[COVER W/ PICTURE OF PEOPLE AT MEETING, COMPUTER SCREENS, BOOKS, AND FINANCIAL
TABLES]
______________________
PROSPECTUS
OCTOBER 1, 1998
AS AMENDED
MARCH 1, 1999
__________________
WELLS FARGO
& COMPANY
401(k) PLAN
__________________
INVESTMENT FUNDS
_______________________
STRATEGIC INCOME FUND
MODERATE BALANCED FUND
GROWTH BALANCED FUND
AGGRESSIVE BLAANCED-EQUITY FUND
DIVERSIFIED EQUITY FUND
LARGE COMPANY GROWTH FUND
DIVERSIFIED SMALL CAP FUND
[LOGO] NORWEST
- --------------------
ADVANTAGE FUNDS(R)
________________________________________________________________________________
|Mutual funds are NOT insured | May Lose Value | No Bank Guarantee.
|by the FDIC. Federal Reserve | |
|System, U.S. Government, or any | |
|government agency. | |
________________________________________|___________________|___________________
<PAGE>
PROSPECTUS
OCTOBER 1, 1998 AS AMENDED MARCH 1, 1999
This Prospectus describes the shares of certain Norwest Advantage mutual funds
offered to Wells Fargo & Company 401(k) Plan participants:
o 1 FIXED INCOME FUND - Strategic Income Fund.
o 3 BALANCED FUNDS - Moderate Balanced Fund Growth Balanced Fund, and
Aggressive Balanced-Equity Fund.
o 3 EQUITY FUNDS - Diversified Equity Fund, Large Company Growth Fund and
Diversified Small Cap 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.
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>
[PICTURES OF PEOPLE IN A MEETING]
<TABLE>
<S> <C> <C> <C>
TABLE OF CONTENTS
PAGE
OVERVIEW.....................................................2 [OVERVIEW TAB]
FINANCIAL HIGHLIGHTS.........................................8 [FINANCIAL
HIGHLIGHTS TAB]
GLOSSARY....................................................14 [GLOSSARY TAB]
[INVESTMENT
OBJECTIVE INVESTMENT OBJECTIVES AND POLICIES..........................15 [INVESTMENT
ICON] OBJECTS & POLICIES TAB]
[RISK RISK CONSIDERATIONS.........................................33 [RISK
ICON] CONSIDERATIONS TAB]
COMMON POLICIES.............................................35 [COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS ....................................37 [MANAGEMENT OF
FUNDS TAB]
HOW TO BUY AND SELL SHARES..................................47 [HOW TO BUY AND
SELL SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS...............................52 [DISTRIBUTIONS
AND TAX MATTERS TAB]
OTHER INFORMATION...........................................54 [OTHER INFORMATION TAB]
</TABLE>
<PAGE>
2
[PICUTRES OF SPEADSHEETS]
OVERVIEW
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE
INVESTING, YOU SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS
UNDER Investment Objectives and Policies AND Risk Considerations.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH
CAN SERVE AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
THE FUNDS AT A GLANCE
[BOND
ICON]
The FIXED INCOME FUND generally seeks a combination of current income and
capital appreciation.
<TABLE>
<S> <C> <C>
FUND OBJECTIVE PRIMARY INVESTMENTS
STRATEGIC INCOME FUND Combination of current income and 70%-90% fixed income investments
capital appreciation. 10%-30% equity investments.
[STOCK &
BOND ICON]
The BALANCED FUNDS generally seek a combination of current income and capital
appreciation.
FUND OBJECTIVE PRIMARY INVESTMENTS
MODERATE BALANCED FUND Combination of current income and 45%-75% fixed income investments
capital appreciation. 25%-55% equity investments.
GROWTH BALANCED FUND Combination of current income and 15%-55% fixed income investments
capital appreciation. 45%-85% equity investments.
AGGRESSIVE BALANCED-EQUITY FUND Combination of current income and 0%-40% fixed income investments
capital appreciation. 60%-100% equity investments.
<PAGE>
3
The EQUITY FUNDS generally seek growth of capital.
[OVERVIEW
TAB
FUND OBJECTIVE PRIMARY INVESTMENTS
[STOCK
ICON]
DIVERSIFIED EQUITY FUND Long-term capital appreciation Diversified investments in five
while moderating annual return different equity investment
volatility. styles.
LARGE COMPANY GROWTH FUND Long-term capital appreciation. Common stock of large
high-quality domestic companies
with superior growth potential.
DIVERSIFIED SMALL CAP FUND Long-term capital appreciation Diversified investments in five
while moderating annual return different small company equity
volatility. investment styles.
</TABLE>
CLASSES OF SHARES
All 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
The Funds invest in one 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 three 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 two Portfolios: Schroder EM Core Portfolio and
International Portfolio. Schroder specializes in providing
international investment advice.
WELLS FARGO BANK is the investment adviser for International Equity
Portfolio. In this capacity, Wells Fargo Bank makes investment
decisions for and administers the Portfolio's investment program.
INVESTMENT SUBADVISERS make investment decisions for certain Funds and
Portfolios under Norwest's general supervision. This prospectus
generally refers to Norwest, Schroder, Wells Fargo Bank, or a
subadviser as an Adviser.
<PAGE>
4
The FORUM FINANCIAL GROUP of companies provide management,
administrative, and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
The normal account minimums, sales and other charges are waived for
all Wells Fargo & Company 401(k) Plan participants.
EXCHANGES
If you own Fund shares, you may exchange them for shares of certain
other Funds.
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.
BALANCED FUNDS AND STRATEGIC INCOME FUND:
[STOCK &
BOND 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.
<PAGE>
5
[OVERVIEW
TAB]
[STOCK
ICON]
EQUITY FUNDS:
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 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. There
are no transaction charges for purchasing, redeeming, or exchanging
shares. The Funds do not have distribution expenses.
ANNUAL FUND OPERATING EXPENSES(1)(4) (as a percentage of average daily net
assets after applicable fee waivers and expense reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE FUNDS THE PORTFOLIOS
Investment Investment Total
Advisory Other Advisory Other Operating
Fees(2) Expenses Fees Expenses Expenses
Strategic Income Fund 0.09% 0.29% 0.36% 0.06% 0.80%(3)
Moderate Balanced Fund 0.12% 0.28% 0.41% 0.07% 0.88%(3)
Growth Balanced Fund 0.13% 0.29% 0.45% 0.06% 0.93%(3)
Aggressive Balanced-Equity Fund 0.00% 0.47% 0.46% 0.07% 1.00%
Diversified Equity Fund 0.16% 0.29% 0.49% 0.06% 1.00%(3)
Large Company Growth Fund N/A 0.33% 0.65% 0.02% 1.00%
Diversified Small Cap Fund 0.00% 0.27% 0.83% 0.10% 1.20%
</TABLE>
(1) Each Fund bears its pro rata portion of the expenses of any Portfolio
in which it invests.
(2) For Strategic Income Fund, each Balanced Fund, Diversified Equity Fund
and Diversified Small Cap Fund, Funds - Investment Advisory Fees
reflect an asset allocation fee, which absent fee waivers, would be
0.25%.
