greater long-term
returns by investing primarily in the common stock of smaller companies
that the Adviser believes to be undervalued and likely to report a level of
corporate earnings exceeding the level expected by investors. The Adviser
values companies based upon both the price-to-earnings ratio of the company
and a comparison of the public market value of the company to a proprietary
model that values the company in the private market. In seeking companies
that will report a level of earnings exceeding that expected by investors,
the Adviser uses both quantitative and fundamental analysis. Among other
factors, the Adviser considers changes of earnings estimates by investment
analysts, the recent trend of company earnings reports, and the fundamental
business outlook for the company.
[RISK ICON]
Market Risk Small Company Risk
INTERNATIONAL PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
directly or indirectly in high-quality companies based outside the United
States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio also may invest in the securities of domestic closed-end
investment companies that invest primarily in foreign securities and may
invest in debt securities of foreign governments or their political
subdivisions, agencies, or instrumentalities, of supranational
organizations, and of foreign corporations. The Portfolio's investments are
generally diversified among securities of issuers in foreign countries
including, but not limited to, Japan, Germany, the United Kingdom, France,
the Netherlands, Hong Kong, Singapore, and Australia. In general, the
Portfolio will invest only in securities of companies and governments in
countries that the Adviser, in its judgment, considers both politically and
economically stable. The Fund may invest more than 25% of its total assets
in investments in a particular country, region, or type of investment.
<PAGE>
The Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The 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.
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
SCHRODER EM CORE PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks to achieve long-term capital appreciation through
direct or indirect investment in equity and debt securities of companies in
emerging market countries in regions such as Southeast Asia, Latin America,
and Eastern and Southern Europe. Current income is incidental to the
Portfolio's objective.
The Portfolio may invest, under normal market conditions, at least 65% of
its total assets in emerging market equity and debt securities, including
convertible securities and stock rights, and warrants.
The Adviser considers "emerging market" countries generally to be all those
countries not included in the Morgan Stanley Capital International World
Index ("MSCI World") of major world economies. If the Adviser determines
that the economy of a MSCI World-listed country is an emerging market
economy, the Adviser may include such country in the emerging market
category. The Portfolio will not necessarily seek to diversify investments
on a geographic basis and may invest more than 25% of its total assets in
issuers located in a single country.
The Fund may invest up to 35% of its total assets in Non-Investment Grade
fixed income securities. The Fund may enter into foreign exchange
contracts, including forward contracts, in anticipation of its currency
requirements and to protect against possible adverse movements in foreign
exchange rates.
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
- --------------------------------------------------------------------------------
5. RISK CONSIDERATIONS [SPREADSHEETS]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds.
Each Fund's exposure to these risks depends upon its specific investment
profile. The Fund's description in INVESTMENT OBJECTIVES AND POLICIES lists
the Fund's principal risks.
[RISK ICON]
CREDIT RISK
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
[RISK ICON]
CURRENCY RATE RISK
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments.
[RISK ICON]
DIVERSIFICATION RISK
The risk that investment in a comparatively small number of issuers will
increase the potential adverse effects of a decline in the value of a
Fund's investment in a single issuer.
[RISK ICON]
FOREIGN RISK
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization,
increased taxation, or confiscation of investors' assets. Also, the risk
that the price of a foreign issuer's securities may not reflect the
issuer's condition because there is not sufficient publicly available
information about the issues. This risk may be greater for investments in
issuers in emerging or developing markets.
[RISK ICON]
GEOGRAPHIC CONCENTRATION RISK
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
[RISK ICON]
INDEX RISK
The risk that a Fund designed to replicate the performance of an index of
securities will replicate the performance of the index during adverse
market conditions because the portfolio manager is not permitted to take a
temporary defensive position or otherwise vary the Fund's investments to
respond to the adverse market conditions.
<PAGE>
[RISK ICON]
INTEREST RATE RISK
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including Municipal Securities and
U.S. Government Securities, an increase in interest rates typically causes
the value of a Fund's fixed-rate securities to fall, while a decline in
interest rates may produce an increase in the market value of the
securities. Because of this risk, an investment in a Fund that invests in
fixed income securities is subject to risk even if all the fixed income
securities in the Fund's portfolio are paid in full at maturity. Changes in
interest rates will affect the value of longer-term fixed income securities
more than shorter-term securities.
[RISK ICON]
LEVERAGE RISK
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
[RISK ICON]
MARKET RISK
[RISK CONSIDERATIONS TAB]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry or section of the economy, or may affect the market
as a whole.
[RISK ICON]
PREPAYMENT RISK
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
[RISK ICON]
SMALL COMPANY RISK
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
- --------------------------------------------------------------------------------
6. COMMON POLICIES [PC SCREENS]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
VOTING ISSUES
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that
shareholders of Funds with comparatively high net asset values will have a
comparatively smaller impact on the outcome of votes by all of the Funds
than do shareholders of Funds with comparatively low net asset values.
DOWNGRADED SECURITIES
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's 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
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective.
When a Tax-Free Fixed Income Fund assumes a temporary defensive position,
it is likely that its shareholders may be subject to federal and applicable
state income taxes on a greater portion of the Fund's income distributions.
PORTFOLIO TRANSACTIONS
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. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. THE FINANCIAL HIGHLIGHTS TABLE lists each Fund's portfolio turnover
rate.
<PAGE>
YEAR 2000 AND EURO
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers(and in particular, foreign service
providers)to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
[COMMON POLICIES TAB]
<PAGE>
- --------------------------------------------------------------------------------
7. MANAGEMENT OF THE FUNDS [SPREADSHEET]
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio except the Portfolios advised by Schroder. In this
capacity, Norwest makes investment decisions for and administers the Funds'
and Portfolios' investment programs. Norwest Investment Management, Inc.'s
address is Norwest Center, Sixth Street and Marquette, Minneapolis, MN
55479.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. is the investment adviser
for the Schroder U.S. Smaller Companies Portfolio, International Portfolio,
and Schroder EM Core Portfolio. In this capacity, Schroder makes investment
decisions for and administers those Portfolios' investment programs.
Schroder Capital Management International Inc.'s address is 787 Seventh
Avenue, 34th Floor0 New York, NY 10019.
Norwest and certain of the Funds and the Portfolios have retained
investment subadvisers to make investment decisions for and administer the
investment programs of those Funds and Portfolios. Norwest decides which
portion of the assets of a Fund or Portfolio the subadviser should manage
and supervises the subadvisers' performance of their duties. The
subadvisers are:
CRESTONE CAPITAL MANAGEMENT, INC. or CRESTONE, An Inveestment Advisory
subsidiary of Norwest Bank, provides investment advice regarding companies
with small market capitalization to various clients, including
institutional investors. Crestone Capital Management, Inc.'s address is
7720 East Bellview Avenue, Suite 220, Englewood, CO 80111.
GALLIARD CAPITAL MANAGEMENT, INC. or GALLIARD, an investment advisory
subsidiary of Norwest Bank, provides investment advisory services to bank
and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations, and corporate and other business entities.
GALLIARD CAPITAL MANAGEMENT, INC.'s address is 800 Lasalle Ave. Suite 2060,
Minneapolis, MN 55479.
PEREGRINE CAPITAL MANAGEMENT, Inc. or Peregrine, an investment advisory
subsidiary of Norwest Bank, provides investment advisory services to
corporate and public pension plans, profit sharing plans,
savings-investment plans, and 401(K) plans. Peregrine Capital Management,
Inc's address is Lasalle Plaza, 800 Lasalle Avenue, Suite 1850,
Minneapolis, MN 55402.
SMITH ASSET MANAGEMENT GROUP, L.P. or SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies, and
high net worth individuals using a disciplined equity style. Smith Asset
Management Group, L.P.'s address is 300 Crescent Court, Suite 750, Dallas,
TX 75201
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments. The
year a portfolio manager began managing a Fund or Portfolio follows the
manager's name in parenthesis. The list
<PAGE>
includes the investment advisory fees payable to Norwest or Schroder by the
Fund and by any Portfolios in which it invests. The list states the
investment advisory fees on an annualized basis as a percentage of a Fund's
or Portfolio's average daily net assets. Descriptions of the portfolio
managers' recent experience follow the list of portfolio managers and
advisory fees.
How investment advisory fees are paid depends on whether or not a Fund
invests in Portfolios.
* If a Fund invests directly in a portfolio of securities, Norwest
receives an investment advisory fee directly from the Fund.
* If a Fund invests in a single Portfolio, Norwest or Schroder receives
an investment advisory fee from the Portfolio.
* If a Fund invests in more than 1 Portfolio, Norwest or Schroder
receives an investment advisory fee from each of those Portfolios. In
addition, Norwest receives a fee from each Fund, except Cash
Investment Fund, for the "asset allocation services" of determining
the Funds' investments in the Portfolios and how much of the Fund's
assets to invest in each Portfolio.
If a Fund invests in more than 1 Portfolio, the total amount of the
investment advisory fee paid to Norwest or Schroder as a result of the
Fund's investments varies depending on how much of the Fund's assets are
invested in, and the investment advisory fee payable to, each Portfolio.
Norwest (and not the Funds or Portfolios) pays the subadvisers' investment
subadvisory fees. The investment subadvisory fees do not increase the
amount of the investment advisory fees paid to Norwest by the Funds or
Portfolios.
[MONEY MARKET FUNDS ICON] [MANAGEMENT OF THE FUNDS TAB]
MONEY MARKET FUNDS
<TABLE>
<S> <C> <C>
CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400 million; and 0.32%
- remaining
PORTFOLIO: MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.20% - first $300 million; 0.16% - next $400 million, and
0.12% - remaining
READY CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1988), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400 million; and
0.32% - remaining
</TABLE>
<PAGE>
MONEY MARKET FUNDS - CONTINUED
[MONEY MARKET FUNDS ICON]
<TABLE>
<S> <C> <C>
U.S. GOVERNMENT FUND
TREASURY FUND
TREASURY PLUS FUND
PORTFOLIO MANAGERS: David D. Sylvester (1987, 1990, 1998), Laurie R. White (1991,
1991, 1998), and Robert G. Leuty (1998)
ADVISORY FEE: FOR EACH FUND: 0.20% - first $300 million; 0.16% - next $400
million; and 0.12% - remaining
MUNICIPAL MONEY MARKET FUND
PORTFOLIO MANAGERS: David D. Sylvester (1995), Laurie R. White (1998), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.35% - first $500 million; 0.325% - next $500 million; and
0.30% - remaining
FIXED INCOME FUNDS
[FIXED INCOME FUNDS ICON]
STABLE INCOME FUND
PORTFOLIO: STABLE INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Karl P. Tourville (1994) and John Huber (1998)
ADVISORY FEE: 0.30%
LIMITED TERM GOVERNMENT INCOME FUND
INTERMEDIATE GOVERNMENT INCOME FUND
PORTFOLIO MANAGER: Marjorie H. Grace, CFA (1997, 1995)
ADVISORY FEE: FOR EACH FUND: 0.33%
DIVERSIFIED BOND FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns, CFA (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
</TABLE>
<PAGE>
FIXED INCOME FUNDS - CONTINUED
[FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
ADVISORY FEE: 0.35%
INCOME FUND
PORTFOLIO MANAGER: Marjorie H. Grace, CFA (1996)
ADVISORY FEE: 0.50%
TOTAL RETURN BOND FUND
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1998), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
STRATEGIC INCOME FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese (1994), CFA and Patricia Burns (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STABLE INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGER: Karl P. Tourville (1994) and John Huber (1998)
ADVISORY FEE: 0.30%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1991), Laurie R. White (1991), and Robert
G. Leuty (1998)
ADVISORY FEES: 0.20% - first $300 million; 0.16% - next $400 million; and
0.12% - remaining
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994), and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
</TABLE>
<PAGE>
FIXED INCOME FUNDS - CONTINUED
[FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994), and Paul E. von Kuster, CFA
(1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh, CFA (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown,.CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
<PAGE>
TAX-FREE FIXED INCOME FUNDS
[TAX-FREE FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
LIMITED TERM TAX-FREE FUND
TAX-FREE INCOME FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1996, 1993)
ADVISORY FEE: for each Fund: 0.50%
COLORADO TAX-FREE FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1993)
ADVISORY FEE: 0.50% -first $300 million; 0.46% - next $400 million; and 0.42%
- remaining
MINNESOTA INTERMEDIATE TAX-FREE FUND
MINNESOTA TAX-FREE FUND
PORTFOLIO MANAGER: Patricia D. Hovanetz, CFA (1997, 1991)
ADVISORY FEE: MINNESOTA INTERMEDIATE TAX-FREE FUND: 0.25%
MINNESOTA TAX-FREE FUND:
0.50% - first $300 million;
0.46% - next $400 million; and 0.42% -
remaining
</TABLE>
BALANCED FUNDS
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C>
MODERATE BALANCED FUND
GROWTH BALANCED FUND
AGGRESSIVE BALANCED-EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STABLE INCOME PORTFOLIO (MODERATE BALANCED FUND ONLY)
SUBADVISER: GALLIARD
PORTFOLIO MANAGER: Karl P. Tourville (1994), and John Huber (1998)
ADVISORY FEE: 0.30%
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
</TABLE>
<PAGE>
BALANCED FUNDS - CONTINUED
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C> <C>
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin (1995), Jr.and Douglas G. Pugh (1997)
Advisory Fee: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
<PAGE>
EQUITY FUNDS
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C>
INDEX FUND
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
INCOME EQUITY FUND
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary Dunn (1994)
ADVISORY FEE: 0.50%.
VALUGROWTH STOCK FUND
PORTFOLIO MANAGER: David S. Lunt, CFA (1996)
ADVISORY FEE: 0.80% - first $300 million; 0.76% - next $400 million; 0.72% -
remaining
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INDEX PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY) AND
SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
EQUITY FUNDS - CONTINUED
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C>
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND - CONTINUED
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
LARGE COMPANY GROWTH FUND
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
DIVERSIFIED SMALL CAP FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%.
</TABLE>
<PAGE>
EQUITY FUNDS - CONTINUED
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C> <C>
DIVERSIFIED SMALL CAP FUND - CONTINUED
PORTFOLIOS: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: 0.95%
SMALL COMPANY STOCK FUND
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
SMALL CAP OPPORTUNITIES FUND
PORTFOLIO: SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Ira L. Unschuld (1998)
ADVISORY FEE: 0.60%
SMALL COMPANY GROWTH FUND
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
INTERNATIONAL FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
PORTFOLIO MANAGERS
Norwest Portfolio Managers:
PATRICIA BURNS, associated with Norwest or its affiliates since 1983.
Ms. Burns is a Senior Vice-President of Peregrine and has been a
portfolio manager at Peregrine for more than ten years.
TASSO H. COIN, JR., associated with Norwest or its affiliates since
1995. Mr. Coin has been a Senior Vice President of Peregrine since
1995. From 1992 to 1995, Mr. Coin was a research officer at Lord Asset
Management.
JOHN S. DALE, associated with Norwest or its affiliates since 1968.
Mr. Dale is a Senior Vice President of Peregrine.
WILLIAM D. GIESE, associated with Norwest or its affiliates since
1982. Mr. Giese is a Senior Vice President of Peregrine, has been a
portfolio manager at Peregrine for more than ten years, and has more
than 20 years' experience in fixed income securities management.
MARJORIE H. GRACE, associated with Norwest or its affiliates since
1992. Ms. Grace is a Director, Taxable Fixed Income of Norwest.
PATRICIA D. HOVANETZ, associated with Norwest or its affiliates since
1966. Ms. Hovanetz is a Director-Tax-Exempt Fixed Income of Norwest
and has been associated with Norwest or Norwest Bank for more than 25
years in capacities related to municipal bond investments.
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr.
Huber has been a portfolio manager and Corporate Trading Specialist at
Galliard since 1995 and has been in investment management since 1990.
WILLIAM T. JACKSON, associated with Norwest or its affiliates since
1993. Mr. Jackson is a Managing Director, Tax-Exempt Fixed Income of
Norwest.
ROBERT G. LEUTY, associated with Norwest or its affiliates since 1992.
Mr. Leuty is a Senior Portfolio Manager of Norwest.
DAVID S. LUNT, associated with Norwest or its affiliates since 1992.
Mr. Lunt is a Managing Director, Equities of Norwest.
KIRK MCCOWN, associated with Norwest or its affiliates since 1990. Mr.
McCown is the founder, President and a Director of Crestone.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995.
Mr. Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was
previously Chief Investment Officer of Insight Investment Management.
<PAGE>
ROBERT B. MERSKY, associated with Norwest or its affiliates since
1968. Mr. Mersky is the President of Peregrine.
AJAY MIRZA, associated with Norwest or its affiliates since 1995. Mr.
Mirza has been a Portfolio Manager and Mortgage Specialist with
Galliard since 1995. Before joining Galliard, Mr. Mirza was a research
analyst at Insight Investment Management and at Lehman Brothers.
GARY E. NUSSBAUM, associated with Norwest or its affiliates since
1990. Mr. Nussbaum is a Senior Vice President of Peregrine.
DOUGLAS G. PUGH, associated with Norwest or its affiliates since 1997.
Mr. Pugh is a Senior Vice President of Peregrine. Before joining
Peregrine, Mr. Pugh was a senior equity analyst and portfolio manager
for Advantus Capital Management and an analyst with Kemper
Corporation.
DAVID L. ROBERTS, associated with Norwest or its affiliates since
1972. Mr. Roberts is a Managing Director, Equities of Norwest.
STEPHEN S. SMITH, associated with Norwest or its affiliates since
1997. Mr. Smith has been a Chief Investment Officer and principal of
the Smith Group since 1995. Mr. Smith previously served as senior
portfolio manager with NationsBank and in several capacities with AIM
Management Company's Summit Fund.
DAVID D. SYLVESTER, associated with Norwest or its affiliates since
1979. Mr. Sylvester currently is a Managing Director - Reserve Asset
Management.
KARL P. TOURVILLE, associated with Norwest or its affiliates since
1986. Mr. Tourville has been a managing partner of Galliard since
1995.
PAUL E. VON KUSTER, associated with Norwest or its affiliates since
1972. Mr. Von Kuster is a Senior Vice President of Peregrine.
LAURIE R. WHITE, associated with Norwest or its affiliates since 1991.
Ms. White is a Director-Reserve Asset Management.
[MANAGEMENT OF THE FUNDS TAB]
DAVID YIM, associated with Norwest or its affiliates since 1995. Mr.
Yim has been a portfolio manager and Director of Investment Research
of Galliard since 1995 and previously worked for American Express
Financial Advisors as a Research Analyst.
Schroder Portfolio Managers:
MARK BRIDGEMAN, associated with Schroder or its affiliates since 1990.
Mr. Bridgeman is a Vice President of Schroder.
HEATHER CRIGHTON, associated with Schroder or its affiliates since
1992. Ms. Crighton is a Vice President of Schroder.
MICHAEL PERELSTEIN, associated with Schroder or its affiliates since
1997. Mr. Perelstein has been a Senior Vice President of Schroder
since January 1997. Previously Mr. Perelstein was a Managing Director
at MacKay Shields.
<PAGE>
JOHN A. TROIANO, associated with Schroders or its affiliates since
1981. Mr. Troiana has been Chief Executive Officer of Schroder since
April 1, 1997 and a Managing Director of Schrodes since October 1995.
IRA L. UNSCHULD, associated with Schroders or its affiliates since
1987. Mr. Unschuld is a Group Vice President.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment
adviser to manage any assets redeemed and invested directly by a
Fund that invests in 1 or more Portfolios. Norwest does not
receive any compensation under this arrangement as long as a Fund
invests entirely in Portfolios. If a Fund redeems assets from a
Portfolio and invests them directly, Norwest receives an
investment advisory fee from the Fund for the management of those
assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial,
administrative, and underwriting services to the Funds. NORWEST
BANK acts as the Funds' transfer agent, dividend disbursing
agent, and custodian.
<PAGE>
- --------------------------------------------------------------------------------
8. HOW TO BUY AND SELL SHARES [SPREADSHEET]
- --------------------------------------------------------------------------------
You may purchase or redeem shares at a price equal to their net asset value
next determined after receipt of your purchase order, or redemption request
in proper form on "Fund Business Days." Fund Business Days are all weekdays
except generally observed national holidays (New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Funds' transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. I Shares and Investor Shares require a minimum initial investment
of $1,000 and a minimum subsequent investments of $100. Institutional
Shares require a minimum initial investment of $100,000 and have no minimum
for subsequent investments.
If you purchase Money Market Fund shares, your shares become eligible to
receive distributions on the day that your order is accepted. If you
purchase shares of any other Fund, your shares become eligible to receive
distributions the Fund Business Day after a purchase order is received in
proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares. You will receive share certificates for your shares only if you
request them in writing. No certificates are issued for fractional shares.
If you purchase Money Market Fund shares, your order will not be complete
until the Fund receives immediately available funds. The Money Market Funds
must receive purchase and redemption orders before the times indicated
below.
Times indicated are Eastern Time.
Payment
Orders Must Be Must Be
Received By Received By
------------ -----------
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 Plus Fund 5:00 p.m. 5:00 p.m.
Treasury Fund 1:00 p.m. 4:00 p.m.
Municipal Money Market Fund Noon 4:00 p.m.
The Money Market Funds may advance the time by which purchase or redemption
orders and payments must be received 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 other circumstances affect a Fund's trading hours.
[HOW TO BUY AND SELL SHARES TAB]
<PAGE>
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification 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.
