NORWEST ADVANTAGE FUNDS /ME/, 497, 1998-07-21

NORWEST ADVANTAGE FUNDS /ME/
497, 1998-07-21

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STOCK FUNDS
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PROSPECTUS

OCTOBER 1, 1997

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

[LOGO]

NOT FDIC INSURED

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

1. PROSPECTUS SUMMARY......................... 2
Highlights of the Funds.................... 2
Expense Information........................ 8

2. FINANCIAL HIGHLIGHTS....................... 12

3. INVESTMENT OBJECTIVES AND POLICIES......... 26
Income Equity Fund......................... 26
ValuGrowth Stock Fund...................... 26
Diversified Equity Fund.................... 27
Growth Equity Fund......................... 28
Small Company Stock Fund................... 30
Small Cap Opportunities Fund............... 30
International Fund......................... 32
Core Portfolio Descriptions................ 33
Additional Investment Policies and Risk
Considerations............................. 40

4. MANAGEMENT................................. 47
Investment Advisory Services............... 47
Management, Administration and Distribution
Services................................... 53
Shareholder Servicing and Custody.......... 54
Expenses of the Funds...................... 55

5. CHOOSING A SHARE CLASS..................... 56
A Shares................................... 57
B Shares................................... 60

6. HOW TO BUY SHARES.......................... 64
Minimum Investment......................... 64
Purchase Procedures........................ 64
Account Application........................ 66
General Information........................ 66

7. HOW TO SELL SHARES......................... 67
General Information........................ 67
Redemption Procedures...................... 67
Other Redemption Matters................... 68

8. OTHER SHAREHOLDER SERVICES................. 70
Exchanges.................................. 70
Automatic Investment Plan.................. 71
Individual Retirement Accounts............. 72
Automatic Withdrawal Plan.................. 72
Reopening Accounts......................... 72

9. DIVIDENDS AND TAX MATTERS.................. 73
Dividends.................................. 73
Tax Matters................................ 73

10. OTHER INFORMATION.......................... 75
Banking Law Matters........................ 75
Determination of Net Asset Value........... 75
Performance Information.................... 76
The Trust and Its Shares................... 76
Core and Gateway Structure................. 78
</TABLE>
<PAGE>
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OCTOBER 1, 1997

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

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

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

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

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

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

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

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

--
1
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

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

INVESTMENT OBJECTIVES AND POLICIES

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

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

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

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

SMALL COMPANY STOCK FUND seeks long-term capital appreciation. This objective
is pursued by investing primarily in the common stock of small- and medium-size
domestic companies.

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

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

FUND STRUCTURES

INCOME EQUITY FUND, SMALL COMPANY STOCK FUND and SMALL CAP OPPORTUNITIES FUND
each seeks to achieve its investment objective by investing all of its
investable assets in a separate portfolio (each a "Core Portfolio") of a
registered, open-end, management investment company (each a "Core Trust") that
has the same investment objective and substantially similar investment policies
as the Fund. Accordingly, the investment experience of each of these Funds will
correspond directly with the investment experience of its corresponding Core
Portfolio. (See "Other Information - Core and

<PAGE>

Gateway Structure.") The Funds and the Core Portfolios in which they invest are:

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

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

FUND CORE PORTFOLIOS
- - ---- ---------------
Diversified Equity Fund Index Portfolio
Income Equity Portfolio
Large Company Growth Portfolio
Disciplined Growth Portfolio
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Small Cap Value Portfolio
International Portfolio
Schroder EM Core Portfolio
Growth Equity Fund Large Company Growth Portfolio
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Small Cap Value Portfolio
International Portfolio
Schroder EM Core Portfolio
International Fund International Portfolio
Schroder EM Core Portfolio

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

INVESTMENT ADVISERS

NORWEST INVESTMENT MANAGEMENT, INC. ("Norwest"), a subsidiary of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), is each Funds' and each Core Portfolio's
(other than Schroder U.S. Smaller Companies Portfolio, Schroder EM Core
Portfolio and International Portfolio) investment adviser. Norwest provides
investment advice to various institutions, pension plans and other accounts
and, as of August 31, 1997, managed over $22 billion in assets. (See
"Management - Investment Advisory Services.")

3
<PAGE>

Norwest Bank serves as transfer agent, dividend disbursing agent and custodian
of the Trust, serves as the custodian of each Core Portfolio other than Schroder
U.S. Smaller Companies Portfolio and Schroder EMCore Portfolio and provides
administrative services to Small Cap Opportunities Fund and International Fund.
(See "Management - Shareholder Servicing and Custody" and "- Management,
Administration and Distribution Services.")

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

CRESTONE CAPITAL MANAGEMENT, INC. ("Crestone"), an investment advisory
subsidiary of Norwest Bank, is the investment subadviser of Small Company Stock
Portfolio. Crestone provides investment advice regarding companies with small
capitalization to various clients, including institutional investors.

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

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. ("Schroder") is the investment
adviser of Schroder U.S. Smaller Companies Portfolio, International Portfolio
and Schroder EMCore Portfolio. Schroder specializes in providing international
investment advice to various clients and, as of December 31, 1996, Schroder and
its affiliates managed more than $150 billion in assets worldwide.

SMITH ASSET MANAGEMENT GROUP, L.P. ("Smith Group") is the investment subadvisor
of Disciplined Growth Portfolio and Small Cap Value Portfolio. Smith Group
provides investment management services to company retirement plans,
foundations, endowments, trust companies, and high net worth individuals using a
disciplined equity style.

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

FUND MANAGEMENT AND ADMINISTRATION

The manager of the Trust and distributor of its shares is Forum Financial
Services, Inc. ("Forum"), a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. Forum Administrative Services, LLC
("FAS") provides administrative services to the Funds and also serves as
administrator of each Core Portfolio, except Schroder U.S. Smaller Companies
Portfolio and Schroder EMCore Portfolio, for which FAS serves

4
<PAGE>

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

SHARES OF THE FUNDS

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

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

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

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

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

HOW TO BUY AND SELL SHARES

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

EXCHANGES

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

<PAGE>

SHAREHOLDER FEATURES

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

DIVIDENDS AND DISTRIBUTIONS

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

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

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

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

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

6
<PAGE>

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

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

<PAGE>

EXPENSE INFORMATION

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

SHAREHOLDER TRANSACTION EXPENSES
(APPLICABLE TO EACH FUND)

<TABLE>
<CAPTION>
A B
SHARES SHARES
-----------------------
<S> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of public offering price) . . . . . 5.5%(1) Zero
Maximum deferred sales charge
(as a percentage of the lesser of original
purchase price or redemption proceeds) . . . . . . . Zero(2) 4.0%(1)(3)
Exchange Fee . . . . . . . . . . . . . . . . . . . . . Zero Zero

</TABLE>

ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

<TABLE>
<CAPTION>
INCOME EQUITY VALUGROWTH STOCK DIVERSIFIED EQUITY
FUND FUND FUND(7)
-------------------- -------------------- --------------------
A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees (after fee waivers)(5). . N/A N/A 0.80% 0.80% 0.17% 0.17%
Rule 12b-1 Fees (after fee waivers)(6) . . . . . . N/A 0.75% N/A 0.75% N/A 0.75%

Other Expenses (after reimbursements). . . . . . . 0.31% 0.31% 0.20% 0.20% 0.27% 0.27%
Investment Advisory Fees - Core Portfolio(s)(5). . 0.50% 0.50% N/A N/A 0.50% 0.50%
Other Expenses - Core Portfolio(s)
(after reimbursements) . . . . . . . . . . . . . . 0.04% 0.04% N/A N/A 0.06% 0.06%
-------------------- -------------------- --------------------
Total Operating Expenses(8). . . . . . . . . . . . 0.85% 1.60% 1.00% 1.75% 1.00% 1.75%

</TABLE>

<TABLE>
<CAPTION>
GROWTH EQUITY SMALL COMPANY SMALL CAP INTERNATIONAL
FUND(7) STOCK FUND(7) OPPORTUNITIES FUND FUND
-------------------- -------------------- -------------------- --------------------
A B A B A B A B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees
(after fee waivers) (5). . . . . . . . . . . 0.22% 0.22% N/A N/A 0.25% 0.25% 0.38% 0.38%
Rule 12b-1 Fees (after fee waivers)(6) . . . N/A 0.75% N/A 0.75% N/A 0.75% N/A 0.75%
Other Expenses (after fee waivers
and reimbursements). . . . . . . . . . . . 0.24% 0.24% 0.25% 0.25% 0.21% 0.21% 0.39% 0.39%
Investment Advisory Fees -
Core Portfolio(s). . . . . . . . . . . . . . 0.69% 0.69% 0.90% 0.90% 0.60% 0.60% 0.48% 0.48%

Other Expenses - Core Portfolio(s)
(after fee waivers and reimbursements) . . . 0.10% 0.10% 0.05% 0.05% 0.19% 0.19% 0.25% 0.25%
-------------------- -------------------- -------------------- --------------------
Total Operating Expenses(8). . . . . . . . . 1.25% 2.00% 1.20% 1.95% 1.25% 2.00% 1.50% 2.25%
</TABLE>

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

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

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

(4) For a further description of the various expenses associated with investing
in the Funds, see "Management." Expenses associated with I Shares of a Fund
differ from those listed in the table. The table is based on expenses
incurred during the Funds' most recent fiscal year ended May 31, 1997,
restated to reflect current fees. To the extent a Fund invests its assets
in various Core Portfolios (each of which bears expenses as noted under
"Investment Advisory Fees - Core Portfolio(s)" and "Other Expenses - Core
Portfolio(s)"), the Fund indirectly bears its pro rata portion of the
expenses of each Core Portfolio in which it invests.

(5) For Diversified Equity Fund, Growth Equity Fund and International Fund,
"Investment Advisory Fees" reflects the fee for Asset Allocation Services.
In addition, for Small Cap Opportunities Fund and International Fund,
"Investment Advisory Fees" reflects the administrative services fee payable
to Norwest. "Investment Advisory Fees - Core Portfolio(s)" reflects the
investment advisory fees incurred by the Core Portfolio(s) in which the
Funds invest. Absent waivers, "Investment Advisory Fees" for ValuGrowth
Stock Fund, Diversified Equity Fund, Growth Equity Fund and International
Fund would be 0.80%, 0.25%, 0.25% and 0.50%, respectively. The "Investment
Advisory Fees - Core Portfolios" incurred by each of Diversified Equity
Fund, Growth Equity Fund, and International Fund will vary based on the
percentage of the Fund's assets invested in each Core Portfolio.

