PROSPECTUS MONEY MARKET FUNDS
________________________________________
OCTOBER 1, 1998 Cash Investment Fund
Ready Cash Investment Fund
_________________________ U.S. Government Fund
Treasury Plus Fund
INSTITUTIONAL FUNDS Treasury Fund
Municipal Money Market Fund
[LOGO] FIXED INCOME FUNDS
________________________________________
Stable Income Fund
Limited Term Government Income Fund
Intermediate Government Income Fund
Diversified Bond Fund
Income Fund
Total Return Bond Fund
Strategic Income Fund
TAX-FREE FIXED INCOME FUNDS
________________________________________
Limited Term Tax-Free Fund
Tax-Free Income Fund
Colorado Tax-Free Fund
Minnesota Intermediate Tax-Free Fund
Minnesota Tax-Free Fund
BALANCED FUNDS
________________________________________
Moderate Balanced Fund
Growth Balanced Fund
Aggressive Balanced-Equity Fund
[COVER WITH PEOPLE, PCS AND PRINTOUT]
EQUITY FUNDS
________________________________________
Index Fund
Index Equity Fund
ValueGrowth SM Stock Fund
Diversified Equity Fund
Growth Equity Fund
Large Company Growth Fund
Diversified Small Cap Fund
Small Company Stock Fund
Small Cap Opportunities Fund
Small Company Growth Fund
International Fund
PERFORMA FUNDS
________________________________________
Performa Strategic Value Bond Fund
Performa Disciplined Growth Fund
Performa Small Cap Value Fund
Performa Global Growth Fund
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
This Prospectus describes the shares of a broad spectrum of mutual funds offered
by Norwest Advantage Funds:
* 6 MONEY MARKET FUNDS - Cash Investment Fund, Ready Cash Investment
Fund, U.S. Government Fund, Treasury Plus Fund, Treasury Fund, and
Municipal Money Market Fund.
* 7 FIXED INCOME FUNDS - Stable Income Fund, Limited Term Government
Income Fund, Intermediate Government Income Fund, Diversified Bond
Fund, Income Fund, Total Return Bond Fund, and Strategic Income Fund.
* 5 TAX-FREE FIXED INCOME FUNDS - Limited Term Tax-Free Fund, Tax-Free
Income Fund, Colorado Tax-Free Fund, Minnesota Intermediate Tax-Free
Fund, and Minnesota Tax-Free Fund.
* 3 BALANCED FUNDS - Moderate Balanced Fund, Growth Balanced Fund, and
Aggressive Balanced-Equity Fund.
* 11 EQUITY FUNDS - Index Fund, Income Equity Fund, ValuGrowth (SM)
Stock Fund, Diversified Equity Fund, Growth Equity Fund, Large Company
Growth Fund, Diversified Small Cap Fund, Small Company Stock Fund,
Small Cap Opportunities Fund, Small Company Growth Fund, and
International Fund.
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
ALTHOUGH THE MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THESE FUNDS.
No governmental agency including the U.S. Securities and Exchange Commission,
has approved or disapproved these securities or determined whether or not this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
<PAGE>
<PAGE>
1
TABLE OF CONTENTS
[SAME PICTURE AS COVER]
OVERVIEW .............................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS ................................12
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY ............................................26
[GLOSSARY TAB]
[INVESTMENT INVESTMENT OBJECTIVES AND POLICIES ..................27
ICON]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK RISK CONSIDERATIONS .................................56
ICON]
[RISK CONSIDERATIONS TAB]
COMMON POLICIES .....................................58
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS .............................60
[MANAGEMENT OF THE FUNDS TAB]
HOW TO BUY AND SELL SHARES ..........................73
[HOW TO BUY AND SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS .......................79
[DISTRIBUTIONS ANT TAX MATTERS TAB]
OTHER INFORMATION ...................................82
[OTHER INFORMATION TAB]
<PAGE>
2
- --------------------------------------------------------------------------------
OVERVIEW [OVER PRINTOUT]
- --------------------------------------------------------------------------------
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE INVESTING, YOU
SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS UNDER INVESTMENT
OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN SERVE
AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
THE FUNDS AT A GLANCE
[MONEY MARKET FUNDS ICON]
The MONEY MARKET FUNDS seek high current income consistent with the preservation
of capital and the maintenance of liquidity.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
CASH INVESTMENT FUND and High current income, High-quality money
READY CASH INVESTMENT preservation of capital and market instruments of U.S. and
FUND liquidity foreign issuers.
U.S. GOVERNMENT FUND High current income, Securities issued or
preservation of capital and guaranteed by the U.S. Government,
liquidity its agencies, and its
instrumentalities.
TREASURY PLUS FUND High current income, Securities issued or
preservation of capital and guaranteed by the U.S. Treasury
liquidity and repurchase agreements on those
obligations.
TREASURY FUND High current income, Securities issued or
preservation of capital, and guaranteed by the U.S. Treasury.
liquidity
MUNICIPAL MONEY MARKET High current tax-exempt Tax-exempt municipal
FUND income, preservation of capital, securities.
and liquidity
<PAGE>
3
</TABLE>
[FIXED INCOME FUNDS ICON]
The FIXED INCOME FUNDS generally seek to provide income and preserve
capital.
[OVERVIEW TAB]
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
STABLE INCOME FUND Maintain safety of Investment grade
principal while providing short-term (average maturity
low volatility total return 2-5 years) securities.
LIMITED TERM GOVERNMENT Provide income and safety Investment grade
INCOME FUND of principal. short-term (average maturity of
1-5 years) U.S. Government
securities.
INTERMEDIATE GOVERNMENT Provide income and safety Investment grade
INCOME FUND of principal. intermediate-term (average
maturity of 3-10 years) U.S.
Government securities.
DIVERSIFIED BOND FUND Total return by Diversifies investments
diversifying its among 3 different
investments among fixed income styles.
different fixed income
investment styles.
INCOME FUND Total return consistent Primarily investment grade
with current income. intermediate term (average
maturity of 3-15 years) domestic
and foreign securities.
TOTAL RETURN BOND FUND Total return. Broad spectrum of primarily
investment grade securities.
STRATEGIC INCOME FUND Combination of current 70%-90% fixed income
income and capital appreciation. investments
10%-30% equity investments.
</TABLE>
<PAGE>
4
[TAX FREE INCOME FUNDS ICON]
The TAX-FREE FIXED INCOME FUNDS generally seek current income exempt from
federal or state income taxes.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
LIMITED TERM TAX-FREE Current income exempt Investment grade
FUND from federal income taxes. short-term (average maturity of
1-5 years) municipal securities.
TAX-FREE INCOME FUND Current income exempt Investment grade
from federal income taxes. (average maturity of 10-20 years)
municipal securities.
COLORADO TAX-FREE FUND A high-level of current income Investment grade (average
exempt from both federal maturity of 10-20+ years)
(including the AMT) and Colorado municipal securities.
Colorado income taxes
consistent with the
preservation of capital.
MINNESOTA INTERMEDIATE A high-level of current income Investment grade intermediate
TAX FREE FUND exempt from both federal and term (average maturity of 5-10
Minnesota income taxes years) Minnesota municipal
(including the AMT) securities.
consistent with the
preservation of capital.
MINNESOTA TAX-FREE FUND A high-level of current income Investment grade (average
exempt from both federal and maturity of 10-20+ years)
Minnisota income taxes Minnesota municipal
(including the AMT) securities.
consistent with the
preservation of capital.
</TABLE>
[BALANCED FUNDS ICON]
The BALANCED FUNDS generally seek a combination of current income and
capital appreciation.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
MODERATE BALANCED FUND Combination of current 45%-75% fixed income
income and capital appreciation. investments
25%-55% equity
investments.
GROWTH BALANCED FUND Combination of current 15%-55% fixed income
income and capital appreciation. investments
45%-85% equity
investments.
AGGRESSIVE BALANCED-EQUITY Combination of current 0%-40% fixed income
FUND income and capital appreciation. investments
60%-100% equity
investments.
<PAGE>
5
[EQUITY FUNDS ICON]
[OVERVIEW TAB]
The EQUITY FUNDS generally seek growth of capital.
FUND OBJECTIVE PRIMARY INVESTMENTS
INDEX FUND Replicate the return Common stock of the
of the S&P 500 Composite Stock 500 companies in the S&P 500
Price Index. Composite Stock Price Index.
INCOME EQUITY FUND Long-term capital Common stock of large high
appreciation consistent with quality domestic companies.
above-average dividend
income.
VALUEGROWTH STOCK FUND Long-term capital Common stock of medium-and
appreciation. large-capitalization
companies that have above
average growth
characteristics and that
appear to be undervalued.
DIVERSIFIED EQUITY FUND Long-term capital Diversified investments in 5
appreciation while different equity investment
moderating annual return styles.
volatility.
GROWTH EQUITY FUND Long-term capital Diversified investments in 3
appreciation while different equity investment
moderating annual return styles.
volatility.
LARGE COMPANY GROWTH Long-term capital Common stock of large
FUND appreciation. high-quality domestic
companies with superior
growth potential.
DIVERSIFIED SMALL CAP Long-term capital Diversified investments in 5
FUND appreciation while different small company
moderating annual return equity investment styles.
volatility.
SMALL COMPANY STOCK Long-term capital Common stock of small and
FUND appreciation. medium sized domestic
companies.
SMALL CAP OPPORTUNITIES Long-term capital Equity securities of small
FUND appreciation. domestic companies.
SMALL COMPANY GROWTH Long-term capital Common stock of small and
FUND appreciation. medium sized domestic
companies.
INTERNATIONAL FUND Long-term capital Common stock of high-
appreciation. quality companies based
outside of the United States.
</TABLE>
<PAGE>
6
CLASSES OF SHARES
This Prospectus offers certain classes of shares of the Funds. Each class is
designed for a different type of investor and may have different fees or
investment minimums.
* All Money Market Funds, except Ready Cash Investment Fund, offer
Institutional Shares. Institutional Shares are designed for institutional
investors.
* Ready Cash Investment Fund and Municipal Money Market Fund offer Investor
Shares. Investor Shares are designed for retail investors.
* All Funds, other than Money Market Funds, offer I Shares. I Shares are
designed for clients of investment advisers and bank trust departments,
trust companies and their affiliates, including broker-dealers if the Fund
does not offer other classes of shares.
FUND STRUCTURES
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in 1 or more other funds identified in this prospectus as
Portfolios. Portfolios do not offer their shares to the public. Except when
necessary to describe a Fund's investment in a Portfolio, this prospectus
discusses a Fund's investments in a Portfolio as if the investments were
made directly in individual securities.
MANAGEMENT OF THE FUNDS
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and all but 3 of the Portfolios. Norwest, a subsidiary
of Norwest Bank Minnesota, N.A. or Norwest Bank, provides investment advice
to institutions, pension plans, and other accounts and currently manages
more than $29 billion in assets.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. or SCHRODER is the
investment adviser for 3 Portfolios: Schroder U.S. Smaller Companies
Portfolio, Schroder EM Core Portfolio, and International Portfolio.
Schroder specializes in providing international investment advice.
INVESTMENT SUBADVISERS make investment decisions for certain Funds and
Portfolios under Norwest's general supervision. This prospectus generally
refers to Norwest, Schroder, or a subadviser as an Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
Shares may be purchased or redeemed without sales or other charges.
* I Shares and Investor Shares require a minimum initial investment
of $1,000 and a minimum subsequent investment of $100.
* Institutional Shares require a minimum initial investment of
$100,000 and have no minimum subsequent investment requirement.
<PAGE>
7
Total Return Bond Fund, Small Company Growth Fund, and Small Cap
Opportunities Fund are closed to new investors. Only residents of Colorado
may purchase shares of Colorado Tax-Free Fund. Only residents of Minnesota
may purchase shares of Minnesota Intermediate Tax-Free Fund and Minnesota
Tax-Free Fund.
[OVERVIEW TAB]
EXCHANGES
If you own Fund shares you may exchange them for shares of certain other Funds.
Your exchange rights will vary depending on the class of shares you own.
DISTRIBUTIONS
The DISTRIBUTIONS AND TAX MATTERS section discusses how often the Funds
distribute net investment income. Each Fund distributes to shareholders its
net capital gain, if any, at least annually.
RISK FACTORS
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets in which the Fund
invests, the investments that the Fund makes, and prevailing economic
conditions over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
MONEY MARKET FUNDS:
[MONEY MARKET FUNDS ICON]
If you invest in a Money Market Fund, the income you receive from the Fund
will vary with changes in interest rates. In addition, the Funds'
investments have "credit risk," which is the risk that an issuer will be
unable, or will be perceived to be unable, to pay the interest or principal
on its obligations when due. Some of the Money Market Funds reduce credit
risk by investing primarily or exclusively in U.S. Government securities.
The Money Market Funds also have the risk that they may not be able to
maintain a stable net asset value of $1.00 per share.
<PAGE>
8
FIXED INCOME FUNDS AND TAX-FREE FIXED INCOME FUNDS:
[FIXED INCOME FUNDS ICON]
TAX-FREE FUNDS ICON]
If you invest in a Fixed Income Fund or a Tax-Free Fixed Income Fund, the
investment income you receive from the Fund will vary with changes in
interest rates. In addition, the value of the Fund's investments generally
will fall when interest rates rise and rise when interest rates fall. When
interest rates fall, there is a risk that issuers will prepay fixed rate
securities, forcing the Fund to invest in securities with lower interest
rates than the prepaid securities.
Some of the Fixed Income Funds invest in mortgage- or other asset-backed
securities. For these Funds, a decline in interest rates may result in
losses in these securities' values and a reduction in their yields as the
holders of the assets backing the securities prepay their debts. Rising
interest rates may cause the average maturity of these Funds to rise due to
a drop in prepayments. A rise in average maturity increases a Fund's
sensitivity to rising interest rates and potential for losses in value.
The Fixed Income Funds and Tax-Free Fixed Income Funds also are subject to
credit risk. Funds that invest primarily in debt securities that are highly
rated by a nationally recognized statistical rating organization, such as
Standard & Poor's Corporation, generally have less credit risk. Funds that
have substantial investments in securities that are not highly rated are
subject to more credit risk.
Some of the Tax-Free Fixed Income Funds invest primarily in debt securities
of the government and municipalities of a single state. Because these Funds
limit their investments to a single state, adverse economic developments
and other factors affecting that state could have a more significant effect
on the Funds' returns. In addition, these Funds may invest in fewer issuers
than the other Funds. A decline in the value of a Fund's investment in an
issuer could therefore have a more significant effect on the value of the
Fund's shares.
BALANCED FUNDS AND STRATEGIC INCOME FUND:
[BALANCED FUNDS ICON]
These Funds divide their investments between fixed income securities and
equity securities in varying proportions, depending on the Fund's
investment policies. As a result, an investment in these Funds will be
subject both to the risks of fixed income securities and to the risks of
equity securities. In addition, the Adviser may vary, within a fixed range,
the allocations of the Fund's assets into each type of investment. There is
a risk that the allocations selected by the Adviser will not achieve the
Fund's objective as effectively as other possible allocations.
EQUITY FUNDS:
[EQUITY FUNDS ICON]
The Equity Funds are subject to "market risk," which is the general risk
that the value of a Fund's investments may decline if the stock markets
perform poorly. There also is a risk that a Fund's investments will
underperform either the securities markets generally or particular segments
of the securities markets.
Equity Funds that invest in smaller issuers or foreign issuers are riskier
than other Equity Funds. Investments in smaller issuers are subject to
greater changes in value because securities of smaller issuers may not
trade as often or be as widely owned as the securities of larger issuers.
Investments in foreign issuers are subject to the risks of foreign
<PAGE>
9
political and economic instability and changes in foreign currency exchange
rates. Foreign investments also are subject to government actions,
including exchange controls and limits on repayments of foreign
investments. Foreign governments may nationalize, tax, or confiscate
investors' assets.
[OVERVIEW TAB]
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you
will bear directly or indirectly when you invest in a Fund. There are no
transaction charges for purchasing, redeeming, or exchanging shares. The
Funds do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1)(5)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees Expenses Expenses
MONEY MARKET FUNDS
Cash Investment Fund N/A 0.22% 0.22% 0.04% 0.48%(4)
Ready Cash Investment Fund (Investor Shares) N/A 0.42% 0.33% 0.07% 0.82%(4)
U.S. Government Fund 0.14% 0.36% N/A N/A 0.50%
Treasury Plus Fund(3) 0.20% 0.30% N/A N/A 0.50%
Treasury Fund 0.15% 0.31% N/A N/A 0.46%
Municipal Money Market Fund
Institutional Shares 0.32% 0.13% N/A N/A 0.45%
Investor Shares 0.32% 0.33% N/A N/A 0.65%
FIXED INCOME FUNDS (I SHARES)
Stable Income Fund N/A 0.28% 0.30% 0.07% 0.65%
Limited Term Government Income Fund 0.33% 0.35% N/A N/A 0.68%
Intermediate Government Income Fund 0.33% 0.35% N/A N/A 0.68%
Diversified Bond Fund 0.00% 0.27% 0.37% 0.06% 0.70%(4)
Income Fund 0.47% 0.28% N/A N/A 0.75%
Total Return Bond Fund N/A 0.19% 0.50% 0.06% 0.75%(4)
Strategic Income Fund 0.09% 0.29% 0.36% 0.06% 0.80%(4)
TAX-FREE FIXED INCOME FUNDS (I SHARES)
Limited Term Tax-Free Fund 0.31% 0.34% N/A N/A 0.65%
Tax-Free Income Fund 0.34% 0.26% N/A N/A 0.60%
Colorado Tax-Free Fund 0.29% 0.31% N/A N/A 0.60%
Minnesota Intermediate Tax-Free Fund 0.25% 0.35% N/A N/A 0.60%
Minnesota Tax-Free Fund 0.23% 0.37% N/A N/A 0.60%
</TABLE>
<PAGE>
10
ANNUAL FUND OPERATING EXPENSES(1)(5) (continued)
(as a percentage of average daily net assets after applicable fee waivers and
expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees Expenses Expenses
BALANCED FUNDS (I SHARES)
Moderate Balanced Fund 0.12% 0.29% 0.41% 0.06% 0.88%(4)
Growth Balanced Fund 0.13% 0.29% 0.45% 0.06% 0.93%(4)
Aggressive Balanced-Equity Fund 0.00% 0.47% 0.46% 0.07% 1.00%
EQUITY FUNDS (I SHARES)
Index Fund N/A 0.06% 0.15% 0.04% 0.25%
Income Equity Fund N/A 0.33% 0.50% 0.02% 0.85%
ValuGrowth Stock Fund 0.78% 0.22% N/A N/A 1.00%
Diversified Equity Fund 0.16% 0.29% 0.49% 0.06% 1.00%(4)
Growth Equity Fund 0.22% 0.26% 0.67% 0.10% 1.25%(4)
Large Company Growth Fund N/A 0.33% 0.65% 0.02% 1.00%
Diversified Small Cap Fund 0.00% 0.27% 0.84% 0.09% 1.20%
Small Company Stock Fund N/A 0.25% 0.90% 0.05% 1.20%(4)
Small Cap Opportunities Fund N/A 0.50% 0.60% 0.15% 1.25%
Small Company Growth Fund N/A 0.32% 0.90% 0.03% 1.25%
International Fund 0.25% 0.56% 0.42% 0.27% 1.50%
</TABLE>
(1) Each Fund bears its pro rata portion of the expenses of any Portfolio
in which it invests.
(2) For Diversified Bond Fund, Strategic Income Fund, each Balanced Fund,
Diversified Equity Fund, Growth Equity Fund, Diversified Small Cap
Fund, and International Fund, Funds - Investment Advisory Fees reflect
an asset allocation fee, which absent fee waivers, would be 0.25%.
Absent fee waivers, The Funds - Investment Advisory Fees for Municipal
Money Market Fund Institutional Shares and Investor Shares, Income
Fund, Limited Term Tax-Free Fund, Tax-Free Income Fund, Colorado
Tax-Free Fund, Minnesota Tax-Free Fund, would be 0.34%, 0.34%, 0.50%,
0.50%, 0.50%, 0.50%, and 0.50%. Absent fee waivers , The Portfolios -
Investment Advisory Fees would be 0.47%.
(3) The expenses, and any fee waivers and reimbursements, for Treasury
Plus Fund are estimated.
(4) Norwest and the Fund's Administrator have agreed to waive their fees in
order to maintain Cash Investment Fund's total combined operating
expenses through May 31, 1999 at 0.48%. Any reduction of those waivers
after May 31, 1999 requires approval by the Fund's Board of Trustees.
Norwest and the Funds' Administrator have agreed to waive fees and
reimburse expenses to maintain Ready Cash Investment Fund's, Total
Return Bond Fund's, and Small Company Stock Fund's total operating
expenses at or below 0.82%; 0.75%, and 1.20%, respectively. Any
reduction of those waivers or reimbursements requires Board review.
Norwest and the Funds' Administrator have agreed to waive their fees
through May 31, 1999, to ensure that the investment advisory,
administrative, and management services fees borne by Diversified Bond
Fund, Strategic Income Fund, Moderate Balanced Fund, Growth Balanced
Fund, Diversified Equity Fund, and Growth Equity Fund do not exceed, in
the aggregate, 0.45%, 0.55%, 0.63%, 0.68%, 0.75%, and 1.00%,
respectively. Any reduction of those waivers after May 31, 1999
requires Board approval.