(3) Norwest and the Fund's administrator have agreed to waive their fees
through May 31, 1999, to ensure that the investment advisory,
administrative, and management services fees borne by Strategic Income
Fund, Moderate Balanced Fund, Growth Balanced Fund and Diversified
Equity Fund do not exceed, in the aggregate, 0.55%, 0.63%, 0.68% and
0.75%, respectively. Any reduction of those waivers after May 31, 1999
requires Board approval.
(4) Absent expense reimbursements and fee waivers, Funds - Other Expenses
and Total Operating Expenses of the Funds would be: Strategic Income
Fund 0.36% and 1.08%, 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%, Diversified Equity Fund 0.32% and 1.17%, Large Company
Growth Fund 0.35% and 1.08% and Diversified Small Cap Fund 1.47% and
2.70%. Absent expense reimbursements and fee waivers, The Portfolios --
Other Expenses would be: Strategic Income Fund 0.11%, Moderate Balanced
Fund 0.12%, Growth Balanced Fund 0.12%, Aggressive Balanced-Equity Fund
0.12%, Diversified Equity Fund 0.11%, Large Company Growth Fund 0.08%
and Diversified Small Cap Fund 0.15%. Except as otherwise noted,
expense reimbursements and fee waivers are voluntary and may be reduced
or eliminated at any time.
<PAGE>
6
EXAMPLE
The following hypothetical 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.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Strategic Income Fund 8 26 44 99
Moderate Balanced Fund 9 28 49 108
Growth Balanced Fund 9 30 51 114
Aggressive Balanced-Equity Fund 10 32 55 122
Diversified Equity Fund 10 32 55 122
Large Company Growth Fund 10 32 55 122
Diversified Small Cap Fund 12 38 66 145
<PAGE>
7
(This page intentionally left blank.)
<PAGE>
8
[PICTURE OF SPREADSHEETS]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Fund's financial performance for 10 years or, if shorter, the Fund's
operating history. Certain information reflects financial results for
a single Fund share. The total returns in the table represent the rate
that an investor would have earned on an investment in a Fund,
assuming reinvestment of all distributions. The information from June
1, 1994 through May 31, 1998, has been audited by KPMG LLP,
independent auditors, whose reports dated July 21, 1998 about a Fund,
along with the Fund's financial statements, are included in the Fund's
Annual Report, which is available at no charge upon request. These
financial statements are incorporated by reference into the SAI. Other
independent auditors audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[BOND
ICON]
Net Realized
Beginning and Distribution Distributions Ending
Net Net Unrealized from Net Net Net Asset
FIXED INCOME FUND - I SHARES Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ---------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND(F)
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(c) to October 31, 1995 $16.19 $0.75 $1.27 -- -- $18.21
</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) Commencement of operations.
(d) Annualized.
(e) Portfolio Turnover Rate and Average Commission are not applicable as the
Fund invested in more than one Portfolio.
(f) Prior to October 1, 1997, Strategic Income Fund was named Conservative
Balanced Fund.
<PAGE>
9
[FINANCIAL
HIGHLIGHTS
TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
---------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(Loss)(c) Expenses(c)Expenses(a)(c) Return(b) Rate Rate (000's Omitted)
- --------------------------------------------------------------------------------------
4.47% 0.80% 1.03% 14.13% N/A(e) N/A(e) $235,254
4.38% 0.81% 0.98% 9.58% 72.03% $0.0720 $128,777
4.65%(d) 0.82%(d) 0.97%(d) 5.14% 56.47% $0.0648 $146,950
4.67%(d) 0.82%(d) 1.03%(d) 12.48% 65.53% N/A $136,710
</TABLE>
<PAGE>
10
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[STOCK &
BOND ICON]
Net Realized
And Distribution 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 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 was not 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 in more than one Portfolio.
<PAGE>
10
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
11
[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>
12
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[EQUITY
ICON]
Net Realized
and Distribution 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
- ---------------------------------------------------------------------------------------------------------------------
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
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 -- -- --
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers and expense reimbursements.
(b) Total Return would have been lower absent expense reimbursements and fee
waivers.
(c) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(d) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(e) Reflects the activity of the Portfolio(s) in which the Fund invests.
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the fund invested in more than one Portfolio.
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C>
13
[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)
- ------------------------------------------------------------------------------------------------------
$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
$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
</TABLE>
<PAGE>
14
[PICTURE OF COMPUTER SCREENS]
GLOSSARY
This Glossary of frequently used terms will help you understand the discussion
of the Funds' objectives, policies, and risks. Defined terms are capitalized
when used in this prospectus.
================================================================================
TERM DEFINITION
................................................................................
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.
................................................................................
Investment Grade Rated at the time of purchase in one
of the four highest long-term or two
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
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 one of the four highest
long-term or two highest short-term
ratings categories by an NRSRO nor unrated
and determined by the Adviser to be of
comparable quality.
................................................................................
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.
................................................................................
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>
15
[PICTURES OF SPREADSHEETS
INVESTMENT OBJECTIVES AND POLICIES
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.
[BOND
ICON]
FIXED INCOME FUND
STRATEGIC INCOME FUND
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
[INVESTMENT
OBJECTIVE ICON]
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 17 Portfolios.
The Fund blends multiple fixed income investment styles in an effort
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 five
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:
<TABLE>
<S> <C> <C> <C>
===========================================================================================================================
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
- ---------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED BOND STYLE 55% 45% - 65%
POSITIVE RETURN BOND PORTFOLIO 18.3% 15% - 21.7%
STRATEGIC VALUE BOND PORTFOLIO 9.2% 7.5% - 10.8%
MANAGED FIXED INCOME PORTFOLIO 27.5% 22.5% - 32.5%
STABLE INCOME PORTFOLIO 15% 15%
MONEY MARKET PORTFOLIO 10% 10%
DIVERSIFIED EQUITY FUND STYLE 20% 10% - 30%
INDEX PORTFOLIO 5% 2.5% - 7.5%
INCOME EQUITY PORTFOLIO 5% 2.5% - 7.5%
LARGE COMPANY STYLE 5% 2.5% - 7.5%
LARGE COMPANY GROWTH PORTFOLIO 4% 2% - 6%
DISCIPLINED GROWTH PORTFOLIO 1% 0.5% - 1.5%
DIVERSIFIED SMALL CAP STYLE 2% 1% - 3%
SMALL CAP INDEX PORTFOLIO 0.4% 0.2% - 0.6%
SMALL COMPANY GROWTH PORTFOLIO 0.5% 0.2% - 0.7%
SMALL COMPANY VALUE PORTFOLIO 0.5% 0.2% - 0.7%
SMALL COMPANY STOCK PORTFOLIO 0.3% 0.25% - 0.5%
SMALL CAP VALUE PORTFOLIO 0.3% 0.2% - 0.5%
INTERNATIONAL STYLE 3% 1.5% - 4.5%
INTERNATIONAL PORTFOLIO 2.2% 0.9% - 3.5%
INTERNATIONAL EQUITY PORTFOLIO 0.7% 0.3% - 1%
SCHRODER EM CORE PORTFOLIO 0.1% 0% - 0.7%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
<PAGE>
16
The percentage of the Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes
in market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
As market or other conditions change, the Adviser may attempt to
enhance the Fund's returns by changing the percentage of Fund assets
invested in fixed income and equity securities. The Fund 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,
three 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
[STOCK &
BOND ICON]BALANCED FUNDS
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.