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as addresses). Norwest Advantage Funds may in the future
modify, limit or terminate any shareholder privilege upon appropriate
notice and may charge a fee for certain shareholder services, although no
such fees are currently contemplated. You may terminate your participation
in any shareholder program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds 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 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent, or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds, or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan, or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
<PAGE>
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares 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.
[HOW TO BUY AND SELL SHARES TAB]
Fund shares are redeemed as of the next determination of the Fund's net
asset value following receipt by the transfer agent of the redemption order
in proper form (and any supporting documentation that the transfer agent
may require). Redeemed Money Market Fund shares are not entitled to receive
distributions on the day on which the redemption is effective. Redeemed
shares of any other Fund are not entitled to receive distributions after
the day on which the redemption is effective.
Redemption orders for Money Market Fund shares are accepted up to the times
indicated above for acceptance of purchase orders of Money Market Fund
shares. As
<PAGE>
described above, the Money Market Funds may advance the times for receipt
of redemption orders.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days); (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by
<PAGE>
paying for shares with wire transfers. Unless otherwise indicated,
redemption proceeds normally are paid by check mailed to your record
address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations or other eligible
institutions. The specific institution must be 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.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
holding I Shares or Investor Shares with a net asset value of less than
$1,000 or any account holding Institutional Shares with a net asset value
of less than $100,000 immediately following any redemption.
<PAGE>
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signatures guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are transmitted by wire on the Fund Business Day of, in
the case of Money Market Funds, or after, in the case of other Funds, the
transfer agent receives a redemption request in proper form.
EXCHANGES
If you hold I Shares or Institutional Shares, you may exchange those shares
for I Shares or Institutional Shares of other Funds offering those shares.
If you hold Investor Shares, you may exchange those shares for Investor
Shares of the Funds offering Investor Shares or for a class of shares of
certain of the Funds that is not offered by this prospectus. Call or write
the transfer agent for more information.
[HOW TO BUY AND SELL SHARES TAB]
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees charged by, and the limitations (including minimum investment
restrictions) of the Fund into which you are exchanging.
<PAGE>
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a Fund only if that
Fund's shares legally may be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered and your Social Security number or other taxpayer identification
number.
<PAGE>
- --------------------------------------------------------------------------------
9. DISTRIBUTIONS AND TAX MATTERS [PC SCREENS]
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Distributions of net investment income are declared and paid as follows:
Declared daily and paid monthly: Each Money Market Fund,
Limited Term Government
Income Fund, Income Fund,
Total Return Bond Fund,
and each Tax-Free Fixed
Income Fund.
Declared and paid monthly: Stable Income Fund,
Intermediate Government
Income Fund, and
Diversified Bond Fund.
Declared and paid quarterly: Income Equity Fund,
ValuGrowth Stock Fund,
and Small Company Stock
Fund.
Declared and paid annually: Strategic Income Fund,
each Balanced Fund, Index
Fund, Diversified Equity
Fund, Growth Equity Fund,
Large Company Growth
Fund, Diversified Small
Cap Fund, Small Cap
Opportunities Fund, Small
Company Growth Fund, and
International Fund.
Each Fund's net capital gain, if any, is distributed at least
annually.
You have 3 choices for receiving distributions: the Reinvestment
Option, the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another
option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of
a Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another Fund. Call or write
the transfer agent for more information about the Directed
Dividend Option.
All distributions are treated in the same manner for federal income tax purposes
whether received in cash or reinvested in shares of a Fund. All distributions
reinvested in a Fund are reinvested at the Fund's net asset value as of the
payment date of the distribution.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions (other than distributions of net investment income of Funds
that distribute net investment income daily) reduce the net asset value of
the Fund paying the distribution by the amount of the distribution.
Furthermore, a distribution made shortly after you purchase shares,
although in effect a return of capital to you, is taxable.
FUNDS INVESTING IN FOREIGN SECURITIES
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. International
Fund intends, 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 and Schroder EM Core Portfolio. If you own shares
of International Fund, you will be notified of your share of those foreign
taxes and will be required to treat the amount of the foreign taxes as
additional income. In that event, you may be entitled to claim a credit or
deduction for those taxes on your federal income tax return.
TAX-EXEMPT DISTRIBUTIONS
Generally, you will not be subject to federal income tax on distributions
paid by Municipal Money Market Fund or by a Tax-Free Fixed Income Fund out
of tax-exempt interest income earned by the Fund ("exempt-interest
distributions"). If you use, or are related to someone who uses, facilities
financed by private activity bonds held by a Fund, you may be subject to
federal income tax on your pro rata share of the interest income from those
securities and should consult your tax adviser before purchasing shares.
Interest on certain private activity bonds is treated as an item of tax
preference for purposes of the federal AMT imposed on individuals and
corporations. In addition, exempt-interest distributions are included in
the "adjusted current earnings" of corporations for AMT purposes. As noted
above, the Municipal Money Market Fund and each Tax-Free Fixed Income Fund
may invest a portion of its assets in securities that generate income that
is not exempt from federal income tax. Further, capital gain, if any,
distributed by these Funds are subject to tax. If you borrow money to
purchase or carry shares of these Funds, the interest on your debt
generally is not deductible for federal income tax purposes. If shares are
sold at a loss after being held for six months or less, the loss will be
disallowed to the extent of any exempt-interest dividends received on those
shares.
<PAGE>
MUNICIPAL MONEY MARKET FUND, LIMITED-TERM TAX-FREE FUND, AND TAX-FREE
INCOME FUND. The federal income tax exemption on exempt-interest
distributions does not necessarily result in an exemption under the income
or other tax laws of any state or local taxing authority. You 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 you reside. You may, however, be subject to tax on distributions of
interest derived from the Municipal Securities of other jurisdictions.
Consult your tax adviser concerning the application of state and local
taxes to investments in a Fund that may differ from the federal income tax
consequences described above.
COLORADO TAX-FREE FUND. It is anticipated that substantially all of the
exempt interest distributions paid by the Fund to individuals will be
exempt from Colorado personal income tax. 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 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 AMT. Because the Fund may, except as indicated, purchase only
Colorado Municipal Securities, none of the exempt-interest distributions
paid by the Fund will be subject to Colorado income tax.
MINNESOTA INTERMEDIATE TAX-FREE FUND and MINNESOTA TAX-FREE FUND. It is
anticipated that substantially all of the exempt-interest distributions
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 distributions paid by
the Fund must be derived from Minnesota Municipal Securities in order for
any portion of the exempt-interest distributions paid by the Fund to be
exempt from the Minnesota personal income tax. Exempt-interest
distributions paid by the Fund to shareholders that are corporations are
subject to Minnesota franchise tax.
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. This 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 AMT on resident individuals is based in part on their income
for purposes of the federal AMT. Accordingly, individual shareholders of
the Fund may be subject to the Minnesota AMT on exempt-interest
distributions paid by the Fund which are attributable to interest received
by the Fund on certain private activity securities, even though those
distributions are exempt from the regular Minnesota personal income tax.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
- --------------------------------------------------------------------------------
10. OTHER INFORMATION [SPREADSHEET]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines its net asset value on each Fund Business Day by
dividing the value of its 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 determine their net asset
values at the following times:
Municipal Money Market Fund Noon, Eastern Time
Treasury Fund 1:00 p.m., Eastern Time
Cash Investment Fund, Ready Cash Investment 3:00 p.m., Eastern Time
Fund and U.S. Government Fund
Each Other Fund 4:00 p.m., Eastern Time
Treasury Plus Fund 5:00 p.m., Eastern Time
All Funds other than Money Market Funds value portfolio securities at
current market value if market quotations are readily available. If market
quotations are not readily available, the Funds value those securities at
fair value as determined by or pursuant to procedures adopted by the Board.
In order to maintain net asset value per share at $1.00, the Money Market
Funds (and the Portfolios in which they invest) value their portfolio
securities at amortized cost. Amortized cost valuation involves valuing an
instrument at its cost and then assuming a constant amortization to
maturity of any discount or premium. If the market value of a Money Market
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 to take any
action to prevent any material effect on shareholders.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies 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.
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund
bears its pro rata portion of the expenses of any Portfolio in which it
invests. The Board may redeem a Fund's investment in a Portfolio at any
time. The Fund could then invest directly in portfolio securities or could
re-invest in 1 or more different Portfolios that could have different fees
and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. 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.
[OTHER INFORMATION TAB]
<PAGE>
If you would like more information about the Funds and their investments, you
may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about each of the Funds,
such as its investments, management, and organization. It is incorporated into
this Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, each Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479 or by calling
1-800-338-1348 or 1-612-667-8833.
The Funds' reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
______________________
PERFORMA FUNDS
_________________________________________
PERFORMA STRATEGIC VALUE BOND FUND
PERFORMA DISCIPLINED GROWTH FUND
PERFORMA SMALL CAP VALUE FUND
PERFORMA GLOBAL GROWTH FUND
__________________________________________
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
THE PERFORMA FUNDS
PERFORMA STRATEGIC VALUE BOND FUND
PERFORMA DISCIPLINED GROWTH FUND
PERFORMA SMALL CAP VALUE FUND
PERFORMA GLOBAL GROWTH FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE SECURITIES AND EXCHANGE COMMISSION, HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS [OVER PCS, SPREADSHEETS AND PEOPLE]
OVERVIEW......................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS..........................6
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY......................................7
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES............8
[INVESTMENT OBJECTIVES AND POLICY TAB]
[RISK ICON]
RISK CONSIDERATIONS..........................12
[RISK CONSIDERATIONS TAB]
COMMON POLICIES..............................14
[COMMON POLICIES TAB]
. MANAGEMENT OF THE FUNDS.....................15
[MANAGEMENT OF THE FUNDS TAB]
HOW TO BUY AND SELL SHARES...................19
[HOW TO BUY AND SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS................21
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION.............................22
[OTHER INFORMATION TAB]
<PAGE>
- --------------------------------------------------------------------------------
1. OVERVIEW [SPREADSHEET]
- --------------------------------------------------------------------------------
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE INVESTING, YOU
SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS UNDER INVESTMENT
OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN SERVE
AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
- --------------------------------------------------------------------------------
THE FUNDS AT A GLANCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY
INVESTMENT
PERFORMA STRATEGIC VALUE Total return by investing Broad spectrum of
BOND FUND primarily in income investment grade securities.
producing securities.
PERFORMA DISCIPLINED Capital appreciation by Stock of companies that
GROWTH FUND investing primarily in appear to possess above
common stock of larger average potential for growth.
companies.
PERFORMA SMALL CAP VALUE Capital appreciation by Stock of smaller companies
FUND investing primarily in that appear undervalued.
common stocks of smaller
companies.
PERFORMA GLOBAL GROWTH Long-term capital Stocks of companies located
FUND appreciation by investing in developed, newly
primarily in commmon stocks industrialized, and emerging
of established companies markets.
throughout the world,
including the United States.
</TABLE>
- --------------------------------------------------------------------------------
FUND STRUCTURES
- --------------------------------------------------------------------------------
Instead of investing directly in a portfolio of securities, each Fund invests in
1 or more other funds identified in this prospectus as a Portfolio. The
Portfolios do not offer their shares to the public. Except when necessary to
describe a Fund's investment in a Portfolio, this prospectus discusses a Fund's
investments in a Portfolio as if the investments were made directly in portfolio
securities.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
[OVERVIEW TAB]
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and Portfolios except Schroder Global Growth
Portfolio. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest
Bank, provides investment advice to institutions, pension plans, and other
accounts and currently manages more than $29 billion in assets.
SCHRODER CAPITAL MANAGEMENT INC. or SCHRODER is the investment adviser for
Schroder Global Growth Portfolio. Schroder specializes in providing
international investment advice. Investment subadvisers make investment
decisions for the other Portfolios under Norwest's general supervision.
This prospectus generally refers to Norwest or a subadviser as an Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
You may purchase or redeem shares without sales or other charges. The Funds
require a minimum initial investment of $1,000 and minimum subsequent
investments of $100.
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each Fund distributes to shareholders its net capital gain, if any, at
least annually. THE DISTRIBUTIONS AND TAX MATTERS section discusses how
often the Funds distribute net investment income.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets in which the Fund
invests, the investments that the Fund makes, and prevailing economic
conditions over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
If you invest in Performa Strategic Value Bond Fund, the investment income
you receive from the Fund will vary with changes in interest rates. In
addition, the value of the Fund's investments generally will fall when
interest rates rise and rise when interest rates fall. When interest rates
fall, there is a risk that issuers will prepay fixed rate securities,
forcing the Fund to invest in securities with lower interest rates than the
prepaid securities.
<PAGE>
A decline in interest rates also may result in losses in the Fund's
mortgage- and other asset-backed securities' values and a reduction in
their yields as the holders of the assets backing the securities prepay
their debts. Rising interest rates may cause the average maturity of the
Fund to rise due to a drop in prepayments. A rise in average maturity
increases the Fund's sensitivity to rising interest rates and potential for
losses in value.
The Fund also is subject to "credit risk," which is the risk that an issuer
will be unable, or will be perceived to be unable, to pay the interest or
principal on its obligations when due. The Fund seeks to limit its credit
risk by investing primarily in debt securities that are highly rated by a
nationally recognized statistical rating organization. The Fund's
investments in securities that are not highly rated are subject to more
credit risk.
Performa Disciplined Growth Fund, Performa Small Cap Value Fund, and
Performa Global Growth Fund are subject to "market risk," which is the
general risk that the value of a Fund's investments may decline if the
stock markets perform poorly. There also is a risk that a Fund's
investments will underperform either the securities markets generally or
particular segments of the securities markets.
Performa Small Cap Value Fund and Performa Global Growth Fund have
additional risks because they invest in smaller and foreign issuers,
respectively. Investments in smaller issuers are subject to greater changes
in value because securities of smaller issuers may not trade as often or be
as widely owned as the securities of larger issuers. Investments in foreign
issuers are subject to the risks of foreign political and economic
instability and changes in foreign currency exchange rates. Foreign
investments also are subject to government actions, including exchange
controls and limits on repayments of foreign investments. Foreign
governments may nationalize, tax or confiscate investors' assets.
- --------------------------------------------------------------------------------
EXPENSES OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The following table will assist you in understanding the expenses that you
will bear directly or indirectly when you invest in a Fund. The Funds do
not impose transaction charges for purchasing, redeeming or exchanging
shares. The Funds do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C> <C> <C>
INVESTMENT OTHER TOTAL FUND
ADVISORY EXPENSES OPERATING
FEES (after fee waivers EXPENSES
(after fee waivers) and expense
reimbursement)
------------------- ------------ ---------
Performa Strategic Value Bond Fund 0.50% 0.35% 0.85%
Performa Disciplined Growth Fund 0.90% 0.35% 1.25%
Performa Small Cap Value Fund 0.95% 0.35% 1.30%
Performa Global Growth Fund 0.00% 1.45% 1.45%
</TABLE>
Each Fund bears its pro rata portion of the expenses of the Portfolio in which
it invests. Investment Advisory Fees are those incurred by the Portfolios.
Absent waivers, Investment Advisory Fees for Performa Global Growth Fund would
be 0.50%. Other Expenses reflect expense reimbursements. Absent expense
reimbursements and fee waivers, Other Expenses and Total Operating Expenses
would be: Performa Strategic Value Bond Fund 1.49% and 1.99%, Performa
Disciplined Growth Fund 1.59% and 2.49%, Performa Small Cap Value Fund 2.64% and
3.59% and Performa Global Growth Fund 15.23% and 15.73%. Expense reimbursements
are voluntary and may be reduced or eliminated at any time.
<PAGE>
EXAMPLE
[OVERVIEW TAB]
The following hypothetical example indicates the dollar amount of expenses you
would pay, assuming a $1,000 investment in a Fund's shares, the expenses listed
in Annual Fund Operating Expenses table, a 5% annual return and reinvestment of
all distributions. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN IN
THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Performa Strategic Value Bond Fund $9 $27 $47 $105
Performa Disciplined Growth Fund $13 $40 $69 $151
Performa Small Cap Value Fund $13 $41 $71 $157
Performa Global Growth Fund $15 $46 $79 $174
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
2. FINANCIAL HIGHLIGHTS [MAP]
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the Fund's operating history. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
a Fund, assuming reinvestment of all distributions. The information has been
audited by KPMG Peat Marwick LLP, independent auditors, whose report dated July
21, 1998 about a Fund, along with the Fund's financial statements, are included
in the Fund's Annual Report, which is available at no charge upon request. These
financial statements are incorporated by reference into the SAI.
<TABLE>
<S> <C> <C> <C> <C>
PERFORMA PERFORMA PERFORMA PERFORMA
STRATEGIC DISCIPLINED SMALL CAP GLOBAL GROWTH
VALUE BOND GROWTH FUND VALUE FUND FUND
FUND
--------------- -------------- --------------- ----------------
Period Ended May 31, 1998
------------------------------------------------------------------------
Net Asset Value, Beginning of Period(a) $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------
Investment Operations
Net Investment Income (Loss) 0.34 0.01 (0.01) 0.03
Net Realized and Unrealized Gain (Loss) on 0.27 0.44 0.17 0.60
---- ---- ---- ----
Investments
Total from Investment Operations 0.61 0.45 0.16 0.63
---- ---- ---- ----
Distributions From:
Net Investment Income (0.33) (0.01) -- --
------------------------- --------------------------
Net Asset Value, End of Period $10.28 $10.44 $10.16 $10.63
====== ====== ====== ======
Total Return 6.20% 4.50% 1.60% 6.30%
Supplementary Data:
Net Assets at End of Period (000's omitted) $9,168 $12,325 $6,422 $1,066
Ratios to Average Net Assets (b)(c):
Net Investment Income (loss) 5.82% 0.14% (0.56)% 0.68%
Net Expenses 0.85% 1.25% 1.30% 1.45%
(Expenses excluding reimbursement/waiver of 1.95% 2.44% 3.54% 9.82%
fees)
Average Commission Rate Per Share(d) N/A $0.0553 $0.0556 $0.0355
Portfolio Turnover Rate(e) 134.56% 68.08% 79.43% 13.82%
- --------------------------------------------------------------------------------
</TABLE>
(a) The Funds commenced operations on October 15, 1997.
(b) Annualized.
(c) Includes expenses allocated from the Portfolio in which the Fund invests.
(d) Represents the average commission per share paid to brokers on the purchase
or sale of portfolio securities of the Portfolio in which the Fund invests.
(e) Represents the activity of the Portfolio in which the Fund invests.
<PAGE>
- --------------------------------------------------------------------------------
3. GLOSSARY [MAP]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[FINANCIAL HIGHLIGHTS TAB]
[GLOSSARY TAB]
Term Definition
- ---- ----------
Board The Board of Trustees of Norwest Advantage
Funds.
Duration A measure of a debt security's average life
that reflects the present value of the
security's cash flow. Prices of securities
with longer durations generally are more
volatile.
Fundamental Requiring shareholder approval to change.
Market Capitalization The total market value of a company's
outstanding common stock.
NRSRO A nationally recognized statistical rating
organization, such as S&P, that rates fixed-
income securities and preferred stock by
relative credit risk.
Non-Investment Grade Neither rated at the time of purchase
in 1 of the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO
nor unrated and determined by the Adviser to
be of comparable quality.
Russell 2000(R)Index A broad-based index of smaller
capitalization companies.
S&P Standard & Poor's Corporation.
S&P 500 Index Standard & Poor's 500 Composite Stock
Price Index, an index of large
capitalization companies.
SAI State of Additional Information.
SEC The U.S. Securities and Exchange Commission.
U.S. Government Security A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies or its
instrumentalities.
<PAGE>
- --------------------------------------------------------------------------------
4. INVESTMENT OBJECTIVES AND POLICIES [MAP]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds.
After each Fund's description, there is a short, alphabetical listing of the
Fund's primary risks. The RISK CONSIDERATIONS section discusses these risks.
PERFORMA STRATEGIC VALUE BOND FUND
[RISK ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek total
return by investing primarily in income producing securities.
INVESTMENT POLICIES. The Fund invests in a broad range of fixed-income
instruments in order to create a strategically diversified portfolio of
fixed-income investments. These investments include corporate bonds,
mortgage- and other asset-backed securities, U.S. Government Securities,
preferred stock, convertible bonds, and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Fund seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current-versus-historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Fund's objective and purchases those securities that
are consistent with the Fund's investment objective.
The Fund particularly seeks strategic diversification. The Fund will not
invest more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate
market.
The Fund may invest in U.S. Government Securities without restriction. The
Fund generally will not invest more than 5% of its total assets in the
corporate bonds of any single issuer.
<PAGE>
The Fund will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the 3 highest rating categories
assigned by at least 1 NRSRO, or which are unrated and determined by the
Adviser to be of comparable quality. The Fund may invest up to 20% of its
total assets in Non-Investment Grade securities.
The average maturity of the Fund will vary between 5 and 15 years. In the
case of mortgage-backed and similar securities, the Fund uses the
security's average life in calculating the Fund's average maturity. The
Fund's Duration normally will vary between 3 and 8 years.
The Fund may use options, swap agreements, interest rate caps, floors, and
collars and futures contracts to manage risk. The Fund also may use options
to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
[INVESTMENT OBJECTIVES AND POLICIES TAB]
PERFORMA DISCIPLINED GROWTH FUND
[RISK ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek capital
appreciation by investing primarily in common stocks of larger companies.
INVESTMENT POLICIES. The Fund seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Fund invests in
companies with average Market Capitalizations greater than $5 billion.