8 9
<PAGE>

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

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

(8) Absent estimated expense reimbursements and fee waivers, the expenses of A
Shares of Income Equity Fund, ValuGrowth Stock Fund, Diversified Equity
Fund, Growth Equity Fund, Small Company Stock Fund, Small Cap Opportunities
Fund and International Fund would be: "Other Expenses," 0.35%, 0.47%,
0.35%, 0.38%, 0.43%, 2.46% and 0.57%, respectively; "Other Expenses - Core
Portfolio(s)," 0.07%, N/A, 0.11%, 0.14%, 0.14%, 0.10%, 0.19% and 0.26%,
respectively; and "Total Operating Expenses," 0.93%, 1.27%, 1.22%, 1.46%,
1.43%, 3.50% and 1.81%, respectively." Absent expense reimbursements and
fee waivers, the expenses of B Shares of Income Equity Fund, ValuGrowth
Stock Fund, Diversified Equity Fund, Growth Equity Fund, Small Company
Stock Fund, Small Cap Opportunities Fund and International Fund would be:
"Other Expenses," 0.36%, 0.54%, 0.35%, 0.41%, 0.48%, 6.69% and 0.63%,
respectively; "Other Expenses - Core Portfolio(s)," 0.07%, N/A, 0.11%,
0.14%, 0.10% and 0.19% and 0.26%, respectively; and "Total Operating
Expenses," 1.93%, 2.34%, 2.21%, 2.98%, 2.48%, 8.73% and 2.88%,
respectively." Except as otherwise noted, expense reimbursements and fee
waivers are voluntary and may be reduced or eliminated at any time.

EXAMPLE

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

<PAGE>

HYPOTHETICAL EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
<S> <C> <C> <C> <C>
INCOME EQUITY FUND
A Shares . . . . . . . . . . . . . . . . 63 81 100 154
B Shares
Assuming redemption
at the end of the period . . . . . . 56 80 107 --
Assuming no redemption . . . . . . . . . 16 50 87 --
-------------------------------------------------
VALUGROWTH STOCK FUND
A Shares . . . . . . . . . . . . . . . . 65 85 107 171
B Shares
Assuming redemption
at the end of the period . . . . . . 58 85 115 --
Assuming no redemption . . . . . . . . . 18 55 95 --
-------------------------------------------------
DIVERSIFIED EQUITY FUND
A Shares . . . . . . . . . . . . . . . . 65 85 107 171
B Shares
Assuming redemption
at the end of the period . . . . . . 58 85 115 --
Assuming no redemption . . . . . . . . . 18 55 95 --
-------------------------------------------------
GROWTH EQUITY FUND
A Shares . . . . . . . . . . . . . . . . 67 92 120 198
B Shares
Assuming redemption
at the end of the period . . . . . . 60 93 128 --
Assuming no redemption . . . . . . . . . 20 63 108 --
-------------------------------------------------
SMALL COMPANY STOCK FUND
A Shares . . . . . . . . . . . . . . . . 67 91 117 192
B Shares
Assuming redemption
at the end of the period . . . . . . 60 91 125 --
Assuming no redemption . . . . . . . . . 20 61 105 --
-------------------------------------------------
SMALL CAP OPPORTUNITIES FUND
A Shares . . . . . . . . . . . . . . . . 57 83 111 189
B Shares
Assuming redemption
at the end of the period . . . . . . 67 92 120 --
Assuming no redemption . . . . . . . . . 27 62 100 --
-------------------------------------------------
INTERNATIONAL FUND
A Shares . . . . . . . . . . . . . . . . 69 100 132 224
B Shares
Assuming redemption
at the end of the period. . . . . . . 63 100 140 --
Assuming no redemption . . . . . . . . . 23 70 120 --

</TABLE>

<PAGE>

2. FINANCIAL HIGHLIGHTS

The following tables provide financial highlights for the Funds. This
information represents selected data for a single outstanding A and B Share
of each Fund for the periods shown. Information for the periods ended May 31,
1994 and thereafter were audited by KPMG Peat Marwick LLP, independent
auditors. Information for prior periods was audited by other independent
auditors. Each Fund's financial statements for the fiscal year ended May 31,
1997, and independent auditors' report thereon, are contained in the Fund's
Annual Report. These financial statements are incorporated by reference into
the SAI. Further information about each Fund's performance is contained in
the Fund's Annual Report, which may be obtained from the Trust without charge.

INCOME EQUITY FUND

(a) The Fund commenced the offering of A and B Shares on May 2, 1996.

(b) The ratio of Gross Expenses to Average Net Assets does not
reflect fee waivers or expense reimbursements.

(d) 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) Annualized.

12 13
<PAGE>

VALUEGROWTH STOCK FUND

<TABLE>
<CAPTION>
NET
REALIZED AND
BEGINNING UNREALIZED DIVIDENDS DISTRIBUTIONS ENDING
NET ASSET NET GAIN FROM NET FROM NET NET ASSET
VALUE INVESTMENT (LOSS) ON INVESTMENT REALIZED VALUE
PER SHARE INCOME INVESTMENTS INCOME GAIN PER SHARE
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A SHARES
June 1, 1996 to May 31, 1997 $22.63 $0.17 $4.80 ($0.13) ($2.41) $25.06
June 1, 1995 to May 31, 1996 $18.82 $0.13 $3.93 ($0.13) ($0.12) $22.63
June 1, 1994 to May 31, 1995 $17.17 $0.17 $1.66 ($0.18) -- $18.82
June 1, 1993 to May 31, 1994 $17.27 $0.10 $0.19 ($0.17) ($0.22) $17.17
June 1, 1992 to 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
December 1, 1990 to November 30, 1991 $11.67 $0.18 $2.82 ($0.19) -- $14.48
December 1, 1989 to November 30, 1990 $12.67 $0.21 ($0.55) ($0.21) ($0.45) $11.67
December 1, 1988 to November 30, 1989 $10.03 $0.18 $2.61 ($0.15) -- $12.67
January 8, 1988 to November 30, 1988(a) $10.00 $0.15 $0.03 ($0.15) -- $10.03
B SHARES
June 1, 1996 to May 31, 1997 $22.28 $0.01 $4.68 ($0.01) ($2.41) $24.55
June 1, 1995 to May 31, 1996 ($18.65 ($0.02) $3.87 ($0.10) ($0.12) $22.28
June 1, 1994 to May 31, 1995 $17.10 $0.07 $1.61 ($0.13) -- $18.65
August 5, 1993 to May 31, 1994(a) $17.12 $0.07 $0.23 ($0.10) ($0.22) $17.10
- - -----------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO TO AVERAGE NET ASSETS
---------------------------------
NET ASSETS
NET PORTFOLIO AVERAGE AT END OF
INVESTMENT NET GROSS TOTAL TURNOVER COMMISSION PERIOD
INCOME EXPENSES EXPENSES(b) RETURN(c) RATE RATE(d) (000'S OMITTED)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A SHARES
June 1, 1996 to May 31, 1997 0.70% 1.01% 1.39% 23.32% 75.50% $0.0781 $18,830
June 1, 1995 to May 31, 1996 0.63% 1.20% 1.42% 21.69% 105.43% $0.0603 $15,232
June 1, 1994 to May 31, 1995 1.01% 1.20% 1.43% 10.72% 63.82% -- $12,138
June 1, 1993 to May 31, 1994 1.06% 1.20% 1.43% 1.68% 86.07% -- $12,922
June 1, 1992 to May 31, 1993 1.02% 1.20% 1.42% 9.32% 57.34% -- $109,669
December 1, 1991 to May 31, 1992 1.34%(e) 1.19%(e) 1.64%(e) 26.46%(e) 29.50% -- $68,659
December 1, 1990 to November 30, 1991 1.57% 1.19% 4.33% 25.84% 31.17% -- $4,853
December 1, 1989 to November 30, 1990 1.88% 1.20% 11.73% (2.91%) 38.67% -- $750
December 1, 1988 to November 30, 1989 1.58% 1.20% 8.38% 28.00% 65.89% -- $411
January 8, 1988 to November 30, 1988(a) 1.84%(e) 1.19%(e) 2.50%(e) 2.04%(e) 30.90% -- $281
B SHARES
June 1, 1996 to May 31, 1997 (0.07%) 1.76% 2.48% 22.33% 75.50% $0.0781 $6,591
June 1, 1995 to May 31, 1996 (0.12%) 1.96% 2.54% 20.79% 105.43% $0.0603 $5,130
June 1, 1994 to May 31, 1995 0.28% 1.95% 2.51% 9.88% 63.82% -- $3,569
August 5, 1993 to May 31, 1994(a) 0.25%(e) 1.95%(e) 2.55%(e) 2.36%(e) 86.07% -- $2,218
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) The Fund commenced operations on January 8, 1988. The Fund's original
class of shares subsequently became A Shares. The Fund commenced the
offering of B Shares on August 5, 1993.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) 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) Annualized.

14 15
<PAGE>

DIVERSIFIED EQUITY FUND

(a) The Fund commenced the offering of A Shares on May 2, 1996 and B Shares on
May 6, 1996.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) 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) Annualized.

(f) Includes expenses allocated from the Core Portfolios in which the Fund was
invested: Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware).

16 17

<PAGE>

GROWTH EQUITY FUND

(a) The Fund commenced the offering of A Shares on May 2, 1996 and B Shares
on May 6, 1996.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) Represents the average commission per share paid to brokers on the
purchase or sale of portfolio securities. Prior to 1996, this data was
not required to be reported in mutual fund financial statements.

(e) Annualized.

(f) Includes expenses allocated from the Core Portfolios in which the Fund
was invested: Index Portfolio, Small Company Portfolio and International
Portfolio II of Core Trust (Delaware).

