PROSPECTUS
OCTOBER 1, 1988 AS AMENDED
MARCH 1, 1999
______________________________
STOCK FUNDS
[LOGO]
[COVER WITH WALL STREET JOURNAL, PCS]
_________________________________
GROWTH BALANCED FUND
INCOME EQUITY FUND
VALUGROWTH SM STOCK FUND
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
LARGE COMPANY GROWTH FUND
DIVERSIFIED SMALL CAP FUND
SMALL COMPANY STOCK FUND
SMALL CAP OPPORTUNITIES FUND
INTERNATIONAL FUND
_________________________________
______________________________________________________________________________
|MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, | | |
|FEDERAL RESERVE SYSTEM, U.S. GOVERNMENT, |MAY LOSE VALUE |NO BANK GUARANTEE|
|OR ANY GOVERNMENT AGENCY | | |
|___________________________________________|________________|________________ |
<PAGE>
<PAGE>
PROSPECTUS
OCTOBER 1, 1998 AS AMENDED
MARCH 1, 1999
STOCK FUNDS
GROWTH BALANCED FUND
INCOME EQUITY FUND
VALUGROWTH (SM) STOCK FUND
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
LARGE COMPANY GROWTH FUND
DIVERSIFIED SMALL CAP FUND
SMALL COMPANY STOCK FUND
SMALL CAP OPPORTUNITIES FUND
INTERNATIONAL FUND
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF NORWEST BANK MINNESOTA, N.A. OR ANY
OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, or ANY OTHER GOVERNMENT AGENCY.
INVESTING IN ANY MUTUAL FUND HAS RISK. IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN ANY OF THE FUNDS.
NO GOVERNMENTAL AGENCY, INCLUDING THE SECURITIES AND EXCHANGE COMMISSION, HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER OR NOT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1
TABLE OF CONTENTS
OVERVIEW ....................................2
[OVERVIEW TAB]
FINANCIAL HIGHLIGHTS ........................10
[FINANCIAL HIGHLIGHTS TAB]
GLOSSARY.....................................20
[GLOSSARY TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVES AND POLICIES ..........21
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[RISK ICON]
RISK CONSIDERATIONS..........................37
[RISK CONSIDERATIONS TAB]
COMMON POLICIES..............................39
[COMMON POLICIES TAB]
MANAGEMENT OF THE FUNDS .....................40
[MANAGEMENT OF THE FUNDS TAB]
CHOOSING A SHARE CLASS ......................49
[CHOOSING A SHARE CLASS TAB]
HOW TO BUY AND SELL SHARES ..................52
[HOW TO BUY SHARES TAB]
DISTRIBUTIONS AND TAX MATTERS .............. 57
[DISTRIBUTIONS AND TAX MATTERS TAB]
OTHER INFORMATION ...........................59
[OTHER INFORMATION TAB]
<PAGE>
2
- --------------------------------------------------------------------------------
OVERVIEW [[OFFICE, WALL STREET JOURNAL]
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE FUNDS. BEFORE
INVESTING, YOU SHOULD READ THE PROSPECTUS AND CONSIDER THE DISCUSSIONS
UNDER INVESTMENT OBJECTIVES AND POLICIES AND RISK CONSIDERATIONS.
NO SINGLE FUND IS A COMPLETE OR BALANCED INVESTMENT PROGRAM, BUT EACH CAN
SERVE AS A PART OF YOUR OVERALL INVESTMENT PROGRAM.
THE FUNDS AT A GLANCE
[FUND ICON]
Growth Balanced Fund seeks a combination of current income and capital
appreciation. The other Funds seek capital growth or high capital return.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND OBJECTIVE PRIMARY INVESTMENTS
GROWTH BALANCED FUND Combination of current income and 15%-55% fixed income investments
capital appreciation. and 45%-85% equity investments
INCOME EQUITY FUND Long-term capital appreciation Common stock of large high
consistent with above-average quality domestic companies.
dividend income.
VALUGROWTH STOCK FUND Long-term capital appreciation. Stock of medium- and large-
capitalization companies that
have above average growth
characteristics and that appear
to be undervalued.
DIVERSIFIED EQUITY FUND Long-term capital appreciation Diversified investments in 5
while moderating annual return different equity investment
volatility. styles.
GROWTH EQUITY FUND Long-term capital appreciation Diversified investments in 3
while moderating annual return different equity investment
volatility. styles.
LARGE COMPANY GROWTH FUND Long-term capital appreciation. Stock of large high-quality
domestic companies with superior
growth potential.
DIVERSIFIED SMALL CAP FUND Long-term capital appreciation Diversified investments in 5
while moderating annual return different small company equity
volatility. investment styles.
SMALL COMPANY STOCK FUND Long-term capital appreciation. Stock of small and medium sized
domestic companies.
SMALL CAP OPPORTUNITIES FUND Long-term capital appreciation. Equity securities of small
domestic companies.
INTERNATIONAL FUND Long-term capital appreciation. Stock of high-quality companies
based outside of the United
States.
</TABLE>
<PAGE>
3
CLASSES OF SHARES
This Prospectus offers 3 classes of shares. Each class has a different fee
structure. All of the Funds offer A Shares and B Shares. Growth Balanced
Fund, Income Equity Fund, Diversified Equity Fund, and Growth Equity Fund
also offer C Shares.
[OVERVIEW TAB]
* A Shares are generally offered at their net asset value plus an initial
sales charge. Certain Funds' A Shares may have distribution or shareholder
servicing fees.
* B Shares are offered at their net asset value. B Shares have distribution
and shareholder servicing fees and convert to A Shares within 7 years after
purchase. If you redeem your B Shares within 6 years of purchase, you pay a
contingent deferred sales charge. The amount of the charge depends on the
length of time you hold the shares.
* C Shares are offered at their net asset value. C Shares have distribution
fees. If you redeem your C Shares within a year of purchase, you pay a
contingent deferred sales charge.