The Fund seeks to identify growth companies that will report a level of
corporate earnings that exceed the level expected by investors. In seeking
these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider, among other factors, changes of
earnings estimates by investment analysts, the recent trend of company
earnings reports, and an analysis of the fundamental business outlook for
the company. The Adviser uses a variety of valuation measures to determine
whether or not the share price already reflects any positive fundamentals
identified by the Adviser. In addition to approximately equal weighting of
portfolio securities, the Adviser attempts to constrain the variability of
the investment returns by employing risk control screens for price
volatility, financial quality, and valuation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk
<PAGE>
PERFORMA SMALL CAP VALUE FUND
[RISK ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek capital
appreciation by investing primarily in common stocks of smaller companies.
INVESTMENT POLICIES. The Fund seeks capital appreciation by investing in
common stocks of smaller companies. The Fund will normally invest
substantially all of its assets in securities of companies with Market
Capitalizations that reflect the Market Capitalization of companies
included in the Russell 2000 Index, which range from approximately $220
million to approximately $1.4 billion.
The Fund seeks higher growth rates and greater long-term returns by
investing primarily in the common stock of smaller companies that the
Adviser believes to be undervalued and likely to report a level of
corporate earnings exceeding the level expected by investors. The Adviser
values companies based upon both the price-to-earnings ratio of the company
and a comparison of the public market value of the company to a proprietary
model that values the company in the private market. In seeking companies
that will report a level of earnings exceeding that expected by investors,
the Adviser uses both quantitative and fundamental analysis. Among other
factors, the Adviser considers changes of earnings estimates by investment
analysts, the recent trend of company earnings reports, and the fundamental
business outlook for the company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
PERFORMA GLOBAL GROWTH FUND
[RISK ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek long-term
growth of capital by investing primarily in common stocks of established
companies throughout the world, including the United States.
INVESTMENT POLICIES. The Fund invests in common stocks of companies located
in developed, newly industrialized, and emerging markets. The Fund normally
invests at least 65% of its total assets in equity securities of companies
located in at least four countries plus the United States. The Fund may
invest in companies of any size, but generally is concentrated in companies
that are large and, to a lesser extent, medium-sized for the particular
market.
<PAGE>
The Adviser's investment process emphasizes stock selection and a
fundamental company analysis. The Adviser seeks companies that it believes
have a sustainable competitive advantage and a potential for growth that is
generally undervalued by other investors. The Adviser considers historical
growth rates and future growth prospects, management capability,
competitive position in both domestic and export markets, and other
factors.
The Adviser seeks to add value by allocating the Fund's investments
geographically. The Adviser selects countries it believes have a favorable
long-term business environment in which adverse macroeconomic or political
conditions are not likely to materially impede corporate growth. The Fund
may invest more than 25% of its total assets in issuers located in a single
country.
The Fund may seek capital appreciation by investing in convertible or
non-convertible debt securities. The Fund may invest in debt securities
issued by corporations or financial institutions. The Fund also may invest
in debt securities issued or guaranteed by international organizations that
promote economic reconstruction or development.
[INVESTMENTOBJECTIVES AND POLICIES TAB]
When selecting debt securities, the Adviser considers favorable changes in
relative foreign exchange rates, relative interest rate levels, or the
creditworthiness of issuers. The Adviser seeks income only incidentally to
seeking capital appreciation. The Fund may invest in debt securities in
order to participate in debt-to-equity conversion programs that are part of
corporate reorganizations.
The Fund may enter into foreign currency 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.
The Fund may use various derivative instruments including instruments such
as options, swap agreements, interest rate caps, floors and collars, and
futures contracts to manage risk or enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
- --------------------------------------------------------------------------------
5. RISK CONSIDERATIONS [MAP]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds.
Each Fund's exposure to these risks depends upon its specific investment
profile. The Fund's description in Investment Objectives and Policies lists
the Fund's principal risks.
- --------------------------------------------------------------------------------
CREDIT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
- --------------------------------------------------------------------------------
CURRENCY RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments. This
risk may be greater for investments in emerging or developing markets.
- --------------------------------------------------------------------------------
FOREIGN RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation, or confiscation of investors' assets. This risk may be greater for
investments in issuers in emerging or developing markets. Also, the risk that
the price of a foreign issuer's securities may not reflect the issuer's
condition because there is not sufficient publicly available information about
the issues.
- --------------------------------------------------------------------------------
GEOGRAPHIC CONCENTRATION RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
- --------------------------------------------------------------------------------
INTEREST RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a
Fund's fixed-rate securities to fall, while a decline in interest rates may
produce an increase in the market value of the securities. Because of this
risk, an investment in a Fund that invests in fixed income securities is
subject to risk even if all the fixed income securities in the Fund's
portfolio are paid in full at maturity. Changes in interest rates will
affect the value of longer-term fixed income securities more than
shorter-term securities.
<PAGE>
- --------------------------------------------------------------------------------
LEVERAGE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
- --------------------------------------------------------------------------------
MARKET RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry, or section of the economy or may affect the market
as a whole.
- --------------------------------------------------------------------------------
PREPAYMENT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
[RISK CONSIDERATIONS TAB]
- --------------------------------------------------------------------------------
SMALL COMPANY RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
- --------------------------------------------------------------------------------
6. COMMON POLICIES [MAP]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
- --------------------------------------------------------------------------------
VOTING ISSUES
- --------------------------------------------------------------------------------
In determining the outcome of shareholder votes, the Funds and the other
funds in the Funds' fund complex normally count votes on a share-by-share
basis. This means that shareholders of funds in the fund complex with
comparatively high net asset values will have a comparatively smaller
impact on the outcome of votes by all of the funds in the fund complex than
do shareholders of funds with comparatively low net asset values.
- --------------------------------------------------------------------------------
DOWNGRADED SECURITIES
- --------------------------------------------------------------------------------
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's 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
- --------------------------------------------------------------------------------
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
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. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. The FINANCIAL HIGHLIGHTS table lists the Funds' portfolio turnover
rate.
- --------------------------------------------------------------------------------
YEAR 2000 AND EURO
- --------------------------------------------------------------------------------
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [MAP]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio except Schroder Global Growth Portfolio. In this
capacity, Norwest makes investment decisions for and administers the Funds'
and Portfolios' investment programs. Norwest Investment Management, Inc.'s
address is Norwest Center, Sixth Street and Marquette, Minneapolis, MN
55479.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. is the investment adviser
for Schroder Global Growth Portfolio. In this capacity, Schroder makes
investment decisions for and administers that Portfolio's investment
program. Schroder Capital Management International Inc.'s address is 787
Seventh Avenue 34th Floor, New York, NY 10019.
Norwest and certain of the Portfolios have retained investment subadvisers
to make investment decisions for and administer the investment programs of
those Funds and Portfolios. Norwest decides which portion of the assets of
a Portfolio the subadviser should manage and supervises the subadvisers'
performance of their duties. The subadvisers are:
GALLIARD CAPITAL MANAGEMENT, INC. or GALLIARD, an investment advisory
subsidiary of Norwest Band, provides investment advisory services to bank
and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations, and corporate and other business entities.
Gaillard Capital Management, Inc.'s address is 800 Lasalle Ave. Suite 2060,
Minneapolis, MN 55479.
SMITH ASSET MANAGEMENT GROUP, L.P. OR SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies, and
high net worth individuals using a disciplined equity style. Smith Asset
Management Group's address is 300 Crescent Court, Suite 750, Dallas, TX
75201
[COMMON POLICIES TAB]
[MANAGEMENT OF THE FUNDS TAB]
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments. The
year a portfolio manager began managing a Fund's portfolio follows the
manager's name in parenthesis. The list includes the investment advisory
fees payable to Norwest or Schroder by the Portfolios. The list states the
investment advisory fees on an annualized basis as a percentage of a
Portfolio's average daily net assets. Descriptions of the portfolio
managers' recent experience follow the list of portfolio managers and
advisory fees.
Norwest (and not the Funds or Portfolios) pays the subadvisers' investment
subadvisory fees. The investment subadvisory fees do not increase the
amount of the investment advisory fees paid to Norwest by the Portfolios.
<PAGE>
PERFORMA STRATEGIC VALUE BOND FUND
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998),
and David Yim (1998).
ADVISORY FEE: 0.50%
PERFORMA DISCIPLINED GROWTH FUND
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997).
ADVISORY FEE: 0.90%
PERFORMA SMALL CAP VALUE FUND
PORTFOLIO: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997).
ADVISORY FEE: 0.95%
PERFORMA GLOBAL GROWTH FUND
PORTFOLIO: SCHRODER GLOBAL GROWTH PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: Michael Perelstein (1997) and Paul Morris (1997).
ADVISORY FEE: 0.50%
PORTFOLIO MANAGERS
Norwest Portfolio Managers:
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr. Huber
has been a Portfolio Manager and Director of Trading at Galliard since 1995
and has been in investment management since 1990.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was previously
Chief Investment Officer of Insight Investment Management.
STEPHEN S. SMITH, associated with Norwest or its affiliates since 1997. Mr.
Smith has been a Chief Investment Officer and principal of the Smith Group
since 1995. Mr. Smith previously served as senior portfolio manager with
NationsBank and in several capacities with AIM Management Company's Summit
Fund.
DAVID YIM, associated with Norwest or its affiliates since 1995. Mr. Yim
has been a Portfolio Manager and Director of Investment Research of
Galliard since 1995 and previously worked for American Express Financial
Advisors as a Research Analyst.
<PAGE>
SCHRODER PORTFOLIO MANAGERS:
PAUL MORRIS, associated with Norwest or its affiliates since 1997. Mr.
Morris has been a Senior Vice President of Schroder Capital Management
International and a Director of Schroder since 1997. Prior to joining
Schroder, Mr. Morris was Principal and Senior Portfolio Manager at Weiss
Peck & Greer, L.L.C., Managing Director (Equity Division) of UBS Asset
Management and an Equity Portfolio Manager at Chase Investors Management
Group.
MICHAEL PERELSTEIN, associated with Norwest or its affiliates since 1997.
Mr. Perelstein has been a Senior Vice President of Schroder since January
1997. Previously Mr. Perelstein was a Managing Director at MacKay Shields.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund. Norwest does
not receive any compensation under this arrangement as long as a Fund
invests entirely in a Portfolio. If a Fund redeems assets from a Portfolio
and invests them directly, Norwest receives an investment advisory fee from
the Fund for the management of those assets.
OTHER FUND SERVICES
The Forum Financial Group of companies provide managerial, administrative,
and underwriting services to the Funds. Norwest Bank acts as the Funds'
transfer agent, dividend disbursing agent, and custodian.
BACKGROUND OF SMITH GROUP PERFORMANCE
[MANAGEMENT OF THE FUNDS TAB]
The table below sets forth composite performance data for the dates
indicated relating to the historical performance of certain separate
accounts and mutual fund portfolios primarily managed by Stephen Smith, the
portfolio manager of Disciplined Growth Portfolio and Small Cap Value
Portfolio. The data illustrate the past performance of Mr. Smith in
managing substantially similar accounts as measured against specified
market indices. It does not represent the performance of the Portfolios.
This performance data is not an indication of future performance of the
Portfolios, the Smith Group or Mr. Smith.
Mr. Smith's composites include all actual, fee-paying, discretionary
institutional private accounts and mutual fund portfolios managed by Mr.
Smith that have substantially the same investment objectives and policies.
Mr. Smith's composite performance was calculated on a total return basis
and includes all dividends and interest, accrued income, and realized and
unrealized gain and loss. The data accounts for securities transactions on
the trade date and uses accrual accounting.
All returns reflect the deduction of the highest effective investment
advisory fees, brokerage commissions, and execution costs paid by the
Adviser's private accounts, without provision for federal or state income
taxes. Returns include returns from cash
<PAGE>
and cash equivalents. Account fees vary depending on, among other things,
the applicable fee schedule, portfolio size and nature of the account.
Custodial fees, if any, were not included in the calculation. A schedule of
Mr. Smith's fees is available on request.
The monthly returns of Mr. Smith's composites combine the individual
accounts' returns (calculated on a time-weighted rate of return) by
asset-weighing each individual account's asset value as of the beginning of
the month. Quarterly and yearly returns are calculated by geometrically
linking the monthly and quarterly returns, respectively.
The institutional private accounts included in Mr. Smith's composites are
not subject to certain investment limitations, diversification
requirements, specific tax restrictions, and investment limitations imposed
on the Portfolios by the Investment Company Act of 1940 or the Internal
Revenue Code. The performance results could have been adversely affected if
the institutional private accounts included in the composite had been
regulated as investment companies.
The composites are unaudited and do not represent the past performance of
nor predict the future returns of the Portfolios or an individual investor
investing in Performa Disciplined Growth Fund or Performa Small Cap Value
Fund. The use of a methodology different from that used to calculate the
performance could result in different performance data.
<TABLE>
<S> <C> <C>
MR. SMITH'S COMPOSITE FOR THE S&P 500 INDEX(3)
----------------
DISCIPLINED GROWTH STYLE(2)
---------------------------
1995 38.05% 37.54%
1996 31.26% 22.99%
1997 39.20% 29.58%
1998 to Date(1) (6.06)% (0.38)%
1 Year(1) (2.36)% 8.09%
3 Years(1) 21.38% 21.72%
Since Inception 28.52% 24.66%
1/1/95(1)
MR. SMITH'S COMPOSITE FOR THE RUSSELL 2000(4)
---------------
SMALL CAP VALUE STYLE
1997 22.38% 20.52%
1 Year(1) (19.55)% (19.22)%
Since Inception
11/1/96(1) 5.64% 0.93%
1998 to Date(1) (18.84)% (22.07)%
</TABLE>
(1) Average annual return through August 31, 1998. Return for less than one
year is not annualized.
(2) The composite returns consist of the total returns for the period January
1995 through August 31, 1998 of accounts for which Stephen S. Smith, now
Chief Investment Officer of the Smith Group, served as the primary manager
as described above, including the period January 1, 1995 - October 31,
1995, during which Mr. Smith was senior portfolio manager for another firm.
The composite does not include the performance of other accounts not
managed similarly to the Portfolio. Since November 1, 1995, when the Smith
Group commenced operations, Mr. Smith has employed the same investment
style in discretionary private accounts as he employed in the accounts
described above. No other person played a significant part in achieving the
prior performance of these accounts during Mr. Smith's tenure. The data for
January 1, 1995 - October 31, 1995 is not, and should not be, construed as
the performance data of Smith Group.
(3) The S&P 500 Index is an unmanaged index containing common stocks of 500
industrial, transportation, utility, and financial companies, regarded as
generally representative of the U.S. stock market. The Index reflects the
reinvestment of income dividends and capital gain distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing.
(4) The Russell 2000 Index is an unmanaged index consisting of the securities
of the 2,000 issuers having the smallest capitalization in the Russell 3000
Index, representing approximately 10% of the Russell 3000 total market
capitalization. The Index reflects the reinvestment of income dividends and
capital gain distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
- --------------------------------------------------------------------------------
8. HOW TO BUY AND SELL SHARES [MAP]
- --------------------------------------------------------------------------------
You may purchase Fund shares on "Fund Business Days" at a price equal to
their net asset value next determined after receipt of your purchase order
in proper form. Fund Business Days are all weekdays except generally
observed national holidays (New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving,
and Christmas) and Good Friday.
- --------------------------------------------------------------------------------
GENERAL PURCHASE INFORMATION
- --------------------------------------------------------------------------------
You may purchase shares only through certain financial institutions. The
Funds' transfer agent processes all transactions in Fund shares. Please
call 1-888-800-6748 for information about opening an account to purchase
Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. Purchases of Fund shares require a minimum initial investment of
$1,000 and minimum subsequent investments of $100. The Funds reserve the
right to reject any subscription for the purchase of shares, including
subscriptions by market timers.
Your shares may be held in your name or in the name of your financial
institution. Subject to your institution's procedures, you may have Fund
shares held in the name of your financial institution transferred into your
name. If your shares are held in the name of your financial institution,
you must contact the financial institution on matters involving your
shares. Your financial institution may charge you for purchasing, redeeming
or exchanging shares. The Funds are not responsible if your financial
institution fails to carry out its obligations to you. There is normally a
three-day settlement period for purchases and redemptions through
broker-dealers.
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification 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.
- --------------------------------------------------------------------------------
GENERAL REDEMPTION INFORMATION
- --------------------------------------------------------------------------------
[HOW TO BUY AND SELL SHARES TAB]
You may redeem Fund shares 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 receipt by the transfer agent of the redemption order
in proper form (and any supporting documentation that the transfer agent
may require). Redeemed shares are not entitled to receive distributions
after the day on which the redemption is effective.
<PAGE>
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days); (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers.
Because of the cost of maintaining smaller accounts, the Performa Funds may
redeem, upon not less than 60 days' written notice, any account with a net
asset value of less than $1,000.
<PAGE>
- --------------------------------------------------------------------------------
9. DISTRIBUTIONS AND TAX MATTERS [MAP]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions of net investment income are declared and paid monthly for
Performa Strategic Value Bond Fund and annually for the other Funds. Each
Fund distributes net capital gain, if any, at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a
Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another Fund. Call or write the
transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a Fund. All
distributions reinvested in a Fund are reinvested at the Fund's net asset
value as of the payment date of the distribution
- --------------------------------------------------------------------------------
TAX MATTERS
- --------------------------------------------------------------------------------
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions reduce the net asset value of the Fund paying the
distribution by the amount of the distribution. Furthermore, a distribution
made shortly after you purchase shares, although in effect a return of
capital to you, is taxable.
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. Performa
Global Growth Fund intends, if eligible to do so, to permit its
shareholders to take a credit (or a deduction) for foreign income and other
taxes paid by Schroder Global Growth Portfolio. If you own shares of
Performa Global Growth Fund, you will be notified of your share of those
foreign taxes and will be required to treat the amount of the foreign taxes
as additional income. In that event, you may be entitled to claim a credit
or deduction for those taxes on your federal income tax return.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
- --------------------------------------------------------------------------------
10. OTHER INFORMATION [MAP]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund determines its net asset value at 4:00 p.m., Eastern Time on each
Fund Business Day by dividing the value of its 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 value portfolio securities at current market value if market
quotations are readily available. If market quotations are not readily
available, the Funds value those securities at fair value as determined by
or pursuant to procedures adopted by the Board.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies 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.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
- --------------------------------------------------------------------------------
Each Fund bears its pro rata portion of the expenses of the Portfolio in
which it invests. The Board may redeem a Fund's investment in a Portfolio
at any time. The Fund could then invest directly in portfolio securities or
could re-invest in 1 or more different Portfolios that could have different
fees and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
NO ONE 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. ANY SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUNDS. 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>
If you would like more information about the Funds and their investments, you
may want to read the following documents:
Statement of Additional Information. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such as
its investments, management, and organization. It is incorporated into this
Prospectus by reference.
Annual and Semi-Annual Reports. Additional information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, each Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479, or by calling
1-800- 338-1348 or 1-612-667-8833.
The Funds' reports and statement of additional information are available from
the Securities and Exchange Commission in Washington, D.C. You may obtain copies
of these documents, upon payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington D.C. 20549-6009. Please call
1-800-SEC-0330 for information about the operation of the SEC's public reference
room. The Fund's reports and other information are also available on the SEC's
Web Site at http:// www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881
[OTHER INFORMATION TAB]
<PAGE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 NORWEST ADVANTAGE FUNDS
10/98 [LOGO]
<PAGE>
- --------------------------------------
[PICTURE OF COINS]
PROSPECTUS
OCTOBER 1, 1998
________________________
WEALTHBUILDER II
[LOGO] NORWEST
----------------
WEALTHBUILDER II
- --------------------------------------
NORWEST
WEALTHBUILDER II
GROWTH BALANCED
PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH AND INCOME
PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH PORTFOLIO
________________________________________________________________________________
Mutual funds are NOT insured
by the FDIC, Federal Reserve May Lose Value No Bank Guarantee
System, U.S. Government, or any
other government agency.
________________________________________________________________________________
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY.............................................................2
Expense Information.....................................................6
FINANCIAL HIGHLIGHTS...........................................................8
INVESTMENT OBJECTIVES AND POLICIES.............................................9
Investment Objectives...................................................9
Investment Policies.....................................................9
Additional Investment Policies and Risk Considerations.................11
MANAGEMENT OF THE PORTFOLIOS..................................................17
PURCHASES AND REDEMPTIONS OF SHARES...........................................21
General Purchase Information...........................................21
HOW TO BUY SHARES.............................................................23
Minimum Investment.....................................................23
Purchase Procedures....................................................23
Subsequent Purchases...................................................24
Account Application....................................................24
General Information....................................................25
HOW TO SELL SHARES............................................................26
General Information....................................................26
Redemption Procedures..................................................26
Other Redemption Matters...............................................27
OTHER SHAREHOLDER SERVICES....................................................28
Exchanges..............................................................28
Automatic Investment Plan..............................................29
Retirement Account.....................................................29
Automatic Withdrawal Plan..............................................30
Reopening Accounts.....................................................30
DIVIDENDS AND TAX MATTERs.....................................................31
Dividends..............................................................31
Tax Matters............................................................31
OTHER INFORMATION.............................................................33
Banking Law Matters ...................................................33
Determination of Net Asset Value.......................................33
Performance Information................................................33
The Trust and Its Shares...............................................34
UNDERSTANDING THIS PROSPECTUS: References to "you" and "your" in this Prospectus
refer to current shareholders and/or prospective investors, and references to
"we", "us", and "our" refer to the Portfolios or the Trust, as the context may
indicate.