18 19

<PAGE>

SMALL COMPANY STOCK FUND

<TABLE>
<CAPTION>
NET
REALIZED AND
BEGINNING UNREALIZED DIVIDENDS DISTRIBUTIONS ENDING
NET ASSET NET GAIN FROM NET FROM NET NET ASSET
VALUE INVESTMENT (LOSS) ON INVESTMENT REALIZED VALUE
PER SHARE INCOME INVESTMENTS INCOME GAIN PER SHARE
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A SHARES
June 1, 1996 to May 31, 1997 $14.02 ($0.04) $0.88 -- ($0.91) $13.95
June 1, 1995 to May 31, 1996 $10.64 $0.01 $3.93 ($0.03) ($0.53) $14.02
June 1, 1994 to May 31, 1995 $9.84 $0.12 $0.87 ($0.11) ($0.08) $10.64
December 31, 1993 to May 31, 1994(a) $10.00 $0.07 ($0.15) ($0.08) -- $9.84
B SHARES
June 1, 1996 to May 31, 1997 $13.83 ($0.11) $0.82 -- ($0.91) $13.63
June 1, 1995 to May 31, 1996 $10.56 ($0.08) $3.90 ($0.02) ($0.53) $13.83
June 1, 1994 to May 31, 1995 $9.82 $0.07 $0.84 ($0.09) ($0.08) $10.56
December 31, 1993 to May 31, 1994(a) $10.00 $0.06 ($0.17) ($0.07) -- $9.82
- - -------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO TO AVERAGE NET ASSETS
-----------------------------------
NET ASSETS
NET PORTFOLIO AVERAGE AT END OF
INVESTMENT NET GROSS TOTAL TURNOVER COMMISSION PERIOD
INCOME EXPENSES EXPENSES(b) RETURN(c) RATE RATE(d) (000'S OMITTED)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A SHARES
June 1, 1996 to May 31, 1997 (0.38%) 1.19% 1.67% 6.34% 210.19% $0.0774 $7,355
June 1, 1995 to May 31, 1996 0.03% 1.21% 1.87% 38.22% 134.53% $0.0555 $5,426
June 1, 1994 to May 31, 1995 1.14% 0.53% 2.32% 10.19% 68.09% -- $1,540
December 31, 1993 to May 31, 1994(a) 1.95%(e) 0.22%(e) 10.66%(e) (1.98%)(e) 14.98% -- $265
B SHARES
June 1, 1996 to May 31, 1997 (1.13%) 1.94% 2.73% 5.46% 210.19% $0.0774 $5,125
June 1, 1995 to May 31, 1996 (0.74%) 1.96% 2.96% 37.32% 134.53% $0.0555 $4,125
June 1, 1994 to May 31, 1995 0.38% 1.27% 3.56% 9.31% 68.09% -- $963
December 31, 1993 to May 31, 1994(a) 1.27%(e) 0.98%(e) 20.87%(e) (2.77%)(e) 14.98% -- $195
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) The Fund commenced operations and the offering of A and B Shares on
December 31, 1993.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) 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) Annualized.

20 21

<PAGE>

SMALL CAP OPPORTUNITIES FUND

<TABLE>
<CAPTION>
NET
REALIZED AND
BEGINNING UNREALIZED DIVIDENDS DISTRIBUTIONS ENDING
NET ASSET NET GAIN FROM NET FROM NET NET ASSET NET
VALUE INVESTMENT (LOSS) ON INVESTMENT REALIZED VALUE INVESTMENT
PER SHARE INCOME INVESTMENTS INCOME GAIN PER SHARE INCOME
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A SHARES
October 9, 1996 to May 31, 1997(a) $17.39 ($0.01) $2.46 -- ($0.01) $19.83 (0.18%)(f)(g)
B SHARES
November 8, 1996 to May 31, 1997(a) $17.41 ($0.05) $2.40 -- ($0.01) $19.75 (0.99%)(f)(g)
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO TO AVERAGE NET ASSETS
--------------------------------------
NET ASSETS
PORTFOLIO AVERAGE AT END OF
NET GROSS TOTAL TURNOVER COMMISSION PERIOD
EXPENSES EXPENSES(b) RETURN(c) RATE RATE(d)(e) (000'S OMITTED)
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A SHARES
October 9, 1996 to May 31, 1997(a) 1.25%(f)(g) 10.51%(f)(g) 11.37% 34.45% $0.0584 $522
B SHARES
November 8, 1996 to May 31, 1997(a) 2.06%(f)(g) 27.27%(f)(g) 13.53% 34.45% $0.0584 $158
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) The Fund commenced the offering of A Shares on October 9, 1996 and B
Shares on November 8, 1996.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) Represents the Portfolio Turnover Rate and Average Commission Rate, of
Schroder U.S. Smaller Companies Portfolio of Schroder Capital Funds.

(e) 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.

(f) Annualized.

(g) Includes expenses allocated for Schroder U.S. Smaller Companies Portfolio
of Schroder Capital Funds.

22 23

<PAGE>

INTERNATIONAL FUND

(a) The Fund commenced the offering of A Shares on April 1, 1995 and the
offering of B Shares on May 12, 1995.

(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.

(d) Represents the Portfolio Turnover Rate and Average Commission Rate of
International Portfolio of Core Trust (Delaware).

(e) 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.

(f) Annualized.

(g) Includes expenses allocated from International Portfolio of Core Trust
(Delaware).

24 25
<PAGE>
- - ----
- - ----

3. INVESTMENT OBJECTIVES AND POLICIES

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

INCOME EQUITY FUND

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

INVESTMENT POLICIES. Income Equity Portfolio invests primarily in the common
stock of large, high-quality domestic companies that have above-average return
potential based on current market valuations. Primary emphasis is placed on
investing in securities of companies with above-average dividend income. In
selecting securities for the Portfolio, Norwest uses various valuation measures,
including above-average dividend yields and below industry average price to
earnings, price to book and price to sales ratios. The Portfolio considers large
companies to be those whose market capitalization is greater than the median of
the Russell 1000 Index. The Portfolio also may invest in preferred stock and
securities convertible into common stock and may purchase American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers. (See "Investment Objectives and Policies - Core Portfolio Descriptions
- - - International Portfolio Investment Considerations and Risk Factors.") Under
normal circumstances, Income Equity Portfolio will not invest more than 10% of
its total assets in the securities of a single issuer.

VALUGROWTH STOCK FUND

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

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

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

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

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

DIVERSIFIED EQUITY FUND

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

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
minimize the volatility and risk of investing in equity securities. The Fund's
portfolio combines five different equity investment styles: (1) index style; (2)
an income equity style; (3) a large company style; (4) a small company style;
and (5) an international style. The Fund allocates the assets dedicated to large
company investments to two Core Portfolios, the assets allocated to small
company investments to four Core Portfolios and the assets dedicated to
international investments to two Core Portfolios. The Fund utilizes different
equity investment styles in order to reduce the risk of price and return
volatility associated with reliance on a single investment style. Because
Diversified Equity Fund blends five equity investment styles, it is anticipated
that its price and return volatility will be less than that of Growth Equity
Fund, which blends three equity investment styles.

--
27
<PAGE>
- - ----
- - ----

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

CURRENT RANGE OF
ALLOCATION INVESTMENT
- - ---------------------------------------------------------------
<S> <C> <C>
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%
Disciplined Growth
Portfolio................ 5%
Small Company style......... 10% 8.5% - 11.5%
Small Company Growth
Portfolio................ 3%
Small Company Value
Portfolio................ 3%
Small Company Stock
Portfolio................ 2.5%
Small Cap Value
Portfolio................ 1.5%
International style......... 15% 13.5% - 16.5%
International Portfolio... 14.25%
Schroder EM Core
Portfolio................ 0.75%
---
TOTAL FUND ASSETS........... 100%
</TABLE>

As market values of the Fund's assets change, the percentage of Fund assets
invested in each Core Portfolio may temporarily deviate from the current
allocations. In response thereto, Norwest daily effects transactions for the
Fund to reestablish its allocations.

Consistent with the Fund's investment objective and policies and under the
general supervision of the Board, Norwest may make changes in the foregoing
percentage allocations at any time Norwest deems appropriate, including in
response to market and other conditions. In addition, upon approval of the Board
and notification of shareholders, the Fund may invest in additional or fewer
Core Portfolios or invest directly in portfolio securities. When Norwest
believes that a change in the allocation percentages is desirable, it will sell
and purchase securities to effect the change.

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

GROWTH EQUITY FUND

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

- - -
28
<PAGE>
- - ----
- - ----

INVESTMENT POLICIES. The Fund follows a "multi-style" approach designed to
reduce the volatility and risk of investing in equity securities. The Fund's
portfolio combines three different equity investment styles: (1) a large company
growth style; (2) a small company style; and (3) an international style. The
Fund allocates the assets dedicated to small company investments to four Core
Portfolios and the assets dedicated to international investments to two Core
Portfolios. The Fund utilizes different equity styles in order to reduce the
risk of price and return volatility associated with reliance on a single style.
It is anticipated that the Fund's price and return volatility will be somewhat
greater than those of Diversified Equity Fund, which blends five equity styles.

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

CURRENT RANGE OF
ALLOCATION INVESTMENT
- - -----------------------------------------------------------------
<S> <C> <C>
Large Company Growth
Portfolio.................... 35% 33% - 37%
Small Company style........... 35% 33% - 37%
Small Company Growth
Portfolio.................. 10.5%
Small Company Value
Portfolio.................. 10.5%
Small Company Stock
Portfolio.................. 8.75%
Small Cap Value Portfolio... 5.25%
International style........... 30% 28% - 32%
International Portfolio..... 28.5%
Schroder EM Core
Portfolio.................. 1.5%
---
TOTAL FUND ASSETS............. 100%
</TABLE>

--
29
<PAGE>
- - ----
- - ----

SMALL COMPANY STOCK FUND

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

INVESTMENT POLICIES. Small Company Stock Portfolio invests primarily in the
common stock of small- and medium-size domestic companies that have a market
capitalization well below that of the average company in the Standard & Poor's
500 Composite Stock Price Index. Small companies are companies whose market
capitalization is less than the largest stock included in the Russell 2000
Index. Medium-size companies have a market capitalization in the range from $500
million to $8 billion.

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

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

The Portfolio also may invest up to 20% of its assets in American Depository
Receipts, European Depository Receipts and other similar securities of foreign
issuers. (See "Additional Investment Policies and Considerations - American
Depository Receipts and European Depository Receipts.")

For a description of investment considerations and risk involved in investing in
small company securities, see "Investment Objectives and Policies - Core
Portfolio Descriptions - Risk of Investing in Small Company Securities."