(5) Absent expense reimbursements and fee waivers, Funds - Other Expenses
and Total Operating Expenses would be: Cash Investment Fund 0.26% and
0.56%, Ready Cash Investment Fund 0.42% and 0.82%, U.S. Government
Fund 0.38% and 0.52%, Treasury Plus Fund 0.40% and 0.60%, Treasury
Fund 0.39% and 0.54%, Municipal Money Market Fund Institutional Shares
0.25% and 0.59%, and Investor Shares 0.49% and 0.83%, Stable Income
Fund 0.38% and 0.81%, Limited Term Government Income Fund 0.56% and
0.89%, Intermediate Government Income Fund 0.39% and 0.72%,
Diversified Bond Fund 0.35% and 1.09%, Income Fund 0.42% and 0.92%,
Total Return Bond Fund 0.37% and 0.98%, Strategic Income Fund 0.36%
and 1.08%, Limited Term Tax-Free Fund 0.53% and 1.03%, Tax-Free Income
Fund 0.42% and 0.92%, Colorado Tax-Free Fund 0.51% and 1.01%,
Minnesota Intermediate Tax-Free Fund 0.47% and 0.72%, Minnesota
Tax-Free Fund 0.54% and 1.04%, Moderate Balanced Fund 0.33% and 1.11%,
Growth Balanced Fund 0.33% and 1.15%, Aggressive Balanced-Equity Fund
1.51% and 2.35%, Index Fund 0.33% and 0.57%, Income Equity Fund 0.34%
and 0.91%, ValuGrowth Stock Fund 0.42% and 1.20%, Diversified Equity
Fund 0.32% and 1.17%, Growth Equity Fund 0.33% and 1.41%, Large
Company Growth Fund 0.35% and 1.08%, Diversified Small Cap Fund 1.47%
and 2.70%, Small Company Stock Fund 0.36% and 1.37%, Small Cap
Opportunities Fund 0.63% and 1.38%, Small Company Growth Fund 0.33%
and 1.31%, and International Fund 0.63% and 1.66%. Absent expense
reimbursements and fee waivers, The Portfolios -- Other Expenses would
be: Cash Investment Fund 0.07%, Stable Income Fund 0.13%, Diversified
Bond Fund 0.12%, Total Return Bond Fund 0.11%, Strategic Income Fund
0.11%, Moderate Balanced Fund 0.12%, Growth Balanced Fund 0.12%,
Aggressive Balanced-Equity Fund 0.12%, Index Fund 0.09%, Income Equity
Fund 0.07%, Diversified Equity Fund 0.11%, Growth Equity Fund 0.15%,
Large Company Growth Fund 0.08%, Diversified Small Cap Fund 0.15%,
Small Company Stock Fund 0.11%, Small Cap Opportunities Fund 0.15%,
Small Company Growth Fund 0.08%, and International Fund 0.31%. Except
as otherwise noted, expense reimbursements and fee waivers are
voluntary and may be reduced or eliminated at any time.
<PAGE>
11
[OVERVIEW TAB]
EXAMPLE
The following hypothetical example indicates the dollar amount of
expenses you would pay, assuming a $1,000 investment in a Fund's
shares, the expenses listed in Annual Fund Operating Expenses table, a
5% annual return, and reinvestment of all distributions. THE EXAMPLE
DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES
AND RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
------ ------- ------- --------
MONEY MARKET FUNDS
Cash Investment Fund $5 $15 $27 $60
Ready Cash Investment Fund (Investor Shares) 8 26 46 101
U.S. Government Fund 5 16 28 63
Treasury Plus Fund 5 16 28 63
Treasury Fund 5 15 26 58
Municipal Money Market Fund
Institutional Shares 5 14 25 57
Investor Shares 7 21 36 81
FIXED INCOME FUNDS (I SHARES)
Stable Income Fund 7 21 36 81
Limited Term Government Income Fund 7 22 38 85
Intermediate Government Income Fund 7 22 38 85
Diversified Bond Fund 7 22 39 87
Income Fund 8 24 42 93
Total Return Bond Fund 8 24 42 93
Strategic Income Fund 8 26 44 99
TAX-FREE FIXED INCOME FUNDS (I SHARES)
Limited Term Tax-Free Fund 7 21 36 81
Tax-Free Income Fund 6 19 33 75
Colorado Tax-Free Fund 6 19 33 75
Minnesota Intermediate Tax-Free Fund 6 19 33 75
Minnesota Tax-Free Fund 6 19 33 75
BALANCED FUNDS (I SHARES)
Moderate Balanced Fund 9 28 49 108
Growth Balanced Fund 9 30 51 114
Aggressive Balanced-Equity Fund 10 32 55 122
EQUITY FUNDS (I SHARES)
Index Fund 3 8 14 32
Income Equity Fund 9 27 47 105
ValuGrowth Stock Fund 10 32 55 122
Diversified Equity Fund 10 32 55 122
Growth Equity Fund 13 40 69 151
Large Company Growth Fund 10 32 55 122
Diversified Small Cap Fund 12 38 66 145
Small Company Stock Fund 12 38 66 145
Small Cap Opportunities Fund 13 40 69 151
Small Company Growth Fund 13 40 69 151
International Fund 15 47 82 179
</TABLE>
<PAGE>
12
FINANCIAL HIGHLIGHTS
[SPREADSHEETS]
The financial highlights table is intended to help you understand each Fund's
financial performance for 10 years or, if shorter, the Fund's operating history.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned
on an investment in a Fund, assuming reinvestment of all distributions. The
information from June 1, 1994 through May 31, 1998, has been audited by KPMG
Peat Marwick LLP, independent auditors, whose reports dated July 21, 1998 about
a Fund, along with the Fund's financial statements, are included in the Fund's
Annual Report, which is available at no charge upon request. These financial
statements are incorporated by reference into the SAI. Other independent
auditors audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
and Distributions Capital
[MONEY MARKET FUNDS ICON] Beginning Net Net Unrealized from Net Contribution
THE MONEY MARKET FUNDS Asset Value Investment Gain (Loss) Investment From
Per Share Income on Investments Income Adviser
- ----------------------------------------------------------------------------------------------------------------------
CASH INVESTMENT FUND
Year Ended May 31, 1998 $1.00 $0.053 -- ($0.053) --
Year Ended May 31, 1997 $1.00 $0.051 -- ($0.051) --
Year Ended May 31, 1996 $1.00 $0.054 -- ($0.054) --
Year Ended May 31, 1995 $1.00 $0.049 -- ($0.049) --
Year Ended May 31, 1994 $1.00 $0.031 -- ($0.031) --
Year Ended May 31, 1993 $1.00 $0.033 -- ($0.033) --
December 1, 1991 to May 31, 1992 $1.00 $0.021 -- ($0.021) --
Year Ended November 30, 1991 $1.00 $0.061 -- ($0.061) --
Year Ended November 30, 1990 $1.00 $0.079 -- ($0.079) --
Year Ended November 30, 1989 $1.00 $0.088 -- ($0.088) --
Year Ended November 30, 1988 $1.00 $0.071 -- ($0.071) --
READY CASH INVESTMENT FUND- INVESTOR SHARES
Year Ended May 31, 1998 $1.00 $0.050 -- ($0.050) --
Year Ended May 31, 1997 $1.00 $0.047 -- ($0.047) --
Year Ended May 31, 1996 $1.00 $0.051 -- ($0.051) --
Year Ended May 31, 1995 $1.00 $0.045 -- ($0.045) --
Year Ended May 31, 1994 $1.00 $0.027 -- ($0.027) --
Year Ended May 31, 1993 $1.00 $0.030 -- ($0.030) --
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) --
Year Ended November 30, 1991 $1.00 $0.058 -- ($0.058) --
Year Ended November 30, 1990 $1.00 $0.076 -- ($0.076) --
Year Ended November 30, 1989 $1.00 $0.085 -- ($0.085) --
January 20, 1988(e) to November 30, 1988 $1.00 $0.059 -- ($0.059) --
</TABLE>
<PAGE>
13
[FINANCIAL HIGHLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
---------------------------------------
Ending
Net Asset Net Net Assets at
Value Per Investment Net Gross Total End of Period
Share Income Expenses Expenses(a) Return(b) (000's Omitted)
-----------------------------------------------------------------------------
$1.00 5.29%(d) 0.48%(d) 0.57%(d) 5.42% $4,685,818
$1.00 5.07% 0.48% 0.49% 5.21% $2,147,894
$1.00 5.36% 0.48% 0.49% 5.50% $1,739,549
$1.00 4.87% 0.48% 0.50% 4.96% $1,464,304
$1.00 3.11% 0.49% 0.49% 3.16% $1,381,402
$1.00 3.29% 0.50% 0.51% 3.36% $1,944,948
$1.00 4.23%(c) 0.50%(c) 0.56%(c) 4.29%(c) $1,292,196
$1.00 6.11% 0.51% 0.54% 6.31% $1,004,979
$1.00 7.92% 0.45% 0.57% 8.22% $747,744
$1.00 8.81% 0.45% 0.64% 9.22% $662,698
$1.00 7.00% 0.43% 0.74% 7.32% $316,349
$1.00 4.95%(d) 0.82%(d) 0.82%(d) 5.07% $789,380
$1.00 4.75% 0.82% 0.83% 4.87% $576,011
$1.00 5.02% 0.82% 0.87% 5.17% $473,879
$1.00 4.64% 0.82% 0.91% 4.62% $268,603
$1.00 2.70% 0.82% 0.92% 2.74% $164,138
$1.00 3.04% 0.82% 0.94% 3.08% $162,585
$1.00 4.01%(c) 0.82%(c) 0.93%(c) 4.05%(c) $176,378
$1.00 5.81% 0.82% 0.96% 5.98% $183,775
$1.00 7.56% 0.82% 0.97% 7.83% $166,911
$1.00 8.51% 0.81% 0.99% 8.86% $144,117
$1.00 7.11%(c) 0.77%(c) 1.13%(c) 6.97%(c) $46,736
<PAGE>
14
[MONEY MARKET FUNDS ICON]
MONEY MARKET FUNDS - I SHARES (continued)
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
and Distributions Capital
Beginning Net Net Unrealized from Net Contribution
Asset Value Investment Gain (Loss) Investment From
Per Share Income on Investments Income Adviser
U.S. GOVERNMENT FUND
Year Ended May 31, 1998 $1.00 $0.051 -- ($0.051) --
Year Ended May 31, 1997 $1.00 $0.049 -- ($0.049) --
Year Ended May 31, 1996 $1.00 $0.052 -- ($0.052) --
Year Ended May 31, 1995 $1.00 $0.047 -- ($0.047) --
Year Ended May 31, 1994 $1.00 $0.030 -- ($0.030) --
Year Ended May 31, 1993 $1.00 $0.030 -- ($0.030) --
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) --
Year Ended November 30, 1991 $1.00 $0.058 -- ($0.058) --
Year Ended November 30, 1990 $1.00 $0.077 -- ($0.077) --
Year Ended November 30, 1989 $1.00 $0.085 -- ($0.085) --
Year Ended November 30, 1988 $1.00 $0.069 -- ($0.069) --
TREASURY FUND
Year Ended May 31, 1998 $1.00 $0.049 -- ($0.049) --
Year Ended May 31, 1997 $1.00 $0.047 -- ($0.047) --
Year Ended May 31, 1996 $1.00 $0.050 -- ($0.050) --
Year Ended May 31, 1995 $1.00 $0.046 -- ($0.046) --
Year Ended May 31, 1994 $1.00 $0.028 -- ($0.028) --
Year Ended May 31, 1993 $1.00 $0.029 -- ($0.029) --
December 1, 1991 to May 31, 1992 $1.00 $0.020 -- ($0.020) --
December 3, 1990(e) to November 30, 1991 $1.00 $0.058 -- ($0.058) --
MUNICIPAL MONEY MARKET FUND
Investor Shares
Year Ended May 31, 1998 $1.00 $0.031 -- ($0.031) --
Year Ended May 31, 1997 $1.00 $0.030 -- ($0.030) --
Year Ended May 31, 1996 $1.00 $0.033 -- ($0.033) --
Year Ended May 31, 1995 $1.00 $0.031 ($0.004) ($0.031) $0.004
Year Ended May 31, 1994 $1.00 $0.021 -- ($0.021) --
Year Ended May 31, 1993 $1.00 $0.021 -- ($0.021) --
December 1, 1991 to May 31, 1992 $1.00 $0.014 -- ($0.014) --
Year Ended November 30, 1991 $1.00 $0.042 -- ($0.042) --
Year Ended November 30, 1990 $1.00 $0.053 -- ($0.053) --
Year Ended November 30, 1989 $1.00 $0.058 -- ($0.058) --
January 7, 1988(e)to November 30, 1988 $1.00 $0.042 -- ($0.042) --
INSTITUTIONAL SHARES
Year Ended May 31, 1998 $1.00 $0.033 -- ($0.033) --
Year Ended May 31, 1997 $1.00 $0.032 -- ($0.032) --
Year Ended May 31, 1996 $1.00 $0.035 -- ($0.035) --
Year Ended May 31, 1995 $1.00 $0.033 ($0.004) ($0.033) $0.004
August 3, 1993(e)to May 31, 1994 $1.00 $0.019 -- ($0.019) --
- -------------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers
(c) Annualized.
(d) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(e) Commencement of operations; Municipal Money Market Fund's initial class
became Investor Shares
(f) Total Return for 1995 includes the effect of a capital contribution from
Norwest Bank. Without the capital contribution, total return would have
been 2.59% for Investor Shares and 2.79% for Institutional Shares.
<PAGE>
15
[FINANCIAL HIGHTLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
---------------------------------------
Ending
Net Asset Net Net Assets at
Value Per Investment Net Gross Total End of Period
Share Income Expenses Expenses(a) Return(b) (000's Omitted)
- --------------------------------------------------------------------------------
$1.00 5.08% 0.50% 0.51% 5.20% $2,260,208
$1.00 4.91% 0.49% 0.49% 5.04% $1,912,574
$1.00 5.13% 0.50% 0.51% 5.27% $1,649,721
$1.00 4.68% 0.50% 0.52% 4.81% $1,159,421
$1.00 3.02% 0.47% 0.53% 3.07% $1,091,141
$1.00 3.00% 0.45% 0.57% 3.06% $903,274
$1.00 3.99%(c) 0.45%(c) 0.61%(c) 4.07%(c) $623,685
$1.00 5.84% 0.45% 0.60% 6.00% $469,487
$1.00
$1.00 7.66% 0.45% 0.61% 7.94% $500,794
$1.00 8.51% 0.45% 0.65% 8.87% $394,137
6.87% 0.42% 0.73% 7.13% $254,104
$1.00
$1.00 4.89% 0.46% 0.54% 5.00% $1,440,515
$1.00 4.74% 0.46% 0.53% 4.87% $1,003,697
$1.00 4.91% 0.46% 0.56% 5.04% $802,270
$1.00 4.62% 0.46% 0.57% 4.65% $661,098
$1.00 2.81% 0.46% 0.58% 2.83% $526,483
$1.00 2.93% 0.47% 0.58% 2.98% $384,751
$1.00 4.01%(c) 0.47%(c) 0.59%(c) 4.07%(c) $374,492
5.62%(c) 0.31%(c) 0.66%(c) 6.02%(c) $354,200
$1.00
$1.00 3.13% 0.65% 0.83% 3.18% $44,070
$1.00 3.01% 0.65% 0.87% 3.08% $54,616
$1.00 3.25% 0.65% 0.88% 3.31% $57,021
$1.00 3.10% 0.65% 0.93% 3.13%(f) $47,424
$1.00 2.03% 0.65% 0.99% 2.09% $33,554
$1.00 2.13% 0.65% 0.97% 2.18% $75,521
$1.00 2.81%(c) 0.63%(c) 0.96%(c) 2.89%(c) $82,678
$1.00 4.10% 0.64% 1.08% 4.26% $66,327
$1.00 5.34% 0.64% 1.16% 5.48% $29,801
$1.00 5.78% 0.62% 1.15% 5.94% $18,639
4.64%(c) 0.60%(c) 1.20%(c) 4.76%(c) $8,963
$1.00
$1.00 3.32% 0.45% 0.59% 3.39% $977,693
$1.00 3.21% 0.45% 0.70% 3.28% $635,655
$1.00 3.41% 0.45% 0.72% 3.52% $592,436
$1.00 3.37% 0.45% 0.74% 3.33%(f) $278,953
$1.00 2.33%(c) 0.45%(c) 0.77%(c) 2.34%(c) $190,356
<PAGE>
16
<TABLE>
<S> <C> <C> <C> <C> <C>
[FIXED INCOME FUNDS ICON]
Net Realized
and Distributions Distributions
Beginning Net Net Unrealized from Net from Net
FIXED INCOME FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized
Per Share Income on Investments Income Gain
- ------------------------------------------------------------------------------------------------------------------
STABLE INCOME FUND
Year Ended May 31, 1998 $10.24 $0.58 $0.05 ($0.57) --
Year Ended May 31, 1997 $10.20 $0.58 $0.04 ($0.58) --
November 1, 1995 to May 31, 1996 $10.72 $0.28 $0.03 ($0.77) ($0.06)
November 11, 1994(e) to October 31, 1995 $10.00 $0.50 $0.22 -- --
LIMITED TERM GOVERNMENT INCOME FUND
October 1, 1997(e) to May 31, 1998 $10.00 $0.38 ($0.11) ($0.38) ($0.01)
INTERMEDIATE GOVERNMENT INCOME FUND
Year Ended May 31, 1998 $10.84 $0.71 $0.37 ($0.70) --
Year Ended May 31, 1997 $10.89 $0.72 ($0.04) ($0.73) --
November 1, 1995 to May 31, 1996 $12.40 $0.40 $0.53 ($1.32) ($1.12)
November 11, 1994(e) to October 31, $11.11 $0.93 $0.36 -- --
1995(g)
DIVERSIFIED BOND FUND
Year Ended May 31, 1998 $25.60 $1.61 $1.51 ($1.66) ($0.03)
Year Ended May 31, 1997 $26.03 $1.59 $0.01 ($1.69) ($0.34)
November 1, 1995 to May 31, 1996 $27.92 $1.07 ($0.99) ($1.67) ($0.30)
November 11, 1994(e) to October 31, 1995 $25.08 $1.65 $1.19 -- --
INCOME FUND
Year Ended May 31, 1998 $9.27 $0.61 $0.51 ($0.61) --
Year Ended May 31, 1997 $9.26 $0.62 $0.01 ($0.62) --
Year Ended May 31, 1996 $9.62 $0.61 ($0.36) ($0.61) --
Year Ended May 31, 1995 $9.51 $0.65 $0.11 ($0.65) --
August 2, 1993(e) to May 31, 1994 $10.68 $0.58 ($0.91) ($0.58) ($0.26)
TOTAL RETURN BOND FUND
Year Ended May 31, 1998 $9.41 $0.59 $0.28 ($0.59) ($0.05)
Year Ended May 31, 1997 $9.40 $0.60 $0.04 ($0.60) ($0.03)
Year Ended May 31, 1996 $9.73 $0.64 ($0.31) ($0.64) ($0.02)
Year Ended May 31, 1995 $9.54 $0.67 $0.19 ($0.67) --
December 31, 1993(e) to May 31, 1994 $10.00 $0.27 ($0.46) ($0.27) --
- -------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(d) Reflects the activity of the Portfolio(s) in which the Fund invests.
(e) Commencement of operations.
</TABLE>
<PAGE>
17
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
RATIO TO AVERAGE
NET ASSETS
--------------------------------------- [FINANCIAL HIGHLIGHTS TAB]
Ending
Net Asset Net Portfolio Net Assets at
Value Per Investment Net Gross Total Turnover End of Period
Share Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- -----------------------------------------------------------------------------------------------
$10.30 5.69%(c) 0.65%(c) 0.76%(c) 6.28% 37.45%(d) $144,215
$10.24 5.73% 0.65% 0.79% 6.24% 41.30% $111,030
$10.20 5.74%(f) 0.65%(f) 0.92%(f) 2.97% 109.95% $83,404
$10.72 5.91%(f) 0.65%(f) 0.98%(f) 7.20% 115.85% $48,087
$9.88 5.78%(f) 0.40%(f) 0.89%(f) 4.42% 99.49% $66,113
$11.22 6.35% 0.68% 0.72% 10.19% 96.76% $400,346
$10.84 6.57% 0.68% 0.72% 6.36% 183.05% $371,278
$10.89 6.71%(f) 0.71%(f) 1.17%(f) 0.60% 74.64% $399,324
$12.40 7.79%(f) 0.68%(f) 0.93%(f) 11.58% 240.90% $50,213
$27.03 5.98%(c) 0.70%(c) 1.02%(c) 12.39% N/A(h) $134,831
$25.60 6.19% 0.70% 0.77% 6.23% 57.19% $162,310
$26.03 6.78%(f) 0.70%(f) 0.77%(f) 0.22% 118.92% $167,159
$27.92 5.87%(f) 0.67%(f) 0.82%(f) 11.32% 58.90% $171,453
$9.78 6.32% 0.75% 0.95% 12.35% 167.09% $290,566
$9.27 6.59% 0.75% 1.02% 6.90% 231.00% $258,207
$9.26 6.30% 0.75% 1.06% 2.58% 270.17% $271,157
$9.62 7.02% 0.75% 1.06% 8.49% 98.83% $109,994
$9.51 6.75%(f) 0.61%(f) 1.09%(f) (4.04%)(f) 26.67% $93,665
$9.64 6.14%(c) 0.75%(c) 0.86%(c) 9.45% 134.56%(d) $109,084
$9.41 6.36% 0.75% 1.05% 6.95% 55.07% $125,437
$9.40 6.57% 0.75% 1.07% 3.41% 77.49% $120,767
$9.73 7.04% 0.71% 1.17% 9.43% 35.19% $96,199
$9.54 6.81%(f) 0.46%(f) 2.10%(f) (4.62%)(f) 37.50% $11,694
</TABLE>
(f) Annualized.
(g) Adjusted for a five to one stock split.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable
as the Fund invested in more
than one Porfolio.
(i) Represents the average commission per share paid to brokers on the purchase
and sale of Portfolio securities. Prior to 1996, the data was not reported
in mutual fund financial statements.
(j) Prior to October 1, 1997, Strategic Income Fund was named Conservative
Balanced Fund.