<PAGE>
1
OCTOBER 1, 1998
Norwest WealthBuilder II Growth Balanced Portfolio, Norwest WealthBuilder II
Growth and Income Portfolio, and Norwest WealthBuilder II Growth Portfolio
(each, a "Portfolio" and collectively, the "Portfolios") are separate investment
portfolios designed to offer you access to professionally managed mutual funds
from well-known fund groups. Each Portfolio seeks to achieve its objective by
allocating its assets across asset classes of stocks, bonds, and money market
instruments through a number of affiliated and unaffiliated funds ("Underlying
Funds"). Each Portfolio holds an investment portfolio of stock funds, for growth
potential, and bond and money market funds, for decreased volatility and
increased price stability. The Portfolios' investment adviser may select from a
wide range of mutual funds based upon changing markets and risk/return
characteristics of the asset classes. Each Portfolio provides a different level
of risk exposure by allocating its investments in different proportions among
equity and bond investment styles. In addition to its own expenses, each
Portfolio bears a pro rata portion of the expenses of the Underlying Funds in
which it invests. Investments in a Portfolio may result in your incurring
greater expenses than if you were to invest directly in the mutual funds in
which the Portfolio invests. The Portfolios are diversified series of Norwest
Advantage Funds (the "Trust"), an open-end, management investment company.
* Norwest Wealthbuilder II Growth Balanced Portfolio seeks a balance of
capital appreciation and income.
* Norwest Wealthbuilder II Growth And Income Portfolio seeks long-term
capital appreciation with a secondary emphasis on income.
* Norwest Wealthbuilder II Growth Portfolio seeks long-term capital
appreciation.
This Prospectus provides you with concise information about the Portfolios and
the Trust that you should know before you invest. A Statement of Additional
Information ("SAI") dated October 1, 1998, as amended from time to time,
containing additional information about the Portfolios has been filed with the
Securities and Exchange Commission (the "SEC"). The SAI is available for
reference on the SEC's Web Site (http://www.sec.gov) and is incorporated into
this Prospectus by reference. You also may obtain a copy of the SAI without
charge by contacting the Trust's distributor, Norwest Advantage Funds at 733
Marquette Avenue, Minneapolis, Minnesota 55479 or by calling 1-800-338-1348 or
1-612-667-8833. Please read this Prospectus and retain it for future reference.
MUTUAL FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, FDIC,
FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENT AGENCY AND 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 SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
2
[PICTURE OF A GLOBE]
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information contained in this Prospectus.
INVESTMENT OBJECTIVES
Norwest WealthBuilder II Growth Balanced Portfolio seeks a balance of
capital appreciation and income.
Norwest WealthBuilder II Growth and Income Portfolio seeks long-term
capital appreciation with a secondary emphasis on income.
Norwest WealthBuilder II Growth Portfolio seeks long-term capital
appreciation.
INVESTMENT POLICIES
Each Portfolio seeks to achieve its investment objective by investing
in a diverse mix of "Underlying Funds", that consist of affiliated and
unaffiliated investment companies or series thereof. In addition, each
Portfolio may hold other investment securities directly and may invest
otherwise uninvested assets in repurchase agreements. You may choose
to invest in one or more of the Portfolios based on your personal
investment goals, risk tolerance, and financial circumstances. (See
"Investment Objectives and Policies.")
PORTFOLIO STRUCTURES
Each Portfolio seeks to achieve its objective by investing in a number
of Underlying Funds. Each Underlying Fund invests using a different
investment objective and a different investment style.
INVESTMENT ADVISER
Norwest Investment Management, Inc. ("Norwest" or the "investment
adviser"), a subsidiary of Norwest Bank Minnesota, N.A. ("Norwest
Bank"), serves as each Portfolio's investment adviser. Norwest also
serves as the investment adviser and, in most cases, affiliates of
Norwest serve as investment subadviser for each affiliated Underlying
Fund. Norwest provides investment advice to various institutions,
pension plans, and other accounts and currently manages more than $29
billion in assets. (See "Management of the Portfolios -- Investment
Advisory Services".) Norwest is paid an investment advisory fee
directly by each Portfolio for its services with respect to allocating
and monitoring the investment of each Portfolio's assets in Underlying
Funds and other investment securities.
<PAGE>
3
PORTFOLIO MANAGEMENT, ADMINISTRATION, AND OTHER SERVICES
Forum Financial Services, Inc. ("Forum"), a registered broker-dealer
and member of the National Association of Securities Dealers, Inc.,
serves as the Portfolios' manager and distributor of the Portfolios'
shares. Forum Administrative Services, LLC ("FAS") provides
administrative services for each Portfolio. (See "Management of the
Portfolios -- Management and Administration" and "Distribution and
Distribution Plan".)
Norwest Bank serves as the Portfolios' transfer and disbursing agent
and custodian. (See "Management of the Portfolios-- Shareholder
Servicing and Custody" and "--Management, Administration, and
Distribution Services".)
PORTFOLIO SHARES
The Portfolios offer C Shares at net asset value plus an initial sales
charge of up to 1.50%. The sales charge may be reduced or waived for
certain purchases. (See "Purchases and Redemptions of Shares --General
Purchase Information".) The Portfolios' C Shares are subject to a
distribution fee at the annual rate of 0.75% of the average daily net
assets of the Portfolios' C Shares.
HOW TO BUY AND SELL SHARES
You may purchase or redeem shares by mail, by bank wire and through
your broker-dealer or financial institution. The minimum initial
investment is $25,000. There is a $500 minimum subsequent investment,
except for IRA and systematic investing for which the minimum
subsequent investment is $150. (See "How to Buy Shares" and "How to
Sell Shares".)
EXCHANGES
You may exchange shares of a Portfolio for shares of other Portfolios
at the respective net asset values next determined. (See "Other
Shareholder Services-- Exchanges".)
SHAREHOLDER FEATURES
Each Portfolio offers an Automatic Investment Plan, Automatic
Withdrawal Plan, and Directed Dividend Option. Your purchases of
shares may be eligible for a Reinstatement Privilege. (See "Other
Shareholder Services".)
DIVIDENDS AND DISTRIBUTIONS
The Portfolios will pay dividends of net investment income and
distributions of net capital gain once each year. We reinvest your
dividends and distributions in additional Portfolio shares unless you
elect to have them paid in cash. (See "Dividends and Tax Matters".)
<PAGE>
CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS
There can be no assurance that a Portfolio or Underlying Fund will
achieve its investment objective, and each Portfolio's and Underlying
Fund's net asset value and total return will fluctuate based upon
changes in the value of its portfolio of investment securities. Upon
redemption, an investment in a Portfolio or Underlying Fund may be
worth more or less than its original value.
The Portfolios seek to reduce the risk of your investment by
diversifying among different asset classes of stock, bond, and money
market instruments and among different fund managers. Investing in a
mutual fund that holds a diversified portfolio of mutual funds
provides a wider range of investment management talent and investment
diversification than is available in a single mutual fund. The
Portfolios are designed to provide you with a single investment that
offers diverse asset classes, fund management, and fund categories.
You still have, however, the risks of investing in the various asset
classes, such as market risks related to stocks and bonds as well as
the risk of investing in a particular Underlying Fund, such as risks
related to the particular investment management style.
"Stock risk" is the possibility that stock prices and, therefore the
net asset value of stock funds, will decline over time. Smaller
company and international stocks, and therefore the mutual funds that
invest in these stocks, offer additional risks beyond general stock
risk. "Bond risk" is the possibility that the market value of bonds,
and therefore the net asset value of bond funds, will decline over
time because of changes in market interest rates or issuers' ability
to meet its repayment obligations.
Investment techniques used by certain of the Underlying Funds may
entail additional risks, such as the potential use of leverage through
borrowings and securities lending. (See "Investment Objectives and
Policies -- Additional Investment Policies and Risk Considerations.")
HOW THE PORTFOLIOS CAN HELP YOU MEET YOUR INVESTMENT NEEDS
If you are looking for a single, convenient investment that provides
broad diversification among actively managed mutual funds, the Norwest
WealthBuilder II Portfolios may be appropriate for you. Our
professional management team reviews, analyzes, selects, and monitors
each Portfolio's Underlying Funds for you.
Asset Allocation Strategy. Each Portfolio diversifies among asset
classes. Commonly referred to as "asset allocation," this strategy can
minimize the risks of investing in a single security or single class
of securities. Because the performance of asset categories does not
always move in the same direction at the same time, investing in a mix
of asset classes can help reduce volatility. This strategy may provide
more consistent returns, which may be higher or lower than a less
diversified investment.
The investment adviser allocates each Portfolio's investments among
Underlying Funds that represent a broad spectrum of investment
options. The stock, bond, and money market fund allocations and the
range of investments are based on the degree to which the Underlying
Funds (and any direct investments) selected are expected in
combination to be appropriate for a Portfolio's particular investment
objective. As a result of appreciation or depreciation, changes in
market factors or otherwise, the percentage of a Portfolio's assets
invested in various Underlying Funds will vary.
<PAGE>
5
You should invest in the Portfolios if you prefer to invest in a portfolio
diversified across major asset classes of stocks, bonds, and money market
instruments and investment styles and want professional, active management
of a portfolio of funds from well-known fund families. The Portfolios are
suitable for intermediate or long-term investing, as well as retirement
savings (including IRAs and other retirement plans). Each Portfolio is
designed to provide a level of exposure to the growth potential and risks
of the stock market different from that provided by the other Portfolios.
The Portfolios also differ in the amount of assets they allocate among
stock funds that invest primarily in large capitalization, small
capitalization, and international issues.
TYPES OF UNDERLYING FUNDS
INVESTMENT COMPANIES. The Portfolios normally invest in open-end management
investment companies or series thereof. The Portfolios may also invest in
closed-end management investment companies and/or unit investment trusts.
Each Portfolio may hold certain securities directly.
STOCK FUNDS. Stock funds invest primarily in domestic or foreign common
stocks or securities convertible into or exchangeable for common stock. The
Underlying Funds may include stock funds holding large company stocks,
small company stocks, and international stocks.
BOND FUNDS. Bond funds invest primarily in debt securities issued by
companies, municipalities, governments, or government agencies. The issuer
of a bond is required to pay the bond holder the amount of the loan (or par
value) at a specified maturity and to make scheduled interest payments.
MONEY MARKET FUNDS. Money market funds invest in U.S.-dollar denominated
short-term money market instruments determined to present minimal credit
risk. Under normal circumstances, the Portfolios may invest in affiliated
Underlying Funds that are money market funds. The Portfolios may also
invest directly in money market instruments, which include commercial paper
and time deposits issued by large banks, repurchase agreements, and U.S.
Government Securities.
<PAGE>
6
- --------------------------------------------------------------------------------
Expense Information
- --------------------------------------------------------------------------------
The following tables will assist you in understanding the fees and
expenses you bear directly or indirectly through investing a
Portfolio's C Shares. The tables do not reflect the operating expenses
and investment advisory fees of the Underlying Funds. (See
"Management" and "Portfolio Expenses" for more information.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
(applicable to each Portfolio)
Maximum Sales Charge on Purchases 1.50%(1)
Deferred Sales Charge or Redemption Fees None
Exchange Fees None
- --------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
(applicable to each Portfolio)
(as a percentage of average daily net assets)
Advisory Fee (fund selection and asset allocation services) 0.00%
12b-1 Fees(2) 0.75%
Other Expenses (after fee waivers and expense reimbursements)(3) 0.50%
- --------------------------------------------------------------------------------
Total Portfolio Operating Expenses 1.25%
________________________________________________________________________________
(1) Without waiver, Advisory Fee would be 0.35%. Without waivers and
reimbursements, Other Expenses and Total Portfolio Operating Expenses for
each Portfolio would be 1.57% and 2.67%, respectively. Except as otherwise
noted, expense reimbursements and fee waivers are voluntary and may be
reduced or eliminated at any time.
(2) Represents fund selection and asset allocation services.
(3) The unaffiliated Underlying Funds in which a Portfolio invests may charge a
Rule 12b-1 fee; in which event, shareholders of the Portfolio also
indirectly bear that expense.
(4) Other Expenses include transfer agency fees payable to Norwest Bank, which
currently receives remuneration from unaffiliated fund companies
participating in WealthBuilder II at an annual rate of 0.25% of the average
daily net assets of the amount invested in the Underlying Fund. Norwest and
Norwest Bank provide investment advisory and other services to affiliated
Underlying Funds and receive compensation from them. In light of this
remuneration and compensation, Norwest Bank has agreed, through at least
May 31, 1999, to waive the Portfolios' transfer agency and shareholder
servicing fees, which normally total 0.25%. After that date, the fee waiver
may be terminated, modified or continued.
<PAGE>
7
EXAMPLE. The following Example indicates the expenses you would pay on
a $1,000 investment in a Portfolio's C Shares assuming: (1) a 5%
annual return, (2) reinvestment of all dividends and distributions,
and (3) redemption at the end of each period. This is only an example
and does not represent past or future expenses or return. Actual
expenses and return may be greater or less than indicated. The 5%
annual return neither predicts nor represents a Portfolio's projected
returns; rather, it is required by government regulation.
HYPOTHETICAL EXPENSE EXAMPLE
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------
GROWTH BALANCED PORTFOLIO $28 $54 $83 $164
GROWTH AND INCOME PORTFOLIO $28 $54 $83 $164
GROWTH PORTFOLIO $28 $54 $83 $164
</TABLE>
________________________________________________________________________________
The purpose of the table above is to help you understand the various costs
and expenses that you bear directly or indirectly through investing in the
Portfolios.
<PAGE>
8
[PICTURE OF A ROLLED UP FINANCIAL NEWSPAPER]
FINANCIAL HIGHLIGHTS
The following table provides financial highlights for each of the
Portfolios. This information represents selected data for a single
outstanding C Share of each Portfolio for the fiscal year ended May
31, 1998. The information for the fiscal year ended May 31, 1998, has
been audited by KPMG Peat Marwick LLP, independent auditors, whose
reports dated July 21, 1998 about a Portfolio, along with the
Portfolios' financial statements for the fiscal year ended May 31,
1998, and further information about each Portfolio's performance are
contained in the Portfolios' Annual Report, which may be obtained from
the Trust without charge. The financial statements are incorporated by
reference into the SAI.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Norwest Norwest
WealthBuilder II WealthBuilder Norwest
Growth Balanced II Growth & WealthBuilder
Portfolio Income Portfolio II Growth
Portfolio
----------------- ----------------- -----------------
Fiscal year ended May 31, 1998
-----------------------------------------------------------
Net Asset Value, Beginning of Period(a) $10.00 $10.00 $10.00
----------------- ----------------- -----------------
Investment Operations
Net Investment Income (Loss) (0.07) -- 0.01
Net Realized and Unrealized Gain (Loss) on 0.76 0.97 1.03
Investments
----------------- ----------------- -----------------
Total from Investment Operations 0.02 0.97 1.02
----------------- ----------------- -----------------
Distributions from
Net Investment Income (0.03) -- (0.01)
------
----------------- ----------------- -----------------
Net Asset Value, End of Period $10.80 $10.97 $11.01
================= ================= =================
___________________________________________________________________________________________________________________
Total Return(b) 8.35% 9.75% 10.17%
Supplementary Data
Net Assets at End of Period (in thousands) $9,300 $8,623 $5,695
Ratios to Average Net Assets:(c)
Expenses 1.25% 1.25% 1.25%
Expenses (excluding expense reimbursements/fee 2.64% 2.90% 3.32%
waivers)
Net Investment Income (Loss) (0.02)% (0.41)% 0.50%
Portfolio Turnover Rate(d) 20.20% 7.19% 15.60%
</TABLE>
- --------------------------------------------------------------------------------
(a) The Portfolios commenced operations on October 1, 1997.
(b) Total Return does not include the effects of sales charges. Total return
would have been lower absent expense reimbursements and/or fee waivers.
(c) Not Annualized.
(d) Annualized.
(e) Portfolio turnover represents the rate of portfolio activity.
<PAGE>
9
[PICTURE OF COINS]
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Investment Objectives.
- --------------------------------------------------------------------------------
There can be no assurance that a Portfolio or an Underlying Fund will
achieve its investment objective.
Norwest WealthBuilder II Growth Balanced Portfolio seeks a balance of
capital appreciation and income.
Norwest WealthBuilder II Growth and Income Portfolio seeks long-term
capital appreciation with a secondary emphasis on income.
Norwest WealthBuilder II Growth Portfolio seeks capital appreciation.
- --------------------------------------------------------------------------------
Investment Policies.
- --------------------------------------------------------------------------------
Each Portfolio seeks to meet its investment objective by allocating
among stock funds, bond funds, and money market funds. Certain
research indicates that the greatest impact on investment returns may
be due to the asset allocation decision (the mix of stocks, bonds, and
cash-equivalents) rather than market timing or the selection of
individual stocks and bonds. For example, a study of the performance
of pension funds indicated that over 90% of the pension funds'
performance was determined by asset mix.
Each Portfolio allocates its investments among stock funds, bond
funds, and money market funds by investing in a combination of
different types of Underlying Funds. Each Portfolio, in accordance
with its investment objective, will change its allocations between
types of Underlying Funds depending on changing market conditions and
the risk/return characteristics of the asset classes. The following
chart indicates each Portfolio's market-neutral position and range of
investment in different types of Underlying Funds. The amount a
Portfolio has invested in stock, bond, and money market funds at any
particular time may vary from the neutral position or the range of
investment due to market conditions or other factors. The investment
adviser rebalances a Portfolio when the Portfolio's asset allocation
deviates by five percent from the target allocation.
<PAGE>
10
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NORWEST WEALTHBUILDER II NEUTRAL POSITION INVESTMENT RANGE
PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
GROWTH BALANCED PORTFOLIO
Stock Funds 65.00% 50%-85%
Bond Funds 33.50% 20%-50%
Money Market Funds 1.50% 0%-3%
GROWTH & INCOME PORTFOLIO
Stock Funds 98.50% 97%-100%
Domestic Large Company 70.00% 50%-90%
Domestic Small Company 14.25% 5%-30%
International 14.25% 5%-30%
Money Market Funds 1.50% 0%-3%
GROWTH PORTFOLIO
Stock Funds 98.50% 97%-100%
Domestic Large Company 49.00% 25%-81%
Domestic Small Company 20.00% 5%-45%
International 29.50% 10%-50%
Money Market Funds 1.50% 0%-3%
</TABLE>
________________________________________________________________________________
The investment adviser attempts to identify and select diversified
portfolios of Underlying Funds based on an analysis of many factors.
The investment adviser uses various analytical techniques, including
quantitative techniques, valuation formulas, and optimization
procedures to assess the relative attractiveness of stocks, bonds, and
money market instruments. The investment adviser uses a Tactical Asset
Allocation Model to identify opportunities to add value by shifting
assets between stocks and bonds. The investment adviser uses a
Tactical Equity Allocation Model to identify opportunities to add
value by shifting assets between different equity styles, such as
domestic versus international, large cap versus small cap, or value
versus growth. After identifying the most and least attractive asset
classes, the investment adviser considers the expected returns from
and risks of an asset class before deciding whether to overweight or
underweight that asset class.
The investment adviser uses quantitative techniques to analyze and
rank potential Underlying Funds based on their historic total return,
volatility, and operating expenses over various time periods. The
investment adviser then reviews potential Underlying Funds' investment
objectives and policies. Potential Underlying Funds that rank the
highest by these criteria are then subjected to further qualitative
and quantitative evaluation of size, management, portfolio holdings,
investment practices and policies, investment style, and other
factors.
Consistent with each Portfolio's investment objective and policies and
under the general supervision of the Trust's Board of Trustees (the
"Board"), the investment adviser may in response to market and other
conditions select what it believes to be the optimal combination of
Underlying Funds for a Portfolio. In addition, the investment adviser
may, at any time, invest a Portfolio's assets in a type of Underlying
Fund that is different from or in addition to those currently used or
may invest directly in domestic and foreign securities and other
instruments. Growth Balanced Portfolio normally will invest at least
25% of its total assets in bond funds, money market funds and debt
securities.
<PAGE>
11
- --------------------------------------------------------------------------------
Additional Investment Policies And Risk Considerations.
- --------------------------------------------------------------------------------
The net asset values of Underlying Funds that use certain investment
strategies, such as leverage and trading in options and futures, may
be more volatile than the net asset values of other Underlying Funds.
The value of the shares of an Underlying Fund that is concentrated in
an industry may be subject to greater market fluctuation than an
investment in an Underlying Fund that invests in a broader range of
securities. No Portfolio will invest 25% or more of its assets in
Underlying Funds that concentrate their investments in any one
industry.
If a Portfolio focuses its investment in only a few Underlying Funds,
the Portfolio may be exposed to greater risk than if it were to invest
in a greater number of Underlying Funds. The Portfolios (and many of
the Underlying Funds) are diversified within the meaning of the 1940
Act. The level of diversification a Portfolio obtains from being
invested in a number of Underlying Funds reduces the risk associated
with an investment in a small number of Underlying Funds or a single
Underlying Fund. This risk is further reduced because each Underlying
Fund's investments are also spread over a range of issuers and
industries.
An Underlying Fund may redeem a Portfolio's investment wholly or in
part by an in-kind distribution of securities from its portfolio in
lieu of cash. In such cases, the Portfolio may hold the securities
distributed by an Underlying Fund until the investment adviser
determines that it is appropriate to dispose of such securities.
The Investment Company Act of 1940 (the "1940 Act") currently
restricts the Portfolios' ability to invest in shares of unaffiliated
Underlying Funds; the investment adviser at times may have to select
alternative investments. The 1940 Act also provides that an Underlying
Fund whose shares are purchased by a Portfolio will be obligated to
redeem shares held by the Portfolio only in an amount up to 1% of the
Underlying Fund's outstanding securities during any period of less
than 30 days. Accordingly, if the Underlying Fund is an "open-end"
fund, the Portfolio will consider shares of the Underlying Fund owned
by the Portfolio in excess of 1% of the Underlying Fund's outstanding
securities to be illiquid. (See "Investment Objectives and Policies --
Illiquid Securities.")