The equity portion of each Balanced Fund's portfolio uses the five
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 three or four different
fixed income investment styles. The blending of multiple fixed income
investment styles is intended to reduce the risk of relying on a single
fixed income investment style and 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, three years or less), it may effect the change by
using futures contracts.
<PAGE>
17
MODERATE BALANCED FUND
[INVEST- INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
MENT combination of current income and capital appreciation by diversifying
OBJECTIVE investments in stocks, bonds, and other fixed income investments.
ICON]
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 16 Portfolios.
ALLOCATION. The current allocations and ranges of investments by the
Fund in each Portfolio are:
[INVESTMENT
OBJECTIVES &
POLICIES TAB]
<TABLE>
<S> <C> <C> <C>
======================================================================================================================
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
- ----------------------------------------------------------------------------------------------------------------------
DIVERSIFIED BOND STYLE 45% 30% - 60%
POSITIVE RETURN BOND PORTFOLIO 15% 10% - 20%
STRATEGIC VALUE BOND PORTFOLIO 7.5% 5% - 10%
MANAGED FIXED INCOME PORTFOLIO 22.5% 15% - 30%
STABLE INCOME PORTFOLIO 15% 15%
DIVERSIFIED EQUITY FUND STYLE 40% 25% - 55%
INDEX PORTFOLIO 10% 6.3% - 13.8%
INCOME EQUITY PORTFOLIO 10% 6.3% - 13.8%
LARGE COMPANY STYLE 10% 6.3% - 13.8%
LARGE COMPANY GROWTH PORTFOLIO 8% 5% - 11.0%
DISCIPLINED GROWTH PORTFOLIO 2% 1.25% - 2.75%
DIVERSIFIED SMALL CAP STYLE 4% 2.5% - 5.5%
SMALL CAP INDEX PORTFOLIO 0.8% 0.5% - 1.1%
SMALL COMPANY GROWTH PORTFOLIO 1% 0.6% - 1.3%
SMALL COMPANY VALUE PORTFOLIO 1% 0.6% - 1.3%
SMALL COMPANY STOCK PORTFOLIO 0.6% 0.4% - 0.9%
SMALL CAP VALUE PORTFOLIO 0.6% 0.4% - 0.9%
INTERNATIONAL STYLE 6% 3.8% - 8.3%
INTERNATIONAL PORTFOLIO 4.4% 2.3% - 6.4%
INTERNATIONAL EQUITY PORTFOLIO 1.4% 0.8% - 1.9%
SCHRODER EM CORE PORTFOLIO 0.2% 0% - 1.3%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
[RISK Credit Risk Currency Rate Risk Foreign Risk
ICON] Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk
<PAGE>
18
GROWTH BALANCED FUND
[INVES- INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
MENT combination of current income and capital appreciation by diversifying
OBJECTIVE investments in stocks and bonds.
ICON]
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 15 Portfolios.
ALLOCATION. The current allocations and ranges of investments by the
Fund in each Portfolio are:
<TABLE>
<S> <C>
======================================================================================================================
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
- ----------------------------------------------------------------------------------------------------------------------
DIVERSIFIED EQUITY FUND STYLE 65% 45% - 85%
INDEX PORTFOLIO 16.3% 11.3% - 21.3%
INCOME EQUITY PORTFOLIO 16.3% 11.3% - 21.3%
LARGE COMPANY STYLE 16.3% 11.3% - 21.3%
LARGE COMPANY GROWTH PORTFOLIO 13% 9% - 17%
DISCIPLINED GROWTH PORTFOLIO 3.3% 2.3% - 4.3%
DIVERSIFIED SMALL CAP STYLE 6.5% 4.5% - 8.5%
SMALL CAP INDEX PORTFOLIO 1.3% 0.9% - 1.7%
SMALL COMPANY GROWTH PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY VALUE PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY STOCK PORTFOLIO 1% 0.7% - 1.4%
SMALL CAP VALUE PORTFOLIO 1% 0.8% - 1.4%
INTERNATIONAL STYLE 9.8% 6.8% - 12.8%
INTERNATIONAL PORTFOLIO 7.2% 4.2% - 9.9%
INTERNATIONAL EQUITY PORTFOLIO 2.2% 1.5% - 2.9%
SCHRODER EM CORE PORTFOLIO 0.4% 0% - 2%
DIVERSIFIED BOND STYLE 35% 15% - 55%
MANAGED FIXED INCOME PORTFOLIO 17.5% 7.5% - 27.5%
STRATEGIC VALUE BOND PORTFOLIO 5.8% 2.5% - 9.2%
POSITIVE RETURN BOND PORTFOLIO 11.7% 5% - 18.3%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
[RISK Credit Risk Currency Rate Risk Foreign Risk
ICON] Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
</TABLE>
<PAGE>
19
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
AGGRESSIVE BALANCED-EQUITY FUND
[Invest- INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
ment combination of current income and capital appreciation by diversifying
Objective investments in stocks and bonds.
Icon]
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 15 Portfolios.
ALLOCATION. The current allocations and ranges of investments by the
Fund in each Portfolio are:
<TABLE>
<S> <C> <C> <C>
========================================================================================================================
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED EQUITY FUND STYLE 80% 60% - 100%
INDEX PORTFOLIO 20% 15% - 25%
INCOME EQUITY PORTFOLIO 20% 15% - 25%
LARGE COMPANY STYLE 20% 15% - 25%
LARGE COMPANY GROWTH PORTFOLIO 16% 12% - 20%
DISCIPLINED GROWTH PORTFOLIO 4% 3% - 5%
DIVERSIFIED SMALL CAP STYLE 8% 6% - 10%
SMALL CAP INDEX PORTFOLIO 1.6% 1.2% - 2%
SMALL COMPANY GROWTH PORTFOLIO 1.9% 1.4% - 2.4%
SMALL COMPANY VALUE PORTFOLIO 1.9% 1.4% - 2.4%
SMALL COMPANY STOCK PORTFOLIO 1.3% 1% - 1.6%
SMALL CAP VALUE PORTFOLIO 1.3% 1% - 1.6%
INTERNATIONAL STYLE 12% 9% - 15%
INTERNATIONAL PORTFOLIO 8.8% 5.6% - 11.6%
INTERNATIONAL EQUITY PORTFOLIO 2.7% 2% - 3.4%
SCHRODER EM CORE PORTFOLIO 0.5% 0% - 2.3%
DIVERSIFIED BOND STYLE 20% 0% - 40%
MANAGED FIXED INCOME PORTFOLIO 10% 0% - 20%
STRATEGIC VALUE BOND PORTFOLIO 3.3% 0% - 6.7%
POSITIVE RETURN BOND PORTFOLIO 6.7% 0% - 13.3%
-----------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
[RISK Credit Risk Currency Rate Risk Foreign Risk
ICON] Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
<PAGE>
20
[STOCK ICON] EQUITY FUNDS
DIVERSIFIED EQUITY FUND
[INVEST- INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
MENT long-term capital appreciation with moderate annual return volatility
OBJECTIVE by diversifying its investments among different equity investment
ICON] 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 12 Portfolios.