<PAGE>
18
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
[BOND ICON]
Net Realized
and Disbritutions Distributions Ending
FIXED INCOME FUNDS - I SHARES Beginning Net Net Unrealized from Net from Net Net Asset
(continued) Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- --------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND(j)
Year Ended May 31, 1998 $18.47 $0.79 $1.75 ($0.86) ($0.59) $19.56
Year Ended May 31, 1997 $18.12 $0.97 $0.71 ($0.95) ($0.38) $18.47
November 1, 1995 to May 31, 1996 $18.21 $0.48 $0.42 ($0.76) ($0.23) $18.12
November 11, 1994(e) to
October 31, 1995 $16.19 $0.75 $1.27 -- -- $18.21
(see notes prior page)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
[TAX-FREE FUNDS ICON]
Net Realized
and Disbritutions Distributions
TAX-FREE FIXED Beginning Net Net Unrealized from Net from Net
INCOME FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized
Per Share Income on Investments Income Gain
- ---------------------------------------------------------------------------------------------------------------
LIMITED TERM TAX-FREE FUND
Year Ended May 31, 1998 $10.39 $0.47 $0.21 ($0.47) ($0.01)
October 1, 1996(c) to May 31, 1997 $10.00 $0.31 $0.39 ($0.31) --
TAX-FREE INCOME FUND
Year Ended May 31, 1998 $10.06 $0.53 $0.48 ($0.53) --
Year Ended May 31, 1997 $9.78 $0.54 $0.28 ($0.54) --
Year Ended May 31, 1996 $9.82 $0.55 ($0.04) ($0.55) --
Year Ended May 31, 1995 $9.60 $0.55 $0.22 ($0.55) --
August 2, 1993(c) to May 31, 1994 $10.14 $0.47 ($0.47) ($0.47) ($0.07)
COLORADO TAX-FREE FUND
Year Ended May 31, 1998 $10.22 $0.53 $0.47 ($0.53) --
Year Ended May 31, 1997 $9.89 $0.54 $0.33 ($0.54) --
Year Ended May 31, 1996 $9.90 $0.53 ($0.01) ($0.53) --
Year Ended May 31, 1995 $9.69 $0.48 $0.21 ($0.48) --
August 23, 1993(c) to May 31, 1994 $10.22 $0.39 ($0.52) ($0.39) ($0.01)
MINNESOTA INTERMEDIATE TAX-FREE FUND
October 1, 1997(c) to May 31, 1998 $10.00 $0.33 $0.03 ($0.33) --
MINNESOTA TAX-FREE FUND
Year Ended May 31, 1998 $10.57 $0.53 $0.48 ($0.53) --
Year Ended May 31, 1997 $10.30 $0.54 $0.27 ($0.54) --
Year Ended May 31, 1996 $10.45 $0.56 ($0.15) ($0.56) --
Year Ended May 31, 1995 $10.16 $0.53 $0.29 ($0.53) --
August 2, 1993(c) to May 31, 1994 $10.74 $0.43 ($0.39) ($0.43) ($0.19)
- ------------------------------------------------------------------------------------
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
</TABLE>
<PAGE>
19
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO TO AVERAGE
NET ASSETS
--------------------------------------- [FINANCIAL HIGHLIGHTS TAB]
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(c Expenses(c) Expenses(a)(c) Return(b) Rate Rate(i) (000's Omitted)
- -----------------------------------------------------------------------------------------------------
4.47% 0.80% 1.03% 14.13% N/A(h) N/A(h) $235,254
4.38% 0.81% 0.98% 9.58% 72.03% $0.0720 $128,777
4.65%(f) 0.82%(f) 0.97%(f) 5.14% 56.47% $0.0648 $146,950
0.82%(f) 1.03%(f) 12.48% 65.53% N/A $136,710
4.67%(f)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
-------------------------------------
Ending
Net Asset Net Portfolio Net Assets at
Value Per Investment Net Gross Total Turnover End of Period
Share Income Expenses Expenses(a) Return(b) Rate (000's Omitted)
- ----------------------------------------------------------------------------------------
$10.59 4.47% 0.65% 1.03% 6.70% 46.06% $54,602
$10.39 4.45%(d) 0.65%(d) 1.27%(d) 6.99% 16.39% $40,990
$10.54 5.09% 0.60% 0.92% 10.22% 142.81% $286,734
$10.06 5.40% 0.50% 1.03% 8.54% 152.33% $259,861
$9.78 5.57% 0.32% 1.06% 5.29% 126.20% $276,159
$9.82 5.84% 0.60% 1.05% 8.42% 130.90% $94,454
$9.60 5.71%(d) 0.60%(d) 1.10%(d) (0.21%)(d) 116.54% $102,084
$10.69 5.01% 0.60% 1.01% 9.97% 69.87% $32,342
$10.22 5.35% 0.45% 1.13% 9.00% 129.26% $25,917
$9.89 5.30% 0.30% 1.13% 5.35% 171.41% $24,074
$9.90 5.08% 0.30% 1.16% 7.47% 47.88% $24,539
$9.69 5.03%(d) 0.11%(d) 1.21%(d) 0.90%(d) 40.92% $15,153
$10.03 5.02%(d) 0.60%(d) 0.72%(d) 3.61% 15.13% $209,685
$11.05 4.84% 0.60% 1.04% 9.71% 68.27% $20,736
$10.57 5.12% 0.60% 1.23% 7.98% 96.68% $11,135
$10.30 5.24% 0.51% 1.30% 3.97% 77.10% $3,988
$10.45 5.29% 0.48% 1.58% 8.44% 139.33% $1,799
$10.16 4.90%(d) 0.61%(d) 1.54%(d) 0.29%(d) 84.23% $872
</TABLE>
(c) Commencement of operations.
(d) Annualized.
<PAGE>
20
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
BALANCED FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -------------------------------------------------------------------------------------------------------------------------------
MODERATE BALANCED FUND
Year Ended May 31, 1998 $21.59 $0.80 $2.72 ($0.86) ($1.27) $22.98
Year Ended May 31, 1997 $20.27 $0.77 $1.60 ($0.76) ($0.29) $21.59
November 1, 1995 to May 31, 1996 $19.84 $0.46 $0.89 ($0.66) ($0.26) $20.27
November 11, 1994(f) to October 31, 1995 $17.25 $0.65 $1.94 -- -- $19.84
GROWTH BALANCED FUND
Year Ended May 31, 1998 $24.77 $0.58 $4.52 ($0.60) ($1.21) $28.06
Year Ended May 31, 1997 $22.83 $0.62 $2.86 ($0.63) ($0.91) $24.77
November 1, 1995 to May 31, 1996 $21.25 $0.31 $1.95 ($0.51) ($0.17) $22.83
November 11, 1994(f) to October 31, 1995 $17.95 $0.47 $2.83 -- -- $21.25
AGGRESSIVE BALANCED-EQUITY FUND
December 2, 1997(f) to May 31, 1998 $10.00 $0.06 $0.99 ($0.01) -- $11.04
- -----------------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund
invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return would have been lower absent expense reimbursements and/or fee
waivers.
(d) Represents the average commission per share paid to brokers on the purchase
or sale of portfolio securities. Prior to 1996, this data wasnot reported
in mutual fund financial statements.
(e) Annualized.
(f) Commencement of operations.
(g) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested exclusively in more than one Portfolio.
<PAGE>
21
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
- --------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(a) Expenses(a) Expenses(a)(b) Return(c) Rate Rate (d) (000's Omitted)
- -------------------------------------------------------------------------------------------
3.57% 0.88% 1.05% 17.04% N/A(g) N/A(g) $464,384
3.70% 0.88% 1.04% 12.04% 45.33% $0.0684 $418,680
3.95%(e) 0.90%(e) 1.04%(e) 7.03% 52.71% $0.0658 $398,005
3.76%(e) 0.92%(e) 1.11%(e) 15.01% 62.08% N/A $373,998
2.38% 0.93% 1.09% 21.40% N/A(g) N/A(g) $665,758
2.47% 0.94% 1.16% 15.81% 24.33% $0.0676 $503,382
2.66%(e) 0.98%(e) 1.16%(e) 10.87% 38.78% $0.0696 $484,641
2.63%(e) 0.99%(e) 1.23%(e) 18.38% 41.04% N/A $374,892
1.58%(e) 1.00%(e) 2.29%(e) 10.55% N/A(g) N/A(g) $8,872
</TABLE>
<PAGE>
22
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[EQUITY FUNDS ICON]
Net Realized
and Dividends Distributions
Beginning Net Net Unrealized from Net from Net Return
EQUITY FUNDS - I SHARES Asset Value Investment Gain (Loss) Investment Realized of
Per Share Income (Loss) on Investments Income Gain Capital
- -------------------------------------------------------------------------------------------------------------------
INDEX FUND
Year Ended May 31, 1998 $39.49 $0.58 $10.74 ($0.65) ($3.80) --
Year Ended May 31, 1997 $31.49 $0.49 $8.50 ($0.48) ($0.51) --
November 1, 1995 to May 31, 1996 $27.67 $0.36 $4.08 ($0.43) ($0.19) --
November 11, 1994(g) to October 31, $21.80 $0.45 $5.42 -- -- --
1995
INCOME EQUITY FUND
Year Ended May 31, 1998 $33.16 $0.52 $8.76 ($0.54) ($0.72) --
Year Ended May 31, 1997 $27.56 $0.56 $5.55 ($0.51) -- --
November 1, 1995 to May 31, 1996 $24.02 $0.29 $4.02 ($0.69) ($0.08) --
November 11, 1994(g) to October 31, $18.90 $0.46 $4.66 -- -- --
1995
VALUGROWTH STOCK FUND
Year Ended May 31, 1998 $25.03 $0.06 $4.76 ($0.16) ($3.54) --
Year Ended May 31, 1997 $22.61 $0.16 $4.80 ($0.13) ($2.41) --
Year Ended May 31, 1996 $18.80 $0.14 $3.91 ($0.12) ($0.12) --
Year Ended May 31, 1995 $17.16 $0.18 $1.64 ($0.18) -- --
August 2, 1993(g) to May 31, 1994 $16.91 $0.13 $0.46 ($0.12) ($0.22) --
DIVERSIFIED EQUITY FUND
Year Ended May 31, 1998 $36.50 $0.22 $8.94 ($0.27) ($2.33) --
Year Ended May 31, 1997 $30.55 $0.25 $6.05 ($0.16) ($0.19) --
November 1, 1995 to May 31, 1996 $27.53 $0.16 $4.25 ($0.42) ($0.97) --
November 11, 1994(g) to October 31, $22.21 $0.22 $5.10 -- -- --
1995
GROWTH EQUITY FUND
Year Ended May 31, 1998 $32.48 ($0.04) $6.86 ($0.04) ($3.54) --
Year Ended May 31, 1997 $29.08 ($0.02) $4.05 ($0.04) ($0.59) --
November 1, 1995 to May 31, 1996 $26.97 -- $4.09 ($0.12) ($1.86) --
November 11, 1994(g) to October 31, $22.28 ($0.02) $4.71 -- -- --
1995
</TABLE>
<PAGE>
23
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
--------------------------------------
Ending
Net Asset Net Portfolio Average Net Assets at
Value Per Investment Net Gross Total Turnover Commission End of Period
Share Income Expenses Expenses(a) Return(b) Rate Rate (c) (000's Omitted)
- --------------------------------------------------------------------------------------------------------
$46.36 1.53%(d) 0.25%(d) 0.58%(d) 30.32% 6.68%(e) 0.0339(e) $784,205
$39.49 2.10% 0.25% 0.56% 29.02% 24.17% $0.0417 $513,134
$31.49 2.25%(f) 0.31%(f) 0.57%(f) 16.27% 9.12% $0.0517 $249,644
$27.67 2.12%(f) 0.50%(f) 0.64%(f) 26.93% 14.48% N/A $186,197
$41.18 1.43%(d) 0.85%(d) 0.86%(d) 28.61% 3.46%(e) 0.0585(e) $1,214,385
$33.16 1.97% 0.85% 0.90% 22.40% 4.76% $0.0792 $425,197
$27.56 2.72%(f) 0.86%(f) 1.13%(f) 18.14% 0.69% $0.0942 $230,831
$24.02 2.51%(f) 0.85%(f) 1.12%(f) 27.09% 7.03% N/A $49,000
$26.15 0.53% 1.00% 1.20% 21.18% 74.25% $0.0588 $609,056
$25.03 0.67% 1.01% 1.33% 23.30% 75.50% $0.0781 $180,204
$22.61 0.62% 1.20% 1.32% 21.72% 105.43% $0.0603 $156,553
$18.80 1.02% 1.20% 1.33% 10.67% 63.82% N/A $136,589
$17.16 0.92%(f) 1.20%(f) 1.39%(f) 2.99%(f) 86.07% N/A $113,061
$43.06 0.60%(d) 1.00%(d) 1.13%(d) 26.12% N/A(h) N/A(h) $1,520,343
$36.50 0.79%(d) 1.02%(d) 1.31%(d) 20.76% 48.08% $0.0626 $1,212,565
$30.55 1.00%(d)(f) 1.06%(d)(f) 1.30%(d)(f) 16.38% 5.76% $0.0671 $907,223
$27.53 1.01%(d)(f) 1.09%(d)(f) 1.37%(d)(f) 23.95% 10.33% N/A $711,111
$35.72 (0.11%)(d) 1.25%(d) 1.35%(d) 22.52% N/A(h) N/A(h) $1,033,251
$32.48 (0.09%)(d) 1.30%(d) 1.84%(d) 14.11% 9.06% $0.0565 $895,420
$29.08 0.01%(d)(f) 1.35%(d)(f) 1.85%(d)(f) 15.83% 7.39% $0.0617 $735,728
$26.97 (0.11%)(d)(f)1.38%(d)(f) 1.92%(d)(f) 21.10% 8.90% N/A $564,004
</TABLE>
<PAGE>
24
[EQUITY FUNDS ICON]
EQUITY FUNDS - I SHARES (continued)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions
Beginning Net Net Unrealized from Net from Net Return
Asset Value Investment Gain (Loss) Investment Realized of
Per Share Income (Loss) on Investments Income Gain Capital
- ----------------------------------------------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND
Year Ended May 31, 1998 $32.63 ($0.11) $10.20 -- ($2.78) --
Year Ended May 31, 1997 $26.97 ($0.03) $5.91 -- ($0.22) --
November 1, 1995 to May 31, 1996 $23.59 ($0.04) $3.64 -- ($0.22) --
November 11, 1994(g) to October 31, $18.50 ($0.05) $5.14 -- -- --
1995
DIVERSIFIED SMALL CAP FUND
December 31, 1997(g) to May 31, 1998 $10.00 -- $0.52 -- -- --
SMALL COMPANY STOCK FUND
Year Ended May 31, 1998 $13.88 ($0.09) $1.11 -- ($2.90) ($0.07)
Year Ended May 31, 1997 $13.96 ($0.04) $0.87 -- ($0.91) --
Year Ended May 31, 1996 $10.59 $0.01 $3.93 ($0.03) ($0.54) --
Year Ended May 31, 1995 $9.80 $0.12 $0.87 ($0.12) ($0.08) --
December 31, 1993(g) to May 31, 1994 $10.00 $0.08 ($0.20) ($0.08) -- --
SMALL CAP OPPORTUNITIES FUND
Year Ended May 31, 1998 $19.84 ($0.06) $4.36 -- ($0.53) --
August 15, 1996 to(g) May 31, 1997 $16.26 ($0.01) $3.60 -- ($0.01) --
SMALL COMPANY GROWTH FUND
Year Ended May 31, 1998 $31.08 ($0.23) $6.88 -- ($4.04) --
Year Ended May 31, 1997 $33.00 ($0.18) $1.83 -- ($3.57) --
November 1, 1995 to May 31, 1996 $29.99 ($0.07) $5.94 -- ($2.86) --
November 11, 1994(g) to October 31, $21.88 ($0.11) $8.22 -- -- --
1995
INTERNATIONAL FUND
Year Ended May 31, 1998 $21.67 $0.09 $2.29 ($0.20) -- --
Year Ended May 31, 1997 $19.84 $0.09 $1.94 ($0.20) -- --
November 1, 1995 to May 31, 1996 $17.99 $0.14 $2.04 ($0.33) -- --
November 11, 1994(g) to October 31, $17.28 $0.09 $0.62 -- -- --
1995
- -----------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers and expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(d) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(e) Reflects the activity of the Portfolio(s) in which the Fund invests.
<PAGE>
25
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
[FINANCIAL HIGHLIGHTS TAB]
RATIO TO AVERAGE
NET ASSETS
--------------------------------------
Ending
Net Asset Net Portfolio Average Net Assets at
Value Per Investment Net Gross Total Turnover Commission End of Period
Share Income Expenses Expenses(a) Return(b) Rate Rate (c) (000's Omitted)
- -----------------------------------------------------------------------------------------------------
$39.94 (0.36%)(d) 1.00%(d 1.03%(d) 32.29 13.03%(e) $0.0552(e) $232,499
$32.63 (0.18%) 0.99% 1.09% 21.93% 24.37% $0.0564 $131,768
$26.97 (0.30%)(f) 1.00%(f) 1.13%(f) 15.40% 16.93% $0.0616 $82,114
$23.59 (0.23%)(f) 1.00%(f) 1.20%(f) 27.51% 31.60% N/A $63,567
$10.52 (0.25%)(d)(f)1.21%(d)(f) 2.65%(d)(f) 5.20% N/A(h) N/A(h) $12,551
$11.93 (0.53%)(d) 1.20%(d) 1.32%(d) 8.12% 166.16%(e) $0.0616(e) $112,713
$13.88 (0.38%) 1.19% 1.56% 6.30% 210.19% $0.0774 $161,995
$13.96 0.05% 1.21% 1.60% 38.30% 134.53% $0.0555 $125,986
$10.59 1.14% 0.52% 1.82% 10.13% 68.09% N/A $54,240
$9.80 2.03%(f) 0.20%(f) 4.33%(f) (2.93%)(f) 14.98% N/A $9,251
$23.61 (0.40%)(d) 1.25%(d) 1.38%(d) 21.95% 54.98%(e) $0.0582(e) $284,828
$19.84 (0.16%)(d)(f) 1.25%(d)(f)1.89%(d)(f) 11.42% 34.45%(e) $0.0584(e) $77,174
$33.69 (0.73%)(d) 1.25%(d) 1.26%(d) 22.38% 123.36%(e) $0.0567(e) $748,269
$31.08 (0.71%) 1.24% 1.29% 5.65% 124.03% $0.0565 $447,580
$33.00 (0.41%)(f) 1.25%(f) 1.29%(f) 21.43% 62.06% $0.0583 $378,546
$29.99 (0.47%)(f) 1.25%(f) 1.35%(f) 37.07% 106.55% N/A $278,058
$23.85 0.45%(d) 1.47%(d) 1.50%(d) 11.19% N/A(h) N/A(h) $279,667
$21.67 0.40%(d) 1.43%(d) 1.44%(d) 10.27% 48.23%(e) $0.0202(e) $228,552
$19.84 0.60%(d)(f) 1.50%(d)(f) 1.52%(d)(f) 12.31% 14.12%(e) $0.0325(e) $143,643
$17.99 0.54%(d)(f) 1.50%(d)(f) 1.66%(d)(f) 4.11% 29.41%(e) N/A $91,401
</TABLE>
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable
as the Fund invested in more than one Portfolio.
<PAGE>
26
- --------------------------------------------------------------------------------
GLOSSARY [PICTURE OF PCS]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
TERM DEFINITION
- ---- ----------
AMT Alternative minimum tax.
BOARD The Board of Trustees of Norwest Advantage
Funds.
DOLLAR ROLL A transaction in which a Fund sells
fixed income securities and commits to
purchase similar, but not identical,
securities at a later date from the same
party.
DURATION A measure of a debt security's average life
that reflects the present value of
the security's cash flow. Prices of
securities with longer durations generally
are more volatile.
FUNDAMENTAL Requiring shareholder approval to change.
INVESTMENT GRADE Rated at the time of purchase in 1 of
the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO or
unrated and determined by the Adviser to be
of comparable quality.
MARKET CAPITALIZATION The total market value of a company's
outstanding common stock.
MUNICIPAL SECURITY A debt security issued by or on behalf of
the states, territories, or possessions
of the United States, the District of
Columbia and their subdivisions,
authorities, instrumentalities, and
corporations, with interest exempt from
federal income tax.
NRSRO A nationally recognized statistical rating
organization, such as S&P, that rates fixed-
income securities and preferred stock by
relative credit risk. NRSROs also rate money
market mutual funds.
NON-INVESTMENT GRADE Neither rated at the time of purchase in 1
of the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO
nor unrated and determined by the Adviser to
be of comparable quality.
RELATED ISSUERS Issuers of Municipal Securities that
economic, business, or political
developments affect in similar ways.
RUSSELL 1000(R) INDEX An index of large- and medium-capitalization
companies.
RUSSELL 2000(R) INDEX An index of smaller capitalization
companies with a broader base of companies
than the S&P 600 Small Cap Index.
S&P Standard & Poor's Corporation.
S&P 500 INDEX Standard & Poor's 500 Composite Stock
Price Index, an index of large
capitalization companies.
S&P 600 SMALL CAP INDEX Standard & Poor's Small Cap 600 Composite
Stock Price Index, an index of small
capitalization companies.
SAI Statement of Additional Information.
SEC The U.S. Securities and Exchange Commission.
STRIPS Separately traded principal or interest
components of securities issued or
guaranteed by the U.S. Treasury under the
Treasury's Separate Trading of Registered
Interest and Principal of Securities
program.
U.S. GOVERNMENT SECURITY A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies, or its
instrumentalities.
U.S. TREASURY SECURITY A security issued or guaranteed by the U.S.
Treasury.
<PAGE>
27
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [SPREADSHEET]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds
and the Portfolios. After each Fund's description, there is a short,
alphabetical listing of the Fund's primary risks. The Risk Considerations
section discusses these risks.
[MONEY MARKET FUNDS ICON]
MONEY MARKET FUNDS
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Money Market Funds' investments are made under the requirements of an
SEC rule governing the investments that money market funds may make. Each
Fund invests only in high-quality, U.S. dollar-denominated short-term money
market instruments that are determined by the Adviser, under procedures
adopted by the Board, to be eligible for purchase and to present minimal
credit risks. The Funds may invest in securities with fixed, variable, or
floating rates of interest.
High-quality instruments include those that: (1) are rated (or, if unrated,
are issued by an issuer with comparable outstanding short-term debt that is
rated) in 1 of the 2 highest rating categories by 2 NRSROs or, if only 1
NRSRO has issued a rating, by that NRSRO; or (2) are otherwise unrated and
determined by the Adviser to be of comparable quality. Each Fund, other
than Municipal Money Market Fund, invests at least 95% of its total assets
in securities in the highest rating category.
CASH INVESTMENT FUND and READY CASH INVESTMENT FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVES. Each Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
CASH INVESTMENT FUND invests equally in 2 Portfolios - Money Market
Portfolio and Prime Money Market Portfolio. Cash Investment Fund,
Money Market Portfolio, and Prime Money Market Portfolio generally
have the same investment objective and investment policies. Because
Prime Money Market Portfolio seeks to maintain a rating within the 2
highest short-term categories assigned by at least 1 NRSRO, it is more
limited in the type and amount of securities it may purchase.
READY CASH INVESTMENT FUND invests its assets in Prime Money Market
Portfolio. The Fund seeks to maintain a rating within the 2 highest
short-term categories assigned by at least 1 NRSRO.
INVESTMENT POLICIES. The Funds invest in a broad spectrum of high-quality
money market instruments of U.S. and foreign issuers, including U.S.
Government Securities, Municipal Securities, and corporate debt securities.
The Funds may invest in obligations of financial institutions. These
include negotiable certificates of deposit, bank notes, bankers'
acceptances and time deposits of U.S. banks (including savings banks and
savings associations), foreign branches of U.S. banks, foreign banks and
their non-U.S. branches, U.S. branches and agencies of foreign banks, and
wholly owned banking-related subsidiaries of foreign banks. The Funds limit
their investments in obligations of financial institutions to institutions
that at the time of investment have total assets in excess of $1 billion,
or the equivalent in other currencies.