Investment decisions for the Underlying Funds are made independently
of the Portfolios and their investment adviser. One Underlying Fund,
therefore, may purchase shares of an issuer whose shares are being
sold by another Underlying Fund, resulting in an indirect cost to a
Portfolio without accomplishing any investment purpose. The Portfolios
may purchase shares of no-load funds that are available without a
transaction fee and load funds that are available to the Portfolios
without a sales charge.
The investment adviser uses the same conditions and criteria to select
affiliated and unaffiliated funds, except that the Portfolios normally
will invest all of their assets allocated to money market funds in
affiliated money market funds.
STOCK FUNDS. Stock funds invest primarily in domestic or foreign
common stocks or securities convertible into or exchangeable for
common stock. The Underlying Funds may include stock funds holding
large company stocks, small company stocks, and international stocks.
<PAGE>
12
Large company stock funds normally invest in U.S. companies with large
and mid-size market capitalization. These companies generally have a
market capitalization in excess of $1.5 billion. Many of these
companies' stocks are included in the Standard & Poor's 500 Composite
Stock Index, a widely recognized, unmanaged index of common stock
prices. The Underlying Funds that invest in these stocks, and
indirectly the Portfolios, are exposed to the possibility that stock
prices, and therefore the net asset value of stock funds, may decline
over short or even extended periods ("stock-market risks"). The
investment adviser believes that a diverse portfolio of large company
stock funds, each holding a diverse portfolio of stocks of various
industries, should tend to reduce stock market risk.
Small company stock funds invest in companies with a market
capitalization below that of large and mid-size companies. The market
capitalization of these companies currently is less than $1.5 billion.
Small company stocks have historically been characterized by greater
total returns, greater volatility of price and returns, and lower
dividend yields than large company stocks. The greater price
volatility may result from there being less market liquidity and
publicly available information regarding small company stocks than
large company stocks. Generally, fewer investors monitor the
activities of small companies than large companies. The investment
adviser believes that a diverse portfolio of small company stock
funds, each holding a diverse portfolio of small company stocks of
various industries, should tend to reduce the risks associated with
small company stocks.
International stock funds generally invest in the securities of
foreign issuers. The Portfolios' investments in international stock
funds involves risks similar to those of investing directly in foreign
stocks. Foreign stocks are stocks issued by publicly traded companies
from all countries except the United States. The Portfolios will
invest only in stock funds that invest primarily in publicly traded
stock of foreign issuers. The Underlying Funds' investments may be
denominated in foreign currencies, with the value of these investments
affected by changes in currency exchange rates versus the U.S. dollar
in addition to normal market fluctuations. The exchange rate between
the U.S. dollar and foreign currencies is determined by the forces of
supply and demand in foreign exchange markets, by changes in interest
rates, as well as by political and economic factors. Other risks and
considerations of international investing include: differences in
accounting, auditing, and financial reporting standards; generally
higher transaction costs on foreign portfolio transactions; small
trading volumes and generally lower liquidity of foreign stock
markets, which may result in greater price volatility; foreign
withholding taxes payable on portfolio holdings, which may reduce
dividend income payable to shareholders; the possibility of
expropriation, nationalization, or confiscatory taxation; adverse
changes in investment or exchange control regulations; political
instability, which could affect U.S. investment in foreign countries;
and potential restrictions on the flow of international capital. These
international investment risks are present when investing in both
developed and developing emerging markets. Some of the Underlying
Funds may attempt to hedge against currency fluctuations by entering
into currency futures, options, or forward contracts. The risks of
such investments are discussed below.
As a portion of its foreign stock fund allocations and subject to its
investment objective, a Portfolio may invest up to 15% of its net
assets in Underlying Funds that invest primarily in developing or
emerging market countries. These countries tend to have economic
structures that are less diverse and mature and political
<PAGE>
13
systems that are less stable than developed market countries. A
developing or emerging market country generally is considered to be in
the initial stages of industrialization. The risks of investing in
developing or emerging markets are similar to but greater than the
risks of investing in developed foreign markets.
As a part of their stock fund allocations, the Portfolios may also
invest in Underlying Funds that invest primarily in stock of issuers
located throughout the world, including the United States. As these
funds may invest in both developed and emerging market countries, they
share the risks associated with investments in both markets, as
discussed above. In addition, because these funds may also invest in
the United States, they expose a Portfolio to the risks associated
with investing in the stock of U.S. issuers.
BOND FUNDS. Bond funds seek current income and invest primarily in
short- or longer-term U.S. government obligations, investment-grade
corporate-debt obligations, and highly rated mortgage-backed and other
asset-backed securities. Bond funds are subject to the potential for
decline in the market value of bonds, and therefore bond funds, due to
interest rate changes or the ability of an issuer to meet its
obligations ("bond risk"). The Underlying Funds may invest in bonds
having either floating- or fixed-interest rates. Bond funds also may
invest in repurchase agreements collateralized by eligible
investments.
The Underlying Funds may invest in obligations issued or guaranteed by
the U.S. Government, its agencies, instrumentalities, and
government-sponsored enterprises, including bills, notes, bonds,
discount notes, and stripped government securities ("U.S. Government
securities"). Not all U.S. Government securities are backed by the
full faith and credit of the United States. If it were not obligated
to do so, there can be no assurance that the U.S. Government would
provide financial support for U.S. Government securities issued by its
agencies, instrumentalities, and government-sponsored enterprises.
The Underlying Funds also may invest in mortgage- and other
asset-backed securities. Mortgage-backed securities are collateralized
by pools of mortgage loans and may be assembled by various
governmental agencies and government-sponsored enterprises, such as
GNMA, FNMA, and FHLMC. Asset-backed securities may be secured by
company receivables, home equity loans, truck and auto loans, leases,
or credit-card receivables. When interest rates decline, there is an
increased likelihood that the mortgages or other assets underlying
mortgage- or other asset-backed securities will be pre-paid, resulting
in the loss of any unamortized premium paid for the securities and the
probability of having to reinvest the proceeds at lower rates. The
Portfolios will not select Underlying Funds that invest primarily in
non-investment grade asset-backed obligations.
The market value of the Underlying Funds' debt investments changes in
response to interest-rate fluctuations and other factors. During
periods of falling interest rates, the values of outstanding debt
securities generally rise; conversely, during periods of rising
interest rates, the values of such securities generally decline. While
securities with longer maturities tend to produce higher yields, the
prices of longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest rates. Changes
in the rating of any debt security by a nationally recognized
statistical rating organization ("NRSRO") and in the ability of an
issuer to make payments of interest and repayments of principal also
affect the value of these
<PAGE>
14
investments. Except under default conditions, changes in the value of
portfolio securities do not affect cash income derived from these
securities but do affect the Underlying Funds' net asset values.
A Portfolio may invest in "balanced funds," which are funds that
normally seek to invest substantial portions of their assets in both
stocks and bonds or preferred stock. Generally, a balanced fund must
invest at least 25% of its assets in fixed income senior securities. A
Portfolio's investment in a balanced fund exposes the Portfolio to the
risks, described above, of an investment in both a stock fund and a
bond fund, because balanced funds invest in both of these instruments.
Each Portfolio may invest more than 5% of its assets in balanced
funds.
Money Market Funds. Money market funds invest in U.S. dollar
denominated short-term money market instruments determined by the
fund's investment adviser to present minimal credit risk. The
Portfolios may also invest directly in money market instruments.
Eligible instruments include:
1. Bank certificates of deposit, time deposits, or bankers'
acceptances of domestic banks (including their foreign branches),
U.S. branches of foreign banks, and foreign branches of foreign
banks, having capital, surplus, and undivided profits in excess
of $100 million.
2. Commercial paper rated in one of the two highest rating
categories by an NRSRO, or commercial paper or notes of issuers
with an unsecured debt issue outstanding currently rated in one
of the two highest rating categories by any NRSRO where the
obligation is on the same or a higher level of priority and
collateralized to the same extent as the rated issue.
3. Obligations issued or guaranteed by the U.S. Government or its
agencies, instrumentalities, or government-sponsored enterprises.
4. Repurchase agreements involving obligations that are suitable for
investment under the categories set forth above.
Closed-End Funds. A closed-end fund has a fixed number of shares.
While an open-end investment company must redeem its shares at net
asset value when tendered for redemption by a shareholder, a
closed-end investment company is not so required. Instead, shares of
closed-end investment companies trade on exchanges and over the
counter like conventional stocks.
Shares of a closed-end investment company may, and typically do, trade
at a discount to net asset value. In addition, there may be no readily
available market for closed-end investment company shares, in which
case the shares are generally considered illiquid and subject to a
Fund's restriction on holding illiquid securities.
Borrowing. As a fundamental policy, each Portfolio may borrow money
from banks or by entering into reverse repurchase agreements and will
limit bank borrowings to amounts not in excess of 33 1/3% of the value
of the Portfolio's total assets. Bank borrowing for other than
temporary or emergency purposes or meeting redemption requests is not
expected to exceed 5% of the value of any Portfolio's assets.
Irrespective of the Portfolio's policy on borrowings, each Portfolio
may enter into reverse repurchase agreements as described above
(transactions in which a Portfolio
<PAGE>
15
sells a security and simultaneously commits to repurchase that
security from the buyer at an agreed upon price on an agreed upon
future date).
Illiquid Securities. No Portfolio 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 Portfolio 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). Limitations on resale may have
an adverse effect on the marketability of portfolio securities, and a
Portfolio might also have to register restricted securities in order
to dispose of them, resulting in expense and/or delay. A Portfolio
might not be able to dispose of restricted or other securities
promptly or at reasonable prices and, thereby, might 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 (the "1933 Act"),
including repurchase agreements and foreign securities. Institutional
investors depend on an efficient institutional market in which the
unregistered security can be readily resold or on the issuer's ability
to honor a demand for repayment of the unregistered security. A
security's contractual or legal restrictions on resale to the general
public or to certain institutions may not be indicative of the
liquidity of the security. If such securities are eligible for
purchase by institutional buyers in accordance with Rule 144A under
the 1933 Act, the investment adviser may determine that such
securities are not illiquid securities under guidelines adopted by the
Board. These guidelines take into account trading activity in the
securities and the availability of reliable pricing information, among
other factors. If there is a lack of trading interest in a particular
Rule 144A security, a Portfolio's holdings of that security may be
illiquid.
Repurchase Agreements and Lending Of Portfolio Securities. Each
Portfolio 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 Portfolio 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 and 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 Portfolio lends a security, it receives payment from
the borrower or interest from investing cash collateral. The Trust
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. A Portfolio may pay fees to arrange
securities loans and will limit securities lending to not more than 33
1/3% of the value of its total assets.
<PAGE>
16
Each Portfolio may invest a certain portion of its cash reserves in
repurchase agreements or an affiliated Underlying Fund that is a money
market fund. A reserve position provides flexibility in meeting
redemptions, expenses, and the timing of new investments and serves as
a short-term defense during periods of unusual volatility.
Portfolio Turnover. The Portfolios anticipate that their annual
portfolio turnover rate will not exceed 100%; there can be no
guarantee, however, that a Portfolio's turnover rate, which is based
on the turnover rate of the Underlying Funds, will be less than 100%.
Investment Policies. Each Portfolio's investment objective and
fundamental investment policies may not be changed without approval of
the holders of a majority of the Portfolio's outstanding voting
securities. 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 each
Portfolio are not fundamental and may be changed by the Board without
shareholder approval. All investment policies relate to each Portfolio
and, unless otherwise noted, not to a portion of a Portfolio that
invests in a particular investment style. A further description of the
Portfolios' investment policies, including additional fundamental
policies, is contained in the SAI.
Year 2000 And Euro. The Portfolios could be adversely affected if the
computer systems used by the investment adviser and other service
providers (and in particular foreign service providers) to the Fund do
not properly process and calculate date-related information and data
from and after January 1, 2000 or information regarding the new common
currency of the European Union. The Year 2000 and Euro issues also may
adversely affect the Portfolios' investments.
Norwest and Forum are taking steps to address the Year 2000 and Euro
issues for their computer systems and to obtain reasonable assurances
that comparable steps are being taken by the Portfolios' other major
service providers. While the Portfolios do not anticipate any adverse
effect on their computer systems from the Year 2000 and Euro issues,
there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Portfolios.
<PAGE>
17
[PICTURE OF FINANCIAL NEWSPAPERS]
MANAGEMENT OF THE PORTFOLIOS
General Oversight of the Portfolios. The Board meets regularly to
review the Portfolios' general policies, investments, performance,
expenses, and other business affairs. The Board consists of eight
persons.
Investment Advisory Services. Subject to the general supervision of
the Board, Norwest makes investment decisions for the Portfolios and
continuously reviews and determines the allocation of the assets of
the Portfolios among the Underlying Funds. Norwest, 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 June 30, 1998 Norwest Corporation had assets of approximately $93.2
billion. Norwest currently manages more than $29 billion in assets.
Advisory Fees. For its services, Norwest is entitled to receive
investment advisory and allocation fees from each Portfolio at the
annual rate 0.35% of the Portfolio's average daily net assets.
Portfolio Managers. Many persons on the advisory staff of Norwest
contribute to the investment services provided to the Portfolios.
Galen Blomster, Ph.D., CFA, Vice President & Director of Research and
Amala Thakkar, CFA, Institutional Product Manager are primarily
responsible for day-to-day management and allocation services and have
been since the inception of each Portfolio. Mr. Blomster and Ms.
Thakkar have been employed by Norwest since 1977 and 1994,
respectively. Prior to joining Norwest, Ms. Thakkar worked for ATE
Enterprises in Bombay, India, as manager of corporate planning. In
addition to their responsibilities for the Portfolios, each portfolio
manager may perform portfolio management and other duties for other
funds of the Trust and for Norwest Bank.
Management and Administration. As manager, Forum supervises the
overall management of the Trust (including the Trust's receipt of
services for which it is obligated to pay) other than investment
advisory services. In this capacity Forum provides the Trust with
general office facilities and persons satisfactory to the Board to
serve as officers of the Trust and oversees the performance of
administrative and professional services rendered to the Portfolios by
others, including the Portfolios' custodian, transfer agent,
accountants, auditors, and legal counsel.
FAS is responsible for performing or overseeing certain administrative
services necessary for the Trust's operations with respect to the
Portfolios including, but not limited to: (1) assisting in the
preparation, printing, and 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; (2) assisting in the preparation of proxy
and information statements and any other communications to
shareholders; (3) assisting the Advisers in monitoring Fund holdings
for compliance with Prospectus and SAI investment restrictions and
assisting in preparation of periodic compliance reports; (4)
preparing, filing, and maintaining the Trust's governing documents,
including the Trust Instrument, Bylaws, and minutes of meetings of
Trustees, Board committees, and shareholders; (5) monitoring the sale
of shares and ensuring that such shares are properly and duly
registered with the SEC and applicable state and other securities
commissions; (6)
<PAGE>
18
calculating of performance data for dissemination to information
services covering the investment company industry, for sales
literature of the Trust, and other appropriate purposes; and (7)
determining the amount of and supervising the declaration of dividends
and other distributions to shareholders as necessary to, among other
things, maintain the qualification of each Fund as a regulated
investment company under the Internal Revenue Code of 1986, as
amended, and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to
shareholders.
As of August 31, 1998 Forum and FAS provided management and
administrative services to registered investment companies and
collective investment funds with assets of approximately $38 billion.
Forum is a member of the National Association of Securities Dealers,
Inc. For their services with respect to each Portfolio, Forum and FAS
each are entitled to receive a fee at an annual rate of 0.05% of the
Portfolio's average daily net assets.
Pursuant to a separate agreement, Forum Accounting Services, LLC
("Forum Accounting") provides portfolio accounting services to each
Portfolio. Forum, FAS, and Forum Accounting are members of the Forum
Financial Group of companies that together provide a full range of
services to the investment company and financial services industry. As
of October 1, 1998, Forum, FAS and Forum Accounting were controlled by
John Y. Keffer, President and Chairman of the Trust.
Distribution and Distribution Plan. Forum acts as distributor of the
Portfolios' shares. The Trust may compensate Forum under a
distribution plan adopted under Rule 12b-1 under the 1940 Act (the
"Distribution Plan") by the Trust for the Portfolio's shares. Forum,
in turn, may use these payments to compensate others for services
provided, or to reimburse others for expenses incurred, in connection
with the distribution of shares. The Distribution Plan authorizes
monthly payments at an annual rate of up to 0.75% of the Portfolios'
average daily net assets.
Payments under the Distribution Plan may be made for various types of
costs, including: (1) advertising expenses; (2) costs of printing
prospectuses and other materials to be given or sent to prospective
investors; (3) expenses of sales employees or agents of Forum,
including salary, commissions, travel, and related expenses in
connection with the distribution of shares; (4) payments to
broker-dealers who advise shareholders regarding the purchase, sale,
or retention of shares; and (5) payments to banks, trust companies,
broker-dealers (other than Forum) or other financial organizations
(collectively, "Processing Organizations"). Payments to a particular
Processing Organization under the Distribution Plan are calculated by
reference to the average daily net assets of shares owned beneficially
by investors who have a brokerage or other service relationship with
the Processing Organization. A Portfolio will not be liable for
distribution expenditures made by Forum in any given year in excess of
the maximum amount payable under the Distribution Plan in that year.
Costs or expenses in excess of the annual limit may not be carried
forward to future years. Salary expenses of sales personnel
responsible for marketing various shares of portfolios of the Trust
may be allocated to those portfolios, including shares of a Portfolio,
that have adopted a plan similar to that of the Portfolios. Travel
expenses may be allocated to, or divided among, the particular
portfolios of the Trust for which they are incurred.
<PAGE>
19
Forum receives no fees for its services as the distributor of the
shares. From its own resources, Forum may pay fees to broker-dealers
or other persons for distribution or other services related to the
Portfolios.
Transfer and Shareholder Services Agent. Norwest Bank which is located
at Norwest Center, Sixth Street and Marquette, Minneapolis, Minnesota
55479, serves as transfer and shareholder services agent for each
Portfolio. As transfer agent, Norwest Bank maintains an account for
each Portfolio shareholder (unless such accounts are maintained by
sub-transfer agents or other processing agents), performs other
transfer agency functions, and acts as dividend disbursing agent for
the Trust. The transfer agent may subcontract any or all of its
functions with respect to all or any portion of the Portfolios'
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 "Service
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
with respect to the Portfolios. For its services, Norwest Bank is
entitled to receive a fee with respect to each Portfolio at an annual
rate of 0.25% of its average daily net assets.
Norwest Bank also serves as each Portfolio's custodian and may appoint
subcustodians for any securities and other assets held in
depositories. For its custodial services, Norwest Bank is entitled to
receive a fee with respect to each Portfolio at an annual rates of:
0.02% of the first $100 million of a Portfolio's average daily net
assets, 0.015% of the next $100 million of the Portfolio's average
daily net assets, and 0.01% of the Portfolio's remaining average daily
net assets. No fee is directly payable by a Portfolio to the extent
the Portfolio is invested in one or more Underlying Funds.
Portfolio Expenses. Subject to the obligation of Norwest and Norwest
Bank to waive fees and/or reimburse the Trust for certain expenses of
the Portfolios, each Portfolio is responsible for all expenses related
to its operations. Each Portfolio bears all costs of its operations
other than expenses specifically assumed by the investment adviser.
The costs borne by each Portfolio include a pro rata portion of the
following: the Portfolio's share of the expenses of the Underlying
Funds in which a Portfolio invests (borne indirectly by the
Portfolio's shareholders); legal and accounting expenses; Trustees'
fees and expenses; insurance premiums, custodian and transfer agent
fees and expenses; brokerage fees and expenses; expenses of
registering and qualifying the Portfolio's shares for sale with the
SEC and with complying with various state securities laws and
regulations; expenses of obtaining quotations on portfolio securities
and pricing of the Portfolio's shares; a portion of the expenses of
maintaining the Portfolio's legal existence and of shareholders'
meetings; and expenses of preparation and distribution to existing
shareholders of reports, proxies, and prospectuses. Trust expenses
directly attributed to the Portfolio are charged to the Portfolio;
other expenses are allocated proportionately among all the series of
the Trust in relation to the net assets of each series. The investment
adviser has undertaken voluntarily to waive a portion of its fees and
or assume certain expenses of each Portfolio, if necessary, in order
to limit total Portfolio expenses excluding taxes, interest, brokerage
commissions and other Portfolio transaction expenses and extraordinary
expenses to 1.25% of the Portfolio's average daily net assets. If
expense reimbursements are required, they are made on a monthly basis.
<PAGE>
19
Each Portfolio service provider may elect to waive all or a portion of
its fees, which are accrued daily and paid monthly. Any such waivers
have the effect of increasing a Portfolio's performance for the period
during which the waiver is in effect. Except as described above, fee
waivers are voluntary and may be reduced or eliminated at any time.
Each service provider to the Trust or its agents and affiliates also
may act in various capacities for, and receive compensation from,
their customers who are Portfolio shareholders. 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 Portfolio.
<PAGE>
21
[PICTURE OF GLOBE]
PURCHASES AND REDEMPTIONS OF SHARES
Shares are continuously sold and redeemed at a price equal to their net asset
value next determined plus any applicable sales charge, after receipt of an
order on every weekday except customary national holidays (New Year's Day,
Martin Luther King, Jr. Day, President's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas) and Good Friday ("Portfolio Business
Day").