The Fund's investments combine five 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 two
Portfolios, the assets allocated to small company investments to five
Portfolios, and the assets dedicated to international investments to
three Portfolios.
ALLOCATION. The current allocations and ranges of investments by the
Fund in each Portfolio are:
<TABLE>
<S> <C> <C> <C>
===============================================================================================================
INVESTMENT STYLE CURRENT RANGE OF
ALLOCATION INVESTMENT
- ---------------------------------------------------------------------------------------------------------------
INDEX PORTFOLIO 25% 23.5% - 26.5%
INCOME EQUITY PORTFOLIO 25% 23.5% - 26.5%
LARGE COMPANY STYLE 25% 23.5% - 26.5%
LARGE COMPANY GROWTH PORTFOLIO 20% 18.5% - 21.5%
DISCIPLINED GROWTH PORTFOLIO 5% 3.5% - 6.5%
DIVERSIFIED SMALL CAP STYLE 10% 8.5% - 11.5%
SMALL CAP INDEX PORTFOLIO 2% 0.5% - 3.5%
SMALL COMPANY GROWTH PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY VALUE PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY STOCK PORTFOLIO 1.6% 0.1% - 3.1%
SMALL CAP VALUE PORTFOLIO 1.6% 0.1% - 3.1%
INTERNATIONAL STYLE 15% 13.5% - 16.5%
INTERNATIONAL PORTFOLIO 11% 8.1% - 13.1%
INTERNATIONAL EQUITY PORTFOLIO 3.4% 1.9% - 4.9%
SCHRODER EM CORE PORTFOLIO 0.6% 0% - 2.6%
- -------------------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may
temporarily deviate from the current allocations due to changes in
market value. The Adviser will effect transactions daily to
reestablish the current allocations. The Adviser may make changes in
the current allocations at any time in response to market and other
conditions. The Fund also may invest in more or fewer Portfolios or
invest directly in portfolio securities.
<PAGE>
21
[RISK Currency Rate Risk Foreign Risk Leverage Risk
ICON] Market Risk Small Company Risk
LARGE COMPANY GROWTH FUND
[INVESTMENT
OBJECTIVE
ICON] [INVESTMENT OBJECTIVES
AND POLICIES TAB]
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 or approximately $3.7 billion. In selecting securities for the
Fund, the Adviser seeks issuers whose stock is attractively valued
with fundamental characteristics that are significantly better than
the market average and support internal earnings growth capability.
The Fund may invest in the securities of companies whose growth
potential is, in the Adviser's opinion, generally unrecognized or
misperceived by the market.
The Fund may invest up to 20% of its total assets in the securities of
foreign companies and may hedge against currency risk by using foreign
currency forward contracts. The Fund may not invest more than 10% of
its total assets in the securities of a single issuer.
[RISK Currency Risk Foreign Risk Leverage Risk
ICON] Market Risk
DIVERSIFIED SMALL CAP FUND
[INVEST- INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
MENT long-term capital appreciation with moderate annual return volatility
OBJECTIVE by diversifying its investments across different small capitalization
ICON] 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 five
Portfolios.
<PAGE>
22
ALLOCATION. The current allocations and ranges of investments by the
Fund in each Portfolio are:
<TABLE>
<S> <C> <C> <C>
=============================================================================================================
CURRENT RANGE OF
INVESTMENT STYLE ALLOCATION INVESTMENT
-------------------------------------------------------------------------------------------------------------
SMALL CAP INDEX PORTFOLIO 20% 18.5% - 21.5%
SMALL COMPANY GROWTH PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY VALUE PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY STOCK PORTFOLIO 16% 14.5% - 17.5%
SMALL CAP VALUE PORTFOLIO 16% 14.5% - 17.5%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may
temporarily deviate from the current allocations due to changes in
market values. The Adviser will effect transactions daily to
reestablish the current allocations. The Adviser may make changes in
the current allocations at any time in response to market and other
conditions. The Fund also may invest in more or fewer Portfolios or
invest directly in portfolio securities.
[RISK Leverage Risk Market Risk Small Company Risk
ICON]
DESCRIPTIONS OF PORTFOLIOS
MONEY MARKET PORTFOLIO
The Portfolio seeks to provide high current income to the extent
consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio invests in a broad spectrum of high-quality
money market instruments of U.S. and foreign issuers, including U.S.
Government Securities, Municipal Securities, and corporate debt
securities. The Portfolio 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 Portfolio limits its investments in
obligations of financial institutions to institutions that at the time
of investment have total assets in excess of $1 billion, or the
equivalent in other currencies.
The Portfolio normally will invest more than 25% of its total assets
in the obligations of domestic and foreign financial institutions,
their holding companies, and their subsidiaries. The Portfolio may not
invest more than 25% of its total assets in any other single industry.
[RISK
ICON] Credit Risk Interest Rate Risk Foreign Risk
<PAGE>
23
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
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 two components,
short bonds with maturities (or average life) of two 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 one 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 one of the two highest long-term rating
categories assigned by an NRSRO or that are unrated and determined by
the Adviser to be of comparable quality. The Portfolio may invest up to
25% of its assets in securities rated in the second highest rating
category. The Portfolio does not invest more than 25% of its total
assets in zero-coupon securities, securities with variable or floating
rates of interest, or asset-backed securities.
[RISK Credit Risk Interest Rate Risk Leverage Risk
ICON] Market Risk Prepayment Risk
STABLE INCOME PORTFOLIO
The Portfolio seeks to maintain safety of principal while providing low
volatility total return. The Portfolio invests primarily in short-term
Investment Grade 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 Portfolio
normally limits its investments in (i) mortgage-backed securities to
not more than 65% of its total assets, (ii) other types of asset-backed
securities to not more than 25% of its total assets; (iii)
mortgage-backed securities that are not U.S. Government Securities to
not more than 25% of its total assets; and (iv) U.S. Government
Securities to not more than 50% of its total assets.
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, and may not invest
more than 10% of its total assets in the securities of any other
issuer.
The Portfolio only purchases Investment Grade securities. The Portfolio
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 two and five years.
<PAGE>
24
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 Credit Risk Foreign Risk Interest Rate Risk
ICON] Leverage Risk Market Risk Prepayment Risk
MANAGED FIXED INCOME PORTFOLIO
The Portfolio seeks consistent fixed income returns by investing
primarily in Investment Grade intermediate-term securities. The
Portfolio invests in a diversified portfolio of fixed and variable rate
U.S. dollar-denominated, fixed income securities of a broad spectrum of
U.S. and foreign issuers, including U.S. Government Securities, and the
debt securities of financial institutions, corporations, and others.