<PAGE>
28
Each Fund normally will invest more than 25% of its total assets in the
obligations of domestic and foreign financial institutions, their holding
companies, and their subsidiaries. Neither Fund may invest more than 25% of
its total assets in any other single industry.
[RISK ICON]
Credit Risk Interest Rate Risk Foreign risk
U.S. GOVERNMENT FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. The Fund invests primarily in U.S. Government
Securities and repurchase agreements for U.S. Government Securities. Under
normal circumstances, the Fund invests at least 65% of its total assets in
these securities. The Fund also may invest in zero coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
TREASURY PLUS FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. Under normal circumstances, the Fund invests at least
80% of its total assets in U.S. Treasury Securities and in repurchase
agreements for U.S. Treasury Securities. The Fund also may invest in U.S.
Government Securities and in repurchase agreements for U.S. Government
Securities. The Fund may invest in zero coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
<PAGE>
29
TREASURY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
INVESTMENT POLICIES. The Fund invests solely in U.S. Treasury Securities,
including zero-coupon securities.
[RISK ICON]
Credit Risk Interest Rate Risk
MUNICIPAL MONEY MARKET FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide high
current income exempt from federal income taxes to the extent consistent
with the preservation of capital and the maintenance of liquidity.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
INVESTMENT POLICIES. The Fund expects to invest 100% of its assets in
Municipal Securities, including short-term municipal bonds and municipal
notes, and leases. These investments may have fixed, variable, or floating
rates of interest and may be zero-coupon securities. As part of its
objective, the Fund normally will invest at least 80% of its total assets
in federally tax-exempt instruments whose income may be subject to the
federal AMT. The Fund may invest up to 20% of its total assets in
securities that pay interest income subject to federal income tax.
The Fund may invest more than 25% but, under normal circumstances, will not
invest more than 35% of its assets in issuers located in a single state.
The Fund may invest more than 25% of its assets in industrial development
bonds and in participation interests in these types of bonds issued by
banks.
[RISK ICON]
Credit Risk Interest Rate Risk Geographic Concentration Risk
FIXED INCOME FUNDS
STABLE INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to maintain safety
of principal while providing low volatility total return.
INVESTMENT POLICIES. The Fund invests primarily in short-term Investment
Grade securities. The Fund invests in a diversified portfolio of fixed and
variable rate U.S. dollar-denominated fixed income securities of a broad
spectrum of U.S. and foreign issuers, including U.S. Government Securities
and the debt securities of financial institutions, corporations, and
others.
<PAGE>
30
The Fund normally limits its investments in:
* mortgage-backed securities to not more than 65% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets;
* mortgage-backed securities that are not U.S. Government Securities to
not more than 25% of its total assets; and
* U.S. Government Securities to not more than 50% of its total assets.
The Fund may not invest more than 30% of its total assets in the securities
issued or guaranteed by any single agency or instrumentality of the U.S.
Government, except the U.S. Treasury, and may not invest more than 10% of
its total assets in the securities of any other issuer.
The Fund only purchases Investment Grade securities. The Fund invests in
debt obligations with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 12 years
and seeks to maintain an average dollar-weighted portfolio maturity of
between 2 and 5 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
LIMITED TERM GOVERNMENT INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide income
and safety of principal by investing primarily in U.S. Government
Securities.
INVESTMENT POLICIES. The Fund invests primarily in fixed and variable rate
U.S. Government Securities. The Fund normally invests at least 65% of its
total assets in U.S. Government Securities and may invest up to 35% of its
total assets in other fixed income securities. The Fund emphasizes the use
of short maturity securities to lessen interest rate risk and uses
mortgage-backed securities to enhance yield.
The Fund limits its investments in:
* mortgage-backed securities to not more than 50% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets; and
* zero-coupon securities, except in STRIPS, to not more than 10% of its
total assets.
<PAGE>
31
In addition, the Fund may not invest more than 25% of its total assets in
securities issued or guaranteed by any single agency or instrumentality of
the U.S. Government, except the U.S. Treasury. The Fund may enter into
short sales.
The Fund will only purchase securities that are rated, at the time of
purchase, within the 2 highest rating categories assigned by an NRSRO, or
which are unrated and determined by the Adviser to be of comparable
quality.
The Fund will invest primarily in debt obligations with maturities (or
average life in the case of mortgage-backed and similar securities) ranging
from overnight to ten years. Under normal circumstances, the Fund's
portfolio of securities will have an average dollar-weighted maturity of
between 1 and 5 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
INTERMEDIATE GOVERNMENT INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide income
and safety of principal by investing primarily in U.S. Government
Securities.
INVESTMENT POLICIES. The Fund invests primarily in fixed and variable rate
U.S. Government Securities. Under normal circumstances, the Fund intends to
invest at least 65% of its assets in U.S. Government Securities and may
invest up to 35% of its assets in fixed income securities that are not U.S.
Government Securities. The Fund emphasizes the use of intermediate maturity
securities to lessen interest rate risk and uses mortgage-backed securities
to enhance yield.
The Fund limits its investments in:
* mortgage-backed securities to not more than 50% of its total assets;
* other types of asset-backed securities to not more than 25% of its
total assets; and
* zero-coupon securities, except in STRIPS, to not more than 10% of its
total assets.
As part of its mortgage-backed securities investments, the Fund may enter
into Dollar Rolls. The Fund may not invest more than 25% of its total
assets in securities issued or guaranteed by any single agency or
instrumentality of the U.S. Government, except the U.S. Treasury. The Fund
may enter into short sales.
The Fund will purchase only securities that are rated, at the time of
purchase, within the 2 highest rating categories assigned by an NRSRO, or
which are unrated and determined by the Adviser to be of comparable
quality.
<PAGE>
32
The Fund will invest primarily in debt obligations with maturities (or
average life in the case of mortgage-backed and similar securities) ranging
from overnight to 30 years. Under normal circumstances, the Fund's
portfolio securities will have an average dollar-weighted maturity of
between 3 and 10 years and a duration of between 70% and 130% of the
Duration of a 5 year Treasury Note.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
DIVERSIFIED BOND FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide total
return by diversifying its investments among different fixed income
investment styles.
INVESTMENT POLICIES. The Fund uses a "multi-style" approach designed to
reduce the price and return volatility of the Fund and to provide more
consistent returns. The Fund's portfolio combines the different fixed
income investment styles of 3 Portfolios - Managed Fixed Income style,
Strategic Value Bond style, and Positive Return style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
0 current range of
allocation investment
----------- -----------
Managed Fixed Income Portfolio 50.0% 45% - 55%
Strategic Value Bond Portfolio 16.7% 11.7% - 21.7%
Positive Return Portfolio 33.3% 28.3% - 38.3%
--------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions periodically to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
33
INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide total
return consistent with current income.
INVESTMENT POLICIES. The Fund invests in a diversified portfolio of fixed
and variable rate fixed income securities issued by domestic and foreign
issuers. The Fund invests in a broad spectrum of U.S. issuers, including
U.S. Government Securities, mortgage- and other asset-backed securities,
and the debt securities of financial institutions, corporations, and
others. The Adviser attempts to increase the Fund's performance by applying
various fixed income management techniques. The Adviser combines these
techniques with fundamental economic, credit, and market analysis while at
the same time controlling total return volatility by targeting the Fund's
Duration within a narrow band around the Duration of the Lipper Corporate
A-Rated Debt Average.
The Fund normally invests at least 30% of its total assets in U.S.
Government Securities. The Fund limits its investments in mortgage-backed
securities to not more than 50% of its total assets and its investments in
other asset-backed securities to not more than 25% of its total assets.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Fund may invest up to 70% of its total assets in corporate securities,
such as bonds, debentures and notes, and fixed income securities that can
be converted into or exchanged for common stocks. The Fund also may invest
in zero coupon securities and enter into Dollar Rolls.
The Fund may invest in debt securities registered and sold in the United
States by foreign issuers and debt securities sold outside the United
States by foreign or U.S. issuers. The Fund restricts its purchases of debt
securities to those denominated and payable in U. S. dollars.
Normally, the Fund will invest at least 80% of its total assets in
Investment Grade securities. The Fund may invest up to 20% of its total
assets in Non-Investment Grade securities rated, at the time of purchase,
in the fifth highest long-term rating category assigned by an NRSRO or
unrated and determined by the Adviser to be of comparable quality.
The Fund invests primarily in securities with maturities (or average life
in the case of mortgage-backed and similar securities) ranging from
overnight to 40 years. It is anticipated that the Fund's portfolio will
have an average dollar-weighted maturity of between 3 and 15 years. The
Fund's portfolio of securities will normally have a Duration of between 70%
and 130% of the Duration of the Lipper Corporate A-Rated Debt Average.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
34
TOTAL RETURN BOND FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek total
return.
INVESTMENT POLICIES. The Fund invests in a broad range of fixed-income
instruments in order to create a strategically diversified portfolio of
fixed-income investments. These investments include corporate bonds,
mortgage- and other asset-backed securities, U.S. Government Securities,
preferred stock, convertible bonds, and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Fund seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current versus historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Fund's objective and purchases those securities that
are consistent with the Fund's investment objective.
The Fund particularly seeks strategic diversification. The Fund will not invest
more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate market.
The Fund may invest in U.S. Government Securities without restriction. The
Fund generally will not invest more than 5% of its total assets in the
corporate bonds of any single issuer.
The Fund will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the 3 highest rating categories
assigned by at least 1 NRSRO, or which are unrated and determined by the
Adviser to be of comparable quality. The Fund may invest up to 20% of its
total assets in Non-Investment Grade securities.
The average maturity of the Fund will vary between 5 and 15 years. In the
case of mortgage-backed and similar securities, the Fund uses the
security's average life in calculating the Fund's average maturity. The
Fund's Duration normally will vary between 3 and 8 years.
The Fund may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Fund also may use
options to enhance return.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
35
STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in bonds, other fixed-income investments, and stocks.
INVESTMENT POLICIES. The Fund is designed for investors seeking to invest
in fixed income securities with limited exposure to equity securities. The
Fund emphasizes safety of principal. The Fund currently invests in 16
Portfolios.
The Fund invests the fixed income portion of its portfolio in: the same 3
Portfolios as Diversified Bond Fund; in Stable Income Portfolio; and Money
Market Portfolio. The blending of multiple fixed income investment styles
is intended to reduce the price and return volatility of, and provide more
consistent returns within, the fixed income portion of the Fund's
investments. The equity portion of the Fund's portfolio uses the 5
different equity investment styles of Diversified Equity Fund. The blending
of multiple equity investment styles is intended to reduce the risk
associated with the use of a single style, which may move in and out of
favor during the course of a market cycle.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
<TABLE>
<S> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED BOND FUND STYLE 55% 45% - 65%
POSITIVE RETURN BOND PORTFOLIO 15% - 21.7%
18.3%
STRATEGIC VALUE BOND PORTFOLIO 7.5% - 10.8%
9.2%
MANAGED FIXED INCOME PORTFOLIO 22.5% - 32.5%
27.5%
STABLE INCOME PORTFOLIO 15% 15%
MONEY MARKET PORTFOLIO 10% 10%
DIVERSIFIED EQUITY FUND STYLE 20% 10% - 30%
INDEX PORTFOLIO 2.5% - 7.5%
5%
INCOME EQUITY PORTFOLIO 2.5% - 7.5%
5%
LARGE COMPANY STYLE 2.5% - 7.5%
5%
LARGE COMPANY GROWTH PORTFOLIO 2% - 6%
4%
DISCIPLINED GROWTH PORTFOLIO 0.5% - 1.5%
1%
DIVERSIFIED SMALL CAP STYLE 1% - 3%
2.0%
SMALL CAP INDEX PORTFOLIO 0.2% - 0.6%
0.4%
SMALL COMPANY GROWTH PORTFOLIO 0.2% - 0.7%
0.5%
SMALL COMPANY VALUE PORTFOLIO 0.2% - 0.7%
0.5%
SMALL COMPANY STOCK PORTFOLIO 0.25% - 0.5%
0.3%
SMALL CAP VALUE PORTFOLIO 0.2% - 0.5%
0.3%
INTERNATIONAL STYLE 1.5% - 4.5%
3.0%
INTERNATIONAL PORTFOLIO 1.2% - 4.5%
2.9%
SCHRODER EM CORE PORTFOLIO 0% - 0.9%
0.2%
-------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of the Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
<PAGE>
36
As market or other conditions change, the Adviser may attempt to enhance
the Fund's returns by changing the percentage of Fund assets invested in
fixed income and equity securities. The Fund may also invest in more or
fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of changes. When the Adviser believes that a change in
the current allocation percentages is desirable, it will sell and purchase
securities to effect the change. When the Adviser believes that a change
will be temporary (generally, 3 years or less), it may effect the change by
using futures contracts.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
TAX-FREE FIXED INCOME FUNDS
[TAX-FREE INCOME FUNDS ICON]
[INVESTMENT ICON]
Each Tax-Free Fixed Income Fund invests at least 80% of its total assets in
Municipal Securities paying interest that is exempt from federal income
tax. In order to respond to business and financial conditions, each Fund
may invest up to 20% of its total assets in securities paying taxable
interest income or securities paying interest income that may be a
preference item for purposes of the federal AMT. In addition, each Fund may
hold a portion of its assets in cash and cash-equivalent securities pending
investment in Municipal Securities, to meet requests for redemptions or to
assume a temporary defensive position.
LIMITED TERM TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to produce current
income exempt from federal income taxes.
INVESTMENT POLICIES. The Fund normally invests substantially all its assets
in Investment Grade Municipal Securities. As a Fundamental investment
policy, the Fund will invest at least 80% of its total assets in securities
paying interest exempt from federal income taxes. The Fund invests
primarily in securities that do not pay interest that is treated as a
preference item for individuals for purposes of the federal AMT.
The average dollar-weighted maturity of the Fund's assets normally will be
between 1 and 5 years, but will vary depending on anticipated market
conditions. The Fund emphasizes investment in Municipal Securities with
interest income rather than maintaining stability of the Fund's net asset
value.
The Fund normally will not invest more than 25% of its total assets in
securities of issuers located in the same state or in Related Issuers.
[RISK ICON]
Credit Risk Interest Rate Risk Market Risk
Prepayment Risk
<PAGE>
37
TAX-FREE INCOME FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to produce current
income exempt from federal income taxes.
INVESTMENT POLICIES. The Fund invests primarily in a portfolio of
Investment Grade Municipal Securities. As a Fundamental investment policy,
the Fund will invest at least 80% of its total assets in Municipal
Securities paying interest exempt from federal income taxes, including the
federal AMT.
The average dollar-weighted maturity of the Fund's assets normally will be
between 10 and 20 years, but will vary depending on market conditions. In
general, the longer the maturity of a Municipal Security, the higher the
rate of interest it pays. However, a longer maturity is generally
associated with a higher level of volatility in the market value of a
security. The Fund emphasizes investments in Municipal Securities with
interest income rather than stability of the Fund's net asset value.
Under normal circumstances, the Fund will not invest more than 25% of its
total assets in issuers located in the same state or in securities of
Related Issuers.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Interest Rate Risk Market Risk
Prepayment Risk
COLORADO TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
shareholders with a high level of current income exempt from both federal
(including the AMT) and Colorado state income taxes consistent with the
preservation of capital. The Fund offers shares only to residents of
Colorado.
INVESTMENT POLICIES. The Fund normally invests substantially all its assets
in Investment Grade Municipal Securities issued by (1) the state of
Colorado and its subdivisions, authorities, instrumentalities, and
corporations and (2) territories and possessions of the United States
("Colorado Municipal Securities"). As a Fundamental policy, the Fund will
invest at least 80% of its total assets in Municipal Securities paying
interest exempt from both federal and Colorado state income taxes
(including the AMT). The Fund invests in securities of a comparatively
small number of issuers. The Fund will not invest more than 25% of its
total assets in securities of Related Issuers or in securities of any 1
issuer except the U.S. Government.
The yields of Colorado Municipal Securities depend on, among other things,
conditions in the Colorado Municipal Securities market and fixed income
markets generally, the size of a particular offering, the maturity of the
securities and the rating of the issue. In some cases, Colorado issues may
have yields that are slightly less than the yields of Municipal Securities
of issuers located in other states because of the favorable effect of the
Colorado state tax exemption on Colorado issues.
<PAGE>
38
The Adviser expects that the Fund's average portfolio maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may
reach or exceed 20 years in the future. Depending on market conditions, the
Fund's average dollar-weighted maturity could be higher or lower. The Fund
emphasizes investments in Municipal Securities paying interest income
rather than maintaining the Fund's stability of net asset value. The Fund
also attempts to limit net asset value fluctuations.
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk \Market Risk
Prepayment Risk
MINNESOTA INTERMEDIATE TAX-FREE FUND and MINNESOTA TAX-FREE FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. Each Fund's investment objective is to provide
shareholders with a high level of current income exempt from both federal
and Minnesota state income taxes (including the AMT) without assuming undue
risk. The Funds offer shares only to residents of Minnesota.
INVESTMENT POLICIES. The Funds normally invest substantially all (and
always at least 75% of) their assets in Investment Grade Municipal
Securities issued by (1) the state of Minnesota and its subdivisions,
authorities, instrumentalities, and corporations and (2) territories and
possessions of the United States ("Minnesota Municipal Securities"). As a
Fundamental policy, the Funds will invest at least 80% of their total
assets in securities paying interest exempt from both federal and Minnesota
state income taxes (including the AMT). The Funds may invest in securities
of a comparatively small number of issuers. Neither Fund will invest more
than 25% of its total assets in securities of Related Issuers or in
securities of any 1 issuer except the U.S. Government.
The yields of Minnesota Municipal Securities depend on, among other things,
conditions in the Minnesota Municipal Securities market and fixed income
markets generally, the maturity of the securities, the rating of the issue,
and the size of a particular offering. In some cases, Minnesota issues may
have yields that are slightly less than the yields of Municipal Securities
of issuers located in other states because of the favorable effect of the
Minnesota state tax exemption on Minnesota issues.
Minnesota Intermediate Tax-Free Fund's average dollar-weighted maturity
normally will be between 5 and 10 years, but will vary depending on
anticipated market conditions.
There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. The Adviser expects that the Fund's average dollar-weighted
maturity normally will be greater than 10 years. The Fund's average
portfolio maturity may reach or exceed 20 years in the future. Depending on
market conditions, the Fund's average dollar-weighted maturity could be
higher or lower. The Funds emphasize investments in Municipal Securities
paying interest income rather than maintaining the Fund's stability of net
asset value.
<PAGE>
39
The Funds may invest up to 25% of their total assets in Non-Investment
Grade Municipal Securities rated in the fifth highest long-term rating
category assigned by an NRSRO or unrated and determined by the Adviser to
be of comparable quality.
[RISK ICON]
Credit Risk Diversification Risk Geographic Concentration Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
BALANCED FUNDS
[BALANCED FUNDS ICON]
Each Balanced Fund invests in a balanced portfolio of fixed income and
equity securities. Moderate Balanced Fund has the smallest investment in
equity securities and is the most conservative Balanced Fund. Aggressive
Balanced-Equity Fund has the largest investment in equity securities and is
the most aggressive Balanced Fund.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The equity portion of each Balanced Fund's portfolio uses the 5 different
equity investment styles of Diversified Equity Fund. The blending of
multiple equity investment styles is intended to reduce the risk associated
with the use of a single style, which may move in and out of favor during
the course of a market cycle. The fixed income portion of each Balanced
Fund's portfolio uses 3 or 4 different fixed income investment styles. The
blending of multiple fixed income investment styles is intended to reduce
the price and return volatility of, and provide more consistent returns
within, the fixed income portion of the Funds.
The percentage of a Balanced Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
As market or other conditions change, the Adviser may attempt to enhance
the returns of a Balanced Fund by changing the percentage of Fund assets
invested in fixed income and equity securities. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of percentage changes. When the Adviser believes that a
change in the current allocation percentages is desirable, it will sell and
purchase securities to effect the change. When the Adviser believes that a
change will be temporary (generally, 3 years or less), it may effect the
change by using futures contracts.
MODERATE BALANCED FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks, bonds, and other fixed income investments.
INVESTMENT POLICIES. The Fund is designed for investors seeking roughly
equivalent exposures to fixed income securities and equity securities. The
Fund's portfolio is more evenly balanced between fixed income and equity
securities than the other Balanced Funds. The Fund currently invests in 15
Portfolios.
<PAGE>
40
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund and in Stable Income Portfolio. This
allocation is intended to reduce the risk of relying on a single fixed
income investment style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- ----------
DIVERSIFIED BOND FUND STYLE 30% - 60%
45%
POSITIVE RETURN BOND PORTFOLIO 10% - 20%
15%
STRATEGIC VALUE BOND PORTFOLIO 5% - 10%
7.5%
MANAGED FIXED INCOME PORTFOLIO 15% - 30%
22.5%
STABLE INCOME PORTFOLIO 15%
15%
DIVERSIFIED EQUITY FUND STYLE 25% - 55%
40%
INDEX PORTFOLIO 6.3% - 13.8%
10%
INCOME EQUITY PORTFOLIO 6.3% - 13.8%
10%
LARGE COMPANY STYLE 6.3% - 13.8%
10%
LARGE COMPANY GROWTH PORTFOLIO 5.0% - 11.0%
8%
DISCIPLINED GROWTH PORTFOLIO 1.25% - 2.75%
2%
DIVERSIFIED SMALL CAP STYLE 2.5% - 5.5%
4%
SMALL CAP INDEX PORTFOLIO 0.5% - 1.1%
0.8%
SMALL COMPANY GROWTH PORTFOLIO 0.6% - 1.3%
1.0%
SMALL COMPANY VALUE PORTFOLIO 0.6% - 1.3%
1.0%
SMALL COMPANY STOCK PORTFOLIO 0.4% - 0.9%
0.6%
SMALL CAP VALUE PORTFOLIO 0.4% - 0.9%
0.6%
INTERNATIONAL STYLE 3.8% - 8.3%
6%
INTERNATIONAL PORTFOLIO 3.0% - 8.3%
5.7%
SCHRODER EM CORE PORTFOLIO 0% - 1.7%
0.3%
-------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
GROWTH BALANCED FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund currently invests in 14 Portfolios.