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General Purchase Information
- --------------------------------------------------------------------------------
You may invest in the Portfolios directly or through certain financial
institutions. If you invest directly in a Portfolio, you are the
shareholder of record. All transactions in the Portfolios' shares are
effected through the transfer agent, which accepts orders for
redemptions and subsequent purchases only from shareholders of record
and new investors. Shareholders of record 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 written
to the Trust (drawn on a U.S. bank), by bank or federal funds wire
transfer, or by Automatic Clearing House (ACH) electronic bank
transfer; cash cannot be accepted.
When you sign your application for a new Portfolio 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 Trust to withhold 31% of your distributions
and redemptions.
Each Portfolio offers C Shares with an initial sales charge of 1.0%.
Purchase orders received by the transfer agent prior to the close of
regular trading on the New York Stock Exchange ("NYSE") on any
Portfolio Business Day are priced at the net asset value determined
that day (the "trade date"). Orders received by financial institutions
prior to the close of regular trading on the NYSE on a Portfolio
Business Day also are priced at the net asset value determined that
day, provided the order is received by the Trust prior to 4:00 p.m.
(Eastern time). For shares purchased through a financial institution
that transmits its orders to the Portfolio, payment for Portfolio
shares is due on the third business day after the trade date. In all
other cases, payment must be made with the purchase order.
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 reallows
discounts to selected broker-dealers. Forum reallows the entire sales
charge to selected broker-dealers for all sales orders 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 Portfolio
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: (1) the
provision of travel arrangements, and lodging; (2) tickets for
entertainment events; and (3) merchandise. In some instances, this
compensation may be made available only
<PAGE>
22
to certain dealers or other financial intermediaries who have sold or
are expected to sell significant amounts of shares of the Funds or who
charge an asset based fee (whether or not they have a fiduciary
relationship with their clients).
No sales charge is assessed on purchases: (1) 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); (2) 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; or
(3) by any registered investment adviser with whom Forum has entered
into a share purchase agreement and that is acting on behalf of its
fiduciary customer accounts. Shares sold without a sales charge may
not be resold except to the Portfolios, and share purchases must be
made for investment purposes.
Reinstatement Privilege. If you have redeemed a Portfolio's shares,
you may, within 60 days following the redemption, purchase shares,
without payment of an additional a front-end sales charge, in any of
the Portfolios in an amount up to the amount of your redemption. If
you want to exercise this "Reinstatement Privilege", please contact
the Trust for further information.
Investors In Other Fund Families. No sales charge is assessed on
purchases of C Shares of a Portfolio with the proceeds of a
redemption, 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 C Shares
of that Portfolio. You should contact the Trust for further
information and to obtain the necessary forms.
Reduced Initial Sales Charges. To qualify for a reduced sales charge,
you or your Processing Organization must notify the transfer agent at
the time of purchase of your intention to so qualify and you must
provide the transfer agent with sufficient information to verify that
your purchase qualifies for the reduced sales charges, which are as
follows:
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<TABLE>
<S> <C> <C> <C> <C> <C>
SALES CHARGE
AS A PERCENTAGE OF
-----------------------------------------------
BROKER-DEALERS'
REALLOWANCE AS A
PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE NET ASSET VALUE OFFERING PRICE
$25,000 up to $250,00 1.5% 1.52% 1.50%
$250,000 up to $500,000 1.25% 1.27% 1.25%
$500,000 up to 1,000,000 1.00% 1.01% 1.00%
$1,000,000 and up 0.75% 0.76% 0.75%
</TABLE>
________________________________________________________________________________
Reduced sales charges may be modified or terminated at any time and
are subject to confirmation of your holdings. Further information
about reduced sales charges is contained in the SAI.
Self-Directed 401(k) Programs. Purchases of Portfolio shares through
self-directed 401(k) programs and other qualified retirement plans
offered by Norwest Bank, 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.
<PAGE>
23
HOW TO BUY SHARES
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Minimum Investment
- --------------------------------------------------------------------------------
There is a $25,000 minimum initial investment in the Portfolios. There
is a $500 minimum for subsequent purchases of Portfolio shares, except
for IRA and systematic investing where the subsequent investment
minimum is reduced to $150. The investment adviser may in its
discretion waive the investment minimums.
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Purchase Procedures
- --------------------------------------------------------------------------------
Initial Purchases. There are three ways to purchase shares initially.
----------
1. BY MAIL. You may send a check along with a completed account
application to the Trust at the address listed under "Account
Application". Checks are accepted at full value subject to collection.
If a check does not clear, the purchase order is canceled, and you are
liable for any losses or fees incurred by the Trust, the transfer agent
or the distributor.
<PAGE>
For individual or Uniform Gift to Minors Act accounts, the check used
must be made payable to Norwest WealthBuilder II Portfolios ["Portfolio
Name"] or to one or more owners of that account and endorsed to Norwest
WealthBuilder II Portfolios ["Portfolio Name"]. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts,
your check to purchase Portfolio shares must be made payable on its
face to "Norwest WealthBuilder II Portfolios" ["Portfolio Name"]. No
other methods of payment by check are accepted.
2. By Bank Wire. You may make an initial investment in a Portfolio using
the wire system for transmittal of money among banks. You should first
telephone the transfer agent at 1-612-667-8833 or 1-800-338-1348 to
obtain an account number. You then should instruct your bank to wire
the money immediately to:
NORWEST BANK MINNESOTA, N.A.
ABA 091 000 019
FOR CREDIT TO: NORWEST WEALTHBUILDER II PORTFOLIOS
0844-131
RE: [NAME OF PORTFOLIO]
ACCOUNT NO.:
ACCOUNT NAME:
You then should promptly complete and mail the account application
form. Your bank may impose a charge on you for transmitting the money
by bank wire. The Trust does not charge for the receipt of wire
transfers. Payment by bank wire is treated as a federal funds payment
when received.
3. Through Financial Institutions. You may purchase and redeem shares
through 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 C Shares, may receive
payments from Forum with respect to sales of C Shares, and may receive
payments as a processing agent from the transfer agent.
<PAGE>
24
In addition, financial institutions, including Processing
Organizations, may charge you a fee for their services; they are
responsible for promptly transmitting purchase, redemption, and other
requests to the Portfolios.
If you purchase shares through a Processing Organization, you are
subject to the procedures of that 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 Portfolio directly. You should acquaint
yourself with the Processing Organization's procedures and should read
this Prospectus in conjunction with any materials and information that
the Processing Organization has provided to you. If you purchase
Portfolio shares through a Processing Organization, you may or may not
be the shareholder of record and, subject to the Processing
Organization's and the Portfolios' procedures, you may have Portfolio
shares transferred into your 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 you if you have
purchased shares through a Processing Organization. You should contact
your 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 would
provide you with confirmations and periodic statements. The Trust is
not responsible for the failure of any Processing Organization to
carry out its obligations to you or other customers.
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Subsequent Purchases
- --------------------------------------------------------------------------------
Subsequent purchases may be made by mailing a check, by sending a bank
wire, or through your Processing Organization as indicated above. All
payments should clearly indicate your name and account number.
- --------------------------------------------------------------------------------
Account Application
- --------------------------------------------------------------------------------
You may obtain an account application to open an account by writing the
Trust at the following address:
NORWEST WEALTHBUILDER II PORTFOLIOS
[NAME OF PORTFOLIO]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
To participate in shareholder services not referenced on your account
application or to change information on your account (such as addresses),
please contact the Trust. The Trust reserves the right in the future to
modify, limit, or terminate any shareholder privilege upon appropriate
notice and to charge a fee for certain shareholder services, although no
such fees are currently contemplated. You may terminate any privilege and
participation in any program at any time by writing the Trust.
<PAGE>
25
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
Portfolio shares are continuously sold on every Portfolio Business
Day. The purchase price for Portfolio shares equals their net asset
value next-determined after receipt of an order plus any applicable
sales charge imposed at the time of purchase.
Portfolio shares are entitled to receive dividends and distributions
as of the first Portfolio Business Day after a purchase order is
accepted. The Trust reserves the right to reject any purchase order
for shares.
<PAGE>
26
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
You may sell your Portfolio shares (redeem) at their net asset value on any
Portfolio Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions.
Your Portfolio shares are redeemed as of the next determination of the
Portfolio's net asset value following receipt by the transfer agent of your
redemption order in proper form (and any supporting documentation that the
transfer agent may require). You are not entitled to receive dividends
declared on your redeemed shares after the day the redemption becomes
effective.
Normally, your 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 your shares being redeemed has been cleared by
your bank, which may take up to 15 days. This delay may be avoided by
paying for shares through wire transfers or ACH (Automatic Clearing House).
Unless otherwise indicated, redemption proceeds normally are paid by check
mailed to your record address. Your 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 Portfolio, 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 Portfolio of
its portfolio securities or determination by the Portfolio 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
- --------------------------------------------------------------------------------
If you have invested through a Processing Organization, you may redeem your
shares through the Processing Organization as described above. If you have
invested directly in a Portfolio, you may redeem your shares as described
below. If you wish to redeem shares by telephone or receive redemption
proceeds by bank wire, you must elect these options by properly completing
the appropriate sections of your account application form. These privileges
may not be available until several weeks after your application is
received.
1. By Mail. You may redeem shares by sending a written request to the transfer
agent. You must sign all written requests for redemption with signature
guaranteed. (See "How to Sell Shares -- Other Redemption Matters".)
2. By Telephone. If you have elected telephone redemption privileges, you may
make a telephone redemption request by calling the transfer agent at
1-800-338-1348 or 1-612-667-8833 and providing your account number, the
exact name in which your shares are registered and the your social security
or taxpayer identification number. In response to the telephone redemption
instruction, the Trust will mail a check to your record address or, if you
have elected wire redemption privileges, wire the proceeds. (See "How to
Sell Shares -- Other Redemption Matters".)
<PAGE>
27
3. By Bank Wire. For redemptions of more than $5,000, if you have elected wire
redemption privileges, you may request a Portfolio to transmit the
redemption proceeds by federal funds wire to a bank account you have
designated in writing. To request bank wire redemptions by telephone, you
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 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: (1) instruction
to change your record name; (2) modification of a designated bank account
for wire redemptions; (3) instruction regarding an Automatic Investment
Plan or Automatic Withdrawal Plan, (4) dividend and distribution election;
(5) telephone redemption; (6) exchange option election or any other option
election in connection with your account; (7) written instruction to redeem
shares whose value exceeds $50,000; (8) redemption in an account in which
the account address has changed within the last 30 days; (9) redemption
when the proceeds are deposited in a Portfolio account under a different
account registration; and (10) 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.
You must elect telephone redemption or exchange 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. You should verify the accuracy of
telephone instructions immediately upon receipt of your confirmation
statements. During times of drastic economic or market changes, telephone
redemption, and exchange privileges may be difficult to implement. In the
event that you are unable to reach the transfer agent by telephone, you may
mail or hand-deliver requests 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 Portfolio account whose aggregate net asset value is less
than $1,000 immediately following any redemption.
<PAGE>
28
OTHER SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
Exchanges
- --------------------------------------------------------------------------------
You may exchange your shares for C Shares of the other Norwest
WealthBuilder II Portfolios. For information, please contact the transfer
agent.
The Portfolios do not charge for exchanges, and there is currently no limit
on the number of exchanges you may make. The Trust reserves the right,
however, to limit excessive exchanges by you or to impose a fee per
exchange over a minimum amount. Exchanges are subject to the fees charged
by, and the limitations (including minimum investment restrictions) of, the
Portfolio into which you are exchanging.
Exchanges may only be made between identically registered accounts or by
opening a new account. You must submit a new account application 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 your exchange is being made. You may only exchange into a
Portfolio if that Portfolio's shares may legally be sold in your state of
residence.
Under federal tax law, the Portfolios treat an exchange as a redemption and
a purchase. Exchange procedures may be amended materially or terminated by
the Trust at any time upon 60 days' notice. (See "Additional Purchase and
Redemption Information" in the SAI.)
Sales Charges. The exchange of C shares may result in additional sales
charges. If you exchange into a Portfolio that imposes an initial sales
charge, you must pay an amount equal to any excess of that Portfolio's
initial sales charge attributable to the number of shares being acquired in
the exchange over any initial sales charge you paid for the shares being
exchanged. For example, if you paid a 1% initial sales charge in connection
with a purchase of shares and then exchanged those shares into shares of
another Portfolio subject to a 1.5% sales charge, you would pay the
differential sales charge on the exchange. C 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. You may make exchanges by mail by writing to the
transfer agent and sending any share certificates for the shares to be
exchanged. You must sign all written requests for exchanges and endorse all
certificates with signature guaranteed. (See "How to Sell Shares -- Other
Redemption Matters".)
2. Exchanges By Telephone. If you have elected telephone exchange privileges,
you may make a telephone exchange request by calling the transfer agent at
1-800-338-1348 or 1-612-667-8833 and providing your account number, the
exact name in which your shares are registered and your social security or
taxpayer identification number. (See "How to Sell Shares -- Other
Redemption Matters".)
<PAGE>
29
- --------------------------------------------------------------------------------
Automatic Investment Plan
- --------------------------------------------------------------------------------
Under the Portfolios' Automatic Investment Plan, you may authorize monthly
amounts of $150 or more to be withdrawn automatically from your designated
bank account (other than a passbook savings account) and sent to the
transfer agent for investment in Portfolio shares. If you wish to use this
plan, you must complete an application, which may be obtained by writing or
calling the transfer agent. The Trust may modify or terminate your
automatic investment plan in the event that the Trust is unable to settle
any transaction with your bank. If the Automatic Investment Plan is
terminated before your account totals $25,000, the Trust reserves the right
to close your account in accordance with the procedures described under
"How to Sell Shares -- Other Redemption Matters".
- --------------------------------------------------------------------------------
Retirement Accounts
- --------------------------------------------------------------------------------
The Portfolios may be a suitable investment vehicle for part or all of the
assets you hold in Traditional or Roth individual retirement accounts
(collectively, "IRAs"). An IRA account application may be obtained by
contacting the Trust at 1-800-338-1348 or 1-612-667-8833. Generally,
investment earnings in an IRA are tax-deferred until you withdraw them. In
the case of a Roth IRA, if certain requirements are met, your investment
earnings will not be taxed even when you withdraw them. You generally may
make IRA contributions of up to a maximum of $2,000 annually. Only
contributions to your Traditional IRAs are tax deductible. However, your
deduction may be reduced if you or, in some cases, your spouse is an active
participant in an employer-sponsored retirement plan and you (or you and
your spouse) have adjusted gross income above certain levels. Your ability
to make contributions to a Roth IRA is restricted if you (or, in some
cases, you and your spouse) have adjusted gross income above certain
levels.
Your employer may also contribute to your IRA as part of a Savings
Incentive Match Plan for Employees, or "SIMPLE plan", established after
December 31, 1996. Under a SIMPLE plan, you may contribute up to $6,000
annually to your IRA, and your employer must generally match such
contributions up to 3% of the your annual salary. Alternatively, your
employer may elect to contribute to your IRA 2% of the lesser of the your
earned income or $160,000.
The foregoing discussion regarding IRAs is based on regulations in effect
as of January 1, 1998 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. You
should consult your tax advisors with respect to their specific tax
situation as well as with respect to state and local taxes.
<PAGE>
30
- --------------------------------------------------------------------------------
Automatic Withdrawal Plan
- --------------------------------------------------------------------------------
If you have shares in a single account that total $25,000 or more, you may
establish an automatic withdrawal plan to provide for the preauthorized
payment from your account of $250 or more on a monthly, quarterly,
semi-annual, or annual basis. Under the automatic withdrawal plan,
sufficient shares in your account are redeemed to provide your periodic
payment and any taxable gain or loss is recognized upon redemption of the
shares. If you wish to use the withdrawal plan, you may do so by completing
an application which may be obtained by writing or calling the transfer
agent. The Trust may suspend your withdrawal privileges without notice if
your account contains insufficient funds to effect a withdrawal or if your
account balance averages less than $25,000 over a period of twelve (12)
months.
- --------------------------------------------------------------------------------
Reopening Accounts
- --------------------------------------------------------------------------------
You may reopen an account, without filing a new account application form,
at any time within one year after the your account is closed, provided that
the information on the account application form on file with the Trust is
still current.
<PAGE>
31
DIVIDENDS AND TAX MATTERS
- --------------------------------------------------------------------------------
Dividends
- --------------------------------------------------------------------------------
Dividends of each Portfolio's net investment income are declared and paid
annually. Distributions of any net capital gain realized by a Portfolio are
distributed annually.
You may choose to have dividends and distributions of a Portfolio
reinvested in shares of that Portfolio (the "Reinvestment Option") or to
receive dividends and distributions in cash (the "Cash Option") or to
direct dividends and distributions to be reinvested in shares of certain
series 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 series of
the Trust.
Under the Reinvestment Option, all of a Portfolio's dividends and
distributions are automatically invested in additional shares of that
Portfolio. All dividends and distributions are reinvested at a Portfolio's
net asset value as of the payment date of the dividend or distribution. You
are assigned this option unless you select another option. Under the Cash
Option, all dividends and distributions are paid to you in cash. Under the
Directed Dividend Option, if you own shares of a Portfolio totaling $25,000
or more in a single account, you may elect to have all dividends and
distributions reinvested in shares of another series of the Trust, provided
that those shares are eligible for sale in your state of residence. For
further information concerning the Directed Dividend Option, please contact
the transfer agent.
- --------------------------------------------------------------------------------
Tax Matters
- --------------------------------------------------------------------------------
Each Portfolio intends to qualify for each fiscal year to be taxed as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). As such, no Portfolio will be liable for federal
income and excise taxes on the net investment income and net capital gain
distributed to its shareholders. Because each Portfolio intends to
distribute all of its net investment income and any net capital gain each
year, each Portfolio should thereby avoid all federal income and excise
taxes.
Dividends paid by a Portfolio out of its net investment income (including
net short-term capital gain) are taxable to shareholders as ordinary
income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in a Portfolio. Distributions of net capital gain may be taxable at
different rates depending on the length of time a Portfolio holds its
assets. If you hold shares for six months or less and during that period
receive a distribution of net capital gain, 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 Portfolio paying the dividend or distribution by the
amount of the dividend or distribution. Furthermore, a dividend or
distribution made shortly after your purchase of shares, although in effect
a return of capital to you, will be taxable to you as described above.
<PAGE>
32
Dividends or distributions received by a shareholder that is exempt from
federal income tax, such as a qualified pension plan, generally will not be
taxable to that shareholder.
To the extent a Portfolio or one of its Underlying Funds invests in the
stock of domestic issuers, dividends received by corporate shareholders of
the Portfolio may qualify for the dividends received deduction for
corporations. The amount of such dividends eligible for the dividends
received deduction is limited to the amount of qualifying dividends from
domestic corporations received during a Portfolio's fiscal year.
Each Portfolio is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to you if you fail to provide the Portfolio with a
correct taxpayer identification number or to make required certifications,
or if you are 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 Portfolio will be mailed to shareholders shortly after the close of
each calendar year.
<PAGE>
33
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 a fund 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. Norwest and any bank or other bank affiliate also may perform
Processing Organization or similar services for the Portfolios and their
shareholders. If a bank or bank affiliate were prohibited in the future
from so acting, changes in the operation of the Portfolios could occur and
you, if you were serviced by the bank or bank affiliate, might no longer be
able to avail yourself of those services. It is not expected that you would
suffer any adverse financial consequences as a result of any of these
occurrences.
- --------------------------------------------------------------------------------
Determination Of Net Asset Value
- --------------------------------------------------------------------------------
The Portfolios determine the net asset value of their shares as of 4:00
p.m., Eastern time, on each Portfolio Business Day by dividing the value of
the Portfolio'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 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 pursuant
to procedures approved by the Board. The Portfolios only determine net
asset value on Portfolio Business Days.
The Underlying Funds are valued at their respective net asset values as
determined by those funds. The Underlying Funds that are money market funds
value their portfolio securities in accordance with Rule 2a-7 under the
1940 Act. The other Underlying Funds value their portfolio securities based
on market quotes if they are readily available.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Portfolio Business Day. Trading in foreign securities,
however, may not take place on all Portfolio Business Days or may take
place on days that are not Portfolio Business Days. The determination of
the prices of foreign securities may be based on the latest market
quotations for the securities. If events occur that affect the securities'
value after the close of the markets on which they trade, the Portfolio or
Underlying Fund may make an adjustment to the value of the securities for
purposes of determining net asset value.
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.
<PAGE>
34
- --------------------------------------------------------------------------------
Performance Information
- --------------------------------------------------------------------------------
A Portfolio may quote performance in terms of yield or total return. All
performance information is based on historical results and is not intended
to indicate future performance. A Portfolio's yield is a way of showing the
rate of income the Portfolio earns on its investments as a percentage of
the Portfolio's share price. To calculate standardized yield, a Portfolio
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 Portfolio's share price at the end of the 30-day period. A
Portfolio's total return shows its overall change in value, including
changes in share price and assuming all the Portfolio's dividends and
distributions are reinvested. A cumulative total return reflects a
Portfolio'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 Portfolio's
performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in the Portfolios' returns,
you 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 Portfolio net of applicable sales charges. A
computation of yield or total return that does not take into account sales
charges will be higher than a similar computation that takes into account
payment of sales charges.
The Portfolios' advertisements may reference ratings and rankings among
similar mutual funds by independent evaluators such as Morningstar, Inc.,
Lipper Analytical Services, Inc., and IBC Financial Data, Inc. In addition,
the performance of a Portfolio 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 Portfolio that invests its
assets using different investment styles. Indices are not used in the
management of a Portfolio but rather are standards by which the investment
adviser and shareholders may compare the performance of the Portfolio to an
unmanaged composite of securities with similar, but not identical,
characteristics as the Portfolio. This material is not to be considered
representative or indicative of future performance. All performance
information for a Portfolio is calculated on a class basis.