The Adviser emphasizes the use of intermediate maturity securities to
lessen Duration and employs low risk yield enhancement techniques to
enhance return over a complete economic or interest rate cycle. The
Adviser considers intermediate-term securities to be those with
maturities of between two 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
invests in debt securities with maturities (or average life in the case
of mortgage-backed and similar securities) ranging from overnight to 30
years. The Portfolio normally will have an average dollar-weighted
portfolio maturity of between three and 12 years and a Duration of
between two and six 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 subdivisions, 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 Credit Risk Foreign Risk Interest Rate Risk
ICON] Leverage Risk Market Risk Prepayment Risk
<PAGE>
25
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
STRATEGIC VALUE BOND PORTFOLIO
The Portfolio seeks total return by investing primarily in income
producing securities. The Portfolio invests in a broad range of fixed
-income instruments in order to create a strategically diversified
portfolio of fixed-income investments. These investments include
corporate bonds, mortgage- and other asset-backed securities, U.S.
Government Securities, preferred stock, convertible bonds, and foreign
bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Portfolio seeks higher
current income instruments such as corporate bonds and mortgage- and
other asset-backed securities in order to enhance returns. The Adviser
believes that this exposure enhances performance in varying economic
and interest rate cycles and avoids excessive risk concentrations. The
Adviser's investment process involves rigorous evaluation of each
security, including identifying and valuing cash flows, embedded
options, credit quality, structure, liquidity, marketability, current
versus historical trading relationships, supply and demand for the
instrument, and expected returns in varying economic/interest rate
environments. The Adviser uses this process to seek to identify
securities which represent the best relative economic value. The
Adviser then evaluates the results of the investment process against
the Portfolio's objective and purchases those securities that are
consistent with the Portfolio's investment objective.
The Portfolio particularly seeks strategic diversification. The
Portfolio will not invest more than:
o 75% of its total assets in corporate bonds;
o 65% of its total assets in mortgage-backed securities;
o 50% of its total assets in asset-backed securities; or
o 25% of its total assets in a single industry of the corporate
market.
The Portfolio may invest in U.S. Government Securities without
restriction. The Portfolio generally will not invest more than 5% of
its total assets in the corporate bonds of any single issuer.
The Portfolio will invest 65% of its total assets in fixed-income
securities rated, at the time of purchase, within the three highest
rating categories assigned by at least one NRSRO, or which are unrated
and determined by the Adviser to be of comparable quality. The
Portfolio may invest up to 20% of its total assets in Non-Investment
Grade securities.
The average maturity of the Portfolio will vary between five and 15
years. In the case of mortgage-backed and similar securities, the
Portfolio uses the security's average life in calculating the
Portfolio's average maturity. The Portfolio's Duration normally will
vary between three and eight years.
The Portfolio may use options, swap agreements, interest rate caps,
floors and collars, and futures contracts to manage risk. The Portfolio
also may use options to enhance return.
<PAGE>
26
[RISK Credit Risk Interest Rate Risk Leverage Risk
ICON] Market Risk Prepayment Risk
INDEX PORTFOLIO
The Portfolio seeks to replicate the return of the S&P 500 Index. The
Portfolio is designed to replicate the return of the S&P 500 Index
with minimum tracking error and to minimize transaction costs. Under
normal circumstances, the Portfolio holds stocks representing 100% of
the capitalization-weighted market values of the S&P 500 Index. The
Adviser generally executes portfolio transactions for the Portfolio
only to replicate the composition of the S&P 500 Index, to invest cash
received from portfolio security dividends or investments in the
Portfolio, and to raise cash to fund redemptions. The Portfolio may
hold cash or cash equivalents to facilitate payment of the Portfolio's
expenses or redemptions and may invest in index futures contracts to a
limited extent. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal the S&P 500
Index.
The S&P 500 Index tracks the total return performance of 500 common
stocks which are chosen for inclusion in the S&P 500 Index by S&P on a
statistical basis. The 500 securities, most of which trade on the New
York Stock Exchange, represent approximately 70% of the total market
value of all U.S. common stocks. Each stock in the S&P 500 Index is
weighted by its market value. Because of the market-value weighting,
the 50 largest companies in the S&P 500 Index currently account for
approximately 47% of its value. The S&P 500 Index emphasizes large
capitalizations and, typically, companies included in the S&P 500
Index are the largest and most dominant firms in their respective
industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P
does not warrant that the S&P 500 Index is a good investment, is
accurate or complete, or will track general stock market performance.
[RISK Market Risk Index Risk
ICON]
INCOME EQUITY PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation
consistent with above-average dividend income. The Portfolio invests
primarily in the common stock of large, high-quality domestic companies
that have above-average return potential based on current market
valuations. The Portfolio primarily emphasizes investments in
securities of companies with above-average dividend income. In
selecting securities for the Portfolio, 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 or
approximately $3.7 billion.
<PAGE>
27
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
The Portfolio may invest in preferred stock, convertible securities,
and securities of foreign companies. The Portfolio 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
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
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.
<PAGE>
28
The S&P 600 Small Cap Index tracks the total return performance of 600
common stocks which are chosen for inclusion in the S&P 600 Small Cap
Index by S&P on a statistical basis. The 600 securities, most of which
trade on the New York Stock Exchange, represent 4% of the total market
value of all U.S. common stocks. Each stock in the S&P 600 Small Cap
Index is weighted by its market value. The S&P 600 Small Cap Index
emphasizes smaller capitalizations and typically, companies included
in the S&P 600 Small Cap Index may not be the largest nor most
dominant firms in their respective industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P
does not warrant that the S&P 600 Small Cap Index is a good
investment, is accurate or complete, or will track general stock
market performance.
[RISK Leverage Risk Market Risk Index Risk
ICON] Small Company Risk
SMALL COMPANY STOCK PORTFOLIO
The Portfolio seeks long-term capital appreciation. The Portfolio
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 or approximately $1.4
billion. The Adviser considers medium companies to be those whose
Market Capitalizations range from $500 million to $8 billion.
In selecting securities for the Portfolio, 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 Portfolio 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 Portfolio may invest up to 20% of its total assets in the
securities of foreign companies. The Portfolio may write covered call
options and purchase call options on equity securities to manage risk
or enhance returns.
[RISK Currency Risk Foreign Risk Market Risk
ICON] Small Company Risk
<PAGE>
29
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
SMALL COMPANY GROWTH PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by
investing in smaller domestic companies. The Portfolio invests
primarily in the common stock of small and medium-sized domestic
companies that are either growing rapidly or completing a period of
significant change. Small companies are those companies whose Market
Capitalization is less than the largest stock in the Russell 2000
Index or approximately $1.4 billion.
In selecting securities for the Portfolio, the Adviser seeks to
identify companies that are rapidly growing (usually with relatively
short operating histories) or that are emerging from a period of
investor neglect by undergoing a dramatic change. These changes may
involve a sharp increase in earnings, the hiring of new management or
measures taken to close the gap between share price and takeover/asset
value.
The Portfolio will invest up to 10% of its total assets in securities
of foreign companies. The Portfolio will not invest more than 10% of
its total assets in the securities of a single issuer.