SMALL CAP OPPORTUNITIES FUND

INVESTMENT OBJECTIVE. The investment objective of the Fund is capital
appreciation. Current income will be incidental to the objective of capital
appreciation. The Fund currently pursues its investment objective by investing
all of its investable assets in Schroder U.S. Smaller Companies Portfolio, which
has

- - -
30
<PAGE>
- - ----
- - ----
the same investment objective and substantially similar investment policies as
the Fund. Therefore, although the following discusses the investment policies of
that Portfolio, it applies equally to the Fund.

INVESTMENT POLICIES. The Portfolio seeks to achieve its investment objective by
investing, under normal market conditions, at least 65% of its total assets in
equity securities of companies domiciled in the United States that, at the time
of purchase, have market capitalizations of $1.5 billion or less.

In its investment approach, Schroder attempts to identify securities of
companies which it believes can generate above average earnings growth, and
which can be bought at favorable prices in relation to book values and earnings.
As part of the investment decision, Schroder's assessment of the competency of
an issuer's management will be an important consideration. These criteria are
not rigid, and other investments may be included in the Portfolio if Schroder
believes they can help the Portfolio to attain its objective.

The Portfolio will invest principally in equity securities (common stocks,
securities convertible into common stocks or, subject to special limitations,
rights or warrants to subscribe for or purchase common stocks). The Portfolio
may also invest to a limited degree in non-convertible debt securities and
preferred stocks when, in the opinion of Schroder, such investments are
consistent with the Portfolio's investment objective.

The Portfolio may invest in securities of small, unseasoned companies (which,
together with any predecessors, have been in operation for less than three
years), as well as in securities of more established companies. In view of the
volatility of price movements of the former, the Portfolio currently intends to
invest no more than 5% of its total assets in securities of small, unseasoned
issuers.

Although there is no minimum rating for debt securities (convertible or non-
convertible) in which the Portfolio may invest, it is the present intention of
the Portfolio to invest no more than 5% of its net assets in debt securities
rated below the fourth highest rating category. These securities are commonly
known as "high yield/high risk" securities or "junk bonds." The Portfolio will
not invest in debt securities that are in default. High yield/high risk
securities are predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal and generally involve a greater volatility
of price than securities in higher rated categories. The Portfolio is not
obligated to dispose of securities due to changes by the rating agencies. (See
"Investment Objectives and Policies - Additional Investment Policies and Risk
Considerations - Debt Securities.")

OPTIONS AND FUTURES TRANSACTIONS. While the Portfolio does not presently intend
to do so, it may write covered call options and purchase certain put and call
options, stock index futures, and options on stock index futures and

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broadly-based stock indices, all of which are referred to as "Hedging
Instruments." In general, the Portfolio may use Hedging Instruments: (1) to
attempt to protect against declines in the market value of the Portfolio's
securities and thus protect the Fund's net asset value per share against
downward market trends; or (2) to establish a position in the equities markets
as a temporary substitute for purchasing particular equity securities. The
Portfolio will not use Hedging Instruments for speculation. The Hedging
Instruments which the Portfolio is authorized to use have certain risks
associated with them. The Hedging Instruments the Portfolio may use and the
risks associated with them are described in greater detail in the SAI. (See
"Additional Investment Policies and Risk Considerations - Options and Futures
Contracts.")

INTERNATIONAL FUND

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

INVESTMENT OBJECTIVE. The investment objective of the Fund is to provide
long-term capital appreciation by investing directly or indirectly in high
quality companies based outside the United States. The Fund currently pursues
its investment objective by investing in two Core Portfolios, International
Portfolio and Schroder EM Core Portfolio, each of which invests using a
different investment style.

INVESTMENT POLICIES. The Fund follows a "multi style" approach designed to
minimize the volatility and risk of investing in international equity
securities. The Fund's investment portfolio combines two different investment
styles: (1) an international equity investment style and (2) an international
emerging markets equity style.

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

CURRENT RANGE OF
ALLOCATION INVESTMENT
-------------------------------------------------------------
<S> <C> <C>
International Portfolio............. 95% 80% - 100%
Schroder EM Core Portfolio.......... 5% 0% - 20%
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TOTAL FUND ASSETS................... 100%
</TABLE>

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CORE PORTFOLIO DESCRIPTIONS

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

The Fund may utilize index futures contracts to a limited extent. Index futures
contracts are bilateral agreements pursuant to which two parties agree to take
or make delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of trading of the contract
and the price at which the futures contract is originally struck. As no physical
delivery of the securities comprising the index is made, a purchaser of index
futures contracts may participate in the performance of the securities contained
in the index without the required capital commitment. Index futures contracts
may be used for several reasons: to simulate full investment in the underlying
index while retaining a cash balance for fund management purposes; to facilitate
trading; or to reduce transaction costs. The Portfolio does not invest in
futures contracts for speculative purposes or to leverage the Portfolio.

The Index tracks the total return performance of 500 common stocks that are
chosen for inclusion in the Index by Standard & Poor's ("S&P") on a statistical
basis. The inclusion of a stock in the Index in no way implies that S&P

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believes the stock to be an attractive investment. The 500 securities, most of
which trade on the New York Stock Exchange, represent approximately 70% of the
total market value of all U.S. common stocks. Each stock in the Index is
weighted by its market value. Because of the market-value weighting, the 50
largest companies in the Index currently account for approximately 47% of its
value. The Index emphasizes large capitalizations and, typically, companies
included in the Index are the largest and most dominant firms in their
respective industries.

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

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

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

The use of index futures contracts entails certain investment risks and costs,
including (1) imperfect correlations between movements in the prices of futures
contracts and movements in the price of the securities hedged which may cause a
given hedge not to achieve its objective; (2) the fact that the skills and
techniques needed to trade futures are different from those needed to select the
other securities in which the Portfolio invests; (3) lack of assurance that a
liquid secondary market will exist for any particular instrument at any
particular time, which, among other things, may hinder the Portfolio's ability
to limit exposures by closing its positions; and (4) the possible need to defer
closing out of certain futures contracts to avoid adverse tax consequences.

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

LARGE COMPANY GROWTH PORTFOLIO. The investment objective of the Large Company
Growth Portfolio is to provide long-term capital appreciation by investing
primarily in large, high-quality domestic companies that Norwest

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believes have superior growth potential. Large companies are those companies
whose market capitalization is greater than the median of the Russell 1000
Index. In selecting securities for the Portfolio, Norwest seeks issuers whose
stock is attractively valued and whose fundamental characteristics both are
significantly better than the market average and support internal earnings
growth capability. The Portfolio may invest in the securities of companies whose
growth potential is, in Norwest's opinion, generally unrecognized or
misperceived by the market. In addition, up to 20% of the total assets invested
in by the Portfolio may be invested in American Depository Receipts, European
Depository Receipts and other, similar securities of foreign issuers and Norwest
may attempt to reduce the overall risk of foreign investments by using foreign
currency forward contracts. (See "Investment Objectives and Policies - Core
Portfolio Descriptions - International Portfolio Investment Considerations and
Risk Factors.") Under normal circumstances, no more than 10% of the assets of
the Portfolio will be invested in the securities of a single issuer. The
Portfolio does not currently invest in preferred stock or securities convertible
into common stock but reserves the right to do so in the future.

DISCIPLINED GROWTH PORTFOLIO. Disciplined Growth Portfolio seeks capital
appreciation by investing in common stocks of larger companies. Disciplined
Growth Portfolio seeks greater long-term returns by investing primarily in the
common stock of companies that, in the view of the investment adviser, possess
above average potential for growth. The average market capitalization of the
companies in which the Portfolio invests will be 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 investment adviser uses both quantitative and fundamental
analysis. Among the factors that the investment adviser considers are 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 investment adviser uses a variety of valuation measures to determine whether
the share price already reflects any positive fundamentals identified by the
investment adviser. In addition to approximately equal weighting of portfolio
securities, the investment adviser attempts to constrain the variability of the
investment returns by employing risk control screens for price volatility,
financial quality and valuation.

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

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Investments in small, unseasoned issuers generally carry greater risk than is
customarily associated with larger, more seasoned companies. Such issuers often
have products and management personnel that have not been tested by time or the
marketplace and their financial resources may not be as substantial as those of
more established companies. Their securities (which a Portfolio may purchase
when they are offered to the public for the first time) may have a limited
trading market which can adversely affect their sale by the Portfolio and can
result in such securities being priced lower than otherwise might be the case.
If other institutional investors engage in trading this type of security, the
Portfolio may be forced to dispose of its holdings at prices lower than might
otherwise be obtained.

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

SMALL COMPANY GROWTH PORTFOLIO. Small Company Growth Portfolio seeks to provide
long-term capital appreciation by investing in smaller sized domestic companies.
Small companies are those companies whose market capitalization is less than the
largest stock in the Russell 2,000 Index.

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

SMALL COMPANY VALUE PORTFOLIO. Small Company Value Portfolio seeks to provide
long-term capital appreciation by investing primarily in smaller companies. The
Portfolio invests primarily in the common stock of companies that have a market
capitalization well below that of the average company in the Standard & Poor's
500 Composite Stock Price Index. Smaller companies are those companies whose
market capitalization is less than the largest stock in the Russell 2000 Index.

The Advisers focus on securities that are conservatively valued in the
marketplace relative to their underlying fundamentals. Value investing provides
investors with a less aggressive way to take advantage of growth opportunities
of small companies. The Advisers seek to invest in stocks priced low relative to
the stock of comparable companies, determined by price/earnings ratios, cash
flows or other measures. Value investing therefore may reduce downside risk
while offering potential for capital appreciation as a stock

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gains favor among other investors and its stock price rises. (See "Investment
Objectives and Policies - Core Portfolio Descriptions - Risks of Investing in
Small Company Securities.")

SMALL CAP VALUE PORTFOLIO. Small Cap Value Portfolio seeks higher growth rates
and greater long-term returns by investing primarily in the common stock of
smaller companies that, in the view of the investment adviser, are undervalued.
Under normal circumstances, the Portfolio will invest substantially all of its
assets, but not less than 65% of its net assets, in securities of companies with
a market capitalization which reflects the market capitalization of companies
included in the Russell 2000 Index.