- --------------------------------------------------------------------------------
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 Portfolio) and may divide portfolios or series into classes of
shares (such as C Shares); the costs of doing so is borne by the Trust or
Portfolio in accordance with the Trust Instrument. Currently the authorized
shares of the Trust are divided into 39 separate series.
Shareholder Voting And Other Rights. Each share of each series or class
thereof of the Trust 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 a class
(and certain other expenses such as transfer agency and administration
expenses) may be borne solely by those shares and each
<PAGE>
35
fund or class votes separately with respect to the provisions of any Rule
12b-1 plan which pertains to the fund or class and other matters for which
separate fund or class voting is appropriate under applicable law.
Generally, shares are voted in the aggregate without reference to a
particular fund or class, except if the matter affects only one fund 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 non-assessable. You may redeem shares at net asset value. If
you hold shares in a series, you are entitled to your 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 Portfolio reserves the right to seek to achieve its investment
objective by investing all of its assets in one or more registered
investment companies having a substantially similar investment objective
and policies.
From time to time certain shareholders may own a large percentage of the
shares of a Portfolio and, accordingly, may be able to greatly affect (if
not determine) the outcome of a shareholder vote.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE
STATEMENT OF ADDITIONAL INFORMATION AND THE PORTFOLIOS' OFFICIAL SALES
LITERATURE IN CONNECTION WITH THE OFFERING OF THE PORTFOLIOS' 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>
36
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
<PAGE>
37
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
<PAGE>
________________________________________________________________________________
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
________________________________________________________________________________
Shareholders Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 Norwest Advantage Funds [Logo]NORWEST
10/98 --------------
WEALTHBUILDER II
<PAGE>
NORWEST ADVANTAGE FUNDS
Exchange Shares
READY CASH INVESTMENT FUND
Exchange Shares
PROSPECTUS
October 1, 1998
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR
ANY OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
NO GOVERNMENTAL AGENCY, INCLUDING THE U.S. SECURITIES AND EXCHANGE COMMISSION,
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1. OVERVIEW
The following is a summary of information about the Fund. Before investing, you
should read the prospectus and consider the discussion under INVESTMENT
OBJECTIVES, POLICIES AND RISKS.
The Fund is not a complete or balanced investment program, but can serve as a
part of your overall investment program.
THE FUND AT A GLANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OBJECTIVE PRIMARY INVESTMENTS
High current income, High-quality money market instruments of
preservation of capital and U.S. and foreign issuers.
liquidity
CLASS OF SHARES
This prospectus offers Exchange Shares of the Fund. You may purchase Exchange
Shares only through exchanges of B Shares of other funds of Norwest Advantage
Funds. Exchange Shares are offered at net asset value. If you redeem Exchange
Shares, you pay a contingent deferred sales charge. The amount of the charge
depends on the length of time you have held the shares.
FUND STRUCTURES
The Fund invests in another fund identified in this prospectus as a Portfolio.
Except when necessary to describe the Fund's investments in the Portfolio, this
prospectus discusses the Fund's investments in the Portfolio as if the
investments were made directly in portfolio securities.
MANAGEMENT OF THE FUND
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the Portfolio's investment
adviser. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest Bank,
provides investment advice to institutions, pension plans and other accounts and
currently manages more than $29 billion in assets. This prospectus generally
refers to Norwest as the Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative and
underwriting services to the Funds.
PURCHASE OF SHARES
Exchange Shares require a minimum initial investment of $1,000 and minimum
subsequent investments of $100.
EXCHANGES
You may exchange Exchange Shares for B Shares of other funds of Norwest
Advantage Funds.
DISTRIBUTIONS
The Fund pays distributions of net investment income monthly.
RISK FACTORS
<PAGE>
Investments in the Fund are subject to risk and may decline in value. If you
invest in the Fund, the income you receive will vary with changes in interest
rates. In addition, the Fund's investments have "credit risk," which is the risk
that an issuer will be unable, or will be perceived to be unable, to pay the
interest and principal on its obligations when due. The Fund also has the risk
that it may not be able to maintain a stable net asset value of $1.00 per share.
The Fund has the risk that the Adviser may not be successful in carrying out its
investment strategy, that a portfolio manager may prove difficult to replace if
he or she becomes unavailable to manage the Fund and that the Fund's particular
investment strategy may result in performance that is worse or better than the
performance of the market as a whole.
EXPENSE INFORMATION
The following table will assist you in understanding the expenses that you will
bear directly or indirectly when you invest in the Fund.
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)
ANNUAL FUND OPERATING EXPENSES(2)(6)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Investment Advisory Fees None
Rule 12b-1 Fees (after fee waivers)(3) 0.75%
Other Expenses (after reimbursements) 0.42%
Investment Advisory Fees - Portfolio(4) 0.33%
Other Expenses - Portfolio (after reimbursements) 0.07%
TOTAL OPERATING EXPENSES (after reimbursements)(5) 1.57%
(1) The amount of the contingent deferred sales charge applicable to any
Exchange Share will depend upon the deferred sales charges of the B Shares
originally purchased. The maximum possible contingent deferred sales charge
is 4.0%. The charge declines from the maximum each year following the
original purchase of B Shares until it reaches zero.
(2) The Fund bears its pro rata share of the Portfolio's expenses.
(3) Absent fee waivers, Rule 12b-1 Fees would be 1.00%.
(4) Norwest and Forum Financial Group have agreed to waive their respective
fees or reimburse expenses in order to maintain the Fund's total combined
operating expenses at or below 1.57%. Any reduction of those waivers or
reimbursements would require review by the Fund's Board of Trustees.
(5) Absent estimated expense reimbursements and fee waivers, the expenses of
Exchange Shares would be: Other Expenses, 4.00%; and Total Operating
Expenses, 5.50%. Except as otherwise noted, expense reimbursements and fee
waivers are voluntary and may be reduced or eliminated at any time.
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses that
you 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
<PAGE>
return and reinvestment of all distributions. THE EXAMPLE DOES NOT REPRESENT
PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR
LESS THAN THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Assuming redemption at the end of the period $56 $80 $106 $187
Assuming no redemption $16 $50 $86 $187
</TABLE>
<PAGE>
2. FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 10 years or since inception of the class.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned
on an investment in the Fund, assuming reinvestment of all distributions. The
information from June 1, 1994 through May 31, 1998 has been audited by KPMG Peat
Marwick, LLP independent auditors, whose report dated July 21, 1998 about the
Fund, along with the Fund's financial statements, are included in the Fund's
Annual Report, which is available at no charge upon request. These financial
statements are incorporated by reference into the SAI. Other independent
auditors audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C>
Ready Cash Investment Fund
--------------------------------------------------------------------------
Year Ended Period
May 31, Ended May 31,
......................................................... .............
------------ . -----------
1998 1997 1996 1995 1994(a)
----------- ------------ ----------- ----------- -------------
Beginning Net Asset Value per Share $1.00 $1.00 $1.00 $1.00 $1.00
Net Investment Income 0.050 0.040 0.043 0.038 0.001
Net Realized and Unrealized Loss on
Investments (0.008)
Dividends from Net Investment Income (0.042) (0.040) (0.043) (0.038) (0.001)
Ending Net Asset Value per Share $1.00 $1.00 $1.00 $1.00 $1.00
Ratios to Average Net Assets:
Expenses(b) 1.56% 1.57% 1.57% 1.57% 1.53%(c)
Net Investment Income 4.21% 4.03% 4.32% 3.62% 2.48%(c)
Total Return 4.29% 4.09% 4.38% 3.69% 2.51%(c)
Net Assets at End of Period (000s $337 $655 $129 $160 $151
omitted)
- ------------------------------------- ----------- -- ------------
</TABLE>
(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 5.57% 5.66% 8.24% 6.32% 1.85%(c)
(c) Annualized.
<PAGE>
- --------------------------------------------------------------------------------
3. GLOSSARY
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the discussion
of the Fund's objectives, policies and risks. Defined terms are capitalized when
used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Term Definition
- ---- ----------
Board The Board of Trustees of Norwest Advantage
Funds.
CDSC Contingent deferred sales charge.
NRSRO A nationally recognized statistical rating
organization, such as Standard & Poor's
Corporation, that rates fixed-income
securities and money market mutual funds by
relative credit risk.
SEC The U.S. Securities and Exchange Commission.
U.S. Government Security A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies or its
instrumentalities.
- --------------------------------------------------------------------------------
4. INVESTMENT OBJECTIVES, POLICIES AND RISKS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.
INVESTMENT POLICIES. The Fund's investments are made under the requirements of
an SEC rule governing the investments that money market funds may make. The Fund
invests only in high-quality, U.S. dollar-denominated short-term money market
instruments that are determined by the Adviser, under procedures adopted by the
Board, to be eligible for purchase and to present minimal credit risks. The Fund
may invest in securities with fixed, variable or floating rates of interest.
High-quality instruments include those that: (1) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1 NRSRO has
issued a rating, by that NRSRO; or (2) are otherwise unrated and determined by
the Adviser to be of comparable quality. The Fund invests at least 95% of its
total assets in securities in the highest rating category.
The Fund invests in a broad spectrum of high-quality money market instruments of
U.S. and foreign issuers, including U.S. Government Securities, municipal
securities and corporate debt securities. The Fund seeks to maintain a rating
within the 2 highest short-term categories assigned by at least 1 NRSRO.
The Fund 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, U.S.
branches and agencies of foreign banks and wholly-owned banking-related
subsidiaries of foreign banks. The Fund limits its investments in obligations of
financial institutions to institutions that at the time of investment have total
assets in excess of $1 billion, or the equivalent in other currencies.
<PAGE>
The Fund 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. The Fund may not invest more than 25% of its
total assets in any other single industry.
The Fund has the following types of primary risks, which are listed in
alphabetical order:
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise be unable to honor a financial obligation.
FOREIGN RISK. The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues.
INTEREST RATE RISK. The risk that changes in interest rates may affect the
value of your investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a Fund's
fixed-rate securities to fall, while a decline in interest rates may produce an
increase in the market value of the securities. Because of this risk, an
investment in the Fund is subject to risk even if all the fixed-income
securities in the Fund's portfolio are paid in full at maturity.
5. MANAGEMENT OF THE FUND
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for the Portfolio.
In this capacity, Norwest makes investment decisions for and administers the
Portfolio's investment programs. Norwest receives an investment advisory fee
from the Portfolio
NORWEST INVESTMENT MANAGEMENT, INC., NORWEST CENTER, SIXTH STREET AND MARQUETTE,
MINNEAPOLIS, MN 55479.
PORTFOLIO MANAGERS: David D. Sylvester, Laurie R. White and Robert G. Leuty are
primarily responsible for the day-to-day management of the Fund's investments.
They became portfolio managers for the Portfolio in 1987, 1991 and 1998,
respectively. Mr. Sylvester has been associated with Norwest and Norwest Bank
since 1979, and currently is a Managing Director - Reserve Asset Management. Ms.
White is a Director-Reserve Asset Management and has been associated with
Norwest or Norwest Bank since 1991. Mr. Leuty has been associated with Norwest
or Norwest Bank since 1992, has been associated in various investment management
capacities since 1993 and has been in his present capacity of Senior Portfolio
Manager since 1998.
ADVISORY FEE: The Adviser receives 0.40% annually of the Portfolio's first $300
million of average daily net assets; 0.36% annually for the next $400 million of
average daily net assets; and 0.32% annually for the remaining average daily net
assets.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by the Fund. Norwest does not
receive any compensation under this arrangement as long as the Fund invests
entirely in a Portfolio or Portfolios. If the Fund redeems its assets from the
Portfolio and invests them directly, Norwest receives an investment advisory fee
from the Fund for the management of those assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative and
underwriting services to the Funds. NORWEST BANK acts as the Funds' transfer
agent, distribution disbursing agent and custodian.
6. CHARACTERISTICS OF EXCHANGE SHARES
Exchange Shares have distribution and shareholder servicing fees of 1.00% of the
average daily net assets of the class under a Rule 12b-1 distribution plan.
Because distribution fees are paid out of the Funds' assets on an on-going
basis, over time these fees will increase the cost of your investment and may
cost more than paying a front-end sales charge.
If you redeem Exchange Shares, there will be a CDSC on the redemption to the
extent that there would be a CDSC if you were redeeming the B Shares you
originally purchased. The amount of the CDSC will vary depending which fund's
shares you originally purchased and the number of years between the purchase of
those shares and the redemption of the Exchange Shares. You will pay the CDSC on
the lesser of the cost of the B Shares originally purchased and the net asset
value of the Exchange Shares upon redemption. There is no CDSC on Exchange
Shares purchased through reinvestments of distributions.
The Fund will redeem shares so that you pay the lowest possible CDSC.
Redemptions will automatically be made first from any Investor Shares in the
Fund, second from Exchange Shares acquired pursuant to reinvestment of
distributions, third from Exchange Shares which have been held for long enough
so that there is no applicable CDSC and fourth from the longest outstanding
remaining Exchange Shares.
CONVERSION FEATURE. Exchange Shares will automatically convert to Investor
Shares of the Fund (a class of the Fund's shares that does not have a CDSC or
distribution fees) when the B Shares you originally purchased would have
converted to A Shares had they not been exchanged. 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, the Fund will
consider Exchange Shares purchased through the reinvestment of distributions to
be held in a separate sub-account. Each time any Exchange Shares in your account
(other than those in the sub-account) convert, a corresponding pro rata portion
of the shares in the sub-account will also convert. The Funds may suspend the
conversion feature in the future; in that event, Exchange Shares might continue
to pay their distribution fee indefinitely.
9. PURCHASE AND REDEMPTION OF SHARES
You may exchange for or redeem shares at a price equal to their net asset value
next determined, subject in the case of redemptions to a CDSC, after receipt of
your exchange order or redemption request in proper form on "Fund Business
Days." Fund Business Days are all weekdays except generally observed national
holidays (New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may exchange for Exchange Shares directly or through a financial
institution. The Fund's transfer agent processes all transactions in Fund
shares. Exchange Shares require a minimum initial investment of $1,000 and
minimum subsequent investments of $100. Your shares become eligible to receive
distributions on the day that your exchange order is received in proper form.
The Fund reserves the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
The Fund must receive purchase and redemption orders before the times indicated
below. Times indicated are Eastern Time.
order must be payment must be
received by received by
<PAGE>
3:00 p.m. 4:00 p.m.
The Fund may advance the time by which purchase or redemption orders and
payments must be received 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 other
circumstances affect the Fund's trading hours.
PURCHASING SHARES DIRECTLY
If you exchange B Shares for Exchange Shares, you will have an account opened
automatically. Call or write the transfer agent if you wish to participate in
shareholder services not offered on the account application or change
information on your account (such as addresses). Norwest Advantage Funds may in
the future modify, limit or terminate any shareholder privilege upon appropriate
notice and may charge a fee for certain shareholder services, although no such
fees are currently contemplated. You may terminate your participation in any
shareholder program by writing to Norwest Advantage Funds.
EXCHANGES BY MAIL. You may exchange B Shares for the Fund's Exchange Shares by
sending a written request accompanied by any share certificates you have been
issued to Norwest Advantage Funds at the following address:
Norwest Advantage Funds
Ready Cash Investment Fund, Exchange Shares
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040
Sign all requests and endorse all certificates with signature guaranteed.
EXCHANGES BY TELEPHONE. If you have elected telephone exchange privileges, you
may exchange B Shares for Exchange Shares by telephoning the transfer agent at
1-800-338-1348 or 1-612-667-8833 and providing your shareholder account number,
the exact name in which the shares are registered and your Social Security
number or other taxpayer identification number.
EXCHANGES THROUGH FINANCIAL INSTITUTIONS
You may exchange and redeem shares through certain broker-dealers, banks and
other financial institutions. When you exchange for the Fund's shares through a
financial institution, the shares may be held in your name or in the name of the
financial institution. Subject to your institution's procedures, you may have
Fund shares held in the name of your financial institution transferred into your
name. If your shares are held in the name of your financial institution, you
must contact the financial institution on matters involving your shares. Your
financial institution may charge you for redeeming or exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent exchanges in writing, by telephone or through a
financial institution as indicated above. All payments should clearly indicate
your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Exchange Shares on any Fund Business Day at their net asset value
subject to a CDSC in the amount you would have had to pay if you had not
exchanged your original B Shares. There is no minimum period of investment and
no restriction on the frequency of redemptions.
<PAGE>
Fund shares are redeemed as of the next determination of the Fund's net asset
value following receipt by the transfer agent of the redemption order in proper
form (and any supporting documentation that the transfer agent may require).
Redeemed shares are not entitled to receive distributions on the day on which
the redemption is effective.
Redemption orders are accepted up to the times indicated above for acceptance of
exchange orders. As described above, the Fund may advance the times for receipt
of redemption orders.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7 days,
unless (1) your bank has not cleared the check originally used to purchase
shares (which may take up to 15 days), (2) the New York Stock Exchange is closed
(or trading is restricted) for any reason other than normal weekend or holiday
closings, (3) there is an emergency in which it is not practical for the Fund to
sell its portfolio securities or for the Fund to determine its net asset value
or (4) the SEC deems it inappropriate for redemption proceeds to be paid. You
can avoid the delay of waiting for your bank to clear your check by paying for
shares with wire transfers. Unless otherwise indicated, redemption proceeds
normally are paid by check mailed to your record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to change
your record name; (3) modification of a designated bank account for wire
redemptions; (4) instruction regarding an Automatic Investment Plan or Automatic
Withdrawal Plan; (5) distribution elections; (6) election of telephone
redemption privileges; (7) election of exchange or other privileges in
connection with your account; (8) written instruction to redeem shares whose
value exceeds $50,000; (9) redemption in an account when the account address has
changed within the last 30 days; (10) redemption when the proceeds are deposited
in a Norwest Advantage Funds account under a different account registration; and
(11) the payment of redemption proceeds to any address, person or account for
which there are not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities exchanges,
credit unions, savings associations or other eligible institutions. The specific
institution must be 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.
The Fund and the transfer agent will use reasonable procedures to verify that
telephone requests are genuine, including recording telephone instructions and
sending written confirmations of the transactions. Such procedures are necessary
because the Fund and transfer agent could be liable for losses due to
unauthorized or fraudulent telephone instructions. You should verify the
accuracy of a telephone instruction as soon as you receive the confirmation
statement. Telephone redemption and exchanges may be difficult to implement in
times of drastic economic or market changes. If you cannot reach the transfer
agent by telephone, you may mail or hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, the Fund may redeem, upon
not less than 60 days' written notice, any account with a net asset value of
less than $1,000 immediately following any redemption.
REDEMPTION PROCEDURES
If you have invested directly in the Fund you may redeem your shares as
described below. If you have invested through a financial institution you may
redeem shares through the financial institution. If you wish to redeem shares by
telephone or receive redemption proceeds by bank wire you should contact the
transfer agent to elect those features. These privileges may not be available
until several weeks after the application is received. You may not redeem shares
by telephone if you have certificates for those shares.
REDEMPTION BY MAIL. You may redeem shares by sending a written request to the
transfer agent accompanied by any share certificate you have been issued. Sign
all requests and endorse all certificates with
signatures guaranteed.
REDEMPTION BY TELEPHONE. If you have elected telephone redemption privileges,
you may redeem shares by telephoning the transfer agent at 1-800-338-1348 or
1-612-667-8833 and providing your shareholder account number, the exact name in
which the shares are registered and your Social Security number or other
taxpayer identification
<PAGE>
number. Norwest Advantage Funds will mail a check to your record address or, if
you have chosen wire redemption privileges, wire the proceeds.
REDEMPTION BY BANK WIRE. If you have elected wire redemption privileges, you may
request the Fund to transmit redemption proceeds of more than $5,000 by federal
funds wire to a bank account you have designated in writing. You must have
chosen the telephone redemption privilege to request bank wire redemptions by
telephone. Redemption proceeds are transmitted by wire on the Fund Business Day
the transfer agent receives a redemption request in proper form.
EXCHANGES
You may exchange Exchange Shares for B Shares of the funds of Norwest Advantage
Funds that offer B Shares. Call or write the transfer agent for more
information.
The Fund does not charge for exchanges, and there is currently no limit on the
number of exchanges you may make. The Fund, however, may limit your ability to
exchange shares if you exchange too often. Exchanges are subject to the fees
charged by, and the limitations (including minimum investment restrictions) of
the fund into which you are exchanging.
You may exchange Fund shares without paying a CDSC. If you redeem shares you
received in an exchange, the CDSC will be calculated as if you never exchanged
the shares you originally purchased.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you wish to
exchange shares into an account registered differently or with different
shareholder privileges. You may exchange into a fund only if that fund's shares
may legally be sold in your state of residence.
The Fund and federal tax law treat an exchange as a redemption and a purchase of
shares. The Fund may amend or terminate exchange procedures on 60 days' notice.
EXCHANGES BY MAIL. You may make an exchange by sending a written request to the
transfer agent accompanied by any share certificates for the shares to be
exchanged. Sign all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE. If you have telephone exchange privileges, you may make
a telephone exchange by calling the transfer agent at 1-800-338-1348 or
1-612-667-8833 and giving your account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number.
8. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
The Fund declares distributions of net investment income daily and pays
distributions monthly. The Fund distributes net capital gain, if any, at least
annually.