<PAGE>
40
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund. This allocation is intended to reduce
the risk of relying on a single fixed income investment style.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED EQUITY FUND STYLE 45% - 85%
65%
INDEX PORTFOLIO 11.3% - 21.3%
16.3%
INCOME EQUITY PORTFOLIO 11.3% - 21.3%
16.3%
LARGE COMPANY STYLE 11.3% - 21.3%
16.3%
LARGE COMPANY GROWTH PORTFOLIO 9.0% - 17.0%
13.0%
DISCIPLINED GROWTH PORTFOLIO 2.3% - 4.3%
3.3%
DIVERSIFIED SMALL CAP STYLE 4.5% - 8.5%
6.5%
SMALL CAP INDEX PORTFOLIO 0.9% - 1.7%
1.3%
SMALL COMPANY GROWTH PORTFOLIO 1.1% - 2%
1.6%
SMALL COMPANY VALUE PORTFOLIO 1.1% - 2%
1.6%
SMALL COMPANY STOCK PORTFOLIO 0.7% - 1.4%
1.0%
SMALL CAP VALUE PORTFOLIO 0.8% - 1.4%
1.0%
INTERNATIONAL STYLE 6.8% - 12.8%
9.8%
INTERNATIONAL PORTFOLIO 5.4% - 12.8%
9.3%
SCHRODER EM CORE PORTFOLIO 0% - 2.6%
0.5%
DIVERSIFIED BOND FUND STYLE 15% - 55%
35%
MANAGED FIXED INCOME PORTFOLIO 7.5% - 27.5%
17.5%
STRATEGIC VALUE BOND PORTFOLIO 2.5% - 9.2%
5.8%
POSITIVE RETURN BOND PORTFOLIO 5% - 18.3%
11.7%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Reverage Risk Market Risk
Prepayment Risk Small Company Risk
</TABLE>
AGGRESSIVE BALANCED-EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversifying
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund has the largest equity securities position of the Balanced Funds.
The Fund currently invests in 14 Portfolios.
The Fund invests the fixed income portion of its portfolio in the same 3
Portfolios as Diversified Bond Fund. This allocation is intended to reduce
the risk of relying on a single fixed income investment style.
<PAGE>
42
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE
INVESTMENT STYLE ALLOCATION OF INVESTMENT
---------------- ---------- -------------
DIVERSIFIED EQUITY FUND STYLE 60% - 100%
80%
INDEX PORTFOLIO 15% - 25%
20%
INCOME EQUITY PORTFOLIO 15% - 25%
20%
LARGE COMPANY STYLE 15% - 25%
20%
LARGE COMPANY GROWTH PORTFOLIO 12% - 20%
16%
DISCIPLINED GROWTH PORTFOLIO 3% - 5%
4%
DIVERSIFIED SMALL CAP STYLE 6% - 10%
8%
SMALL CAP INDEX PORTFOLIO 1.2% - 2%
1.6%
SMALL COMPANY GROWTH PORTFOLIO 1.4% - 2.4%
1.9%
SMALL COMPANY VALUE PORTFOLIO 1.4% - 2.4%
1.9%
SMALL COMPANY STOCK PORTFOLIO 1% - 1.6%
1.3%
SMALL CAP VALUE PORTFOLIO 1% - 1.6%
1.3%
INTERNATIONAL STYLE 9% - 15%
12%
INTERNATIONAL PORTFOLIO 7.2% - 15%
11.4%
SCHRODER EM CORE PORTFOLIO 0% - 3%
0.6%
DIVERSIFIED BOND FUND STYLE 0% - 40%
20%
MANAGED FIXED INCOME PORTFOLIO 0% - 20%
10.0%
STRATEGIC VALUE BOND PORTFOLIO 0% - 6.7%
3.3%
POSITIVE RETURN BOND PORTFOLIO 0% - 13.3%
6.7%
----------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
[EQUITY FUNDS ICON]
EQUITY FUNDS
INDEX FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to replicate the
return of the S&P 500 Index.
INVESTMENT POLICIES. The Fund is designed to replicate the return of the
S&P 500 Index with minimum tracking error and to minimize transaction
costs. Under normal circumstances, the Fund holds stocks representing 100%
of the capitalization-weighted market values of the S&P 500 Index. The
Adviser generally executes portfolio transactions for the Fund only to
replicate the composition of the S&P 500 Index, to invest cash received
from portfolio security dividends or investments in the Fund, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts to a limited
<PAGE>
43
extent. For these and other reasons, the Fund's performance can be expected
to approximate but not equal the S&P 500 Index.
The S&P 500 Index tracks the total return performance of 500 common stocks
which are chosen for inclusion in the S&P 500 Index by S&P on a statistical
basis. The 500 securities, most of which trade on the New York Stock
Exchange, represent approximately 70% of the total market value of all U.S.
common stocks. Each stock in the S&P 500 Index is weighted by its market
value. Because of the market-value weighting, the 50 largest companies in
the S&P 500 Index currently account for approximately 47% of its value. The
S&P 500 Index emphasizes large capitalizations and, typically, companies
included in the S&P 500 Index are the largest and most dominant firms in
their respective industries.
S&P does not sponsor, sell, promote, or endorse the Fund. S&P does not
warrant that the S&P 500 Index is a good investment, is accurate or
complete, or will track general stock market performance.
[INVESTMENT POLICIES AND OBJECTIVES TAB]
[RISK ICON]
Market Risk Index Risk
INCOME EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation consistent with above-average dividend
income.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have above-average return
potential based on current market valuations. The Fund primarily emphasizes
investments in securities of companies with above-average dividend income.
In selecting securities for the Fund, the Adviser uses various valuation
measures, including above-average dividend yields and below industry
average price-to-earnings, price-to-book and price-to-sales ratios. The
Adviser considers large companies to be those whose market capitalization
is greater than the median of the Russell 1000 Index.
The Fund may invest in preferred stock, convertible securities, and
securities of foreign companies. The Fund will not normally invest more
than 10% of its total assets in the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
<PAGE>
44
VALUGROWTH STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation.
INVESTMENT POLICIES. The Fund invests primarily in medium- and
large-capitalization companies that, in the view of the Adviser, possess
above average growth characteristics and appear to be undervalued. The
Adviser considers medium-capitalization companies to be those whose Market
Capitalization is in the range of $500 million to $8 billion. The Adviser
considers large companies to be those whose Market Capitalization is
greater than the median of the Russell 1000 Index.
The Fund seeks to identify and invest in those companies with earnings and
dividends that the Adviser believes will grow faster than both inflation
and the economy in general. The Fund invests in companies with growth
potential that, in the opinion of the Adviser, has not yet been fully
reflected in the market price of the companies' shares. In seeking these
investments, the Adviser relies primarily on a company-by-company analysis
(rather than on a broader analysis of industry or economic sector trends).
The Adviser considers such matters as the quality of a company's
management, the existence of a leading or dominant position in a major
product line or market, the soundness of the company's financial position,
the maintenance of a relatively high rate of return on invested capital,
and shareholder's equity. Once companies are identified as possible
investments, the Adviser applies a number of valuation measures to
determine the relative attractiveness of each company and selects those
companies whose shares are most attractively priced.
The Fund may invest in companies that the Adviser considers to be "special
situations." Special situation companies often have the potential for
significant future earnings growth but have not performed well in the
recent past. These situations may include management turnarounds, corporate
or asset restructurings, or significantly undervalued assets. These
investments form a comparatively small portion of the Fund's portfolio.
The Fund may invest up to 20% of its total assets in securities of foreign
companies. The Fund also may write covered call options and purchase call
options on equity securities to manage risk or enhance returns.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in a single investment
style. The Fund currently invests in 11 Portfolios.
<PAGE>
45
The Fund's investments combine 5 different equity investment styles - an
index style, an income equity style, a large company style, a diversified
small cap style, and an international style. The Fund allocates the assets
dedicated to large company investments to 2 Portfolios, the assets
allocated to small company investments to 5 Portfolios, and the assets
dedicated to international investments to 2 Portfolios. Because Diversified
Equity Fund blends 5 equity investment styles, it is anticipated that its
price and return volatility will be less than that of Growth Equity Fund,
which blends 3 equity investment styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
----------------- ---------- ----------
INDEX PORTFOLIO 23.5% - 26.5%
25%
INCOME EQUITY PORTFOLIO 23.5% - 26.5%
25%
LARGE COMPANY STYLE 23.5% - 26.5%
25%
LARGE COMPANY GROWTH PORTFOLIO 18.5% - 21.5%
20%
DISCIPLINED GROWTH PORTFOLIO 3.5% - 6.5%
5%
DIVERSIFIED SMALL CAP STYLE 8.5% - 11.5%
10%
SMALL CAP INDEX PORTFOLIO 0.5% - 3.5%
2.0%
SMALL COMPANY GROWTH PORTFOLIO 0.9% - 3.9%
2.4%
SMALL COMPANY VALUE PORTFOLIO 0.9% - 3.9%
2.4%
SMALL COMPANY STOCK PORTFOLIO 0.1% - 3.1%
1.6%
SMALL CAP VALUE PORTFOLIO 0.1% - 3.1%
1.6%
INTERNATIONAL STYLE 13.5% - 16.5%
15%
INTERNATIONAL PORTFOLIO 10.8% - 16.5%
14.3%
SCHRODER EM CORE PORTFOLIO 0% - 3.3%
0.8%
----------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
</TABLE>
100%
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market value. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
GROWTH EQUITY FUND
[INVESTMENT OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a high level
of long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed to
reduce the volatility and risk of investing in a single equity style. The Fund
currently invests in 8 Portfolios.
<PAGE>
46
The Fund's investments combine 3 different equity styles - a large company
growth style, a diversified small cap style, and an international style. The
Fund allocates the assets dedicated to small company investments to 5 Portfolios
and the assets dedicated to international investments to 2 Portfolios. It is
anticipated that the Fund's price and return volatility will be somewhat greater
than those of Diversified Equity Fund, which blends 5 equity styles.
ALLOCATION. The current allocations and ranges of investments by the Fund in
each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE LOCATION INVESTMENT
---------------- -------- ----------
LARGE COMPANY GROWTH PORTFOLIO 35% 33% - 37%
DIVERSIFIED SMALL CAP STYLE 35% 33% - 37%
SMALL CAP INDEX PORTFOLIO 5.0% - 9.0%
7.0%
SMALL COMPANY GROWTH PORTFOLIO 8.5% - 12.5%
8.4%
SMALL COMPANY VALUE PORTFOLIO 8.5% - 12.5%
8.4%
SMALL COMPANY STOCK PORTFOLIO 3.6% - 7.6%
5.6%
SMALL CAP VALUE PORTFOLIO 3.6% - 7.6%
5.6%
INTERNATIONAL STYLE 30% 28% - 32%
INTERNATIONAL PORTFOLIO 22.4% - 32.0%
28.5%
SCHRODER EM CORE PORTFOLIO 0% - 6.4%
1.5%
---------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
LARGE COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing primarily in large,
high-quality domestic companies that the Adviser believes have superior
growth potential.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have superior growth potential.
The Adviser considers large companies to be those whose Market
Capitalization is greater than the median of the Russell 1000 Index. In
selecting securities for the Fund, the Adviser seeks issuers whose stock is
attractively valued with fundamental characteristics that are significantly
better than the market average and support internal earnings growth
capability. The Fund may invest in the securities of companies whose growth
potential is, in the Adviser's opinion, generally unrecognized or
misperceived by the market.
<PAGE>
47
The Fund may invest up to 20% of its total assets in the securities of
foreign companies and may hedge against currency risk by using foreign
currency forward contracts. The Fund may not invest more than 10% of its
total assets in the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED SMALL CAP FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments across different small capitalization equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in small capitalization
equity securities. The Fund invests in several different small
capitalization equity styles in order to reduce the risk of price and
return volatility associated with reliance on a single investment style.
The Fund currently invests in 5 Portfolios.
[[INVESTMENT OBJECTIVES AND POLICIES TAB]
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- ----------
SMALL CAP INDEX PORTFOLIO 18.5% - 21.5%
20%
SMALL COMPANY GROWTH PORTFOLIO 22.5% - 25.5%
24%
SMALL COMPANY VALUE PORTFOLIO 22.5% - 25.5%
24%
SMALL COMPANY STOCK PORTFOLIO 14.5% - 17.5%
16%
SMALL CAP VALUE PORTFOLIO 14.5% - 17.5%
16%
------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS
100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
<PAGE>
48
SMALL COMPANY STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small- and medium-size domestic companies that have Market Capitalizations
well below that of the average company in the S&P 500 Index. The Adviser
considers small companies to be those companies whose Market
Capitalizations are less than the largest stock in the Russell 2000 Index.
The Adviser considers medium companies to be those whose Market
Capitalizations range from $500 million to $8 billion.
In selecting securities for the Fund, the Adviser seeks securities with
significant price appreciation potential and attempts to identify companies
that show above-average growth, as compared to long-term overall market
growth. The Fund invests in companies that may be in a relatively early
stage of development or may produce goods and services that have favorable
prospects for growth due to increasing demand or developing markets.
Frequently, such companies have a small management group and single product
or product line expertise, which, in the view of the Adviser, may result in
an enhanced entrepreneurial spirit and greater focus. The Adviser believes
that such companies may develop into significant business enterprises and
that an investment in these companies offers a greater opportunity for
capital appreciation than an investment in larger, more established
companies.
The Fund may invest up to 20% of its total assets in the securities of
foreign companies. The Fund may write covered call options and purchase
call options on equity securities to manage risk or enhance returns.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL CAP OPPORTUNITIES FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in equity securities of
U.S. companies that, at the time of purchase, have Market Capitalizations
of $1.5 billion or less.
The Adviser attempts to identify securities of companies that it believes
can generate above-average earnings growth and sell at favorable prices in
relation to book values and earnings. The Adviser's assessment of a
company's management's competence will be an important consideration. These
criteria are not rigid and the Fund may make other investments to achieve
its objective.
The Fund will invest principally in equity securities, including common
stocks, securities convertible into common stocks or, subject to special
limitations, rights or warrants to subscribe for or purchase common stocks.
The Fund also may invest to a limited degree in non-convertible debt
securities and preferred stocks.
<PAGE>
49
The Fund may use options and futures contracts to manage risk. The Fund
also may use options to enhance return.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
SMALL COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing in smaller domestic companies.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small and medium-sized domestic companies that are either growing rapidly
or completing a period of significant change. Small companies are those
companies whose Market Capitalization is less than the largest stock in the
Russell 2000 Index.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
In selecting securities for the Fund, the Adviser seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by
undergoing a dramatic change. These changes may involve a sharp increase in
earnings, the hiring of new management or measures taken to close the gap
between share price and takeover/asset value.
The Fund will invest up to 10% of its total assets in securities of foreign
companies. The Fund will not invest more than 10% of its total assets in
the securities of a single issuer.
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
INTERNATIONAL FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing directly or indirectly in
high-quality companies based outside the United States.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in international
securities. The Fund's investment portfolio combines 2 different investment
styles - an international equity investment style and an international
emerging markets investment style. The Fund invests in 2 Portfolios.
<PAGE>
50
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
<TABLE>
<S> <C> <C>
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
---------------- ---------- -----------
INTERNATIONAL PORTFOLIO 95% 80% - 100%
SCHRODER EM CORE PORTFOLIO 5% 0% - 20%
----------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
DESCRIPTIONS OF PORTFOLIOS
MONEY MARKET PORTFOLIO and PRIME MONEY MARKET PORTFOLIO
The Cash Investment Fund and Ready Cash Investment Fund section of this
prospectus describes these Portfolios.
POSITIVE RETURN BOND PORTFOLIO
The Portfolio seeks to produce a positive total return each calendar year
regardless of general bond market performance by investing in a portfolio
of U.S. Government Securities and corporate fixed income securities. The
Portfolio's assets are divided into 2 components, short bonds with
maturities (or average life) of 2 years or less and long bonds with
maturities of 25 years or more. Shifts between short bonds and long bonds
are made based on movement in the prices of bonds rather than on the
Adviser's forecast of interest rates. During periods of falling prices
(generally, increasing interest rate environments) long bonds are sold to
protect capital and limit losses. Conversely, when bond prices rise, long
bonds are purchased. The average dollar-weighted maturity of the Portfolio
will vary between 1 and 30 years.
Under normal circumstances, the Portfolio invests at least 50% of its net
assets in U.S. Government Securities, including U.S. Treasury Securities.
The Portfolio only purchases securities that are rated, at the time of
purchase, within 1 of the 2 highest long-term rating categories assigned by
an NRSRO or that are unrated and determined by the
<PAGE>
51
Adviser to be of comparable quality. The Portfolio may invest up to 25% of
its assets in securities rated in the second highest rating category. The
Portfolio does not invest more than 25% of its total assets in zero-coupon
securities, securities with variable or floating rates of interest, or
asset-backed securities.
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
STABLE INCOME PORTFOLIO
The Stable Income Fund section of this prospectus describes this Portfolio.
MANAGED FIXED INCOME PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks consistent fixed income returns by investing primarily
in Investment Grade intermediate-term securities. The Portfolio invests in
a diversified portfolio of fixed and variable rate U.S. dollar-denominated,
fixed income securities of a broad spectrum of U.S. and foreign issuers,
including U.S. Government Securities, and the debt securities of financial
institutions, corporations, and others. The Adviser emphasizes the use of
intermediate maturity securities to lessen Duration and employs low risk
yield enhancement techniques to enhance return over a complete economic or
interest rate cycle. The Adviser considers intermediate-term securities to
be those with maturities of between 2 and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to
not more than 65% of its total assets and its investment in other
asset-backed securities to not more than 25% of its net assets. In
addition, the Portfolio may not invest more than 30% of its total assets in
the securities issued or guaranteed by any single agency or instrumentality
of the U.S. Government, except the U.S. Treasury.
The Portfolio only purchases Investment Grade securities. The Portfolio
normally will have an average dollar-weighted portfolio maturity of between
3 and 12 years and a Duration of between 2 and 6 years.
The Portfolio also may invest up to 10% of its total assets in securities
issued or guaranteed by foreign governments the Adviser deems stable, or
their subdivisioins, agencies, or instrumentalities; loan or security
participations; securities of supranational organizations; and Municipal
Securities.
The Portfolio may use options, swap agreements, interest rate caps, floors
and collars, and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
<PAGE>
52
STRATEGIC VALUE BOND PORTFOLIO
The Total Return Bond Fund section of this prospectus describes this
Portfolio. Total Return Bond Fund invests all its assets in this Portfolio.
The only difference between the Fund and the Portfolio is that the
Portfolio's investment objective is to seek total return by investing
primarily in income producing securities.
INDEX PORTFOLIO
The Index Fund section of this prospectus describes this Portfolio.
INCOME EQUITY PORTFOLIO
The Income Equity Fund section of this prospectus describes this Portfolio.
LARGE COMPANY GROWTH PORTFOLIO
The Large Company Growth Fund section of this prospectus describes this
Portfolio.
DISCIPLINED GROWTH PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
larger companies. The Portfolio seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Portfolio invests
in companies with average Market Capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level
of corporate earnings that exceed the level expected by investors. In
seeking these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider, among other factors, changes of
earnings estimates by investment analysts, the recent trend of company
earnings reports, and an analysis of the fundamental business outlook for
the company. The Adviser uses a variety of valuation measures to determine
whether or not the share price already reflects any positive fundamentals
identified by the Adviser. In addition to approximately equal weighting of
portfolio securities, the Adviser attempts to constrain the variability of
the investment returns by employing risk control screens for price
volatility, financial quality, and valuation.
[RISK ICON]
Market Risk
<PAGE>
53
SMALL CAP INDEX PORTFOLIO
The Portfolio seeks to replicate the return of the S&P 600 Small Cap Index
with minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio will hold stocks representing 100% of the
capitalization-weighted market values of the S&P 600 Small Cap Index. The
Adviser generally executes portfolio transactions only to replicate the
composition of the S&P 600 Small Cap Index, to invest cash received from
portfolio security dividends or investments in the Portfolio, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal that of the S&P
600 Small Cap Index.
The S&P 600 Small Cap Index tracks the total return performance of 600
common stocks which are chosen for inclusion in the S&P 600 Small Cap Index
by S&P on a statistical basis. The 600 securities, most of which trade on
the New York Stock Exchange, represent 4% of the total market value of all
U.S. common stocks. Each stock in the S&P 600 Small Cap Index is weighted
by its market value. The S&P 600 Small Cap Index emphasizes smaller
capitalizations and typically, companies included in the S&P 600 Small Cap
Index may not be the largest nor most dominant firms in their respective
industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 600 Small Cap Index is a good investment, is accurate
or complete, or will track general stock market performance.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
Leverage Risk Market Risk Index Risk
Small Company Risk
SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Fund section of this prospectus describes this
Portfolio.
SMALL COMPANY GROWTH PORTFOLIO
The Small Company Growth Fund section of this prospectus describes this
Portfolio.
SMALL COMPANY VALUE PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
primarily in smaller companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index. The Adviser focuses on securities
that are conservatively valued in the marketplace relative to the stock of
comparable companies, determined by price/earnings ratios, cash flows, or
other measures. Value investing provides investors with a less aggressive
way to take advantage of growth
<PAGE>
54
opportunities of small companies. Value investing may reduce downside risk
and offer potential for capital appreciation as a stock gains favor among
other investors and its stock price rises.
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
Small Company Risk
SMALL CAP VALUE PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
smaller companies. The Portfolio will normally invest substantially all of
its assets in securities of companies with Market Capitalizations that
reflect the Market Capitalization of companies included in the Russell 2000
Index. The Portfolio seeks higher growth rates and greater long-term
returns by investing primarily in the common stock of smaller companies
that the Adviser believes to be undervalued and likely to report a level of
corporate earnings exceeding the level expected by investors. The Adviser
values companies based upon both the price-to-earnings ratio of the company
and a comparison of the public market value of the company to a proprietary
model that values the company in the private market. In seeking companies
that will report a level of earnings exceeding that expected by investors,
the Adviser uses both quantitative and fundamental analysis. Among other
factors, the Adviser considers changes of earnings estimates by investment
analysts, the recent trend of company earnings reports, and the fundamental
business outlook for the company.
[RISK ICON]
Market Risk Small Company Risk
INTERNATIONAL PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
directly or indirectly in high-quality companies based outside the United
States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio also may invest in the securities of domestic closed-end
investment companies that invest primarily in foreign securities and may
invest in debt securities of foreign governments or their political
subdivisions, agencies, or instrumentalities, of supranational
organizations, and of foreign corporations. The Portfolio's investments are
generally diversified among securities of issuers in foreign countries
including, but not limited to, Japan, Germany, the United Kingdom, France,
the Netherlands, Hong Kong, Singapore, and Australia. In general, the
Portfolio will invest only in securities of companies and governments in
countries that the Adviser, in its judgment, considers both politically and
economically stable. The Fund may invest more than 25% of its total assets
in investments in a particular country, region, or type of investment.