The Portfolio invests in those smaller companies that the investment adviser
believes to be undervalued and which will report a level of corporate earnings
exceeding the level expected by investors. The determination of value is 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 investment adviser uses both
quantitative and fundamental analysis. Among the factors that the investment
adviser considers are changes of earnings estimates by investment analysts, the
recent trend of company earnings reports, and the fundamental business outlook
for the company. (See "Investment Objectives and Policies - Core Portfolio
Descriptions - Risks of Investing in Small Company Securities.")

INTERNATIONAL PORTFOLIO. The investment objective of International Portfolio is
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. International Portfolio also may invest in the
securities of domestic closed-end investment companies investing primarily in
foreign securities and may invest in debt obligations of foreign governments or
their political subdivisions, agencies or instrumentalities, of supranational
organizations and of foreign corporations. International Portfolio's investments
will be diversified among securities of issuers in foreign countries including,
but not limited to, Japan, Germany, the United Kingdom, France, The Netherlands,
Hong Kong, Singapore and Australia. In general, International Portfolio will
invest only in securities of companies and governments in countries that
Schroder, in its judgment, considers both politically and economically stable.
International Portfolio has no limit on the amount of its assets that may be
invested in any one type of foreign instrument or in any foreign country;
however, to the extent International Portfolio concentrates its assets in a
foreign country, it will incur greater risks.

International Portfolio may purchase preferred stock and convertible debt
securities, including convertible preferred stock, and may purchase American
Depository Receipts, European Depository Receipts or other similar securities of
foreign issuers. International Portfolio also may enter into foreign

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exchange contracts, including forward contracts to purchase or sell foreign
currencies, in anticipation of its currency requirements and to protect against
possible adverse movements in foreign exchange rates. Although such contracts
may reduce the risk of loss to International Portfolio from adverse movements in
currency values, the contracts also limit possible gains from favorable
movements.

INTERNATIONAL PORTFOLIO INVESTMENT CONSIDERATIONS AND RISK FACTORS

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

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

FOREIGN INVESTMENT. All investments, domestic and foreign, involve certain
risks. Investments in the securities of foreign issuers may involve risks in
addition to those normally associated with investments in the securities of

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U.S. issuers. All foreign investments are subject to risks of foreign political
and economic instability, adverse movements in foreign exchange rates, the
imposition or tightening of exchange controls or other limitations on
repatriation of foreign capital, and changes in foreign governmental attitudes
towards private investment, possibly leading to nationalization, increased
taxation or confiscation of foreign investors' assets.

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

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

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

SCHRODER EM CORE PORTFOLIO. The investment objective of Schroder EM Core
Portfolio is to seek to achieve long-term capital appreciation through direct or
indirect investment in equity and debt securities of issuers domiciled or doing
business 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, up to 65% of its total
assets in emerging market equity and debt securities, including common stocks;
convertible preferred stocks; stock rights and warrants; convertible debt
securities; and non-convertible debt securities. (Investments in stock rights
and warrants will not be considered for purposes of determining compliance with
this policy.) The Portfolio may invest up to 35% of its total assets in
high-risk debt securities that are unrated or rated below investment grade. The
Portfolio may be able to invest in certain emerging markets solely or primarily
through governmentally authorized investment companies or vehicles. When
investing through investment companies, the Portfolio may

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pay substantial premiums above such investment companies' net asset value per
share. The Portfolio does not intend to invest in other investment companies
unless, in the judgment of Schroder, the potential benefits of such investment
justify the payments of any applicable premiums or sales charges.

In recent years, many emerging market countries have begun programs of economic
reform: removing import tariffs, dismantling trade barriers, deregulating
foreign investment, privatizing state-owned industries, permitting the value of
their currencies to float against the dollar and other major currencies, and
generally reducing the level of state intervention in industry and commerce.
Important intra-regional economic integration also holds the promise of greater
trade and growth. At the same time, significant progress has been made in
restructuring the heavy external debt burden that certain emerging market
countries accumulated during the 1970s and 1980s. While there is no assurance
that these trends will continue, Schroder, will seek out attractive investment
opportunities in these countries.

"Emerging market" countries are all those not included in the Morgan Stanley
Capital International World Index ("MSCI World") of major world economies. If,
however, the investment adviser determines that the economy of a MSCI
World-listed country is an emerging market economy, Schroder 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 any one country.

Investment in sovereign debt carries high risk. Schroder EM Core Portfolio may
invest a portion of its assets in Brady Bonds, which are securities created
through the exchange of existing commercial bank loans to sovereign entities for
new obligations in connection with debt restructuring. In general, the risks
incurred by the Portfolio are of the type described under "Investment Objectives
and Policies - Core Portfolio Descriptions - International Portfolio Investment
Considerations and Risk Factors." These risks are, however, greatly enhanced in
the Portfolio.

ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS

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

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approval. Likewise, nonfundamental investment policies of a Core Portfolio may
be changed by that investment company's board of trustees ("Core Board") without
shareholder approval.

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

As used herein, the term U.S. Government Securities means obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities. All investment policies relate to each Fund and, unless
otherwise noted, not to a portion of a Fund that invests in a particular
investment style.

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

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

DIVERSIFICATION AND CONCENTRATION. Each Fund is diversified as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"). As a fundamental
policy, with respect to 75% of its assets, no Fund may purchase a security
(other than a U.S. Government Security or a security of an investment company)
if, as a result: (1) more than 5% of the Fund's total assets would be invested
in the securities of a single issuer; or (2) the Fund would own more than 10% of
the outstanding voting securities of any single issuer. Each Fund is prohibited
from concentrating its assets in the securities of issuers in any one industry.
As a fundamental policy, each Fund may not purchase a security if, as a result,
more than 25% of the value of the Fund's total assets would be invested in the
securities of issuers conducting their

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principal business activities in the same industry. This limit does not apply to
investments in U.S. Government Securities or repurchase agreements covering U.S.
Government Securities.

Each Fund reserves the right upon notification to shareholders to invest up to
100% of its investable assets in one or more other investment companies such as
the Core Portfolios.

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

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

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a convertible security is the higher of its investment value (its value as a
fixed income security) and its conversion value (the value of the underlying
shares of common stock if the security is converted). As a fixed income
security, the value of a convertible security generally increases when interest
rates decline and generally decreases when interest rates rise. The value of
convertible securities, however, is also influenced by the value of the
underlying common stock.

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

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

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

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and that changes in economic conditions or other circumstances are more likely
to lead to a weakened capacity of issuers of such bonds to make principal and
interest payments than is the case with higher grade bonds.

In purchasing high yield/high risk securities, the Funds will rely on the
investment adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issuer of such securities. Nonetheless, investors should
review the investment objective and policies of the Fund and consider their
willingness to assume risk before making an investment.

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. Each Fund may enter
into repurchase agreements and may lend securities from its portfolio to
brokers, dealers and other financial institutions. These investments may entail
certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty in these transactions or a counterparty defaulted on its
obligations, a Fund may have difficulty in exercising its rights to the
underlying securities, may incur costs and experience time delays in disposing
of them and may suffer a loss.

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

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

ILLIQUID SECURITIES. No Fund may invest more than 15% of its net assets in
illiquid securities. Illiquid securities are securities that cannot be disposed
of

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

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

TEMPORARY DEFENSIVE POSITION. When business or financial conditions warrant,
each Fund may assume a temporary defensive position and invest without limit in
cash or prime quality cash equivalents: including: (1) short-term U.S.
Government Securities; (2) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of commercial banks doing business in the
United States (United States banks in the case of Small Cap Opportunities Fund);
(3) commercial paper; (4) repurchase agreements; and (5) shares of "money market
funds" registered under the 1940 Act within the limits specified therein. During
periods when and to the extent that a Fund has assumed a temporary defensive
position, it may not be pursuing its investment objective. Prime quality
instruments are those that are rated in one of the two highest short-term rating
categories by an NRSRO or, if not rated, determined by the Advisers to be of
comparable quality. Apart from temporary defensive purposes, a Fund may at any
time invest a portion of its assets in cash and cash equivalents as described
above (in United States banks in the case of Small Cap Opportunities Fund).
Except during periods when a Fund assumes a temporary defensive position, each
Fund will have at least 65% of its total assets invested in common stock and
International Fund will

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have at least 65% of its net assets invested in securities of companies
domiciled outside the United States. International Portfolio and Schroder EM
Core Portfolio may hold cash and bank instruments denominated in any major
foreign currency.

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

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

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

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

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4. MANAGEMENT

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

INVESTMENT ADVISORY SERVICES

NORWEST INVESTMENT MANAGEMENT. Subject to the general supervision of the Board,
Norwest Investment Management, Inc. makes investment decisions for the Funds
(except Small Cap Opportunities Fund and International Fund) and continuously
reviews, supervises and administers each Fund's investment program or oversees
the investment decisions of the investment subadvisers, as applicable. Norwest
provides its investment advisory services directly to ValuGrowth Stock Fund and
indirectly to each Fund that operates in a Core and Gateway Structure through
its investment advisory services to the Core Portfolios. In addition, subject to
the general supervision of the Board, Norwest continuously reviews and
determines the allocation of the assets of Diversified Equity Fund and Growth
Equity Fund among the various investment styles and Core Portfolios in which
those Funds invest ("Asset Allocation Services"). Norwest, which is located at
Norwest Center, Sixth Street and Marquette, Minneapolis, Minnesota 55479, is an
indirect subsidiary of Norwest Corporation, a multi-bank holding company that
was incorporated under the laws of Delaware in 1929. As of June 30, 1997,
Norwest Corporation had assets of $83.6 billion, which made it the 11th largest
bank holding company in the United States. As of June 30, 1997, Norwest
Corporation and its affiliates managed assets with a value of approximately
$52.9 billion.

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

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

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

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

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

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

CRESTONE CAPITAL MANAGEMENT, INC. Crestone, which is located at 7720 East
Belleview Avenue, Suite 220, Englewood, Colorado 80111, is an investment
advisory subsidiary of Norwest Bank. Crestone provides investment advice
regarding companies with small market capitalization to various clients,
including institutional investors. As of June 30, 1997, Crestone managed assets
with a value of approximately $534 million.

PEREGRINE CAPITAL MANAGEMENT, INC. Peregrine, which is located at LaSalle Plaza,
800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402, is an investment
adviser subsidiary of Norwest Bank. Peregrine provides investment advisory
services to corporate and public pension plans, profit sharing plans,
savings-investment and 401(k) plans. As of June 30, 1997, Peregrine managed
approximately $5.0 billion in assets.