[RISK Currency Risk Foreign Risk Market Risk
ICON] Small Company Risk
SMALL COMPANY VALUE PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by
investing primarily in smaller companies whose Market Capitalization
is less than the largest stock in the Russell 2000 Index or
approximately $1.4 billion. The Adviser focuses on securities that are
conservatively valued in the marketplace relative to the stock of
comparable companies, determined by price/earnings ratios, cash flows,
or other measures. Value investing provides investors with a less
aggressive way to take advantage of growth opportunities of small
companies. Value investing may reduce downside risk and offer
potential for capital appreciation as a stock gains favor among other
investors and its stock price rises.
[RISK
ICON] Leverage Risk Market Risk Small Company Risk
SMALL CAP VALUE PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks
of smaller companies. The Portfolio will normally invest substantially
all of its assets in securities of companies with Market
Capitalizations that reflect the Market Capitalization of companies
included in the Russell 2000 Index, which range from approximately
$221.9 million to approximately $1.4 billion. The Portfolio seeks
higher growth rates and greater
<PAGE>
30
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 Market Risk Small Company Risk
ICON]
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.
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 Credit Risk Currency Rate Risk Foreign Risk
ICON] Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk
<PAGE>
31
[INVESTMENT OBJECTIVES
AND POLICIES TAB]
INTERNATIONAL EQUITY PORTFOLIO
The Portfolio seeks long-term total return, with an emphasis on
capital appreciation, by investing primarily in equity securities of
foreign companies. The Portfolio invests at least 80% of its assets in
a diversified portfolio of common stock of companies located or
operating in developed and emerging markets. It is expected that the
securities held by the Portfolio will be traded on a stock exchange or
other market in the country in which the issuer is based, but they
also may be traded in other countries, including the United States.
The Portfolio must invest its assets in the securities of at least
five different countries other than the United States. The Portfolio
may also invest in American Depositary Receipts, European Depositary
Receipts, or other similar instruments convertible into securities of
foreign issuers.
The Adviser uses a fundamentals-driven, value-oriented analysis to
identify companies with above-average potential for long-term growth.
The Adviser considers a company's historical performance and its
projected future earnings. The Adviser also considers other key
criteria such as a company's local, regional or global franchise;
history of effective management demonstrated by expanding revenues and
earnings growth; prudent financial and accounting policies and ability
to take advantage of a changing business environment. In allocating
among countries, regions and industry sectors, the Adviser considers
economic growth prospects, monetary and fiscal policies, political
stability, currency trends, market liquidity and investor sentiment.
[RISK Currency Rate Risk Foreign Risk Geographic Concentration Risk
ICON] Leverage Risk Market Risk
SCHRODER EM CORE PORTFOLIO
The Portfolio seeks to achieve long-term capital appreciation through
direct or indirect investment in equity and debt securities of
companies in emerging market countries in regions such as Southeast
Asia, Latin America, and Eastern and Southern Europe. Current income
is incidental to the Portfolio's objective.
The Portfolio may invest, under normal market conditions, at least 65%
of its total assets in emerging market equity and debt securities,
including convertible securities and stock rights, and warrants.
The Adviser considers "emerging market" countries generally to be all
those countries not included in the Morgan Stanley Capital
International World Index ("MSCI World") of major world economies. If
the Adviser determines that the economy of a MSCI World-listed country
is an emerging market economy, the Adviser may include such country in
the emerging market category. The Portfolio will not necessarily seek
to diversify investments on a geographic basis and may invest more
than 25% of its total assets in issuers located in a single country.
<PAGE>
32
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 Credit Risk Currency Rate Risk Foreign Risk
ICON] Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
33
[PICTURE OF LAP TOP COMPUTER AND FINANCIAL TABLES]
[RISK CONSIDERATIONS
TAB]
RISK CONSIDERATIONS
This section describes the principal risks that may apply to the
Funds. Each Fund's exposure to these risks depends upon its specific
investment profile. The Fund's description in INVESTMENT OBJECTIVES
AND POLICIES lists the Fund's principal risks.
CREDIT RISK
[RISK The risk that the issuer of a security, or the counterparty to a
ICON] 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 The risk that fluctuations in the exchange rates between the U.S.
ICON] dollar and foreign currencies may negatively affect a Fund's
investments.
FOREIGN RISK
The risk that foreign investments may be subject to political and
[RISK economic instability, the imposition or tightening of exchange
ICON] 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 issuers. This risk may be
greater for investments in issuers in emerging or developing markets.
GEOGRAPHIC CONCENTRATION RISK
The risk that factors adversely affecting a Fund's investments in
[RISK issuers located in a state, country, or region will affect the Fund's
ICON] net asset value more than would be the case if the Fund had made more
geographically diverse investments.
INDEX RISK
The risk that a Fund designed to replicate the performance of an index
[RISK of securities will replicate the performance of the index during
ICON] 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>
34
INTEREST RATE RISK
[RISK The risk that changes in interest rates may affect the value of your
ICON] 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.
LEVERAGE RISK
[RISK The risk that some transactions may multiply smaller market movements
ICON] 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
The risk that the market value of a Fund's investments will fluctuate
[MARKET as the stock and bond markets fluctuate generally. Market risk may
RISK] affect a single issuer, industry or section of the economy, or may
affect the market as a whole.
PREPAYMENT RISK
The risk that issuers will prepay fixed rate securities when interest
[RISK rates fall, forcing the Fund to invest in securities with lower
ICON] interest rates than the prepaid securities. For a Fund investing in
mortgage- and other asset-backed securities, this is also the risk that
a decline in interest rates may result in holders of the assets backing
the securities to prepay their debts, resulting in potential losses in
these securities' values and yield. Alternatively, rising interest
rates may reduce the amount of prepayments on the assets backing these
securities, causing the Fund's average maturity to rise and increasing
the Fund's sensitivity to rising interest rates and potential for
losses in value.
SMALL COMPANY RISK
The risk that investments in smaller companies may be more volatile
[RISK than investments in larger companies. Smaller companies may have higher
ICON] 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>
35
[PICTURE OF COMPUTER SCREENS]
[COMMON
POLICIES TAB]
COMMON POLICIES
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.
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>
36
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>
[PICTURE OF SPREADSHEETS]
37
MANAGEMENT OF THE FUNDS
[MANAGEMENT
OF THE FUNDS
TAB]
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each
Fund and each Portfolio except the Portfolios advised by Schroder or
Wells Fargo Bank. 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 International Portfolio and Schroder EM Core Portfolio. In
this capacity, Schroder makes investment decisions for and administers
those Portfolios' investment programs. Schroder Capital Management
International Inc.'s address is 787 Seventh Avenue, 34th Floor, New
York, NY 10019.
WELLS FARGO BANK is the investment adviser for International Equity
Portfolio. In this capacity, Wells Fargo Bank makes investment
decisions for and administers the Portfolio's investment program.
Wells Fargo Bank's address is 525 Market Street, San Francisco, CA
94105.
Norwest, Wells Fargo Bank 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 and Wells Fargo Bank decide which portion of the assets of a
Fund or Portfolio the subadviser should manage and supervise the
subadvisers' performance of their duties. The subadvisers are:
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
Avenue, Suite 2060, Minneapolis, MN 55479.