You have 3 choices for receiving distributions: the Reinvestment Option, the
Cash Option and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions are automatically invested
in additional shares of the Fund. You are automatically assigned this
option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
<PAGE>
* Under the Directed Dividend Option, if you own $10,000 or more of the
Fund's shares in a single account, you can have the Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax purposes
whether received in cash or reinvested in shares of a fund. All distributions
reinvested in a fund are reinvested at the fund's net asset value as of the
payment date of the distribution.
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise taxes.
The Fund's distributions of net investment income (including net short-term
capital gain) are taxable as ordinary income. Distributions of net capital gain
(i.e., the excess of net long-term capital gain over net short-term capital
loss), if any, are taxable as long-term capital gain, regardless of how long a
shareholder has held shares in the Fund. Distributions of net capital gain may
be taxable at different rates depending on the length of time the Fund holds its
assets. The Fund's income from foreign investments may be subject to foreign
income or other taxes.
9. OTHER INFORMATION
INVESTMENT POLICIES
Except as otherwise indicated, the Board may change the Fund's investment
policies without shareholder approval. The Fund's investment objective requires
shareholder approval to amend.
DOWNGRADED SECURITIES
The Fund may retain a security whose rating has been lowered (or a security of
comparable quality to a security whose rating has been lowered) below the Fund's
lowest permissible rating category if the Fund's Adviser determines that
retaining the security is in the best interests of the Fund.
YEAR 2000 AND EURO
The Funds could be adversely affected if the computer systems used by the
Adviser and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000 and
Euro issues for their computer systems and to obtain reasonable assurances that
comparable steps are being taken by the Funds' other major service providers.
While the Funds do not anticipate any adverse effect on their computer systems
from the Year 2000 and Euro issues, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds.
DETERMINATION OF NEW ASSET VALUE
The Fund determines its net asset value at 3:00 p.m., Eastern Time, on each Fund
Business Day by dividing the value of its 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.
In order to maintain net asset value per share at $1.00, the Fund values its
portfolio securities at amortized cost. Amortized cost valuation involves
valuing an instrument at its cost and then assuming a constant amortization to
maturity of any discount or premium. If the market value of the Fund's portfolio
deviates more than 1/2 of 1% from the
<PAGE>
value determined on the basis of amortized cost, the Board will consider whether
to take any action to prevent any material effect on shareholders.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO
The Fund bears its pro rata portion of the expenses of the Portfolio. The Board
may redeem the Fund's investment in the Portfolio. The Fund could then invest
directly in portfolio securities or could re-invest in 1 or more different
Portfolios that could have different fees and expenses. The Fund might redeem,
for example, if other investors had sufficient voting power to change the
investment objectives or policies of the Portfolio in a manner detrimental to
the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUND'S OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. 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.
If you would like more information about the Fund and its investments, you may
want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. The Fund's statement of additional
information, or "SAI," contains detailed information about the Fund, such as its
investments, management and organization. It is incorporated into this
prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about the Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, the Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report and semi-annual report by
contacting your broker or trust officer, by contacting Forum Financial Services,
Inc., at Two Portland Square, Portland, Maine 04101 or by calling 1-800-
xxx-xxxx or 1-207-879-0001.
The Fund's reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Fund is 811-4881.
<PAGE>
NORWEST ADVANTAGE FUNDS
READY CASH INVESTMENT FUND
Public Entities Shares
PROSPECTUS
October 1, 1998
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR
ANY OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
NO GOVERNMENTAL AGENCY, INCLUDING THE U.S. SECURITIES AND EXCHANGE COMMISSION,
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1. OVERVIEW
The following is a summary of information about the Fund. Before investing, you
should read the prospectus and consider the discussion under Investment
Objectives, Policies and Risks.
The Fund is not a complete or balanced investment program, but can serve as a
part of your overall investment program.
THE FUND AT A GLANCE
- --------------------------------------------------------------------------------
OBJECTIVE PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
High current income, High-quality money market instruments of
preservation of capital and U.S. and foreign issuers.
liquidity
CLASS OF SHARES
This prospectus offers Public Entities Shares of the Fund. Public Entities
Shares are designed primarily for Minnesota public entities-- including county
treasuries, school and water/sewer districts and other public entities.
FUND STRUCTURES
The Fund invests in another fund identified in this prospectus as a Portfolio.
Except when necessary to describe the Fund's investments in the Portfolio, this
prospectus discusses the Fund's investments in the Portfolio as if the
investments were made directly in portfolio securities.
MANAGEMENT OF THE FUND
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the Portfolio's investment
adviser. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest Bank,
provides investment advice to institutions, pension plans and other accounts and
currently manages more than $[ ] billion in assets. This prospectus generally
refers to Norwest as the Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative and
underwriting services to the Funds.
PURCHASE AND REDEMPTION OF SHARES
You may purchase or redeem shares without sales or other charges. Public
Entities Shares require a minimum initial investment of $100,000 and have no
minimum subsequent investment requirement.
EXCHANGES
You may exchange your shares for shares of certain other funds of Norwest
Advantage Funds.
DISTRIBUTIONS
<PAGE>
The Fund pays distributions of net investment income monthly.
RISK FACTORS
Investments in the Fund are subject to risk and may decline in value. If you
invest in the Fund, the income you receive will vary with changes in interest
rates. In addition, the Fund's investments have "credit risk," which is the risk
that an issuer will be unable, or will be perceived to be unable, to pay the
interest and principal on its obligations when due. The Fund also has the risk
that it may not be able to maintain a stable net asset value of $1.00 per share.
The Fund has the risk that the Adviser may not be successful in carrying out its
investment strategy, that a portfolio manager may prove difficult to replace if
he or she becomes unavailable to manage the Fund and that the Fund's particular
investment strategy may result in performance that is worse or better than the
performance of the market as a whole.
EXPENSE INFORMATION
The following table will assist you in understanding the expenses that you will
bear directly or indirectly when you invest in the Fund. There are no
transaction charges for purchasing, redeeming or exchanging shares. Public
Entities Shares do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Investment Advisory Fee(after fee waivers)(2) 0.33%
Other Expenses (after fee waivers and reimbursements)(3) 0.22%
-----
Total Operating Expenses (after fee waivers and reimbursements)(3) 0.55%
(1) The expenses are estimated. The Fund indirectly bears its pro rata share of
the Portfolio's expenses.
(2) Investment Advisory Fee reflects the investment advisory fee incurred by
the Portfolio.
(3) Absent estimated expense reimbursements and fee waivers, the expenses would
be: Other Expenses, 0.56% and Total Operating Expenses, 0.89%. Expense
reimbursements and fee waivers are voluntary and may be reduced or
eliminated at any time.
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses you
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 distributions. THE EXAMPLE DOES NOT REPRESENT OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN IN THE EXAMPLE.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$6 18 31 69
<PAGE>
2. GLOSSARY
This Glossary of frequently used terms will help you understand the discussion
of the Fund's objectives, policies and risks. Defined terms are capitalized when
used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Term Definition
- ---- -----------
Board The Board of Trustees of Norwest Advantage
Funds.
NRSRO A nationally recognized statistical rating
organization, such as Standard & Poor's
Corporation, that rates fixed-income
securities and preferred stock by relative
credit risk. NRSROs also rate money market
mutual funds.
SEC The U.S. Securities and Exchange Commission.
U.S. Government Security A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies or its
instrumentalities.
- --------------------------------------------------------------------------------
3. INVESTMENT OBJECTIVES, POLICIES AND RISKS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.
INVESTMENT POLICIES. The Fund's investments are made under the requirements of
an SEC rule governing the investments that money market funds may make. The Fund
invests only in high-quality, U.S. dollar-denominated short-term money market
instruments that are determined by the Adviser, under procedures adopted by the
Board, to be eligible for purchase and to present minimal credit risks. The Fund
may invest in securities with fixed, variable or floating rates of interest.
High-quality instruments include those that: (1) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1 NRSRO has
issued a rating, by that NRSRO; or (2) are otherwise unrated and determined by
the Adviser to be of comparable quality. The Fund invests at least 95% of its
total assets in securities in the highest rating category.
The Fund invests in a broad spectrum of high-quality money market instruments of
U.S. and foreign issuers, including U.S. Government Securities, municipal
securities and corporate debt securities. The Fund seeks to maintain a rating
within the 2 highest short-term categories assigned by at least 1 NRSRO.
<PAGE>
The Fund 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, U.S.
branches and agencies of foreign banks and wholly-owned banking-related
subsidiaries of foreign banks. The Fund limits its investments in obligations of
financial institutions to institutions that at the time of investment have total
assets in excess of $1 billion, or the equivalent in other currencies.
The Fund 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. The Fund may not invest more than 25% of its
total assets in any other single industry.
The Fund has the following types of primary risks, which are listed in
alphabetical order:
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise be unable to honor a financial obligation.
FOREIGN RISK. The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues.
INTEREST RATE RISK. The risk that changes in interest rates may affect the
value of your investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a Fund's
fixed-rate securities to fall, while a decline in interest rates may produce an
increase in the market value of the securities. Because of this risk, an
investment in the Fund is subject to risk even if all the fixed-income
securities in the Fund's portfolio are paid in full at maturity.
4. MANAGEMENT OF THE FUND
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for the Portfolio.
In this capacity, Norwest makes investment decisions for and administers the
Portfolio's investment programs. Norwest receives an investment advisory fee
from the Portfolio.
NORWEST INVESTMENT MANAGEMENT, INC., NORWEST CENTER, SIXTH STREET AND MARQUETTE,
MINNEAPOLIS, MN 55479.
PORTFOLIO MANAGERS: David D. Sylvester, Laurie R. White and Robert G. Leuty are
primarily responsible for the day-to-day management of the Fund's investments.
They became portfolio managers for the Portfolio in 1987, 1991 and 1998,
respectively. Mr. Sylvester has been associated with Norwest and Norwest Bank
since 1979, and currently is a Managing Director - Reserve Asset Management. Ms.
White is a Director-Reserve Asset Management and has been associated with
Norwest or Norwest Bank since 1991. Mr. Leuty has been associated with Norwest
or Norwest Bank since 1992, has been associated in various investment management
capacities since 1993 and has been in his present capacity of Senior Portfolio
Manager since 1998.
ADVISORY FEE: The Adviser receives 0.40% annually of the Portfolio's first $300
million of average daily net assets; 0.36% annually for the next $400 million of
average daily net assets; and 0.32% annually for the remaining average daily net
assets.
<PAGE>
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by the Fund. Norwest does not
receive any compensation under this arrangement as long as the Fund invests
entirely in a Portfolio or Portfolios. If the Fund redeems its assets from the
Portfolio and invests them directly, Norwest receives an investment advisory fee
from the Fund for the management of those assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative and
underwriting services to the Funds. NORWEST BANK acts as the Funds' transfer
agent, distribution disbursing agent and custodian.
5. PURCHASES AND REDEMPTIONS OF SHARES
You may purchase or redeem shares at a price equal to their net asset value next
determined after receipt of your purchase order or redemption request in proper
form on "Fund Business Days." Fund Business Days are all weekdays except
generally observed national holidays (New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The Fund's
transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption charge.
Public Entities Shares require a minimum initial investment of $100,000 and have
no minimum for subsequent investments. Your shares become eligible to receive
distributions on the day that your purchase order is received in proper form.
The Fund reserves the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
Your order will not be complete until the Fund receives immediately available
funds. The Fund must receive purchase and redemption orders before the times
indicated below. Times indicated are Eastern Time.
order must be payment must be
received by received by
----------- -----------
3:00 p.m. 4:00 p.m.
The Fund may advance the time by which purchase or redemption orders and
payments must be received 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 other
circumstances affect the Fund's trading hours.
<PAGE>
PURCHASE PROCEDURES
PURCHASING SHARES DIRECTLY
You may obtain an account application by writing Norwest Advantage
Funds at the following address:
Norwest Advantage Funds
Ready Cash Investment Fund, Public Entities Shares
Norwest Bank Minnesota, N.A.
Transfer Agent
733 Marquette Avenue
Minneapolis, MN 55479-0040
When you sign an application for a new Fund account, you are certifying that
your Social Security number or other taxpayer identification 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 Fund
to withhold 31% of your distributions and redemptions.
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.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on your
account (such as addresses). Norwest Advantage Funds may in the future modify,
limit or terminate any shareholder privilege upon appropriate notice and may
charge a fee for certain shareholder services, although no such fees are
currently contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL. You may send a check or money order along with a completed
account application to Norwest Advantage Funds 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 2 business days after receipt of
the check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable for
any losses or fees incurred by Norwest Advantage Funds, the transfer agent or
the Fund's distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts, you
must write a check or purchase a money order payable to Norwest Advantage Funds
or endorse a check made out to you to Norwest Advantage Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, make the
check used to purchase shares payable to Norwest Advantage Funds. No other
methods of payment by check will be accepted for these types of accounts.
PURCHASES BY BANK WIRE You must first telephone the Fund's transfer agent at
1-612-667-8833 or 1-800-338-1348 to obtain an account number before making an
initial investment by bank wire. Then instruct your bank to wire your money
immediately to:
Norwest Bank Minnesota, N.A.
A091 000 019
For Credit to: Norwest Advantage Funds 0844-131
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Re: Ready Cash Investment Fund, Public Entities Shares
Account No.:
Account Name:
Complete and mail the account application promptly. Your bank may charge for
transmitting the money by wire. The Fund does not charge for the receipt of wire
transfers. The Fund treats payment by bank wire as a federal funds payment when
received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. When you purchase the Fund's shares through a
financial institution, the shares may be held in your name or in the name of the
financial institution. Subject to your institution's procedures, you may have
Fund shares held in the name of your financial institution transferred into your
name. If your shares are held in the name of your financial institution, you
must contact the financial institution on matters involving your shares. Your
financial institution may charge you for purchasing, redeeming or exchanging
shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a bank wire or
through a financial institution as indicated above. All payments should clearly
indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares 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 receipt by the transfer agent of the redemption order in proper
form (and any supporting documentation that the transfer agent may require).
Redeemed shares are not entitled to receive distributions on the day on which
the redemption is effective.
Redemption orders are accepted up to the times indicated above for acceptance of
purchase orders. As described above, the Fund may advance the times for receipt
of redemption orders.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7 days,
unless (i) your bank has not cleared the check to purchase the shares (which may
take up to 15 days), (ii) the New York Stock Exchange is closed (or trading is
restricted) for any reason other than normal weekend or holiday closings, (iii)
there is an emergency in which it is not practical for the Fund to sell its
portfolio securities or for the Fund to determine its net asset value or (iv)
the SEC deems it inappropriate for redemption proceeds to be paid. You can avoid
the delay of waiting for your bank to clear your check by paying for shares with
wire transfers. Unless otherwise indicated, redemption proceeds normally are
paid by check mailed to your record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to change
your record name; (3) modification of a designated bank account for wire
redemptions; (4) instruction regarding an Automatic Investment Plan or Automatic
Withdrawal Plan; (5) distribution elections; (6) election of telephone
redemption privileges; (7) election of exchange or other privileges in
connection with your account; (8) written instruction to redeem shares whose
value
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exceeds $50,000; (9) redemption in an account when the account address has
changed within the last 30 days; (10) redemption when the proceeds are deposited
in a Norwest Advantage Funds account under a different account registration; and
(11) the payment of redemption proceeds to any address, person or account for
which there are not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities exchanges,
credit unions, savings associations or other eligible institutions. The specific
institution must be 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.
The Fund and the transfer agent will use reasonable procedures to verify that
telephone requests are genuine, including recording telephone instructions and
sending written confirmations of the transactions. Such procedures are necessary
because the Fund and transfer agent could be liable for losses due to
unauthorized or fraudulent telephone instructions. You should verify the
accuracy of a telephone instruction as soon as you receive the confirmation
statement. Telephone redemption and exchanges may be difficult to implement in
times of drastic economic or market changes. If you cannot reach the transfer
agent by telephone, you may mail or hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, the Fund may redeem, upon
not less than 60 days' written notice, any account with a net asset value of
less than $100,000 immediately following any redemption.
REDEMPTION PROCEDURES
If you have invested directly in the Fund you may redeem your shares as
described below. If you have invested through a financial institution you may
redeem shares through the financial institution. If you wish to redeem shares by
telephone or receive redemption proceeds by bank wire you should complete the
appropriate sections of the account application. These privileges may not be
available until several weeks after the application is received. You may not
redeem shares by telephone if you have certificates for those shares.
REDEMPTION BY MAIL. You may redeem shares by sending a written request to the
transfer agent accompanied by any share certificate you have been issued. Sign
all requests and endorse all certificates with signatures guaranteed.
REDEMPTION BY TELEPHONE. If you have elected telephone redemption privileges,
you may redeem shares by telephoning the transfer agent at 1-800-338-1348 or
1-612-667-8833 and providing your shareholder account number, the exact name in
which the shares are registered and your Social Security number or other
taxpayer identification number. Norwest Advantage Funds will mail a check to
your record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE. If you have elected wire redemption privileges, you may
request the Fund to transmit redemption proceeds of more than $5,000 by federal
funds wire to a bank account you have designated in writing. You must have
chosen the telephone redemption privilege to request bank redemptions by
telephone. Redemption proceeds are transmitted by wire on the Fund Business Day
the transfer agent receives a redemption request in proper form.
EXCHANGES
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You may exchange Public Entities Shares for shares of other funds of Norwest
Advantage Funds. Call or write the transfer agent for more information.
The Fund does not charge for exchanges, and there is currently no limit on the
number of exchanges you may make. The Fund, however, may limit your ability to
exchange shares if you exchange too often. Exchanges are subject to the fees
charged by, and the limitations (including minimum investment restrictions) of
the fund into which you are exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you wish to
exchange shares into an account registered differently or with different
shareholder privileges. You may exchange into a fund only if that fund's shares
may legally be sold in your state of residence.
The Fund and federal tax law treat an exchange as a redemption and a purchase of
shares. The Fund may amend or terminate exchange procedures on 60 days' notice.
EXCHANGES BY MAIL. You may make an exchange by sending a written request to the
transfer agent accompanied by any share certificates for the shares to be
exchanged. Sign all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE. If you have telephone exchange privileges, you may make
a telephone exchange by calling the transfer agent at 1-800-338-1348 or
1-612-667-8833 and giving your account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
The Fund declares distributions of net investment income daily and pays
distributions monthly. The Fund distributes net capital gain, if any, at least
annually.
You have 3 choices for receiving distributions: the Reinvestment Option, the
Cash Option and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions are automatically invested
in additional shares of the Fund. You are automatically assigned this
option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of the
Fund's shares in a single account, you can have the Fund's distributions
reinvested in shares of another fund of Norwest Advantage Funds. Call or
write the transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a fund. All
distributions reinvested in a fund are reinvested at the fund's net asset
value as of the payment date of the distribution.
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TAX MATTERS
The Funds are managed so that they do not owe Federal income or excise taxes.
The Fund's distributions of net investment income (including net short-term
capital gain) are taxable as ordinary income. Distributions of net capital gain
(i.e., the excess of net long-term capital gain over net short-term capital
loss), if any, are taxable as long-term capital gain, regardless of how long a
shareholder has held shares in the Fund. Distributions of net capital gain may
be taxable at different rates depending on the length of time the Fund holds its
assets. The Fund's income from foreign investments may be subject to foreign
income or other taxes.
7. OTHER INFORMATION
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INVESTMENT POLICIES
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Except as otherwise indicated, the Board may change the Fund's investment
policies without shareholder approval. The Fund's investment objective requires
shareholder approval to amend.
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DOWNGRADED SECURITIES
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The Fund may retain a security whose rating has been lowered (or a security of
comparable quality to a security whose rating has been lowered) below the Fund's
lowest permissible rating category if the Fund's Adviser determines that
retaining the security is in the best interests of the Fund.
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YEAR 2000 AND EURO
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The Funds could be adversely affected if the computer systems used by the
Adviser and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information regarding the
new common currency of the European Union. The Year 2000 and Euro issues also
may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000 and
Euro issues for their computer systems and to obtain reasonable assurances that
comparable steps are being taken by the Funds' other major service providers.
While the Funds do not anticipate any adverse effect on their computer systems
from the Year 2000 and Euro issues, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds.
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DETERMINATION OF NET ASSET VALUE
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The Fund determines its net asset value at 3:00p.m., Eastern Time, on each Fund
Business Day by dividing the value of its 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.
In order to maintain net asset value per share at $1.00, the Fund values its
portfolio securities at amortized cost. Amortized cost valuation involves
valuing an instrument at its cost and then assuming a constant amortization to
maturity of any discount or premium. If the market value of the 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 to take any action to prevent any material
effect on shareholders.
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ADDITIONAL INFORMATION ABOUT THE PORTFOLIO
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The Fund bears its pro rata portion of the expenses of the Portfolio. The Board
may redeem the Fund's investment in the Portfolio. The Fund could then invest
directly in portfolio securities or could re-invest in 1 or more different
Portfolios that could have different fees and expenses. The Fund might redeem,
for example, if other investors had sufficient voting power to change the
investment objectives or policies of the Portfolio in a manner detrimental to
the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUND'S OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFER MAY NOT LAWFULLY BE MADE
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If you would like more information about the Fund and its investments, you may
want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. The Fund's statement of additional
information, or "SAI," contains detailed information about the Fund, such as its
investments, management and organization. It is incorporated into this
prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about the Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, the Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report and semi-annual report by
contacting your broker or trust officer, by contacting Forum Financial Services,
Inc., at Two Portland Square, Portland, Maine 04101 or by calling 1-800-
xxx-xxxx or 1-207-879-0001.
The Fund's reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Fund is 811-4881.