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. Schroder, whose principal
business address is 787 Seventh Avenue, New York, New York 10019, is a wholly
owned U.S. subsidiary of Schroders Incorporated (doing business in

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New York State as Schroders Holdings), the wholly owned U.S. holding company
subsidiary of Schroders plc. Schroders plc is the holding company parent of a
large worldwide group of banks and financial services companies (referred to as
the "Schroder Group"), with associated companies and branch and representative
offices located in eighteen countries worldwide. The Schroder Group specializes
in providing investment management services and had assets under management in
excess of $175 billion as of June 30, 1997.

SMITH ASSET MANAGEMENT GROUP, L.P. Smith Group, whose principal business address
is 500 Crescent Court, Suite 250, Dallas, Texas 75201 is a registered investment
advisor. Smith Group provides investment management services to company
retirement plans, foundations, endowments, trust companies, and high net worth
individuals using a disciplined equity style. As of June 13, 1997, the Smith
Group managed over $200 million in assets.

PORTFOLIO MANAGERS. Many persons on the advisory staff of Norwest, Crestone,
Peregrine and Schroder contribute to the investment services provided to the
Funds and the Core Portfolios. The following persons, however, are primarily
responsible for day-to-day management and, unless otherwise noted, have been
primarily responsible since the inception of the Fund or Portfolio. In addition
to their primary responsibility for day-to-day management of the Fund/Portfolio,
certain of the portfolio managers may have other duties with respect to Norwest
Bank.

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

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

DIVERSIFIED EQUITY FUND, GROWTH EQUITY FUND AND INTERNATIONAL FUND - The
day-to-day management of each Fund, with respect to the portion of a Fund's
portfolio that is invested in a particular Core Portfolio, is performed by
the portfolio managers listed for the Core Portfolios.

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

SMALL CAP OPPORTUNITIES FUND/SCHRODER U.S. SMALLER COMPANIES
PORTFOLIO - Fariba Talebi. Ms. Talebi is a Group Vice President of

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Schroder, with the assistance of a small cap investment team, is primarily
responsible for the day-to-day management of the Portfolio's investments.
Ms. Talebi has been employed by SCMI in the investment research and
portfolio management areas since 1987.

INDEX PORTFOLIO - David D. Sylvester and Laurie R. White. Mr. Sylvester has
been associated with Norwest Bank since 1979, and as a Vice President and
Senior Portfolio Manager since 1985. He has over 20 years' experience in
managing securities portfolios. Ms. White has been a Vice President and
Senior Portfolio Manager of Norwest since 1991; from 1989 to 1991, she was
a Portfolio Manager at Richfield Bank and Trust. Mr. Sylvester and Ms.
White began serving as portfolio managers of Index Portfolio on January 1,
1996.

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

DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO - Stephen S.
Smith, CFA. Mr. Smith is the Chief Investment Officer for Smith Group and
is a principal in the firm. He has held this position since November, 1995.
Prior thereto, Mr. Smith served as senior portfolio manager with
NationsBank where he managed approximately $1 billion of client assets. At
NationsBank, Mr. Smith held a variety of management positions including
manager of the institutional asset management group, manager of the
disciplined equity style and member of the Investment Policy Committee. At
NationsBank he also served as sub-adviser for a portfolio of AIM Management
Company's Summit Fund.

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

SMALL COMPANY GROWTH PORTFOLIO - Robert B. Mersky, CFA and Paul E. von
Koster, CFA. Mr. Mersky is the President of Peregrine Capital Management,
Inc. Mr. Mersky has held various investment management positions with
Norwest, Peregrine and their affiliates since 1977. From 1980 to 1984 he
was head of investments for Norwest Bank. Mr. von Koster is a Senior Vice
President of Peregrine. Mr. von Koster has held various investment
management positions with Peregrine, Norwest and their affiliates since
1972.

INTERNATIONAL PORTFOLIO - Michael Perelstein, a Senior Vice President of
Schroder, with the assistance of an SCMI investment committee, are
primarily responsible for the day-to-day management of the Portfolio's
investment portfolio. Mr. Perelstein has been a Senior Vice President of
Schroder since January 2, 1997. Prior thereto, Mr. Perelstein was a

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Managing Director at MacKay Shields. Mr. Perelstein has more than twelve
years of international and global investment experience. Since January
1997, Mr. Perelstein has served as portfolio manager of International
Portfolio.

SCHRODER EM CORE PORTFOLIO - John A. Troiano. Mr. Troiano, a Vice President
of Schroder Capital Funds, assisted by the management team of Heather
Crighton and Mark Bridgeman, are responsible for the day-to-day management
of the investment portfolio. Mr. Troiano, Chief Executive Officer of
Schroder since April 1, 1997, has been a Managing Director of Schroder
since October 1995 and has been employed by various Schroder Group
companies in the investment research and portfolio management areas since
1981. Ms. Crighton is a Vice President of Schroder and has been employed by
Schroder/various Schroder Group companies in the investment research and
portfolio management areas since 1992. Mr. Bridgeman, also a Vice President
of Schroder, has been employed by various Schroder Group companies in the
investment research and portfolio management areas since 1990.

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

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

With respect to Diversified Equity Fund, Growth Equity Fund and International
Fund, Norwest is entitled to receive investment advisory fees from the Funds for
its Asset Allocation Services at a maximum annual rate of 0.25% of each Fund's
average daily net assets. No advisory fee for Asset Allocation Services is
payable by International Fund until December 1, 1997. In addition, each of
Diversified Equity Fund, Growth Equity Fund, and International Fund bears an
investment advisory fee at a blended rate based on the investment advisory fee
of the Core Portfolio in which the Fund invests.

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Norwest and Schroder receive investment advisory fees from the Core Portfolios
at the following annual rates of the Portfolio's average daily net assets. The
total fee payable by a Fund through its investments in Core Portfolios will vary
based on the percentage of its assets invested in each Core Portfolio.

CORE PORTFOLIO INVESTMENT ADVISORY FEE
- - --------------------------------------------------------------
<S> <C>
Index Portfolio................... 0.15%
Income Equity Portfolio........... 0.50%
Large Company Growth Portfolio.... 0.65%
Disciplined Growth Portfolio...... 0.90%
Small Company Stock Portfolio..... 0.90%
Small Company Growth Portfolio.... 0.90%
Small Company Value Portfolio..... 0.90%
Small Cap Value Portfolio......... 0.95%
International Portfolio........... 0.45%
Schroder EM Core Portfolio........ 1.00%
</TABLE>

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

Each Fund investing its assets in one or more Core Portfolios may withdraw its
investments from its corresponding Core Portfolio(s) at any time if the Board
determines that it is in the best interests of the Fund to do so. (See "Other
Information - Core and Gateway Structure.") Accordingly, each of these Funds has
retained Norwest as its investment adviser. Similarly, in the event that a Fund
withdraws its investment from a Core Portfolio, to the extent the Fund invested
in a Core Portfolio advised by Schroder or a Subadviser, the Fund has retained
Schroder and that Subadviser as an investment subadviser. Under these "dormant"
investment advisory arrangements, none of Norwest, Schroder, Crestone or
Peregrine receives any advisory fees with respect to a Fund as long as the Fund
remains completely invested in its respective Core Portfolio(s) or any other
investment companies. In the event that Income Equity Fund or Small Company
Stock Fund were to withdraw their assets from their corresponding Core
Portfolios, Norwest would receive an investment advisory fee at the same rate as
it does for the Core Portfolio. Similarly, to the extent Diversified Equity
Fund, Growth Equity Fund, Small Cap Opportunities Fund or International Fund
were to withdraw any or all of their assets from their corresponding Core
Portfolios, Norwest would receive an investment advisory fee on the withdrawn
assets at an annual rate of 0.65%, 0.90%, 0.925% and 0.85% of the Funds' average
daily net assets, respectively and would pay Schroder, Crestone and Peregrine,
as applicable, a fee for their investment subadvisory services.

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MANAGEMENT, ADMINISTRATION AND
DISTRIBUTION SERVICES

As manager, Forum supervises the overall management of the Trust (including the
Trust's receipt of services for which the Trust is obligated to pay) other than
investment advisory services. In this capacity, Forum provides the Trust with
general office facilities, provides persons satisfactory to the Board to serve
as officers of the Trust and oversees the performance of administrative and
professional services rendered to the Funds by others. FAS is responsible for
performing certain administrative services necessary for the Trust's operations
with respect to each Fund including: (1) preparing and printing updates of the
Trust's registration statement and prospectuses to its shareholders, the SEC and
state securities administrators; (2) preparing proxy and information statements
and any other communications to shareholders; (3) monitoring the sale of shares
and ensuring that such shares are properly and duly registered with the SEC and
applicable state securities administrators; and (4) supervising the declaration
of dividends and distributions to shareholders.

As of June 30, 1997, Forum and FAS provided management and administrative
services to registered investment companies and collective investment funds with
assets of approximately $25.5 billion. Forum is a member of the National
Association of Securities Dealers, Inc. For their services, Forum and FAS each
receives a fee with respect to ValuGrowth Stock Fund and International Fund at
an annual rate of 0.05% of the Fund's average daily net assets and with respect
to each other Fund at an annual rate of 0.025% of the Fund's average daily net
assets.

FAS also serves as an administrator of each Core Portfolio (except Schroder U.S.
Smaller Companies Portfolio and Schroder EM Core Portfolio) and provides
services to the Core Portfolios that are similar to those provided to the Funds
by Forum and FAS. For its services FAS receives a fee with respect to each Core
Portfolio (other than Schroder U.S. Smaller Companies Portfolio and Schroder EM
Core Portfolio) at an annual rate of 0.05% of the Portfolio's average daily net
assets (0.15% in the case of International Portfolio). Schroder Advisors Inc.
("Schroder Advisors") serves as the administrator of Schroder U.S. Smaller
Companies Portfolio and Schroder EM Core Portfolio and FAS serves as the
subadministrator of those Portfolios. Schroder Advisors and FAS provide certain
management and administrative services necessary for the Portfolios' operations,
other than the administrative services provided to the Portfolios by Schroder.
For their services, Schroder Advisors receives no fee from Schroder U.S. Smaller
Companies Portfolio and -0.075% from Schroder EM Core Portfolio. FAS receives a
fee at an annual rate of 0.10% of each Portfolio's average daily net assets.