FUND STRUCTURES
Some of the Funds invest directly in a portfolio of securities. Other Funds
invest in 1 or more other funds identified in this prospectus as
Portfolios. The Portfolios do not offer their shares to the public. Except
when necessary to describe a Fund's investment in a Portfolio, this
prospectus discusses a Fund's investments in a Portfolio as if the
investments were made directly in individual securities.
MANAGEMENT OF THE FUNDS
NORWEST INVESTMENT MANAGEMENT, INC. or NORWEST is the investment adviser
for all of the Funds and all but 4 of the Portfolios. Norwest, a subsidiary
of Norwest Bank Minnesota, N.A. or Norwest Bank, provides investment advice
to institutions, pension plans, and other accounts and currently manages
more than $28 billion in assets. SCHRODER CAPITAL MANAGEMENT INTERNATIONAL
INC. or SCHRODER is the investment adviser for 3 Portfolios: Schroder U.S.
Smaller Companies Portfolio, International Portfolio, and Schroder EM Core
Portfolio. Schroder specializes in providing international investment
advice. WELLS FARGO BANK, N.A. or WELLS FARGO BANK is the investment
adviser for International Equity Portfolio. Wells Fargo Bank furnishes
investment guidance and policy direction to the Portfolio. INVESTMENT
SUBADVISERS make investment decisions for certain Funds and Portfolios
under Norwest's and Wells Fargo Bank's general supervision. This prospectus
generally refers to Norwest, Schroder, Wells Fargo Bank or a subadviser as
an Adviser.
THE FORUM FINANCIAL GROUP of companies provide management, administrative,
and underwriting services to the Funds.
INVESTMENT MINIMUMS AND RESTRICTIONS
The Funds require minimum initial investments of $1,000 and minimum subsequent
investments of $100. Small Cap Opportunities Fund is closed to new investors.
<PAGE>
4
EXCHANGES
If you own Fund shares, you may exchange them for shares of certain other
funds. Your exchange rights will vary depending on the class of shares you
own.
DISTRIBUTIONS
Each Fund distributes to shareholders its net capital gain, if any, at
least annually. The Distributions and Tax Matters section discusses how
often the Funds distribute net investment income.
RISK FACTORS
[RISK ICON]
All investments in a Fund are subject to risk and may decline in value. The
amount and types of risk vary from Fund to Fund depending on the Fund's
investment objective, the Adviser's strategy, the markets the Fund invests
in, the investments that the Fund makes, and prevailing economic conditions
over the period of your investment.
Every Fund also has the risk that its Adviser may not be successful in
carrying out its investment strategy, that a portfolio manager may prove
difficult to replace if he or she becomes unavailable to manage the Fund,
and that the Fund's particular investment strategy may result in
performance that is worse or better than the performance of the market as a
whole. Your investment in a Fund also will have risk if you do not plan to
invest for a period that is long enough to permit the investment to recover
from an adverse market movement.
The Funds are subject to "market risk," which is the general risk that the
value of a Fund's investments may decline if the stock markets perform
poorly. There also is a risk that a Fund's investments will underperform
either the securities markets generally or particular segments of the
securities markets.
Funds that invest in smaller issuers or foreign issuers are riskier than
other Funds. Investments in smaller issuers are subject to greater market
volatility because securities of smaller issuers may not trade as often or
be as widely owned as the securities of larger issuers. Investments in
foreign issuers are subject to the risks of foreign political and economic
instability and changes in foreign exchange rates. Foreign investments also
are subject to government actions, including exchange controls and limits
on repayments of foreign investments. Foreign governments may nationalize,
tax, or confiscate investors' assets.
Growth Balanced Fund divides its investments between fixed income
securities and equity securities in varying proportions, with an emphasis
on equity securities. An investment in the Fund will be subject both to the
risks of fixed income securities and to the risks of equity securities.
The investment income you receive from Growth Balanced Fund will vary with
changes in interest rates. The value of the Fund's fixed income investments
generally will fall when interest rates rise and rise when interest rates
fall. The Fund's fixed income investments also are subject to "credit
risk," which is the risk that an issuer will be unable, or will be
perceived to be unable, to pay the interest and principal on its
obligations when due.
<PAGE>
5
When interest rates fall, there is a risk that issuers will prepay fixed
rate securities, forcing the Fund to invest in securities with lower
interest rates than the prepaid securities. The Fund also may invest in
mortgage- or other asset-backed securities. A decline in interest rates may
result in losses in these securities' values and a reduction in their
yields as the holders of the assets backing the securities prepay their
debts. Rising interest rates may cause the average maturity of this Fund to
rise due to a drop in prepayments. A rise in average maturity or duration
increases the Fund's sensitivity to rising interest rates and potential for
losses in value.
[OVERVIEW TAB]
In addition, the Adviser may vary, within a fixed range, the allocations of
Growth Balanced Fund's assets into each type of investment. There is a risk
that the allocations selected by the Adviser will not achieve the Fund's
objective as effectively as other possible allocations.
EXPENSES OF INVESTING IN THE FUNDS
The following table will assist you in understanding the expenses that you
will bear directly and indirectly when you invest in a Fund.