<PAGE>
55
The Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The Portfolio also may enter into
foreign exchange contracts, including forward contracts to purchase or sell
foreign currencies, in anticipation of its currency requirements and to
protect against possible adverse movements in foreign exchange rates.
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
SCHRODER EM CORE PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks to achieve long-term capital appreciation through
direct or indirect investment in equity and debt securities of companies in
emerging market countries in regions such as Southeast Asia, Latin America,
and Eastern and Southern Europe. Current income is incidental to the
Portfolio's objective.
The Portfolio may invest, under normal market conditions, at least 65% of
its total assets in emerging market equity and debt securities, including
convertible securities and stock rights, and warrants.
The Adviser considers "emerging market" countries generally to be all those
countries not included in the Morgan Stanley Capital International World
Index ("MSCI World") of major world economies. If the Adviser determines
that the economy of a MSCI World-listed country is an emerging market
economy, the Adviser may include such country in the emerging market
category. The Portfolio will not necessarily seek to diversify investments
on a geographic basis and may invest more than 25% of its total assets in
issuers located in a single country.
The Fund may invest up to 35% of its total assets in Non-Investment Grade
fixed income securities. The Fund may enter into foreign exchange
contracts, including forward contracts, in anticipation of its currency
requirements and to protect against possible adverse movements in foreign
exchange rates.
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
56
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [SPREADSHEETS]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds.
Each Fund's exposure to these risks depends upon its specific investment
profile. The Fund's description in INVESTMENT OBJECTIVES AND POLICIES lists
the Fund's principal risks.
[RISK ICON]
CREDIT RISK
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
[RISK ICON]
CURRENCY RATE RISK
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments.
[RISK ICON]
DIVERSIFICATION RISK
The risk that investment in a comparatively small number of issuers will
increase the potential adverse effects of a decline in the value of a
Fund's investment in a single issuer.
[RISK ICON]
FOREIGN RISK
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization,
increased taxation, or confiscation of investors' assets. Also, the risk
that the price of a foreign issuer's securities may not reflect the
issuer's condition because there is not sufficient publicly available
information about the issues. This risk may be greater for investments in
issuers in emerging or developing markets.
[RISK ICON]
GEOGRAPHIC CONCENTRATION RISK
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
[RISK ICON]
INDEX RISK
The risk that a Fund designed to replicate the performance of an index of
securities will replicate the performance of the index during adverse
market conditions because the portfolio manager is not permitted to take a
temporary defensive position or otherwise vary the Fund's investments to
respond to the adverse market conditions.
<PAGE>
57
[RISK ICON]
INTEREST RATE RISK
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including Municipal Securities and
U.S. Government Securities, an increase in interest rates typically causes
the value of a Fund's fixed-rate securities to fall, while a decline in
interest rates may produce an increase in the market value of the
securities. Because of this risk, an investment in a Fund that invests in
fixed income securities is subject to risk even if all the fixed income
securities in the Fund's portfolio are paid in full at maturity. Changes in
interest rates will affect the value of longer-term fixed income securities
more than shorter-term securities.
[RISK ICON]
LEVERAGE RISK
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
[RISK ICON]
MARKET RISK
[RISK CONSIDERATIONS TAB]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry or section of the economy, or may affect the market
as a whole.
[RISK ICON]
PREPAYMENT RISK
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
[RISK ICON]
SMALL COMPANY RISK
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
58
- --------------------------------------------------------------------------------
COMMON POLICIES [PC SCREENS]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
VOTING ISSUES
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that
shareholders of Funds with comparatively high net asset values will have a
comparatively smaller impact on the outcome of votes by all of the Funds
than do shareholders of Funds with comparatively low net asset values.
DOWNGRADED SECURITIES
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's Adviser
determines that retaining the security is in the best interests of the
Fund. Because a downgrade often results in a reduction in the market price
of the security, sale of a downgraded security may result in a loss.
TEMPORARY DEFENSIVE POSITION
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective.
When a Tax-Free Fixed Income Fund assumes a temporary defensive position,
it is likely that its shareholders may be subject to federal and applicable
state income taxes on a greater portion of the Fund's income distributions.
PORTFOLIO TRANSACTIONS
From time to time, a Fund may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues,
or markets. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. THE FINANCIAL HIGHLIGHTS TABLE lists each Fund's portfolio turnover
rate.
<PAGE>
59
YEAR 2000 AND EURO
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers(and in particular, foreign service
providers)to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
[COMMON POLICIES TAB]
<PAGE>
60
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [SPREADSHEET]
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio except the Portfolios advised by Schroder. In this
capacity, Norwest makes investment decisions for and administers the Funds'
and Portfolios' investment programs. Norwest Investment Management, Inc.'s
address is Norwest Center, Sixth Street and Marquette, Minneapolis, MN
55479.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. is the investment adviser
for the Schroder U.S. Smaller Companies Portfolio, International Portfolio,
and Schroder EM Core Portfolio. In this capacity, Schroder makes investment
decisions for and administers those Portfolios' investment programs.
Schroder Capital Management International Inc.'s address is 787 Seventh
Avenue, 34th Floor0 New York, NY 10019.
Norwest and certain of the Funds and the Portfolios have retained
investment subadvisers to make investment decisions for and administer the
investment programs of those Funds and Portfolios. Norwest decides which
portion of the assets of a Fund or Portfolio the subadviser should manage
and supervises the subadvisers' performance of their duties. The
subadvisers are:
CRESTONE CAPITAL MANAGEMENT, INC. or CRESTONE, An Inveestment Advisory
subsidiary of Norwest Bank, provides investment advice regarding companies
with small market capitalization to various clients, including
institutional investors. Crestone Capital Management, Inc.'s address is
7720 East Bellview Avenue, Suite 220, Englewood, CO 80111.
GALLIARD CAPITAL MANAGEMENT, INC. or GALLIARD, an investment advisory
subsidiary of Norwest Bank, provides investment advisory services to bank
and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations, and corporate and other business entities.
GALLIARD CAPITAL MANAGEMENT, INC.'s address is 800 Lasalle Ave. Suite 2060,
Minneapolis, MN 55479.
PEREGRINE CAPITAL MANAGEMENT, Inc. or Peregrine, an investment advisory
subsidiary of Norwest Bank, provides investment advisory services to
corporate and public pension plans, profit sharing plans,
savings-investment plans, and 401(K) plans. Peregrine Capital Management,
Inc's address is Lasalle Plaza, 800 Lasalle Avenue, Suite 1850,
Minneapolis, MN 55402.
SMITH ASSET MANAGEMENT GROUP, L.P. or SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies, and
high net worth individuals using a disciplined equity style. Smith Asset
Management Group, L.P.'s address is 300 Crescent Court, Suite 750, Dallas,
TX 75201
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments. The
year a portfolio manager began managing a Fund or Portfolio follows the
manager's name in parenthesis. The list
<PAGE>
61
includes the investment advisory fees payable to Norwest or Schroder by the
Fund and by any Portfolios in which it invests. The list states the
investment advisory fees on an annualized basis as a percentage of a Fund's
or Portfolio's average daily net assets. Descriptions of the portfolio
managers' recent experience follow the list of portfolio managers and
advisory fees.
How investment advisory fees are paid depends on whether or not a Fund
invests in Portfolios.
* If a Fund invests directly in a portfolio of securities, Norwest
receives an investment advisory fee directly from the Fund.
* If a Fund invests in a single Portfolio, Norwest or Schroder receives
an investment advisory fee from the Portfolio.
* If a Fund invests in more than 1 Portfolio, Norwest or Schroder
receives an investment advisory fee from each of those Portfolios. In
addition, Norwest receives a fee from each Fund, except Cash
Investment Fund, for the "asset allocation services" of determining
the Funds' investments in the Portfolios and how much of the Fund's
assets to invest in each Portfolio.
If a Fund invests in more than 1 Portfolio, the total amount of the
investment advisory fee paid to Norwest or Schroder as a result of the
Fund's investments varies depending on how much of the Fund's assets are
invested in, and the investment advisory fee payable to, each Portfolio.
Norwest (and not the Funds or Portfolios) pays the subadvisers' investment
subadvisory fees. The investment subadvisory fees do not increase the
amount of the investment advisory fees paid to Norwest by the Funds or
Portfolios.
[MONEY MARKET FUNDS ICON] [MANAGEMENT OF THE FUNDS TAB]
MONEY MARKET FUNDS
<TABLE>
<S> <C> <C>
CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400 million; and 0.32%
- remaining
PORTFOLIO: MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1987), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.20% - first $300 million; 0.16% - next $400 million, and
0.12% - remaining
READY CASH INVESTMENT FUND
PORTFOLIO: PRIME MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1988), Laurie R. White (1991), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.40% - first $300 million; 0.36% - next $400 million; and
0.32% - remaining
</TABLE>
<PAGE>
62
MONEY MARKET FUNDS - CONTINUED
[MONEY MARKET FUNDS ICON]
<TABLE>
<S> <C> <C>
U.S. GOVERNMENT FUND
TREASURY FUND
TREASURY PLUS FUND
PORTFOLIO MANAGERS: David D. Sylvester (1987, 1990, 1998), Laurie R. White (1991,
1991, 1998), and Robert G. Leuty (1998)
ADVISORY FEE: FOR EACH FUND: 0.20% - first $300 million; 0.16% - next $400
million; and 0.12% - remaining
MUNICIPAL MONEY MARKET FUND
PORTFOLIO MANAGERS: David D. Sylvester (1995), Laurie R. White (1998), and Robert G.
Leuty (1998)
ADVISORY FEE: 0.35% - first $500 million; 0.325% - next $500 million; and
0.30% - remaining
FIXED INCOME FUNDS
[FIXED INCOME FUNDS ICON]
STABLE INCOME FUND
PORTFOLIO: STABLE INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Karl P. Tourville (1994) and John Huber (1998)
ADVISORY FEE: 0.30%
LIMITED TERM GOVERNMENT INCOME FUND
INTERMEDIATE GOVERNMENT INCOME FUND
PORTFOLIO MANAGER: Marjorie H. Grace, CFA (1997, 1995)
ADVISORY FEE: FOR EACH FUND: 0.33%
DIVERSIFIED BOND FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns, CFA (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
</TABLE>
<PAGE>
63
FIXED INCOME FUNDS - CONTINUED
[FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
ADVISORY FEE: 0.35%
INCOME FUND
PORTFOLIO MANAGER: Marjorie H. Grace, CFA (1996)
ADVISORY FEE: 0.50%
TOTAL RETURN BOND FUND
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1998), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
STRATEGIC INCOME FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese (1994), CFA and Patricia Burns (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STABLE INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGER: Karl P. Tourville (1994) and John Huber (1998)
ADVISORY FEE: 0.30%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1991), Laurie R. White (1991), and Robert
G. Leuty (1998)
ADVISORY FEES: 0.20% - first $300 million; 0.16% - next $400 million; and
0.12% - remaining
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994), and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
</TABLE>
<PAGE>
64
FIXED INCOME FUNDS - CONTINUED
[FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
STRATEGIC INCOME FUND - CONTINUED
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994), and Paul E. von Kuster, CFA
(1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh, CFA (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown,.CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
<PAGE>
65
TAX-FREE FIXED INCOME FUNDS
[TAX-FREE FIXED INCOME FUNDS ICON]
<TABLE>
<S> <C> <C>
LIMITED TERM TAX-FREE FUND
TAX-FREE INCOME FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1996, 1993)
ADVISORY FEE: for each Fund: 0.50%
COLORADO TAX-FREE FUND
PORTFOLIO MANAGER: William T. Jackson, CFA (1993)
ADVISORY FEE: 0.50% -first $300 million; 0.46% - next $400 million; and 0.42%
- remaining
MINNESOTA INTERMEDIATE TAX-FREE FUND
MINNESOTA TAX-FREE FUND
PORTFOLIO MANAGER: Patricia D. Hovanetz, CFA (1997, 1991)
ADVISORY FEE: MINNESOTA INTERMEDIATE TAX-FREE FUND: 0.25%
MINNESOTA TAX-FREE FUND:
0.50% - first $300 million;
0.46% - next $400 million; and 0.42% -
remaining
</TABLE>
BALANCED FUNDS
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C>
MODERATE BALANCED FUND
GROWTH BALANCED FUND
AGGRESSIVE BALANCED-EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998)
ADVISORY FEE: 0.50%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998)
ADVISORY FEE: 0.35%
PORTFOLIO: STABLE INCOME PORTFOLIO (MODERATE BALANCED FUND ONLY)
SUBADVISER: GALLIARD
PORTFOLIO MANAGER: Karl P. Tourville (1994), and John Huber (1998)
ADVISORY FEE: 0.30%
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
</TABLE>
<PAGE>
66
BALANCED FUNDS - CONTINUED
[BALANCED FUNDS ICON]
<TABLE>
<S> <C> <C> <C>
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin (1995), Jr.and Douglas G. Pugh (1997)
Advisory Fee: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
<PAGE>
67
EQUITY FUNDS
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C>
INDEX FUND
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
INCOME EQUITY FUND
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary Dunn (1994)
ADVISORY FEE: 0.50%.
VALUGROWTH STOCK FUND
PORTFOLIO MANAGER: David S. Lunt, CFA (1996)
ADVISORY FEE: 0.80% - first $300 million; 0.76% - next $400 million; 0.72% -
remaining
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INDEX PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY) AND
SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
68
EQUITY FUNDS - CONTINUED
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C>
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND - CONTINUED
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
LARGE COMPANY GROWTH FUND
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
DIVERSIFIED SMALL CAP FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%.
</TABLE>
<PAGE>
69
EQUITY FUNDS - CONTINUED
[EQUITY FUNDS ICON]
<TABLE>
<S> <C> <C> <C>
DIVERSIFIED SMALL CAP FUND - CONTINUED
PORTFOLIOS: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: 0.95%
SMALL COMPANY STOCK FUND
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
SUBADVISER: CRESTONE
PORTFOLIO MANAGER: Kirk McCown, CFA (1993)
ADVISORY FEE: 0.90%
SMALL CAP OPPORTUNITIES FUND
PORTFOLIO: SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Ira L. Unschuld (1998)
ADVISORY FEE: 0.60%
SMALL COMPANY GROWTH FUND
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
INTERNATIONAL FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997), and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
70
PORTFOLIO MANAGERS
Norwest Portfolio Managers:
PATRICIA BURNS, associated with Norwest or its affiliates since 1983.
Ms. Burns is a Senior Vice-President of Peregrine and has been a
portfolio manager at Peregrine for more than ten years.
TASSO H. COIN, JR., associated with Norwest or its affiliates since
1995. Mr. Coin has been a Senior Vice President of Peregrine since
1995. From 1992 to 1995, Mr. Coin was a research officer at Lord Asset
Management.
JOHN S. DALE, associated with Norwest or its affiliates since 1968.
Mr. Dale is a Senior Vice President of Peregrine.
WILLIAM D. GIESE, associated with Norwest or its affiliates since
1982. Mr. Giese is a Senior Vice President of Peregrine, has been a
portfolio manager at Peregrine for more than ten years, and has more
than 20 years' experience in fixed income securities management.
MARJORIE H. GRACE, associated with Norwest or its affiliates since
1992. Ms. Grace is a Director, Taxable Fixed Income of Norwest.
PATRICIA D. HOVANETZ, associated with Norwest or its affiliates since
1966. Ms. Hovanetz is a Director-Tax-Exempt Fixed Income of Norwest
and has been associated with Norwest or Norwest Bank for more than 25
years in capacities related to municipal bond investments.
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr.
Huber has been a portfolio manager and Corporate Trading Specialist at
Galliard since 1995 and has been in investment management since 1990.
WILLIAM T. JACKSON, associated with Norwest or its affiliates since
1993. Mr. Jackson is a Managing Director, Tax-Exempt Fixed Income of
Norwest.
ROBERT G. LEUTY, associated with Norwest or its affiliates since 1992.
Mr. Leuty is a Senior Portfolio Manager of Norwest.
DAVID S. LUNT, associated with Norwest or its affiliates since 1992.
Mr. Lunt is a Managing Director, Equities of Norwest.
KIRK MCCOWN, associated with Norwest or its affiliates since 1990. Mr.
McCown is the founder, President and a Director of Crestone.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995.
Mr. Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was
previously Chief Investment Officer of Insight Investment Management.
<PAGE>
71
ROBERT B. MERSKY, associated with Norwest or its affiliates since
1968. Mr. Mersky is the President of Peregrine.
AJAY MIRZA, associated with Norwest or its affiliates since 1995. Mr.
Mirza has been a Portfolio Manager and Mortgage Specialist with
Galliard since 1995. Before joining Galliard, Mr. Mirza was a research
analyst at Insight Investment Management and at Lehman Brothers.
GARY E. NUSSBAUM, associated with Norwest or its affiliates since
1990. Mr. Nussbaum is a Senior Vice President of Peregrine.
DOUGLAS G. PUGH, associated with Norwest or its affiliates since 1997.
Mr. Pugh is a Senior Vice President of Peregrine. Before joining
Peregrine, Mr. Pugh was a senior equity analyst and portfolio manager
for Advantus Capital Management and an analyst with Kemper
Corporation.
DAVID L. ROBERTS, associated with Norwest or its affiliates since
1972. Mr. Roberts is a Managing Director, Equities of Norwest.
STEPHEN S. SMITH, associated with Norwest or its affiliates since
1997. Mr. Smith has been a Chief Investment Officer and principal of
the Smith Group since 1995. Mr. Smith previously served as senior
portfolio manager with NationsBank and in several capacities with AIM
Management Company's Summit Fund.
DAVID D. SYLVESTER, associated with Norwest or its affiliates since
1979. Mr. Sylvester currently is a Managing Director - Reserve Asset
Management.
KARL P. TOURVILLE, associated with Norwest or its affiliates since
1986. Mr. Tourville has been a managing partner of Galliard since
1995.
PAUL E. VON KUSTER, associated with Norwest or its affiliates since
1972. Mr. Von Kuster is a Senior Vice President of Peregrine.
LAURIE R. WHITE, associated with Norwest or its affiliates since 1991.
Ms. White is a Director-Reserve Asset Management.
[MANAGEMENT OF THE FUNDS TAB]
DAVID YIM, associated with Norwest or its affiliates since 1995. Mr.
Yim has been a portfolio manager and Director of Investment Research
of Galliard since 1995 and previously worked for American Express
Financial Advisors as a Research Analyst.
Schroder Portfolio Managers:
MARK BRIDGEMAN, associated with Schroder or its affiliates since 1990.
Mr. Bridgeman is a Vice President of Schroder.
HEATHER CRIGHTON, associated with Schroder or its affiliates since
1992. Ms. Crighton is a Vice President of Schroder.
MICHAEL PERELSTEIN, associated with Schroder or its affiliates since
1997. Mr. Perelstein has been a Senior Vice President of Schroder
since January 1997. Previously Mr. Perelstein was a Managing Director
at MacKay Shields.
<PAGE>
72
JOHN A. TROIANO, associated with Schroders or its affiliates since
1981. Mr. Troiana has been Chief Executive Officer of Schroder since
April 1, 1997 and a Managing Director of Schrodes since October 1995.
IRA L. UNSCHULD, associated with Schroders or its affiliates since
1987. Mr. Unschuld is a Group Vice President.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment
adviser to manage any assets redeemed and invested directly by a
Fund that invests in 1 or more Portfolios. Norwest does not
receive any compensation under this arrangement as long as a Fund
invests entirely in Portfolios. If a Fund redeems assets from a
Portfolio and invests them directly, Norwest receives an
investment advisory fee from the Fund for the management of those
assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial,
administrative, and underwriting services to the Funds. NORWEST
BANK acts as the Funds' transfer agent, dividend disbursing
agent, and custodian.
<PAGE>
73
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [SPREADSHEET]
- --------------------------------------------------------------------------------
You may purchase or redeem shares at a price equal to their net asset value
next determined after receipt of your purchase order, or redemption request
in proper form on "Fund Business Days." Fund Business Days are all weekdays
except generally observed national holidays (New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Funds' transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. I Shares and Investor Shares require a minimum initial investment
of $1,000 and a minimum subsequent investments of $100. Institutional
Shares require a minimum initial investment of $100,000 and have no minimum
for subsequent investments.
If you purchase Money Market Fund shares, your shares become eligible to
receive distributions on the day that your order is accepted. If you
purchase shares of any other Fund, your shares become eligible to receive
distributions the Fund Business Day after a purchase order is received in
proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares. You will receive share certificates for your shares only if you
request them in writing. No certificates are issued for fractional shares.
If you purchase Money Market Fund shares, your order will not be complete
until the Fund receives immediately available funds. The Money Market Funds
must receive purchase and redemption orders before the times indicated
below.
Times indicated are Eastern Time.
Payment
Orders Must Be Must Be
Received By Received By
------------ -----------
Cash Investment Fund 3:00 p.m. 4:00 p.m.
Ready Cash Investment Fund 3:00 p.m. 4:00 p.m.
U.S. Government Fund 2:00 p.m. 4:00 p.m.
Treasury Plus Fund 5:00 p.m. 5:00 p.m.
Treasury Fund 1:00 p.m. 4:00 p.m.
Municipal Money Market Fund Noon 4:00 p.m.
The Money Market Funds may advance the time by which purchase or redemption
orders and payments must be received on days that the New York Stock
Exchange or Minneapolis Federal Reserve Bank closes early, the Public
Securities Association recommends that the government securities markets
close early or other circumstances affect a Fund's trading hours.
[HOW TO BUY AND SELL SHARES TAB]
<PAGE>
74
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification number is
correct and that you are not subject to backup withholding. If you violate
certain federal income tax provisions, the Internal Revenue Service can
require the Funds to withhold 31% of your distributions and redemptions.
You must pay for your shares in U.S. dollars by check or money order drawn
on a U.S. bank, by bank or federal funds wire transfer, or by electronic
bank transfer. Cash cannot be accepted.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as addresses). Norwest Advantage Funds may in the future
modify, limit or terminate any shareholder privilege upon appropriate
notice and may charge a fee for certain shareholder services, although no
such fees are currently contemplated. You may terminate your participation
in any shareholder program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds at the address listed above. Checks
and money orders are accepted at full value subject to collection. Payment
by a check drawn on any member of the Federal Reserve System can normally
be converted into federal funds within 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent, or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds, or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan, or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
<PAGE>
75
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares at their net asset value on any Fund Business
Day. There is no minimum period of investment and no restriction on the
frequency of redemptions.