PEREGRINE CAPITAL MANAGEMENT, INC. or PEREGRINE, an investment
advisory subsidiary of Norwest Bank, provides investment advisory
services to corporate and public pension plans, profit sharing plans,
savings-investment plans, and 401(k) plans. Peregrine Capital
Management, Inc's address is LaSalle Plaza, 800 LaSalle Avenue, Suite
1850, Minneapolis, MN 55402.
SMITH ASSET MANAGEMENT GROUP, L.P. or SMITH, an investment advisory
affiliate of Norwest Bank, provides investment management services to
company retirement plans, foundations, endowments, trust companies,
and high net worth individuals using a disciplined equity style. Smith
Asset Management Group, L.P.'s address is 300 Crescent Court, Suite
750, Dallas, TX 75201
WELLS CAPITAL MANAGEMENT INCORPORATED, or WCM, a wholly-owned
subsidiary of Wells Fargo Bank, is the investment Subadviser for
International Equity Portfolio. WCM provides investment advisory
services to various bank and thrift institutions, investment
companies, pension and profit sharing plans, trusts, estates,
corporations and other
<PAGE>
38
business entities. WCM's address is 525 Market Street, 10th Floor, San
Francisco, CA 94105.
Listed below, for each Fund, are the portfolio managers primarily
responsible for the day-to-day management of the Funds' investments.
The year a portfolio manager began managing a Fund or Portfolio
follows the manager's name in parenthesis. The list includes the
investment advisory fees payable to Norwest, Wells Fargo Bank 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 more than one Portfolio.
o If a Fund invests in a single Portfolio, Norwest receives an
investment advisory fee from the Portfolio.
o If a Fund invests in more than onE Portfolio, Norwest, Wells
Fargo Bank or Schroder receives an investment advisory fee from
each of those Portfolios. In addition, Norwest receives a fee
from each Fund for the "asset allocation services" of determining
the Funds' investments in the Portfolios and how much of the
Fund's assets to invest in each Portfolio.
If a Fund invests in more than one Portfolio, the total amount of the
investment advisory fee paid to Norwest, Wells Fargo Bank 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 Wells Fargo Bank (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 or Wells Fargo Bank by the Funds or Portfolios.
<TABLE>
<S> <C> <C> <C>
FIXED INCOME FUND
________________________________________________________________________________
[BOND STRATEGIC INCOME FUND
ICON] 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%
</TABLE>
<PAGE>
39
[MANAGEMENT
OF THE FUNDS TAB]
<TABLE>
<S> <C> <C> <C>
FIXED INCOME FUND - CONTINUED
________________________________________________________________________________
STRATEGIC INCOME FUND - CONTINUED
[BOND PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
ICON] 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%
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%
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%
</TABLE>
<PAGE>
40
<TABLE>
<S> <C> <C> <C>
FIXED INCOME FUND - CONTINUED
________________________________________________________________________________
STRATEGIC INCOME FUND - CONTINUED
[BOND PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
ICON] PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: INTERNATIONAL EQUITY PORTFOLIO
SUBADVISER: WCM
PORTFOLIO MANAGERS: Katherine Schapiro, CFA (1999) and Stacey Ho, CFA (1999)
ADVISORY FEE: 1.20%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997) and Mark Bridgeman (1997)
ADVISORY FEE: 1.00%
BALANCED FUNDS
________________________________________________________________________________
[STOCK MODERATE BALANCED FUND
& BOND GROWTH BALANCED FUND
ICON] 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%
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%
</TABLE>
<PAGE>
41
[MANAGEMENT
OF THE FUNDS
TAB]
BALANCED FUND - CONTINUED
<TABLE>
<S> <C> <C> <C>
[STOCK MODERATE BALANCED FUND
& BOND GROWTH BALANCED FUND
ICON] AGGRESSIVE BALANCED-EQUITY FUND - CONTINUED
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%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: INTERNATIONAL EQUITY PORTFOLIO
SUBADVISER: WCM
PORTFOLIO MANAGERS: Katherine Schapiro, CFA (1999) and Stacey Ho, CFA (1999)
ADVISORY FEE: 1.20%
</TABLE>
<PAGE>
42
BALANCED FUNDS - CONTINUED
<TABLE>
<S> <C> <C> <C>
________________________________________________________________________________
[STOCK MODERATE BALANCED FUND
& BOND GROWTH BALANCED FUND
ICON] AGGRESSIVE BALANCED-EQUITY FUND - CONTINUED
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGERS: John A. Troiano (1997), Heather Crighton (1997) and Mark Bridgeman (1997)
ADVISORY FEE: 1.00%
EQUITY FUNDS
________________________________________________________________________________
DIVERSIFIED EQUITY FUND
[STOCK
ICON] FUND ADVISORY FEE: 0.25%
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%
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 (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
43
[MANAGEMENT
OF THE FUNDS
TAB]
<TABLE>
<S> <C> <C> <C>
EQUITY FUNDS - CONTINUED
________________________________________________________________________________
DIVERSIFIED EQUITY FUND - CONTINUED
[STOCK PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
ICON] PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: INTERNATIONAL EQUITY PORTFOLIO
SUBADVISER: WCM
PORTFOLIO MANAGERS: Katherine Schapiro, CFA (1999) and Stacey Ho, CFA (1999)
ADVISORY FEE: 1.20%
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
PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%
PORTFOLIOS: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: 0.95%
</TABLE>
<PAGE>
44
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.
GARY J. DUNN, associated with Norwest or its affiliates since 1979. Mr. Dunn is
a Director of Institutional Investments of Norwest.
WILLIAM D. GIESE, associated with Norwest or its affiliates since 1982. Mr.
Giese is a Senior Vice-President of Peregrine, has been a portfolio manager at
Peregrine for more than 10 years, and has more than 20 years' experience in
fixed income securities management.
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr. Huber has
been a portfolio manager and Corporate Trading Specialist at Galliard since 1995
and has been in investment management since 1991.
KENNETH LEE, associated with Norwest or its affiliates since 1999. Mr. Lee also
provides fundamental security analysis and portfolio management at WCM. He has
been associated with WCM or its affiliates since 1993.
ROBERT G. LEUTY, associated with Norwest or its affiliates since 1992. Mr. Leuty
is a Senior Portfolio Manager of Norwest.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is responsible
for investment process and strategy. Mr. Merriam was previously Chief Investment
Officer of Insight Investment Management.
ROBERT B. MERSKY, associated 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.
<PAGE>
45
[MANAGEMENT
OF THE FUNDS
TAB]
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.
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.
THOMAS ZEIFANG, associated with Norwest or its affiliates since 1999. Mr.
Zeifang also is a portfolio manager at WCM, with whom he has been associated
since 1995. Prior to 1995, he served as an analyst at Fleet Investment Advisors.
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.
JOHN A. TROIANO, associated with Schroder or its affiliates since 1981. Mr.
Troiano has been Chief Executive Officer of Schroder since April 1, 1997 and a
Managing Director of Schroder since October 1995.
Wells Fargo Portfolio Managers:
STACEY HO, CFA, associated with WCM since 1997. Ms. Ho is co-manager for the
international equity portfolios and funds. Prior thereto, she was a senior
portfolio manager at Clemente Capital Management and prior thereto, managed
Japanese and U.S. equity portfolios at Edison International.