Shareholder Transaction Expenses
(applicable to each Fund)
<TABLE>
<S> <C> <C> <C>
A B C
Shares Shares Shares
- ----------------------------------------------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of public offering price) 5.5% Zero Zero
Maximum deferred sales charge
(as a percentage of the lesser of original purchase Zero 4.0%(1) 1.0%(2)
price or redemption proceeds)
</TABLE>
ANNUAL FUND OPERATING EXPENSE(7)
(as a percentage of average daily net assets)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
GROWTH INCOME
BALANCED FUND(3)(6) EQUITY FUND
A B C A B C
Shares Shares Shares Shares Shares Shares(3)
--------- --------- ---------- --------- ---------- ----------
Investment Advisory Fee (4) 0.13% 0.13% 0.13% N/A N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) 0.10% 0.75% 0.75% N/A 0.75% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.41% 0.29% 0.29% 0.33% 0.33% 0.33%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios 0.45% 0.45% 0.45% .050% 0.50% 0.50%
Other Expenses - Portfolios 0.06% 0.06% 0.06% 0.02% 0.02% 0.02%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.15% 1.68% 1.68% 0.85% 1.60% 1.60%
</TABLE>
<PAGE>
6
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
VALUGROWTH DIVERSIFIED
STOCK FUND EQUITY FUND(6)
A B A B C
Shares Shares Shares Shares Shares(3)
--------------- -------------- --------- ---------- ----------
Investment Advisory Fee (4) 0.78% 0.78% 0.16% 0.16% 0.16%
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% N/A 0.75% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.22% 0.22% 0.29% 0.29% 0.29%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) N/A N/A 0.49% 0.49% 0.49%
Other Expenses - Portfolios N/A N/A 0.06% 0.06% 0.06%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.00% 1.75% 1.00% 1.75% 1.75%
GROWTH LARGE COMPANY
EQUITY FUND(6) GROWTH FUND(3)
A B C A B
Shares Shares Shares(3) Shares Shares
--------- --------- ---------- ---------------- --------------
Investment Advisory Fee (4) 0.22% 0.22% 0.22% N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% 0.75% 0.10% 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.26% 0.26% 0.26% 0.43% 0.33%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) 0.67% 0.67% 0.67% 0.65% 0.65%
Other Expenses - Portfolios 0.10% 0.10% 0.10% 0.02% 0.02%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.25% 2.00% 2.00% 1.20% 1.75%
DIVERSIFIED SMALL SMALL COMPANY
CAP FUND(3) STOCK FUND(6)
A B A B
Shares Shares Shares Shares
--------------- -------------- ---------------- --------------
Investment Advisory Fee (4) 0.00% 0.00% N/A N/A
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) 0.10% 0.75% N/A 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.37% 0.27% 0.25% 0.25%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolios(4) 0.83% 0.83% 0.90% 0.90%
Other Expenses - Portfolios 0.10% 0.10% 0.05% 0.05%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.40% 1.95% 1.20% 1.95%
</TABLE>
<PAGE>
7
[OVERVIEW TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SMALL CAP INTERNATIONAL FUND
OPPORTUNITIES FUND
A B A B
Shares Shares Shares Shares
--------------- -------------- ---------------- --------------
Investment Advisory Fee (4) N/A N/A 0.25% 0.25%
Rule 12b-1 Fees (AFTER FEE WAIVERS)(5) N/A 0.75% N/A 0.75%
Other Expenses (AFTER FEE WAIVERS AND 0.50% 0.50% 0.56% 0.56%
REIMBURSEMENTS)
Investment Advisory Fee - Portfolio(4) 0.60% 0.60% 0.42% 0.42%
Other Expenses - Portfolios 0.15% 0.15% 0.27% 0.27%
(AFTER FEE WAIVERS AND REIMBURSEMENTS)
Total Operating Expenses(7) 1.25% 2.00% 1.50% 2.25%
</TABLE>
(1) The maximum 4.0% deferred sales charge on B Shares applies to redemptions
during the first year after purchase; the charge declines to 3.0% during
the second and third years, 2.0% during the fourth and fifth years, 1.0%
during the sixth year and zero the following year.
(2) The 1.0% deferred sales charge on C Shares applies only to redemptions
during the first year after purchase.
(3) The expenses, and any fee waivers and reimbursements, for Growth Balanced
Fund, Large Company Growth Fund, Diversified Small Cap Fund, and C shares
of Income Equity Fund, Diversified Equity Fund and Growth Equity Fund are
estimated.
(4) For Growth Balanced Fund, Diversified Equity Fund, Growth Equity Fund
Diversified Small Cap Fund, and International Fund Investment Advisory Fee
reflects an asset allocation fee, which absent fee waivers, would be 0.25%.
Investment Advisory Fee - Portfolios states the investment advisory fees of
any Portfolios in which a Fund invests. Absent fee waivers, Investment
Advisory Fee - Portfolios for International Fund would be 0.47% and for
Growth Equity Fund 0.68%.
(5) Absent fee waivers, Rule 12b-1 Fees would be 1.00% for B Shares.
(6) Norwest and the Fund's Administrator have agreed to waive fees and
reimburse expenses to maintain Small Company Stock Fund's total operating
expenses at or below 1.20% for A Shares and 1.95% for B Shares. Any
reduction of those waivers or reimbursements requires review by the Funds'
Board of Trustees. Norwest and the Fund's Administrator have agreed to
waive their fees through May 31, 1999 to ensure that the combined
investment advisory, administrative and management services fees borne by
Growth Balanced Fund, Diversified Equity Fund, and Growth Equity Fund do
not exceed 0.68%, 0.75%, and 1.00% respectively. Any reduction of those
waivers after May 31, 1999 requires Board approval.