[HOW TO BUY AND SELL SHARES TAB]
Fund shares are redeemed as of the next determination of the Fund's net
asset value following receipt by the transfer agent of the redemption order
in proper form (and any supporting documentation that the transfer agent
may require). Redeemed Money Market Fund shares are not entitled to receive
distributions on the day on which the redemption is effective. Redeemed
shares of any other Fund are not entitled to receive distributions after
the day on which the redemption is effective.
Redemption orders for Money Market Fund shares are accepted up to the times
indicated above for acceptance of purchase orders of Money Market Fund
shares. As
<PAGE>
76
described above, the Money Market Funds may advance the times for receipt
of redemption orders.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days); (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers. Unless otherwise
indicated, redemption proceeds normally are paid by check mailed to your
record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations or other eligible
institutions. The specific institution must be acceptable to the transfer
agent. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
holding I Shares or Investor Shares with a net asset value of less than
$1,000 or any account holding Institutional Shares with a net asset value
of less than $100,000 immediately following any redemption.
<PAGE>
77
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signatures guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are transmitted by wire on the Fund Business Day of, in
the case of Money Market Funds, or after, in the case of other Funds, the
transfer agent receives a redemption request in proper form.
EXCHANGES
If you hold I Shares or Institutional Shares, you may exchange those shares
for I Shares or Institutional Shares of other Funds offering those shares.
If you hold Investor Shares, you may exchange those shares for Investor
Shares of the Funds offering Investor Shares or for a class of shares of
certain of the Funds that is not offered by this prospectus. Call or write
the transfer agent for more information.
[HOW TO BUY AND SELL SHARES TAB]
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees charged by, and the limitations (including minimum investment
restrictions) of the Fund into which you are exchanging.
<PAGE>
78
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a Fund only if that
Fund's shares legally may be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered and your Social Security number or other taxpayer identification
number.
<PAGE>
79
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [PC SCREENS]
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Distributions of net investment income are declared and paid as follows:
DECLARED DAILY AND PAID MONTHLY: Each Money Market Fund,
Limited Term Government
Income Fund, Income Fund,
Total Return Bond Fund,
and each Tax-Free Fixed
Income Fund.
DECLARED AND PAID MONTHLY: Stable Income Fund,
Intermediate Government
Income Fund, and
Diversified Bond Fund.
DECLARED AND PAID QUARTERLY: Income Equity Fund,
ValuGrowth Stock Fund,
and Small Company Stock
Fund.
DECLARED AND PAID ANNUALLY: Strategic Income Fund,
each Balanced Fund, Index
Fund, Diversified Equity
Fund, Growth Equity Fund,
Large Company Growth
Fund, Diversified Small
Cap Fund, Small Cap
Opportunities Fund, Small
Company Growth Fund, and
International Fund.
Each Fund's net capital gain, if any, is distributed at least
annually.
You have 3 choices for receiving distributions: the Reinvestment
Option, the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another
option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of
a Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another Fund. Call or write
the transfer agent for more information about the Directed
Dividend Option.
All distributions are treated in the same manner for federal income tax purposes
whether received in cash or reinvested in shares of a Fund. All distributions
reinvested in a Fund are reinvested at the Fund's net asset value as of the
payment date of the distribution.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
80
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions (other than distributions of net investment income of Funds
that distribute net investment income daily) reduce the net asset value of
the Fund paying the distribution by the amount of the distribution.
Furthermore, a distribution made shortly after you purchase shares,
although in effect a return of capital to you, is taxable.
FUNDS INVESTING IN FOREIGN SECURITIES
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. International
Fund intends, if eligible to do so, to permit its shareholders to take a
credit (or a deduction) for foreign income and other taxes paid by
International Portfolio and Schroder EM Core Portfolio. If you own shares
of International Fund, you will be notified of your share of those foreign
taxes and will be required to treat the amount of the foreign taxes as
additional income. In that event, you may be entitled to claim a credit or
deduction for those taxes on your federal income tax return.
TAX-EXEMPT DISTRIBUTIONS
Generally, you will not be subject to federal income tax on distributions
paid by Municipal Money Market Fund or by a Tax-Free Fixed Income Fund out
of tax-exempt interest income earned by the Fund ("exempt-interest
distributions"). If you use, or are related to someone who uses, facilities
financed by private activity bonds held by a Fund, you may be subject to
federal income tax on your pro rata share of the interest income from those
securities and should consult your tax adviser before purchasing shares.
Interest on certain private activity bonds is treated as an item of tax
preference for purposes of the federal AMT imposed on individuals and
corporations. In addition, exempt-interest distributions are included in
the "adjusted current earnings" of corporations for AMT purposes. As noted
above, the Municipal Money Market Fund and each Tax-Free Fixed Income Fund
may invest a portion of its assets in securities that generate income that
is not exempt from federal income tax. Further, capital gain, if any,
distributed by these Funds are subject to tax. If you borrow money to
purchase or carry shares of these Funds, the interest on your debt
generally is not deductible for federal income tax purposes. If shares are
sold at a loss after being held for six months or less, the loss will be
disallowed to the extent of any exempt-interest dividends received on those
shares.
<PAGE>
81
MUNICIPAL MONEY MARKET FUND, LIMITED-TERM TAX-FREE FUND, AND TAX-FREE
INCOME FUND. The federal income tax exemption on exempt-interest
distributions does not necessarily result in an exemption under the income
or other tax laws of any state or local taxing authority. You may be exempt
from state and local taxes on distributions of tax-exempt interest income
derived from obligations of the state and/or municipalities of the state in
which you reside. You may, however, be subject to tax on distributions of
interest derived from the Municipal Securities of other jurisdictions.
Consult your tax adviser concerning the application of state and local
taxes to investments in a Fund that may differ from the federal income tax
consequences described above.
COLORADO TAX-FREE FUND. It is anticipated that substantially all of the
exempt interest distributions paid by the Fund to individuals will be
exempt from Colorado personal income tax. Distributions made by the Fund to
Colorado individuals, trusts, estates, and corporations subject to the
Colorado income tax generally will be treated for Colorado income tax
purposes in the same manner as they are treated for federal income tax
purposes. Some differences may arise for taxpayers subject to the AMT
because interest on Colorado private activity bonds is not a preference
item for Colorado income tax purposes. Furthermore, Colorado has no
corporate AMT. Because the Fund may, except as indicated, purchase only
Colorado Municipal Securities, none of the exempt-interest distributions
paid by the Fund will be subject to Colorado income tax.
MINNESOTA INTERMEDIATE TAX-FREE FUND and MINNESOTA TAX-FREE FUND. It is
anticipated that substantially all of the exempt-interest distributions
paid by the Fund to individuals will be exempt from Minnesota personal
income tax. Interest earned on Minnesota Municipal Securities is generally
excluded from gross income for Minnesota state income tax purposes, while
interest earned on securities issued by municipal issuers from other states
is not excluded. At least 95% of the exempt-interest distributions paid by
the Fund must be derived from Minnesota Municipal Securities in order for
any portion of the exempt-interest distributions paid by the Fund to be
exempt from the Minnesota personal income tax. Exempt-interest
distributions paid by the Fund to shareholders that are corporations are
subject to Minnesota franchise tax.
Under Minnesota law, if the difference in state income tax treatment
between Minnesota Municipal Securities and the Municipal Securities of
issuers in other states should be judicially determined to discriminate
against interstate commerce, the Minnesota legislature has expressed its
intention that the discrimination be remedied by adding interest on
Minnesota Municipal Securities to the taxable income of Minnesota
residents. This treatment would begin with the taxable years that begin
during the calendar year in which the court's decision is final. If the
interest on Minnesota Municipal Securities is determined in general to be
taxable income for Minnesota income tax, the Fund will consider what
actions are to be taken in light of its current investment objectives and
investment policies.
The Minnesota AMT on resident individuals is based in part on their income
for purposes of the federal AMT. Accordingly, individual shareholders of
the Fund may be subject to the Minnesota AMT on exempt-interest
distributions paid by the Fund which are attributable to interest received
by the Fund on certain private activity securities, even though those
distributions are exempt from the regular Minnesota personal income tax.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
82
- --------------------------------------------------------------------------------
OTHER INFORMATION [SPREADSHEET]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines its net asset value on each Fund Business Day by
dividing the value of its net assets (i.e,. the value of its securities and
other assets less its liabilities) by the number of shares outstanding at
the time the determination is made. The Funds determine their net asset
values at the following times:
TIME
- --------------------------------------------------------------------------------
Treasury Fund and Municipal Money Market Fund Noon, Eastern Time
Cash Investment Fund, Ready Cash Investment
Fund and U.S. Government Fund 3:00 p.m., Eastern Time
Each Other Fund 4:00 p.m., Eastern Time
Treasury Plus Fund 5:00 p.m., Eastern Time
All Funds other than Money Market Funds value portfolio securities at
current market value if market quotations are readily available. If market
quotations are not readily available, the Funds value those securities at
fair value as determined by or pursuant to procedures adopted by the Board.
In order to maintain net asset value per share at $1.00, the Money Market
Funds (and the Portfolios in which they invest) value their portfolio
securities at amortized cost. Amortized cost valuation involves valuing an
instrument at its cost and then assuming a constant amortization to
maturity of any discount or premium. If the market value of a Money Market
Fund's portfolio deviates more than 1/2 of 1% from the value determined on
the basis of amortized cost, the Board will consider whether to take any
action to prevent any material effect on shareholders.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies into U.S. dollars at the
mean of the bid and asked prices of such currencies against the U.S. dollar
last quoted by a major bank prior to the time of conversion.
<PAGE>
83
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund
bears its pro rata portion of the expenses of any Portfolio in which it
invests. The Board may redeem a Fund's investment in a Portfolio at any
time. The Fund could then invest directly in portfolio securities or could
re-invest in 1 or more different Portfolios that could have different fees
and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFER MAY NOT LAWFULLY BE MADE.
[OTHER INFORMATION TAB]
<PAGE>
84
If you would like more information about the Funds and their investments, you
may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about each of the Funds,
such as its investments, management, and organization. It is incorporated into
this Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, each Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479 or by calling
1-800-338-1348 or 1-612-667-8833.
The Funds' reports and SAI are available from the Securities and Exchange
Commission in Washington, D.C. You may obtain copies of these documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington D.C. 20549-6009. Please call 1-800-SEC-0330 for information
about the operation of the SEC's public reference room. The Fund's reports and
other information are also available on the SEC's Web site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
______________________
PERFORMA FUNDS
_________________________________________
PERFORMA STRATEGIC VALUE BOND FUND
PERFORMA DISCIPLINED GROWTH FUND
PERFORMA SMALL CAP VALUE FUND
PERFORMA GLOBAL GROWTH FUND
__________________________________________
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998
THE PERFORMA FUNDS
PERFORMA STRATEGIC VALUE BOND FUND
PERFORMA DISCIPLINED GROWTH FUND
PERFORMA SMALL CAP VALUE FUND
PERFORMA GLOBAL GROWTH FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE SECURITIES AND EXCHANGE COMMISSION, HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS [OVER PCS, SPREADSHEETS AND PEOPLE]
OVERVIEW......................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS..........................6
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY......................................7
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES............8
[INVESTMENT OBJECTIVES AND POLICY TAB]
[RISK ICON]
RISK CONSIDERATIONS..........................12
[RISK CONSIDERATIONS TAB]
COMMON POLICIES..............................14
[COMMON POLICIES TAB]
. MANAGEMENT OF THE FUNDS.....................15
[MANAGEMENT OF THE FUNDS TAB]
HOW TO BUY AND SELL SHARES...................19
[HOW TO BUY AND SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS................21
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION.............................22
[OTHER INFORMATION TAB]
<PAGE>
2
- --------------------------------------------------------------------------------
OVERVIEW [SPREADSHEET]
- --------------------------------------------------------------------------------
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE INVESTING, YOU
SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS UNDER INVESTMENT
OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN SERVE
AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
- --------------------------------------------------------------------------------
THE FUNDS AT A GLANCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY
INVESTMENT
PERFORMA STRATEGIC VALUE Total return by investing Broad spectrum of
BOND FUND primarily in income investment grade securities.
producing securities.
PERFORMA DISCIPLINED Capital appreciation by Stock of companies that
GROWTH FUND investing primarily in appear to possess above
common stock of larger average potential for growth.
companies.
PERFORMA SMALL CAP VALUE Capital appreciation by Stock of smaller companies
FUND investing primarily in that appear undervalued.
common stocks of smaller
companies.
PERFORMA GLOBAL GROWTH Long-term capital Stocks of companies located
FUND appreciation by investing in developed, newly
primarily in commmon stocks industrialized, and emerging
of established companies markets.
throughout the world,
including the United States.
</TABLE>
- --------------------------------------------------------------------------------
FUND STRUCTURES
- --------------------------------------------------------------------------------
Instead of investing directly in a portfolio of securities, each Fund invests in
1 or more other funds identified in this prospectus as a Portfolio. The
Portfolios do not offer their shares to the public. Except when necessary to
describe a Fund's investment in a Portfolio, this prospectus discusses a Fund's
investments in a Portfolio as if the investments were made directly in portfolio
securities.
<PAGE>
3
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
[OVERVIEW TAB]
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and Portfolios except Schroder Global Growth
Portfolio. Norwest, a subsidiary of Norwest Bank Minnesota, N.A. or Norwest
Bank, provides investment advice to institutions, pension plans, and other
accounts and currently manages more than $29 billion in assets.
SCHRODER CAPITAL MANAGEMENT INC. or SCHRODER is the investment adviser for
Schroder Global Growth Portfolio. Schroder specializes in providing
international investment advice. Investment subadvisers make investment
decisions for the other Portfolios under Norwest's general supervision.
This prospectus generally refers to Norwest or a subadviser as an Adviser.
The FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
You may purchase or redeem shares without sales or other charges. The Funds
require a minimum initial investment of $1,000 and minimum subsequent
investments of $100.
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each Fund distributes to shareholders its net capital gain, if any, at
least annually. THE DISTRIBUTIONS AND TAX MATTERS section discusses how
often the Funds distribute net investment income.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets in which the Fund
invests, the investments that the Fund makes, and prevailing economic
conditions over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
If you invest in Performa Strategic Value Bond Fund, the investment income
you receive from the Fund will vary with changes in interest rates. In
addition, the value of the Fund's investments generally will fall when
interest rates rise and rise when interest rates fall. When interest rates
fall, there is a risk that issuers will prepay fixed rate securities,
forcing the Fund to invest in securities with lower interest rates than the
prepaid securities.
<PAGE>
4
A decline in interest rates also may result in losses in the Fund's
mortgage- and other asset-backed securities' values and a reduction in
their yields as the holders of the assets backing the securities prepay
their debts. Rising interest rates may cause the average maturity of the
Fund to rise due to a drop in prepayments. A rise in average maturity
increases the Fund's sensitivity to rising interest rates and potential for
losses in value.
The Fund also is subject to "credit risk," which is the risk that an issuer
will be unable, or will be perceived to be unable, to pay the interest or
principal on its obligations when due. The Fund seeks to limit its credit
risk by investing primarily in debt securities that are highly rated by a
nationally recognized statistical rating organization. The Fund's
investments in securities that are not highly rated are subject to more
credit risk.
Performa Disciplined Growth Fund, Performa Small Cap Value Fund, and
Performa Global Growth Fund are subject to "market risk," which is the
general risk that the value of a Fund's investments may decline if the
stock markets perform poorly. There also is a risk that a Fund's
investments will underperform either the securities markets generally or
particular segments of the securities markets.
Performa Small Cap Value Fund and Performa Global Growth Fund have
additional risks because they invest in smaller and foreign issuers,
respectively. Investments in smaller issuers are subject to greater changes
in value because securities of smaller issuers may not trade as often or be
as widely owned as the securities of larger issuers. Investments in foreign
issuers are subject to the risks of foreign political and economic
instability and changes in foreign currency exchange rates. Foreign
investments also are subject to government actions, including exchange
controls and limits on repayments of foreign investments. Foreign
governments may nationalize, tax or confiscate investors' assets.
- --------------------------------------------------------------------------------
EXPENSES OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The following table will assist you in understanding the expenses that you
will bear directly or indirectly when you invest in a Fund. The Funds do
not impose transaction charges for purchasing, redeeming or exchanging
shares. The Funds do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C> <C> <C>
INVESTMENT OTHER TOTAL FUND
ADVISORY EXPENSES OPERATING
FEES (after fee waivers EXPENSES
(after fee waivers) and expense
reimbursement)
------------------- ------------ ---------
Performa Strategic Value Bond Fund 0.50% 0.35% 0.85%
Performa Disciplined Growth Fund 0.90% 0.35% 1.25%
Performa Small Cap Value Fund 0.95% 0.35% 1.30%
Performa Global Growth Fund 0.00% 1.45% 1.45%
</TABLE>
EACH FUND BEARS ITS PRO RATA PORTION OF THE EXPENSES OF THE PORTFOLIO IN WHICH
IT INVESTS. INVESTMENT ADVISORY FEES ARE THOSE INCURRED BY THE PORTFOLIOS.
ABSENT WAIVERS, INVESTMENT ADVISORY FEES FOR PERFORMA GLOBAL GROWTH FUND WOULD
BE 0.50%. OTHER EXPENSES REFLECT EXPENSE REIMBURSEMENTS. ABSENT EXPENSE
REIMBURSEMENTS AND FEE WAIVERS, OTHER EXPENSES AND TOTAL OPERATING EXPENSES
WOULD BE: PERFORMA STRATEGIC VALUE BOND FUND 1.49% AND 1.99%, PERFORMA
DISCIPLINED GROWTH FUND 1.59% AND 2.49%, PERFORMA SMALL CAP VALUE FUND 2.64% AND
3.59% AND PERFORMA GLOBAL GROWTH FUND 15.23% AND 15.73%. EXPENSE REIMBURSEMENTS
ARE VOLUNTARY AND MAY BE REDUCED OR ELIMINATED AT ANY TIME.
<PAGE>
5
EXAMPLE
[OVERVIEW TAB]
The following hypothetical example indicates the dollar amount of expenses you
would pay, assuming a $1,000 investment in a Fund's shares, the expenses listed
in Annual Fund Operating Expenses table, a 5% annual return and reinvestment of
all distributions. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN IN
THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Performa Strategic Value Bond Fund $9 $27 $47 $105
Performa Disciplined Growth Fund $13 $40 $69 $151
Performa Small Cap Value Fund $13 $41 $71 $157
Performa Global Growth Fund $15 $46 $79 $174
</TABLE>
<PAGE>
6
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS [MAP]
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the Fund's operating history. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
a Fund, assuming reinvestment of all distributions. The information has been
audited by KPMG Peat Marwick LLP, independent auditors, whose report dated July
21, 1998 about a Fund, along with the Fund's financial statements, are included
in the Fund's Annual Report, which is available at no charge upon request. These
financial statements are incorporated by reference into the SAI.
<TABLE>
<S> <C> <C> <C> <C>
PERFORMA PERFORMA PERFORMA PERFORMA
STRATEGIC DISCIPLINED SMALL CAP GLOBAL GROWTH
VALUE BOND GROWTH FUND VALUE FUND FUND
FUND
-------------------------------------------------------------------------
Period Ended May 31, 1998
------------------------------------------------------------------------
Net Asset Value, Beginning of Period(a) $10.00 $10.00 $10.00 $10.00
Investment Operations
Net Investment Income (Loss) 0.34 0.01 (0.01) 0.03
Net Realized and Unrealized Gain (Loss) on 0.27 0.44 0.17 0.60
---- ---- ---- ----
Investments
Total from Investment Operations 0.61 0.45 0.16 0.63
---- ---- ---- ----
Distributions From:
Net Investment Income (0.33) (0.01) -- --
Net Asset Value, End of Period $10.28 $10.44 $10.16 $10.63
Total Return 6.20% 4.50% 1.60% 6.30%
Supplementary Data:
Net Assets at End of Period (000's omitted) $9,168 $12,325 $6,422 $1,066
Ratios to Average Net Assets (b)(c):
Net Investment Income (loss) 5.82% 0.14% (0.56)% 0.68%
Net Expenses 0.85% 1.25% 1.30% 1.45%
(Expenses excluding reimbursement/waiver of 1.95% 2.44% 3.54% 9.82%
fees)
Average Commission Rate Per Share(d) N/A $0.0553 $0.0556 $0.0355
Portfolio Turnover Rate(e) 134.56% 68.08% 79.43% 13.82%
- --------------------------------------------------------------------------------
</TABLE>
(a) The Funds commenced operations on October 15, 1997.
(b) Annualized.
(c) Includes expenses allocated from the Portfolio in which the Fund invests.
(d) Represents the average commission per share paid to brokers on the purchase
or sale of portfolio securities of the Portfolio in which the Fund invests.
(e) Represents the activity of the Portfolio in which the Fund invests.
<PAGE>
7
- --------------------------------------------------------------------------------
GLOSSARY [MAP]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[FINANCIAL HIGHLIGHTS TAB]
[GLOSSARY TAB]
Term Definition
- ---- ----------
BOARD The Board of Trustees of Norwest Advantage
Funds.
DURATION A measure of a debt security's average life
that reflects the present value of the
security's cash flow. Prices of securities
with longer durations generally are more
volatile.
FUNDAMENTAL Requiring shareholder approval to change.
MARKET CAPITALIZATION The total market value of a company's
outstanding common stock.
NRSRO A nationally recognized statistical rating
organization, such as S&P, that rates fixed-
income securities and preferred stock by
relative credit risk.
NON-INVESTMENT Grade Neither rated at the time of purchase
in 1 of the 4 highest long-term or 2 highest
short-term ratings categories by an NRSRO
nor unrated and determined by the Adviser to
be of comparable quality.
RUSSELL 2000(R)INDEX A broad-based index of smaller
capitalization companies.
S&P Standard & Poor's Corporation.
S&P 500 INDEX Standard & Poor's 500 Composite Stock
Price Index, an index of large
capitalization companies.
SAI State of Additional Information.
SEC The U.S. Securities and Exchange Commission.
U.S. GOVERNMENT SECURITY A security issued or guaranteed as to
principal and interest by the U.S.
Government, its agencies or its
instrumentalities.
<PAGE>
8
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [MAP]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds.
After each Fund's description, there is a short, alphabetical listing of the
Fund's primary risks. The RISK CONSIDERATIONS section discusses these risks.