<PAGE>
46
KATHERINE SCHAPIRO, CFA, associated with Wells Fargo Bank since 1992. Prior to
her association with Wells Fargo Bank, she was a Vice-President and fund manager
for Newport Pacific Management, an international investment advisory firm based
in San Francisco. Ms. Schapiro is President of the Security Analysts of San
Francisco.
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 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>
47
[PICTURE OF LAP TOP WITH FINANCIAL TABLES]
[HOW TO BUY
AND SELL
SHARES TAB]
HOW TO BUY AND SELL SHARES
You may purchase or redeem shares at a price equal to their net asset
value next determined after receipt of your purchase order, or
redemption request in proper form on "Fund Business Days." Fund
Business Days are all weekdays except generally observed national
holidays (New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas) and Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution.
The Funds' transfer agent processes all transactions in Fund shares.
You may purchase and redeem Fund shares without a sales or redemption
charge. I Shares require a minimum initial investment of $1,000 and a
minimum subsequent investments of $100.
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.
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.
<PAGE>
48
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 two
business days after receipt of the check. Checks drawn on some
non-member banks may take longer. If your check does not clear, the
purchase order will be canceled and you will be liable for any losses
or fees incurred by Norwest Advantage Funds, the transfer agent, or
the distributor.
To purchase shares for individual or Uniform Gift to Minors Act
accounts, you must write a check or purchase a money order payable to
Norwest Advantage Funds, or endorse a check made out to you to Norwest
Advantage Funds. For corporation, partnership, trust, 401(k) plan, or
other non-individual type accounts, make the check used to purchase
shares payable to Norwest Advantage Funds. No other methods of payment
by check will be accepted for these types of accounts.
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833
or 1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire
your money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO:
NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may
charge for transmitting the money by wire. The Funds do not charge for
the receipt of wire transfers. The Funds treat payment by bank wire as
a federal funds payment when received.
<PAGE>
49
[HOW TO BUY
AND SELL
SHARES TAB]
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers,
banks, and other financial institutions. When you purchase a Fund's
shares through a financial institution, the shares may be held in your
name or in the name of the financial institution. Subject to your
institution's procedures, you may have Fund shares held in the name of
your financial institution transferred into your name. If your shares
are held in the name of your financial institution, you must contact
the financial institution on matters involving your shares. Your
financial institution may charge you for purchasing, redeeming, or
exchanging shares.
SUBSEQUENT PURCHASES OF SHARES
You can make subsequent purchases by mailing a check, by sending a
bank wire, or through a financial institution as indicated above. All
payments should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem Fund shares at their net asset value on any Fund
Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions.
Fund shares are redeemed as of the next determination of the Fund's
net asset value following receipt by the transfer agent of the
redemption order in proper form (and any supporting documentation that
the transfer agent may require). Redeemed shares are not entitled to
receive distributions after the day on which the redemption is
effective.
Normally, redemption proceeds are paid immediately following receipt
of a redemption order in proper form. In any event, you will be paid
within 7 days, unless: (1) your bank has not cleared the check to
purchase the shares (which may take up to 15 days); (2) the New York
Stock Exchange is closed (or trading is restricted) for any reason
other than normal weekend or holiday closings; (3) there is an
emergency in which it is not practical for the Fund to sell its
portfolio securities or for the Fund to determine its net asset value;
or (4) the 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.
<PAGE>
50
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 with a net asset value of less than $1,000
immediately following any redemption.
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution
you may redeem shares through the financial institution. If you wish
to redeem shares by telephone or receive redemption proceeds by bank
wire you should complete the appropriate sections of the account
application. These privileges may not be available until several weeks
after the application is received. You may not redeem shares by
telephone if you have certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer
agent accompanied by any share certificate you have been issued. Sign
all requests and endorse all certificates with 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.
<PAGE>
51
[HOW TO BUY
AND SELL SHARES TAB]
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 after the transfer agent receives a redemption request in
proper form.
EXCHANGES
You may exchange I Shares for I Shares of other Funds offering those
shares. Call or write the transfer agent for more information.
The Funds do not charge for exchanges, and there is currently no limit
on the number of exchanges you may make. The Funds, however, may limit
your ability to exchange shares if you exchange too often. Exchanges
are subject to the fees charged by, and the limitations (including
minimum investment restrictions) of the Fund into which you are
exchanging.
You may only exchange shares into a pre-existing account if that
account is identically registered. You must submit a new account
application if you wish to exchange shares into an account registered
differently or with different shareholder privileges. You may exchange
into a Fund only if that Fund's shares legally may be sold in your
state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange
procedures on 60 days' notice.
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>
52
[PICTURE OF COMPUTER SCREENS]
DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of net investment income are declared and paid annually.
Each Fund's net capital gain, if any, is distributed at least
annually.
You have three choices for receiving distributions: the Reinvestment
Option, the Cash Option, and the Directed Dividend Option.
o 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.
o Under the Cash Option, you are paid all distributions in cash.
o Under the Directed Dividend Option, if you own $10,000 or more of 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 (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.
<PAGE>
53
[DISTRIBUTIONS &
TAX MATTERS TAB]
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, International Equity
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.
<PAGE>
54
[PICTURE OF SPREADSHEETS]
OTHER INFORMATION
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 4:00 p.m., Eastern Time.
All 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, Money Market
Portfolio values its portfolio securities at amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and then
assuming a constant amortization to maturity of any discount or
premium. If the market value of Money Market Portfolio'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.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in one 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 one 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.
<PAGE>
55
[OTHER
INFORMATION TAB]
FUND REORGANIZATIONS
The Norwest Advantage Funds' Board of Trustees recently approved the
reorganization of each Norwest Advantage Fund into new portfolios of
Wells Fargo Funds Trust. The reorganizations are part of a plan to
consolidate the Stagecoach and Norwest Advantage fund families
following last November's merger of Wells Fargo & Company and Norwest
Corporation. Norwest Advantage Funds will present each proposed Fund
reorganization to the Fund's shareholders for their approval at a
special shareholders' meeting that is planned for August 1999.
If shareholders approve the reorganizations, each Norwest Advantage
Fund offered by this Prospectus will reorganize into a corresponding
Wells Fargo Funds Trust portfolio that has substantially similar
investment objectives and policies. These Wells Fargo Funds Trust
portfolios will not combine with other funds of the Stagecoach or
Norwest Advantage fund families.
You may not purchase shares of the Wells Fargo Funds Trust portfolios
until after the reorganizations occur, which is anticipated to be in
September 1999.
You need not act with respect to the reorganizations at this time.
Norwest Advantage Funds will mail proxy materials to you in June if
you are a shareholder as of May 6, 1999. These materials will describe
the reorganizations in detail, including any effect on expense ratios.
If you buy fund shares after that date, you will not be entitled to
vote those shares on the fund's reorganization, but you may request a
copy of the proxy materials.
THE REORGANIZATIONS ARE EXPECTED TO BE TAX-FREE TRANSACTIONS. THE
REORGANIZATIONS WILL NOT TRIGGER ANY SALES CHARGES.
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.
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56
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.