(7) Absent estimated expense reimbursements and fee waivers, Other Expenses,
Other Expenses-Portfolios, and Total Operating Expenses of A Shares would
be: Growth Balanced Fund 0.47%, 0.12%, and 1.39%, Income Equity Fund 0.39%,
0.07, and 0.96%, ValuGrowth Stock Fund 0.47%, N/A, and 1.25%, Diversified
Equity Fund 0.39%, 0.11% and, 1.24%, Growth Equity Fund 0.40%, 0.15%, and
1.48%, Large Company Growth Fund 0.49%, 0.08%, and 1.32%, Diversified Small
Cap Fund 1.61%, 0.15%, and 2.94%, Small Company Stock Fund 0.47%, 0.11%,
and 1.48%, Small Cap Opportunities Fund 1.03%, 0.15%, and 1.78%, and
International Fund 0.83%, 0.31%, and 1.86%. Absent expense reimbursements
and fee waivers, Other Expenses, Other Expenses-Portfolio(s) and Total
Operating Expenses of B Shares would be: Growth Balanced Fund 0.33%, 0.12%,
and 2.15%, Income Equity Fund 0.39%, 0.07%, and 1.96%, ValuGrowth Stock
Fund 0.53%, N/A, and 2.31%, Diversified Equity Fund 0.39%, 0.11%, and
2.24%, Growth Equity Fund 0.43%, 0.15%, and 2.51%, Large Company Growth
Fund 0.35%, 0.08%, and 2.08%, Diversified Small Cap Fund 1.47%, 0.15%, and
3.70%, Small Company Stock Fund 0.52%, 0.11%, and 2.53%, Small Cap
Opportunities Fund 1.30%, 0.15%, and 3.05%, and International Fund 0.92%,
0.31%, and 2.95%. Absent estimated expense reimbursements and fee waivers,
Other Expenses, Other Expenses-Portfolio(s) and Total Operating Expenses of
C Shares would be: Growth Balanced Fund 0.33%, 0.12%, and 1.90%, Income
Equity Fund 0.39%, 0.07%, and 1.71%, Diversified Equity Fund 0.39%, 0.11%,
and 1.99%, and Growth Equity Fund 0.43%, 0.15%, and 2.26%. Except as
otherwise noted, expense reimbursements and fee waivers are voluntary and
may be reduced or eliminated at any time.
<PAGE>
8
EXAMPLE
The following hypothetical example indicates the dollar amount of expenses
you would pay, assuming a $1,000 investment in a Fund's shares, the
expenses listed in the Annual Fund Operating Expenses table, a 5% annual
return, reinvestment of all distributions, the deduction of the maximum
initial sales charge for A Shares and C Shares, the deduction of the
contingent deferred sales charge for B Shares and C Shares applicable to a
redemption at the end of the period and the conversion of B Shares to A
Shares at the end of 7 years. THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN
THOSE SHOWN IN THE EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Balanced Fund
A Shares $64 $83 $104 $163
B Shares
Assuming redemption
at the end of the period 57 83 111 199
Assuming no redemption 17 53 91 199
C Shares
Assuming redemption
at the end of the period 27 53 91 199
Assuming no redemption 17 53 91 199
Income Equity Fund
A Shares 63 81 100 154
B Shares
Assuming redemption
at the end of the period 56 80 107 190
Assuming no redemption 16 50 87 190
C Shares
Assuming redemption
at the end of the period 26 50 87 190
Assuming no redemption 16 50 87 190
ValuGrowth Stock Fund
A Shares 65 85 107 171
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
Diversified Equity Fund
A Shares 65 85 107 171
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
C Shares
Assuming redemption
at the end of the period 28 55 95 206
Assuming no redemption 18 55 95 206
</TABLE>
<PAGE>
9
[OVERVIEW TAB]
<TABLE>
<S> <C> <C> <C> <C>
Growth Equity Fund
A Shares 67 92 120 198
B Shares
Assuming redemption
at the end of the period 60 93 128 233
Assuming no redemption 20 63 108 233
C Shares
Assuming redemption
at the end of the period 30 63 108 233
Assuming no redemption 20 63 108 233
Small Company Stock Fund
A Shares 67 91 117 192
B Shares
Assuming redemption
at the end of the period 60 91 125 227
Assuming no redemption 20 61 105 227
Small Cap Opportunities Fund
A Shares 67 93 120 198
B Shares
Assuming redemption
at the end of the period 60 93 128 233
Assuming no redemption 20 63 108 233
Large Company Growth Fund
A Shares 67 91 117 192
B Shares
Assuming redemption
at the end of the period 58 85 115 206
Assuming no redemption 18 55 95 206
Diversified Small Cap Fund
A Shares 67 91 117 192
B Shares
Assuming redemption
at the end of the period 60 91 125 227
Assuming no redemption 20 61 105 227
International Fund
A Shares 69 100 132 224
B Shares
Assuming redemption
at the end of the period 63 100 140 258
Assuming no redemption 23 70 120 258
</TABLE>
<PAGE>
10
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FINANCIAL HIGHLIGHTS [PC MONITORS]
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each
Fund's financial performance for 10 years or, if shorter, the Fund's
operating history. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that
an investor would have earned on an investment in a Fund, assuming
reinvestment of all distributions. The information from June 1, 1994
through May 31, 1998 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report dated July 21, 1998 about a Fund, along with the
Fund's financial statements, are included in the Fund's Annual Report,
which is available at no charge upon request. These financial statements
are incorporated by reference into the SAI. Other independent auditors
audited information for prior periods.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions Ending
Beginning Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME EQUITY FUND
A SHARES
Year Ended May 31, 1998 $33.16 $0.52 $8.77 ($0.54) ($0.72) $41.19
Year Ended May 31, 1997 $27.56 $0.57 $5.54 ($0.51) -- $33.16
May 2, 1996(f) to May 31, 1996 $26.94 $0.07 $0.55 -- -- $27.56
B SHARES
Year Ended May 31, 1998 $33.09 $0.24 $8.75 ($0.24) ($0.72) $41.12
Year Ended May 31, 1997 $27.54 $0.36 $5.52 ($0.33) -- $33.09
May 2, 1996(f) to May 31, 1996 $26.94 $0.02 $0.58 -- -- $27.54
- ----------------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(d) Includes expenses allocated from the Portfolio in which the Fund invests.
(e) Reflects the activity of the Portfolio in which the Fund invests.
(f) Commencement of operations.
(g) Annualized.