In addition, pursuant to a separate agreement, Norwest receives a fee with
respect to Small Cap Opportunities Fund and International Fund at an annual rate
of 0.25% of the Funds' average daily net assets. Under this agreement, Norwest
is responsible for compiling data and preparing communications between the Fund
and its shareholders, maintaining requisite information flows between the Fund
and Schroder, monitoring and reporting to

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53
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the Board on the performance of the applicable Core Portfolio and reimbursing
the Fund for certain excess expenses. No fees are payable under this agreement
if the Fund is not completely invested in a Core Portfolio. Small Cap
Opportunities Fund and International Fund incur total management and
administrative fees at a higher rate than many other mutual funds, including
other funds of the Trust.

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

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

SHAREHOLDER SERVICING AND CUSTODY

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

Norwest Bank also serves as each Fund's and each Core Portfolio's (other than
Schroder U.S. Smaller Companies Portfolio and Schroder EM Core Portfolio)
custodian and may appoint subcustodians for the foreign securities and other
assets held in foreign countries. For its custodial service, Norwest Bank
receives a fee with respect to each Fund and each Core Portfolio at an annual
rate of: 0.02% of the first $100 million of the Fund's or Core Portfolio's
average daily net assets, 0.015% of the next $100 million of the Fund's

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or Core Portfolio's average daily net assets and 0.01% of the Fund's or Core
Portfolio's remaining average daily net assets. No fee is directly payable by a
Fund to the extent the Fund is invested in a Core Portfolio. With respect to
International Portfolio, Norwest receives a fee at an annual rate of 0.07% of
the Portfolio's average daily net assets plus monthly out of pocket expenses.
The Chase Manhattan Bank, N.A. serves as custodian of Schroder U.S. Smaller
Companies Portfolio and Schroder EM Core Portfolio and is paid a fee for its
services.

EXPENSES OF THE FUNDS

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

Norwest and Forum have agreed to waive their respective fees or reimburse
expenses in order to maintain Small Company Stock Fund's total combined
operating expenses through May 31, 1998 at the same levels as the Fund's total
operating expenses prior to May 31, 1997 (1.20% for A Shares and 1.95% for B
Shares). After May 31, 1998, any proposed reduction in the amounts of those
waivers and reimbursements would be reviewed by the Board.
Norwest and Forum have agreed to waive their respective fees through May 31,
1999 in order to ensure that the fees borne by each of Diversified Equity Fund
and Growth Equity Fund for investment advisory, administrative and management
services would not exceed, in the aggregate, 0.75% and 1.00%, respectively (the
"Waiver"). After May 31, 1999, each Fund's aggregate payment for those services
could increase if the Waiver was reduced or eliminated. Any reduction or
elimination of the Waiver, however, would require Board approval (and notice to
shareholders), which would be given only if the Board determined that the amount
of the fees to be paid to Norwest or Forum after the reduction or elimination
would be fair and reasonable.

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

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

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5. CHOOSING A SHARE CLASS

Investors should compare sales charges and fees before selecting a particular
class of shares. Investors should consider whether, during the anticipated life
of their investment in a Fund, the accumulated distribution services fee and
maintenance fee and contingent deferred sales charges on B Shares prior to
conversion would be less than the initial sales charge on A Shares purchased at
the same time and whether that differential would be offset by the higher yield
of A Shares. A summary of the charges applicable to shares of each Fund is
listed under "Prospectus Summary - Expense Information." Sales personnel of
broker-dealers and other financial institutions selling a Fund's shares may
receive differing compensation for selling A Shares and B Shares.

Because initial sales charges are deducted at the time of purchase, investors
purchasing a Fund's A Shares receive fewer shares than if the sales charge were
not deducted and, accordingly, do not have the entire purchase price invested.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
whether, in light of the initial sales charge and its effect on the amount of
the purchase price invested, purchases of A Shares are more or less advantageous
than purchases of B Shares with their associated accumulated continuing
distribution and maintenance charges. For example, based on estimated current
fees and expenses, an investor purchasing A Shares, which are subject to a 5.5%
initial sales charge, who elects to reinvest all dividends and distributions
would have to hold the A Shares approximately six years for the B Shares'
distribution services fee and maintenance fee to exceed the initial sales charge
imposed when purchasing A Shares. The foregoing example does not take into
account the time value of money, fluctuations in net asset value or the effects
of different performance assumptions.

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A SHARES

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

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

--------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000.................. 5.50% 5.76% 5.00%
$50,000 to $99,999................. 4.50% 4.71% 4.00%
$100,000 to $249,000............... 3.50% 3.63% 3.00%
$250,000 to $499,000............... 2.50% 2.56% 2.25%
$500,000 to $999,000............... 2.00% 2.04% 1.80%
$1,000,000 to $2,499,999........... 0.00% 0.00% 1.00%
$2,500,000 to $4,999,999........... 0.00% 0.00% 0.50%
Over $5,000,000.................... 0.00% 0.00% 0.25%

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

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

In addition, from time to time and at its own expense, Forum may provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns or other dealer-sponsored special events.
Compensation may include: (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 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

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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, (3) by any registered investment adviser with whom Forum has
entered into a share purchase agreement and which is acting on behalf of its
fiduciary customer accounts; (4) of A Shares of a Fund made through the Directed
Dividend Option from a fund of the Trust that charges a front-end sales charge
(see "Dividends and Tax Matters,") or (5) of at least $50,000 through an
individual retirement account in A Shares of Diversified Equity Fund or Growth
Equity Fund, when the shareholder makes a non-binding commitment to subsequently
enroll the assets in the Norwest WealthBuilder IRA program, an asset allocation
program offered by Norwest Investment Services, Inc. ("NISI"). In connection
with purchases of A Shares of Diversified Equity Fund or Growth Equity Fund with
no sales charge as described in clause (v), Forum makes payments to NISI of up
to 1.00% of the value of the shares purchased. Shares sold without a sales
charge may not be resold except to the Funds and share purchases must be made
for investment purposes.

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

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

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

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

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CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An investor's purchase of
additional A Shares of a Fund may qualify for rights of accumulation ("ROA")
under which the applicable sales charge will be based on the total of the
investor's current purchase and the net asset value (at the end of the previous
Fund Business Day) of all A Shares of that Fund held by the investor. For
example, if an investor owned A Shares of a Fund worth $500,000 at the then
current net asset value and purchased A Shares of that Fund worth an additional
$50,000, the sales charge for the $50,000 purchase would be at the 2.0% rate
applicable to a $550,000 purchase, rather than at the 4.5% rate applicable to a
$50,000 purchase.

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

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

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

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

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sales charge will be imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares derived from
the reinvestment of dividends and distributions.

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

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

B SHARES

DISTRIBUTION PLAN. B Shares of a Fund are sold at their net asset value per
share without the imposition of a sales charge at the time of purchase. With
respect to B Shares, each Fund has adopted a distribution plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan") providing for distribution payments, at an
annual rate of up to 0.75% of the average daily net assets of the Fund
attributable to the B Shares (the "distribution services fee"), by each Fund to
Forum, to compensate Forum for its distribution activities. The distribution
payments due to Forum from each Fund comprise: (1) sales commissions at levels
set from time to time by the Board ("sales commissions"); and (2) an interest
fee calculated by applying the rate of 1% over the prime rate to the outstanding
balance of uncovered distribution charges. The current sales commission rate is
4.0% and Forum currently expects to pay sales commissions to each broker-dealer
at the time of sale of up to 4.0% of the purchase price of B Shares of each Fund
sold by the broker-dealer.

Under the distribution services agreement between Forum and the Trust, Forum
will receive, in addition to the distribution services fee, all contingent
deferred sales charges due upon redemptions of B Shares. The combined contingent
deferred sales charge and distribution services fee on B Shares are intended to
finance the distribution of those shares by permitting an investor to purchase
shares through broker-dealers without the assessment of an initial sales charge
and, at the same time, permitting Forum to compensate broker-dealers in
connection with the sales of the shares. Proceeds from the

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60
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contingent deferred sales charge with respect to a Fund are paid to Forum to
defray the expenses related to providing distribution-related services in
connection with the sales of B Shares, such as the payment of compensation to
broker-dealers selling B Shares. Forum may spend the distribution services fees
it receives as it deems appropriate on any activities primarily intended to
result in the sale of B Shares.

Under the Plan, a Fund will make distribution services fee payments to Forum
only for periods during which there are outstanding uncovered distribution
charges attributable to that Fund. Uncovered distribution charges are equivalent
to all sales commissions previously due (plus interest), less amounts received
pursuant to the Plan and all contingent deferred sales charges previously paid
to Forum. At May 31, 1997, Income Equity Fund, ValuGrowth Stock Fund,
Diversified Equity Fund, Growth Equity Fund, Small Company Stock Fund, Small Cap
Opportunities Fund and International Fund had uncovered distribution expenses of
$90,315, $119,169, $1,132,878, $301,051, $122,207,5,656 and $51,784,
respectively, or approximately 2.70%, 1.80%, 3.34%, 3.46%, 2.38%, 3.58% and
3.10% of each respective Fund's net assets attributable to B Shares as of the
same date.

The amount of distribution services fees and contingent deferred sales charge
payments received by Forum with respect to a Fund is not related directly to the
amount of expenses incurred by Forum in connection with providing distribution
services to the B Shares and may be higher or lower than those expenses. Forum
may be considered to have realized a profit under the Plan if, at any time, the
aggregate amounts of all distribution services fees and contingent deferred
sales charge payments previously made to Forum exceed the total expenses
incurred by Forum in distributing B Shares.
Pursuant to the Plan, each Fund has agreed also to pay Forum a maintenance fee
in an amount equal to 0.25% of the average daily net assets of the Fund
attributable to B Shares for providing personal services to shareholder
accounts. The maintenance fee may be paid by Forum to broker-dealers in an
amount not to exceed 0.25% of the value of the B Shares held by the customers of
the broker-dealers. The distribution services fee and the maintenance fee are
each accrued daily and paid monthly and will cause a Fund's B Shares to have a
higher expense ratio and to pay lower dividends than A Shares of that Fund.
Notwithstanding the discontinuation of distribution services fees with respect
to a Fund, the Fund may continue to pay maintenance fees.