PERFORMA STRATEGIC VALUE BOND FUND
[OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek total
return by investing primarily in income producing securities.
INVESTMENT POLICIES. The Fund invests in a broad range of fixed-income
instruments in order to create a strategically diversified portfolio of
fixed-income investments. These investments include corporate bonds,
mortgage- and other asset-backed securities, U.S. Government Securities,
preferred stock, convertible bonds, and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Fund seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current-versus-historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Fund's objective and purchases those securities that
are consistent with the Fund's investment objective.
The Fund particularly seeks strategic diversification. The Fund will not
invest more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate
market.
The Fund may invest in U.S. Government Securities without restriction. The
Fund generally will not invest more than 5% of its total assets in the
corporate bonds of any single issuer.
<PAGE>
9
The Fund will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the 3 highest rating categories
assigned by at least 1 NRSRO, or which are unrated and determined by the
Adviser to be of comparable quality. The Fund may invest up to 20% of its
total assets in Non-Investment Grade securities.
The average maturity of the Fund will vary between 5 and 15 years. In the
case of mortgage-backed and similar securities, the Fund uses the
security's average life in calculating the Fund's average maturity. The
Fund's Duration normally will vary between 3 and 8 years.
The Fund may use options, swap agreements, interest rate caps, floors, and
collars and futures contracts to manage risk. The Fund also may use options
to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
[INVESTMENT OBJECTIVES AND POLICIES TAB]
PERFORMA DISCIPLINED GROWTH FUND
[OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek capital
appreciation by investing primarily in common stocks of larger companies.
INVESTMENT POLICIES. The Fund seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Fund invests in
companies with average Market Capitalizations greater than $5 billion.
The Fund seeks to identify growth companies that will report a level of
corporate earnings that exceed the level expected by investors. In seeking
these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider, among other factors, changes of
earnings estimates by investment analysts, the recent trend of company
earnings reports, and an analysis of the fundamental business outlook for
the company. The Adviser uses a variety of valuation measures to determine
whether or not the share price already reflects any positive fundamentals
identified by the Adviser. In addition to approximately equal weighting of
portfolio securities, the Adviser attempts to constrain the variability of
the investment returns by employing risk control screens for price
volatility, financial quality, and valuation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk
<PAGE>
10
PERFORMA SMALL CAP VALUE FUND
[OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek capital
appreciation by investing primarily in common stocks of smaller companies.
INVESTMENT POLICIES. The Fund seeks capital appreciation by investing in
common stocks of smaller companies. The Fund will normally invest
substantially all of its assets in securities of companies with Market
Capitalizations that reflect the Market Capitalization of companies
included in the Russell 2000 Index, which range from approximately $220
million to approximately $1.4 billion.
The Fund seeks higher growth rates and greater long-term returns by
investing primarily in the common stock of smaller companies that the
Adviser believes to be undervalued and likely to report a level of
corporate earnings exceeding the level expected by investors. The Adviser
values companies based upon both the price-to-earnings ratio of the company
and a comparison of the public market value of the company to a proprietary
model that values the company in the private market. In seeking companies
that will report a level of earnings exceeding that expected by investors,
the Adviser uses both quantitative and fundamental analysis. Among other
factors, the Adviser considers changes of earnings estimates by investment
analysts, the recent trend of company earnings reports, and the fundamental
business outlook for the company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
PERFORMA GLOBAL GROWTH FUND
[OBJECTIVE ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek long-term
growth of capital by investing primarily in common stocks of established
companies throughout the world, including the United States.
INVESTMENT POLICIES. The Fund invests in common stocks of companies located
in developed, newly industrialized, and emerging markets. The Fund normally
invests at least 65% of its total assets in equity securities of companies
located in at least four countries plus the United States. The Fund may
invest in companies of any size, but generally is concentrated in companies
that are large and, to a lesser extent, medium-sized for the particular
market.
<PAGE>
11
The Adviser's investment process emphasizes stock selection and a
fundamental company analysis. The Adviser seeks companies that it believes
have a sustainable competitive advantage and a potential for growth that is
generally undervalued by other investors. The Adviser considers historical
growth rates and future growth prospects, management capability,
competitive position in both domestic and export markets, and other
factors.
The Adviser seeks to add value by allocating the Fund's investments
geographically. The Adviser selects countries it believes have a favorable
long-term business environment in which adverse macroeconomic or political
conditions are not likely to materially impede corporate growth. The Fund
may invest more than 25% of its total assets in issuers located in a single
country.
The Fund may seek capital appreciation by investing in convertible or
non-convertible debt securities. The Fund may invest in debt securities
issued by corporations or financial institutions. The Fund also may invest
in debt securities issued or guaranteed by international organizations that
promote economic reconstruction or development.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
When selecting debt securities, the Adviser considers favorable changes in
relative foreign exchange rates, relative interest rate levels, or the
creditworthiness of issuers. The Adviser seeks income only incidentally to
seeking capital appreciation. The Fund may invest in debt securities in
order to participate in debt-to-equity conversion programs that are part of
corporate reorganizations.
The Fund may enter into foreign currency forward contracts to purchase or
sell foreign currencies in anticipation of its currency requirements and to
protect against possible adverse movements in foreign exchange rates.
The Fund may use various derivative instruments including instruments such
as options, swap agreements, interest rate caps, floors and collars, and
futures contracts to manage risk or enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
12
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [MAP]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds.
Each Fund's exposure to these risks depends upon its specific investment
profile. The Fund's description in Investment Objectives and Policies lists
the Fund's principal risks.
- --------------------------------------------------------------------------------
CREDIT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
- --------------------------------------------------------------------------------
CURRENCY RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments. This
risk may be greater for investments in emerging or developing markets.
- --------------------------------------------------------------------------------
FOREIGN RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation, or confiscation of investors' assets. This risk may be greater for
investments in issuers in emerging or developing markets. Also, the risk that
the price of a foreign issuer's securities may not reflect the issuer's
condition because there is not sufficient publicly available information about
the issues.
- --------------------------------------------------------------------------------
GEOGRAPHIC CONCENTRATION RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
- --------------------------------------------------------------------------------
INTEREST RATE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a
Fund's fixed-rate securities to fall, while a decline in interest rates may
produce an increase in the market value of the securities. Because of this
risk, an investment in a Fund that invests in fixed income securities is
subject to risk even if all the fixed income securities in the Fund's
portfolio are paid in full at maturity. Changes in interest rates will
affect the value of longer-term fixed income securities more than
shorter-term securities.
<PAGE>
13
- --------------------------------------------------------------------------------
LEVERAGE RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
- --------------------------------------------------------------------------------
MARKET RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry, or section of the economy or may affect the market
as a whole.
- --------------------------------------------------------------------------------
PREPAYMENT RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
[RISK CONSIDERATIONS TAB]
- --------------------------------------------------------------------------------
SMALL COMPANY RISK
- --------------------------------------------------------------------------------
[RISK ICON]
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
14
- --------------------------------------------------------------------------------
COMMON POLICIES [MAP]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Funds' investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
- --------------------------------------------------------------------------------
VOTING ISSUES
- --------------------------------------------------------------------------------
In determining the outcome of shareholder votes, the Funds and the other
funds in the Funds' fund complex normally count votes on a share-by-share
basis. This means that shareholders of funds in the fund complex with
comparatively high net asset values will have a comparatively smaller
impact on the outcome of votes by all of the funds in the fund complex than
do shareholders of funds with comparatively low net asset values.
- --------------------------------------------------------------------------------
DOWNGRADED SECURITIES
- --------------------------------------------------------------------------------
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's Adviser
determines that retaining the security is in the best interests of the
Fund. Because a downgrade often results in a reduction in the market price
of the security, sale of a downgraded security may result in a loss.
- --------------------------------------------------------------------------------
TEMPORARY DEFENSIVE POSITION
- --------------------------------------------------------------------------------
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
From time to time, a Fund may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues,
or markets. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. The FINANCIAL HIGHLIGHTS table lists the Funds' portfolio turnover
rate.
- --------------------------------------------------------------------------------
YEAR 2000 AND EURO
- --------------------------------------------------------------------------------
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
<PAGE>
15
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [MAP]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio except Schroder Global Growth Portfolio. In this
capacity, Norwest makes investment decisions for and administers the Funds'
and Portfolios' investment programs. Norwest Investment Management, Inc.'s
address is Norwest Center, Sixth Street and Marquette, Minneapolis, MN
55479.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. is the investment adviser
for Schroder Global Growth Portfolio. In this capacity, Schroder makes
investment decisions for and administers that Portfolio's investment
program. Schroder Capital Management International Inc.'s address is 787
Seventh Avenue 34th Floor, New York, NY 10019.
Norwest and certain of the Portfolios have retained investment subadvisers
to make investment decisions for and administer the investment programs of
those Funds and Portfolios. Norwest decides which portion of the assets of
a Portfolio the subadviser should manage and supervises the subadvisers'
performance of their duties. The subadvisers are:
GALLIARD CAPITAL MANAGEMENT, INC. or GALLIARD, an investment advisory
subsidiary of Norwest Band, provides investment advisory services to bank
and thrift institutions, pension and profit sharing plans, trusts and
charitable organizations, and corporate and other business entities.
Gaillard Capital Management, Inc.'s address is 800 Lasalle Ave. Suite 2060,
Minneapolis, MN 55479.
SMITH ASSET MANAGEMENT GROUP, L.P. OR SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies, and
high net worth individuals using a disciplined equity style. Smith Asset
Management Group's address is 300 Crescent Court, Suite 750, Dallas, TX
75201
[COMMON POLICIES TAB]
[MANAGEMENT OF THE FUNDS TAB]
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments. The
year a portfolio manager began managing a Fund's portfolio follows the
manager's name in parenthesis. The list includes the investment advisory
fees payable to Norwest or Schroder by the Portfolios. The list states the
investment advisory fees on an annualized basis as a percentage of a
Portfolio's average daily net assets. Descriptions of the portfolio
managers' recent experience follow the list of portfolio managers and
advisory fees.
Norwest (and not the Funds or Portfolios) pays the subadvisers' investment
subadvisory fees. The investment subadvisory fees do not increase the
amount of the investment advisory fees paid to Norwest by the Portfolios.
<PAGE>
16
PERFORMA STRATEGIC VALUE BOND FUND
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998),
and David Yim (1998).
ADVISORY FEE: 0.50%
PERFORMA DISCIPLINED GROWTH FUND
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997).
ADVISORY FEE: 0.90%
PERFORMA SMALL CAP VALUE FUND
PORTFOLIO: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997).
ADVISORY FEE: 0.95%
PERFORMA GLOBAL GROWTH FUND
PORTFOLIO: SCHRODER GLOBAL GROWTH PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: Michael Perelstein (1997) and Paul Morris (1997).
ADVISORY FEE: 0.50%
PORTFOLIO MANAGERS
Norwest Portfolio Managers:
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr. Huber
has been a Portfolio Manager and Director of Trading at Galliard since 1995
and has been in investment management since 1990.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was previously
Chief Investment Officer of Insight Investment Management.
STEPHEN S. SMITH, associated with Norwest or its affiliates since 1997. Mr.
Smith has been a Chief Investment Officer and principal of the Smith Group
since 1995. Mr. Smith previously served as senior portfolio manager with
NationsBank and in several capacities with AIM Management Company's Summit
Fund.
DAVID YIM, associated with Norwest or its affiliates since 1995. Mr. Yim
has been a Portfolio Manager and Director of Investment Research of
Galliard since 1995 and previously worked for American Express Financial
Advisors as a Research Analyst.
<PAGE>
17
SCHRODER PORTFOLIO MANAGERS:
PAUL MORRIS, associated with Norwest or its affiliates since 1997. Mr.
Morris has been a Senior Vice President of Schroder Capital Management
International and a Director of Schroder since 1997. Prior to joining
Schroder, Mr. Morris was Principal and Senior Portfolio Manager at Weiss
Peck & Greer, L.L.C., Managing Director (Equity Division) of UBS Asset
Management and an Equity Portfolio Manager at Chase Investors Management
Group.
MICHAEL PERELSTEIN, associated with Norwest or its affiliates since 1997.
Mr. Perelstein has been a Senior Vice President of Schroder since January
1997. Previously Mr. Perelstein was a Managing Director at MacKay Shields.
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund. Norwest does
not receive any compensation under this arrangement as long as a Fund
invests entirely in a Portfolio. If a Fund redeems assets from a Portfolio
and invests them directly, Norwest receives an investment advisory fee from
the Fund for the management of those assets.
OTHER FUND SERVICES
The Forum Financial Group of companies provide managerial, administrative,
and underwriting services to the Funds. Norwest Bank acts as the Funds'
transfer agent, dividend disbursing agent, and custodian.
BACKGROUND OF SMITH GROUP PERFORMANCE
[MANAGEMENT OF THE FUNDS TAB]
The table below sets forth composite performance data for the dates
indicated relating to the historical performance of certain separate
accounts and mutual fund portfolios primarily managed by Stephen Smith, the
portfolio manager of Disciplined Growth Portfolio and Small Cap Value
Portfolio. The data illustrate the past performance of Mr. Smith in
managing substantially similar accounts as measured against specified
market indices. It does not represent the performance of the Portfolios.
This performance data is not an indication of future performance of the
Portfolios, the Smith Group or Mr. Smith.
Mr. Smith's composites include all actual, fee-paying, discretionary
institutional private accounts and mutual fund portfolios managed by Mr.
Smith that have substantially the same investment objectives and policies.
Mr. Smith's composite performance was calculated on a total return basis
and includes all dividends and interest, accrued income, and realized and
unrealized gain and loss. The data accounts for securities transactions on
the trade date and uses accrual accounting.
All returns reflect the deduction of the highest effective investment
advisory fees, brokerage commissions, and execution costs paid by the
Adviser's private accounts, without provision for federal or state income
taxes. Returns include returns from cash
<PAGE>
18
and cash equivalents. Account fees vary depending on, among other things,
the applicable fee schedule, portfolio size and nature of the account.
Custodial fees, if any, were not included in the calculation. A schedule of
Mr. Smith's fees is available on request.
The monthly returns of Mr. Smith's composites combine the individual
accounts' returns (calculated on a time-weighted rate of return) by
asset-weighing each individual account's asset value as of the beginning of
the month. Quarterly and yearly returns are calculated by geometrically
linking the monthly and quarterly returns, respectively.
The institutional private accounts included in Mr. Smith's composites are
not subject to certain investment limitations, diversification
requirements, specific tax restrictions, and investment limitations imposed
on the Portfolios by the Investment Company Act of 1940 or the Internal
Revenue Code. The performance results could have been adversely affected if
the institutional private accounts included in the composite had been
regulated as investment companies.
The composites are unaudited and do not represent the past performance of
nor predict the future returns of the Portfolios or an individual investor
investing in Performa Disciplined Growth Fund or Performa Small Cap Value
Fund. The use of a methodology different from that used to calculate the
performance could result in different performance data.
<TABLE>
<S> <C> <C>
MR. SMITH'S COMPOSITE FOR THE
DISCIPLINED GROWTH STYLE(2) S&P 500 INDEX(3)
- --------------------------------------------------------------------------------------------------------
1995 38.05% 37.54%
1996 31.26% 22.99%
1997 39.20% 33.34%
1998 to Date(1) (6.06)% (0.38)%
1 Year(1) (2.36)% 8.09%
3 Years(1) 21.38% 21.72%
Since Inception 1/1/95(1) 28.52% 24.66%
MR. SMITH'S COMPOSITE FOR THE
SMALL CAP VALUE STYLE RUSSELL 2000(4)
- --------------------------------------------------------------------------------------------------------
1997 22.38% 22.36%
1998 Year to date (1) (18.84)% (22.07)%
1 Year (19.55)% (19.22)%
Since Inception 11/1/96(1) 5.64% 0.93%
</TABLE>
(1) Average annual return through August 31, 1998. Return for less than one
year is not annualized.
(2) The composite returns consist of the total returns for the period January
1995 through August 31, 1998 of accounts for which Stephen S. Smith, now
Chief Investment Officer of the Smith Group, served as the primary manager
as described above, including the period January 1, 1995 - October 31,
1995, during which Mr. Smith was senior portfolio manager for another firm.
The composite does not include the performance of other accounts not
managed similarly to the Portfolio. Since November 1, 1995, when the Smith
Group commenced operations, Mr. Smith has employed the same investment
style in discretionary private accounts as he employed in the accounts
described above. No other person played a significant part in achieving the
prior performance of these accounts during Mr. Smith's tenure. The data for
January 1, 1995 - October 31, 1995 is not, and should not be, construed as
the performance data of Smith Group.
(3) The S&P 500 Index is an unmanaged index containing common stocks of 500
industrial, transportation, utility, and financial companies, regarded as
generally representative of the U.S. stock market. The Index reflects the
reinvestment of income dividends and capital gain distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing.
(4) The Russell 2000 Index is an unmanaged index consisting of the securities
of the 2,000 issuers having the smallest capitalization in the Russell 3000
Index, representing approximately 10% of the Russell 3000 total market
capitalization. The Index reflects the reinvestment of income dividends and
capital gain distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
<PAGE>
19
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [GLOBE DESIGN WITH PEOPLE]
- --------------------------------------------------------------------------------
You may purchase Fund shares on "Fund Business Days" at a price equal to
their net asset value next determined after receipt of your purchase order
in proper form. Fund Business Days are all weekdays except generally
observed national holidays (New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving,
and Christmas) and Good Friday.
- --------------------------------------------------------------------------------
GENERAL PURCHASE INFORMATION
- --------------------------------------------------------------------------------
You may purchase shares only through certain financial institutions. The
Funds' transfer agent processes all transactions in Fund shares. Please
call 1-888-800-6748 for information about opening an account to purchase
Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. Purchases of Fund shares require a minimum initial investment of
$1,000 and minimum subsequent investments of $100. The Funds reserve the
right to reject any subscription for the purchase of shares, including
subscriptions by market timers.
Your shares may be held in your name or in the name of your financial
institution. Subject to your institution's procedures, you may have Fund
shares held in the name of your financial institution transferred into your
name. If your shares are held in the name of your financial institution,
you must contact the financial institution on matters involving your
shares. Your financial institution may charge you for purchasing, redeeming
or exchanging shares. The Funds are not responsible if your financial
institution fails to carry out its obligations to you. There is normally a
three-day settlement period for purchases and redemptions through
broker-dealers.
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification number is
correct and that you are not subject to backup withholding. If you violate
certain federal income tax provisions, the Internal Revenue Service can
require the Funds to withhold 31% of your distributions and redemptions.
- --------------------------------------------------------------------------------
GENERAL REDEMPTION INFORMATION
- --------------------------------------------------------------------------------
[HOW TO BUY AND SELL SHARES TAB]
You may redeem Fund shares at their net asset value on any Fund Business
Day. There is no minimum period of investment and no restriction on the
frequency of redemptions.
Fund shares are redeemed as of the next determination of the Fund's net
asset value following receipt by the transfer agent of the redemption order
in proper form (and any supporting documentation that the transfer agent
may require). Redeemed shares are not entitled to receive distributions
after the day on which the redemption is effective.
<PAGE>
20
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days); (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value; or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers.
Because of the cost of maintaining smaller accounts, the Performa Funds may
redeem, upon not less than 60 days' written notice, any account with a net
asset value of less than $1,000.
<PAGE>
21
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [GLOBE DESIGN WITH PEOPLE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions of net investment income are declared and paid monthly for
Performa Strategic Value Bond Fund and annually for the other Funds. Each
Fund distributes net capital gain, if any, at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option, and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a
Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another Fund. Call or write the
transfer agent for more information about the Directed Dividend
Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a Fund. All
distributions reinvested in a Fund are reinvested at the Fund's net asset
value as of the payment date of the distribution
- --------------------------------------------------------------------------------
TAX MATTERS
- --------------------------------------------------------------------------------
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions reduce the net asset value of the Fund paying the
distribution by the amount of the distribution. Furthermore, a distribution
made shortly after you purchase shares, although in effect a return of
capital to you, is taxable.
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. Performa
Global Growth Fund intends, if eligible to do so, to permit its
shareholders to take a credit (or a deduction) for foreign income and other
taxes paid by Schroder Global Growth Portfolio. If you own shares of
Performa Global Growth Fund, you will be notified of your share of those
foreign taxes and will be required to treat the amount of the foreign taxes
as additional income. In that event, you may be entitled to claim a credit
or deduction for those taxes on your federal income tax return.
[DISTRIBUTIONS AND TAX MATTERS TAB]
<PAGE>
22
- --------------------------------------------------------------------------------
OTHER INFORMATION [GLOBE DESIGN WITH PEOPLE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund determines its net asset value at 4:00 p.m., Eastern Time on each
Fund Business Day by dividing the value of its net assets (i.e.,. the value
of its securities and other assets less its liabilities) by the number of
shares outstanding at the time the determination is made.
The Funds value portfolio securities at current market value if market
quotations are readily available. If market quotations are not readily
available, the Funds value those securities at fair value as determined by
or pursuant to procedures adopted by the Board.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies into U.S. dollars at the
mean of the bid and asked prices of such currencies against the U.S. dollar
last quoted by a major bank prior to the time of conversion.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
- --------------------------------------------------------------------------------
Each Fund bears its pro rata portion of the expenses of the Portfolio in
which it invests. The Board may redeem a Fund's investment in a Portfolio
at any time. The Fund could then invest directly in portfolio securities or
could re-invest in 1 or more different Portfolios that could have different
fees and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE
STATEMENT OF ADDITIONAL INFORMATION, AND THE FUNDS' OFFICIAL SALES
LITERATURE. ANY SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY
NOT LAWFULLY BE MADE.
<PAGE>
23
If you would like more information about the Funds and their investments, you
may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such as
its investments, management, and organization. It is incorporated into this
Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about each Fund's
investments is available in its annual and semi-annual reports to shareholders.
In the annual report, each Fund's portfolio manager discusses the market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual report by
contacting your investment representative or by contacting Norwest Advantage
Funds at 733 Marquette Avenue, Minneapolis, Minnesota 55479, or by calling
1-800- 338-1348 or 1-612-667-8833.
The Funds' reports and statement of additional information are available from
the Securities and Exchange Commission in Washington, D.C. You may obtain copies
of these documents, upon payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington D.C. 20549-6009. Please call
1-800-SEC-0330 for information about the operation of the SEC's public reference
room. The Fund's reports and other information are also available on the SEC's
Web Site at http:// www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881
[OTHER INFORMATION TAB]
<PAGE>
<PAGE>
<PAGE>
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 NORWEST ADVANTAGE FUNDS
10/98 [LOGO]