<PAGE>
11
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
- ---------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income Expenses Expenses(a) Return(b) Rate Rate (c) (000's Omitted)
- -----------------------------------------------------------------------------------------------
1.44%(d) 0.85%(d) 0.91%(d) 28.64% 3.46%(e) $0.0585(e) $75,144
1.95% 0.85% 0.93% 22.40% 4.76% $0.0792 $43,708
3.69%(g) 0.91%(g) 1.91%(g) 2.30% 0.69% $0.0942 $31,448
0.69%(d) 1.60%(d) 1.91%(d) 27.67% 3.46%(e) $0.0585(e) $67,385
1.24% 1.59% 1.96% 21.48% 4.76% $0.0792 $33,626
1.72%(g) 2.63%(g) 2.92%(g) 2.23% 0.69% $0.0942 $17,318
</TABLE>
<PAGE>
12
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
VALUGROWTH STOCK FUND
Net Realized
and Dividends Distributions Ending
Beginning Net Unrealized from Net from Net Net Asset
Net
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- -----------------------------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $25.06 $0.13 $4.69 ($0.16) ($3.54) $26.18
Year Ended May 31, 1997 $22.63 $0.17 $4.80 ($0.13) ($2.41) $25.06
Year Ended May 31, 1996 $18.82 $0.13 $3.93 ($0.13) ($0.12) $22.63
Year Ended May 31, 1995 $17.17 $0.17 $1.66 ($0.18) -- $18.82
Year Ended May 31, 1994 $17.27 $0.10 $0.19 ($0.17) ($0.22) $17.17
Year Ended May 31, 1993 $16.30 $0.17 $1.34 ($0.17) ($0.37) $17.27
December 1, 1991 to May 31, 1992 $14.48 $0.09 $1.83 ($0.10) -- $16.30
Year Ended November 30, 1991 $11.67 $0.18 $2.82 ($0.19) -- $14.48
Year Ended November 30, 1990 $12.67 $0.21 ($0.55) ($0.21) ($0.45) $11.67
Year Ended November 30, 1989 $10.03 $0.18 $2.61 ($0.15) -- $12.67
January 8, 1988(e) to November 30, 1988 $10.00 $0.15 $0.03 ($0.15) -- $10.03
B SHARES
Year Ended May 31, 1998 $24.55 ($0.02) $4.56 ($0.03) ($3.54) $25.52
Year Ended May 31, 1997 $22.28 $0.01 $4.68 ($0.01) ($2.41) $24.55
Year Ended May 31, 1996 $18.65 ($0.02) $3.87 ($0.10) ($0.12) $22.28
Year Ended May 31, 1995 $17.10 $0.07 $1.61 ($0.13) -- $18.65
August 5, 1993(e) to May 31, 1994 $17.12 $0.07 $0.23 ($0.10) ($0.22) $17.10
- -----------------------------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(d) Annualized.
(e) Commencement of operations; the original class of shares became A Shares.
<PAGE>
13
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C>
Ratio to Average
Net Assets
-------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income Expenses Expenses(a) Return(b) Rate Rate (c) (000's Omitted)
- -------------------------------------------------------------------------------------------
0.56% 1.00% 1.26% 21.15% 74.25% $0.0588 $27,771
0.70% 1.01% 1.39% 23.32% 75.50% $0.0781 $18,830
0.63% 1.20% 1.42% 21.69% 105.43% $0.0603 $15,232
1.01% 1.20% 1.43% 10.72% 63.82% -- $12,138
1.06% 1.20% 1.43% 1.68% 86.07% -- $12,922
1.02% 1.20% 1.42% 9.32% 57.34% -- $109,669
1.34%(d) 1.19%(d) 1.64%(d) 26.46%(d) 29.50% -- $68,659
1.57% 1.19% 4.33% 25.84% 31.17% -- $4,853
1.88% 1.20% 11.73% (2.91%) 38.67% -- $750
1.58% 1.20% 8.38% 28.00% 65.89% -- $411
1.84%(d) 1.19%(d) 2.50%(d) 2.04%(d) 30.90% -- $281
(0.19%) 1.75% 2.31% 20.30% 74.25% $0.0588 $8,943
(0.07%) 1.76% 2.48% 22.33% 75.50% $0.0781 $6,591
(0.12%) 1.96% 2.54% 20.79% 105.43% $0.0603 $5,130
0.28% 1.95% 2.51% 9.88% 63.82% -- $3,569
0.25%(d) 1.95%(d) 2.55%(d) 2.36%(d) 86.07% -- $2,218
</TABLE>
<PAGE>
14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
DIVERSIFIED EQUITY FUND
Net Realized
Beginning and Dividends Distributions Ending
Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- --------------------------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $36.51 $0.16 $8.99 ($0.27) ($2.33) $43.06
Year Ended May 31, 1997 $30.56 $0.20 $6.10 ($0.16) ($0.19) $36.51
May 2, 1996(e)to May 31, 1996 $29.89 $0.02 $0.65 -- -- $30.56
B SHARES
Year Ended May 31, 1998 $36.31 ($0.06) $8.85 ($0.08) ($2.33) $42.69
Year Ended May 31, 1997 $30.54 $0.03 $6.00 ($0.07) ($0.19) $36.31
May 6, 1996(e) to May 31, 1996 $29.41 $0.02 $1.11 -- -- $30.54
- -------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers
PAGE 15
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
---------------------------------------
Portfolio Average Net Assets at
Net
Investment Net Gross Total Turnover Commission End of Period
Income(a) Expenses(a) Expenses(a)(b) Return(c) Rate Rate (d) (000's Omitted)
- ----------------------------------------------------------------------------------------
0.60% 1.00% 1.20% 26.08% N/A(g) N/A(g) $56,350
0.81% 1.02% 1.40% 20.75% 48.08% $0.0626 $25,271
1.88%(f) 1.52%(f) 4.06%(f) 2.24% 5.76% $0.0671 $2,699
(0.15%) 1.75% 2.19% 25.13% N/A(g) N/A(g) $81,548
0.09% 1.76% 2.41% 19.86% 48.08% $0.0626 $33,870
1.24%(f) 2.37%(f) 4.95%(f) 3.84% 5.76% $0.0671 $2,447
</TABLE>
(d) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual Funds financials statements.