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

In the event that the Plan is terminated or not continued with respect to a
Fund, the Fund may, under certain circumstances, continue to pay distribution
services fees to Forum (but only with respect to sales that occurred prior to
the termination or discontinuance of the Plan). Those circumstances are
described in detail in the SAI. In deciding whether to purchase B Shares of a

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Fund, investors should consider that payments of distribution services fees
could continue until such time as there are no uncovered distribution charges
under the Plan attributable to that Fund. In approving the Plan, the Board
determined that there was a reasonable likelihood that the Plan would benefit
each Fund and its B shareholders.

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

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

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

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

Redemptions of Shares will be effected in the manner that results in the
imposition of the lowest deferred sales charge. Redemptions with respect to a

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shareholder's investment in a Fund will automatically be made first from any A
Shares in the Fund, second from B Shares of the Fund acquired pursuant to
reinvestment of dividends and distributions, third from B Shares of the Fund
held for over six years and fourth from the longest outstanding B Shares of the
Fund held for less than six years.

No contingent deferred sales charge is imposed on: (1) redemptions of Shares
acquired through the reinvestment of dividends and distributions; (2)
involuntary redemptions by a Fund of shareholder accounts with low account
balances; (3) redemptions of Shares following the death or disability of a
shareholder if the Fund is notified within one year of the shareholder's death
or disability; (4) redemptions to effect a distribution (other than a lump sum
distribution) from an IRA, Keogh plan or Section 403(b) custodial account or
from a qualified retirement plan; and (5) redemptions by any registered
investment adviser with whom Forum has entered into a share purchase agreement
and which is acting on behalf of its fiduciary customer accounts. See the SAI
for further information.

CONVERSION FEATURE. After seven years from the end of the calendar month in
which the shareholder's purchase order for B shares was accepted, the B Shares
will automatically convert to A Shares of that Fund. The conversion will be on
the basis of the relative net asset values of the Shares, without the imposition
of any sales load, fee or other charge. For purposes of conversion, B Shares of
a Fund purchased by a shareholder through the reinvestment of dividends and
distributions will be considered to be held in a separate sub-account. Each time
any B Shares in the shareholder's account (other than those in the sub-account)
convert, a corresponding pro rata portion of those shares in the sub-account
will also convert. The conversion of B Shares to A Shares is subject to the
continuing availability of certain opinions of counsel, and the conversion of a
Fund's B Shares to A Shares may be suspended if such an opinion is no longer
available at the time the conversion is to occur. In that event, no further
conversions of the Fund's B Shares would occur and shares might continue to be
subject to a distribution services and maintenance fee for an indefinite period.

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6. HOW TO BUY SHARES

MINIMUM INVESTMENT

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

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

PURCHASE PROCEDURES

INITIAL PURCHASES
THERE ARE THREE WAYS TO PURCHASE SHARES INITIALLY.

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

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

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

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

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

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

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

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

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

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ACCOUNT APPLICATION

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

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

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

GENERAL INFORMATION

Fund shares are continuously sold on every weekday except customary national
holidays (New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas) and Good Friday
("Fund Business Day"). The purchase price for Fund shares equals their net asset
value next-determined after acceptance of an order plus, in the case of the A
Shares, any applicable sales charge imposed at the time of purchase.

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

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

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7. HOW TO SELL SHARES

GENERAL INFORMATION

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

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 dividends declared after the day the
redemption becomes effective.

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

REDEMPTION PROCEDURES

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

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

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

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

OTHER REDEMPTION MATTERS

To protect shareholders and the Funds against fraud, signatures on certain
requests must have a signature guarantee. Requests must be made in writing and
include a signature guarantee for any of the following transactions: (1)
endorsement on a share certificate, (2) instruction to change a shareholder's
record name; (3) modification of a designated bank account for wire redemptions,
(4) instruction regarding an Automatic Investment Plan or Automatic Withdrawal
Plan, (5) dividend and distribution election, (6) telephone redemption, (7)
exchange option election or any other option election in connection with the
shareholder's account, (8) written instruction to redeem Shares whose value
exceeds $50,000, (9) redemption in an account in which 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 remitting of redemption proceeds to any address, person or account for
which there are not established standing instructions on the account.

Signature guarantees may be provided by any bank, broker-dealer, national
securities exchange, credit union, savings association or other eligible
institution that is authorized to guarantee signatures and is acceptable to the
Transfer Agent. Whenever a signature guarantee is required, the signature of
each person required to sign for the account must be guaranteed.

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

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account whose aggregate net asset value is less than $1,000 immediately
following any redemption.

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8. OTHER SHAREHOLDER SERVICES

EXCHANGES

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

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

Exchanges may only be made between identically registered accounts or to open a
new account. A new account application is required to open a new account through
an exchange if the new account will not have an identical registration and the
same shareholder privileges as the account from which the exchange is being
made. Shareholders may only exchange into a fund if that fund's shares may
legally be sold in the shareholder's state of residence.

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

SALES CHARGES. The exchange of A Shares may result in additional sales charges.
If an exchange of A Shares is made into a fund that imposes an initial sales
charge, the shareholder is required to pay an amount equal to any excess of that
Fund's initial sales charge attributable to the number of shares being acquired
in the exchange over any initial sales charge paid by the shareholder for the A
Shares being exchanged. For example, if a shareholder paid a 2% initial sales
charge in connection with a purchase of shares and then exchanged those shares
into A Shares of another fund with a 3% initial sales

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

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

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

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

AUTOMATIC INVESTMENT PLAN

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

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INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). An IRA account application form
may be obtained by contacting the Trust at (800) 338-1348 or (612) 667-8833.
Generally, all contributions and investment earnings in an IRA will be
tax-deferred until withdrawn. Individuals may make tax-deductible IRA
contributions of up to a maximum of $2,000 annually. However, the deduction will
be reduced if the individual or, in the case of a married individual filing
jointly, either the individual or the individual's spouse is an active
participant in an employer-sponsored retirement plan and has adjusted gross
income above certain levels.

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

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

AUTOMATIC WITHDRAWAL PLAN

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

REOPENING ACCOUNTS

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

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9. DIVIDENDS AND TAX MATTERS

DIVIDENDS

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

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

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

TAX MATTERS

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

Dividends paid by a Fund out of its net investment income (including net
short-term capital gain) are taxable to shareholders of the Fund as ordinary
income. Pursuant to the Taxpayer Relief Act of 1997, two different tax rates
apply to net capital gains -- that is, the excess of net gains from capital
assets held for more than one year over net losses from capital assets held for
not more than one year. One rate (generally 28%) applies to net gains on capital

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assets held for more than one year but not more than 18 months ("mid-term
gains"), and a second rate (generally 20%) applies to the balance of such net
capital gains ("adjusted net capital gains"). Distributions of mid-term gains
and adjusted net capital gains will be taxable to shareholders as such,
regardless of how long a shareholder has held shares in the Fund. If a
shareholder holds Shares for six months or less and during that period receives
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
Fund paying the dividend or distribution by the amount of the dividend or
distribution. Furthermore, a dividend or distribution made shortly after the
purchase of Shares by a shareholder, although in effect a return of capital to
that particular shareholder, will be taxable to the shareholder as described
above.

It is expected that a portion of each Fund's dividends (except International
Fund's) from net investment income will be eligible for the dividends received
deduction for corporations. The amount of such dividends eligible for the
dividends received deduction is limited to the amount of dividends from domestic
corporations received during a Fund's fiscal year. To the extent International
Fund invests in the securities of domestic issuers a portion of the dividends
received by corporate shareholders of the Fund may qualify for the dividends
received deduction for corporations.

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

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

CORE PORTFOLIOS. Each Core Portfolio is not required to pay federal income taxes
on its net investment income and capital gain, as it is treated as a partnership
for federal income tax purposes. All interest, dividends and gains and losses of
a Core Portfolio are deemed to have been "passed through" to the Funds investing
in the Core Portfolio in proportion to the Funds' interests in the Core
Portfolio, regardless of whether such amounts have been distributed by the Core
Portfolio to the Funds.

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

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10. OTHER INFORMATION

BANKING LAW MATTERS

Federal banking rules generally permit a bank or bank affiliate to act as
investment adviser, transfer agent, or custodian to an investment company and to
purchase shares of the investment company as agent for and upon the order of a
customer and, in connection therewith, to retain a sales charge or similar
payment. Forum believes that Norwest and any bank or other bank affiliate also
may perform Processing Organization or similar services for the Trust and its
shareholders without violating applicable federal banking rules. If a bank or
bank affiliate were prohibited in the future from so acting, changes in the
operation of the Trust could occur and a shareholder serviced by the bank or
bank affiliate may no longer be able to avail itself of those services. It is
not expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each class of each Fund is determined as of
4:00 p.m., Eastern Time, on each Fund Business Day by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. Securities owned by a Fund or Portfolio for which market quotations are
readily available are valued at current market value or, in their absence, at
fair value as determined by the Board or the Core Board or pursuant to
procedures approved by the Board or the Core Board, as applicable. The Funds
only determine net asset value on Fund Business Days.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business on each Fund Business Day. In addition, trading in
foreign securities generally or in a particular country or countries may not
take place on all Fund Business Days. Trading does take place in various foreign
markets, however, on days on which a Fund's net asset value is not calculated.
Calculation of the net asset value per share of a Fund may not occur
contemporaneously with the determination of the prices of the foreign securities
used in the calculation. Events affecting the values of foreign securities that
occur after the time their prices are determined and before the Fund's
determination of net asset value will not be reflected in the Fund's calculation
of net asset value unless Norwest or Schroder determines that the particular
event would materially affect net asset value, in which case an adjustment will
be made.

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

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PERFORMANCE INFORMATION

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

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

THE TRUST AND ITS SHARES

The Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate portfolios or series (such as a Fund) and may
divide portfolios or series into classes of shares (such as A Shares); the costs
of doing so will be borne by the Trust. Currently the authorized shares of the
Trust are divided into thirty-nine separate series.

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

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

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

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

As of September 2, 1997, Norwest Bank may be deemed to have controlled Income
Equity Fund. Norwest Bank Colorado, N.A. may be deemed to have controlled
ValueGrowth Stock Fund through investment in the Funds by their customers. From
time to time certain shareholders may own a large percentage of the Shares of a
Fund and, accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.

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CORE AND GATEWAY STRUCTURE

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

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

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

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

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

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

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

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SHAREHOLDER INFORMATION:

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