(e) Commencement of operations.
(f) Annualized.
(g) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
<PAGE>
PAGE 14
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
GROWTH EQUITY FUND
Net Realized
Beginning and Dividends Distributions Ending
Net Net Unrealized from Net from Net Net Asset
Asset Value Investment Gain (Loss) Investment Realized Value Per
Per Share Income on Investments Income Gain Share
- ------------------------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $32.49 ($0.06) $6.88 ($0.04) ($3.54) $35.73
Year Ended May 31, 1997 $29.08 ($0.02) $4.06 ($0.04) ($0.59) $32.49
May 2, 1996 to May 31, 1996(e) $28.50 -- $0.58 -- -- $29.08
B SHARES
Year Ended May 31, 1998 $32.28 ($0.23) $6.72 -- ($3.54) $35.23
Year Ended May 31, 1997 $29.07 ($0.13) $3.93 -- ($0.59) $32.28
May 6, 1996 to May 31, 1996(e) $28.18 -- $0.89 -- -- $29.07
- -------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
PAGE 15
<TABLE>
<S> <C> <C> <C>
Ratio to Average
Net Assets
- -------------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income Expenses(a) Expenses(a)(b) Return(c) Rate Rate(d) (000's Omitted)
(Loss)(a)
- ------------------------------------------------------------------------------------------------
(0.11%) 1.25% 1.42% 22.55% N/A(g) N/A(g) $21,567
(0.12%) 1.30% 1.95% 14.11% 9.06% $0.0565 $14,146
0.34%(f) 2.08%(f) 6.40%(f) 2.04% 7.39% $0.0617 $3,338
(0.85%) 2.00% 2.45% 21.63% N/A(g) N/A(g) $16,615
(0.82%) 2.04% 3.02% 13.28% 9.06% $0.0565 $8,713
(0.40%)(f) 2.92%(f) 7.44%(f) 3.16% 7.39% $0.0617 $703
</TABLE>
(d) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual funds financials statements.
(e) Commencement of operations.
(f) Annualized.
(g) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
<PAGE>
16
SMALL COMPANY STOCK FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Realized
and Dividends Distributions
Beginning Net Return Unrealized from Net from Net
Net
Asset Value Investment of Gain (Loss) Investment Realized
Per Share Income Capital on Investments Income Gain
- -----------------------------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $13.95 ($0.07) ($0.07) $1.09 -- ($2.90)
Year Ended May 31, 1997 $14.02 ($0.04) -- $0.88 -- ($0.91)
Year Ended May 31, 1996 $10.64 $0.01 -- $3.93 ($0.03) ($0.53)
Year Ended May 31, 1995 $9.84 $0.12 -- $0.87 ($0.11) ($0.08)
December 31, 1993 to May 31, 1994(f) $10.00 $0.07 -- ($0.15) ($0.08) --
B SHARES
Year Ended May 31, 1998 $13.63 ($0.11) ($0.07) $1.01 -- ($2.90)
Year Ended May 31, 1997 $13.83 ($0.11) -- $0.82 -- ($0.91)
Year Ended May 31, 1996 $10.56 ($0.08) -- $3.90 ($0.02) ($0.53)
Year Ended May 31, 1995 $9.82 $0.07 -- $0.84 ($0.09) ($0.08)
December 31, 1993 to May 31, 1994(f) $10.00 $0.06 -- ($0.17) ($0.07) --
- -----------------------------------------------------------------
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(b) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(c) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual funds financials statements.
PAGE 17
<TABLE>
<S> <C> <C> <C>
Ratio to Average Net Assets
- -------------------------------------------
Ending
Net Asset Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Value Per Income Expenses Expenses(a) Return(b) Rate Rate(c) (000's Omitted)
Share (Loss)
- ---------- -----------------------------------------------------------------------------------------------
$12.00 (0.50%) 1.20%(d) 1.42%(d) 8.07% 166.16(e) $0.0616(e) $8,426
$13.95 (0.38%) 1.19% 1.67% 6.34% 210.19% $0.0774 $7,355
$14.02 0.03% 1.21% 1.87% 38.22% 134.53% $0.0555 $5,426
$10.64 1.14% 0.53% 2.32% 10.19% 68.09% - $1,540
$9.84 1.95%(g) 0.22% 10.66%(g) (1.98%)(g) 14.98% - $265
$11.56 (1.26%)(d) 1.95%(d) 2.47%(d) 7.29% 166.16%(e) $0.0616(e) $5,799
$13.63 (1.13%) 1.94% 2.73% 5.46% 210.19% $0.0774 $5,125
$13.83 (0.74%) 1.96% 2.96% 37.32% 134.53% $0.0555 $4,125
$10.56 0.38% 1.27% 3.56% 9.31% 68.09% - $963
$9.82 1.27(g) 0.98%(g) 20.87%(g) (2.77%)(g) 14.98% - $195
</TABLE>
(d) Includes expenses allocated from the Portfolio in which the Fund invests.
(e) Reflects the activity of the Portfolio in which the Fund invests.
(f) Commencement of operations.
(g) Annualized.
<PAGE>
16
SMALL CAP OPPORTUNITIES FUND
[FINANCIAL HIGHLIGHTS TAB]
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
and Distributions Ending
Beginning Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Realized Value Per
Per Share Income on Investments Gain Share
- ---------------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $19.83 ($0.07) $4.37 ($0.53) $23.60
October 9, 1996(f)to May 31, 1997 $17.39 ($0.01) $2.46 ($0.01) $19.83
B SHARES
Year Ended May 31, 1998 $19.75 ($0.05) $4.15 ($0.53) $23.32
November 8, 1996(f) to May 31, 1997 $17.41 ($0.05) $2.40 ($0.01) $19.75
- ---------------------------------------------------------------------------------
</TABLE>
(a) Includes expenses from the Portfolioin which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the
effects of sales charges. Total Return would have been lower absent expense
reimbursements and fee waivers.
PAGE 17
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
------------------------------------------
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income (Loss)(a) Expenses(a) Expenses(a)(b)Return(c) Rate(d) Rate(d)(e) (000's Omitted)
- -----------------------------------------------------------------------------------------------
(0.43%) 1.27% 1.86% 21.97% 54.98% $0.0582 $6,870
(0.18%)(g) 1.25%(g) 10.51%(g) 11.37% 34.45% $0.0584 $522
(1.21%) 2.02% 3.05% 21.03% 54.98% $0.0582 $6,140
(0.99%)(g) 2.06%(g) 27.27%(g) 13.53% 34.45% $0.0584 $158
</TABLE>
(d) Reflects the activity of the Portfolio in which the Fund invests.
(e) Average Commission Rate represents theaverage commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(f) Commencement of operations.
(g) Annualized.
<PAGE>
18
INTERNATIONAL FUND
<TABLE>
<S> <C> <C> <C> <C> <C>
Net Realized
Beginning and Dividends Ending
Net Net Unrealized from Net Net Asset
Asset Value Investment Gain (Loss) Investment Value Per
Per Share Income on Income Share
Investments
- ----------------------------------------------------------------------------------------------------
A SHARES
Year Ended May 31, 1998 $21.66 $0.03 $2.35 ($0.20) $23.84
Year Ended May 31, 1997 $19.82 $0.10 $1.94 ($0.20) $21.66
November 1, 1995 to May 31, 1996 $17.97 $0.35 $1.83 ($0.33) $19.82
April 1, 1995(g) to October 31, 1995 $16.50 $0.01 $1.46 -- $17.97
B SHARES
Year Ended May 31, 1998 $21.55 ($0.09) $2.31 ($0.07) $23.70
Year Ended May 31, 1997 $19.71 ($0.06) $1.93 ($0.03) $21.55
November 1, 1995 to May 31, 1996 $17.91 $0.25 $1.83 ($0.28) $19.71
May 12, 1995(g)to October 31, 1995 $17.20 $0.01 $0.70 -- $17.91
- ----------------------------------------------------------------------------
</TABLE>
(a) Includes expenses allocated from the Portfolios in which the Fund invests.
(b) The ratio of Gross Expenses to Average Net Assets does not reflect fee
waivers or expense reimbursements.
(c) Total Return does not include the effects of sales charges. Total Return
would have been lower absent expense reimbursements and fee waivers.
(d) Average Commission Rate represents the average commission per share paid to
brokers on the purchase or sale of portfolio securities. Prior to 1996,
this data was not reported in mutual fund financial statements.
(e) Reflects the activity of the Portfolios in which the Fund invests.
(f) Annualized.
(g) Commencement of operations.
(h) Portfolio Turnover Rate and Average Commission Rate are not applicable as
the Fund invested in more than one Portfolio.
<PAGE>
19
[FINANCIAL HIGHLIGHTS TAB]
Ratio to Average
Net Assets
----------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Portfolio Average Net Assets at
Investment Net Gross Total Turnover Commission End of Period
Income(a) Expenses(a) Expenses(a)(b) Return(c) Rate Rate(d) (000's Omitted)
- ---------------------------------------------------------------------------------------------
0.44% 1.47% 1.72% 11.20% N/A(h) N/A(h) $3,342
0.42% 1.43% 1.72% 10.33% 48.23%(e) $0.0202(e) $2,240
0.92%(f) 1.50%(f) 2.51%(f) 12.31% 14.12%(e) $0.0325(e) $1,080
0.26%(f) 1.32%(f) 20.95%(f) 8.91% 29.41% (e) -- $216
(0.29%) 2.22% 2.81% 10.39% N/A(h) N/A(h) $2,245
(0.34%) 2.18% 2.76% 9.44% 48.23%(e) $0.0202(e) $1,667
(0.02%)(f) 2.25%(f) 3.11%(f) 11.79% 14.12%(e) $0.0325(e) $995
0.17%(f) 1.27%(f) 14.57%(f) 4.30% 29.41%(e) -- $395
</TABLE>
<PAGE>
20
- --------------------------------------------------------------------------------
GLOSSARY [PC MONITORS]
- --------------------------------------------------------------------------------
This Glossary of frequently used terms will help you understand the
discussion of the Funds' objectives, policies, and risks. Defined terms are
capitalized when used in this prospectus.
Term Definition
- ---- ----------
Board The Board of Trustees of Norwest Advantage Funds.
CDSC Contingent deferred sales charge.
Duration A measure of a debt security's average life that reflects
the present value of the security's cash flow. The prices of
securities with longer Durations generally are more
volatile.
Fundamental Requiring shareholder approval.
Investment Grade Rated at the time of purchase in 1 of the 4 highest
long-term or 2 highest short-term ratings categories by an
NRSRO or unrated and determined by the Adviser to be
comparable quality.
Market The total market value of a company's outstanding common
Capitalization stock.
NRSRO A nationally recognized statistical rating organization,
such as S&P, that rates fixed income securities and
preferred stock by relative credit risk.
Non-Investment Neither rated at the time of purchase in 1 of the 4 highest
Grade long-term or 2 highest short-term ratings categories by an
NRSRO nor unrated and determined by the Adviser to be of
comparable quality.
Russell 1000(R) An index of large- and medium- capitalization companies.
Index
Russell 2000(R) An index of smaller capitalization companies with a broader
Index base of companies than the S&P 600 Small Cap Index.
S&P Standard & Poor's Corporation.
S&P 500 Index Standard & Poor's 500 Composite Stock Price Index, an index
of large capitalization companies.
S&P 600 Small Cap Standard & Poor's Small Cap 600 Composite Stock Price
Index Index(C), an index of small capitalization companies.
SAI Statement of Additional Information.
SEC The U.S. Securities and Exchange Commission.
U.S. Government A security issued or guaranteed as to principal and interest
Security by the U.S. Government, its agencies or its
instrumentalities.
<PAGE>
21
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
This section discusses the investment objectives and policies of the Funds
and the Portfolios. After each Fund's description, there is a short,
alphabetical listing of the Fund's primary risks. The RISK CONSIDERATIONS
section below discusses these risks.
THE FUNDS
GROWTH BALANCED FUND
[GLOSSARY TAB]
[INVESTMENT OBJECTIVES AND POLICIES TAB]
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a
combination of current income and capital appreciation by diversified
investments in stocks and bonds.
INVESTMENT POLICIES. The Fund is designed for investors seeking long-term
capital appreciation in the equity securities market in a balanced fund.
The Fund currently invests in 15 Portfolios.
The Fund invests the equity portion of its portfolio in the 5 different
equity investment styles of Diversified Equity Fund. The blending of
multiple equity investment styles is intended to reduce the risk associated
with the use of a single style, which may move in and out of favor during
the course of a market cycle. The Fund invests the fixed-income portion of
its portfolio in Positive Return Bond Portfolio, Strategic Value Bond
Portfolio, and Managed Fixed Income Portfolio. The blending of multiple
fixed income investment styles is intended to reduce the price and return
volatility of, and provide more consistent returns within, the fixed-income
portion of the Fund's investments.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range Of
Investment Style Allocation Investment
---------------- ---------- ----------
DIVERSIFIED EQUITY FUND STYLE 65% 45% - 85%
INDEX PORTFOLIO 16.3% 11.3% - 21.3%
INCOME EQUITY PORTFOLIO 16.3% 11.3% - 21.3%
LARGE COMPANY STYLE 16.3% 11.3% - 21.3%
LARGE COMPANY GROWTH PORTFOLIO 13.0% 9.0% - 17.0%
DISCIPLINED GROWTH PORTFOLIO 3.3% 2.3% - 4.3%
DIVERSIFIED SMALL CAP STYLE 6.5% 4.5% - 8.5%
SMALL CAP INDEX PORTFOLIO 1.3% 0.9% - 1.7%
SMALL COMPANY GROWTH PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY VALUE PORTFOLIO 1.6% 1.1% - 2%
SMALL COMPANY STOCK PORTFOLIO 1.0% 0.7% - 1.4%
SMALL CAP VALUE PORTFOLIO 1.0% 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% - 2.0%
</TABLE>
<PAGE>
22
<TABLE>
<S> <C> <C>
GROWTH BALANCED FUND (CONTINUED)
current range of
investment style allocation investment
---------------- ---------- ----------
DIVERSIFIED BOND FUND STYLE 35% 15% - 55%
MANAGED FIXED INCOME PORTFOLIO 17.5% 7.5% - 27.5%
STRATEGIC VALUE BOND PORTFOLIO 5.8% 2.5% - 9.2%
POSITIVE RETURN BOND PORTFOLIO 11.7% 5% - 18.3%
--------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of the Fund's assets invested in different styles may
temporarily deviate from the Fund's current allocation due to changes in
market values. The Adviser will effect transactions periodically to
reestablish the current allocation.
As market or other conditions change, the Adviser may attempt to enhance
the Fund's returns by changing the percentage of Fund assets invested in
fixed income and equity securities. The Fund also may invest in more or
fewer Portfolios or invest directly in portfolio securities. Absent
unstable market conditions, the Adviser does not anticipate making a
substantial number of percentage changes. When the Adviser believes that a
change in the current allocation percentages is desirable, it will sell and
purchase securities to effect the change. When the Adviser believes that a
change will be temporary (generally, 3 years or less), it may effect the
change by using futures contracts.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Interest Rate Risk Leverage Risk Market Risk
Prepayment Risk Small Company Risk
INCOME EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation consistent with above-average dividend
income.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have above-average return
potential based on current market valuations. The Fund primarily emphasizes
investments in securities of companies with above-average dividend income.
In selecting securities for the Fund, the Adviser uses various valuation
measures, including above-average dividend yields and below industry
average price-to-earnings, price-to-book, and price-to-sales ratios. The
Adviser considers large companies to be those whose Market Capitalization
is greater than the median of the Russell 1000 Index.
The Fund may invest in preferred stock, convertible securities, and
securities of foreign companies. The Fund will not normally invest more
than 10% of its total assets in the securities of a single issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
<PAGE>
23
VALUGROWTH STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation.
INVESTMENT POLICIES. The Fund invests primarily in medium- and
large-capitalization companies that, in the view of the Adviser, possess
above average growth characteristics, and appear to be undervalued. The
Adviser considers medium-capitalization companies to be those whose Market
Capitalization is in the range of $500 million to $8 billion. The Adviser
considers large companies to be those whose Market Capitalization is
greater than the median of the Russell 1000 Index.
The Fund seeks to identify and invest in those companies with earnings and
dividends that the Adviser believes will grow faster than both inflation
and the economy in general. The Fund invests in companies with growth
potential that, in the opinion of the Adviser, has not yet been fully
reflected in the market price of the companies' shares. In seeking these
investments, the Adviser relies primarily on a company-by-company analysis
(rather than on a broader analysis of industry or economic sector trends.
The Adviser considers such matters as the quality of a company's
management, the existence of a leading or dominant position in a major
product line, or market, the soundness of the company's financial position,
and the maintenance of a relatively high rate of return on invested capital
and shareholder's equity. Once companies are identified as possible
investments, the Adviser applies a number of valuation measures to
determine the relative attractiveness of each company and selects those
companies whose shares are most attractively priced.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Fund may invest in companies that the Adviser considers to be "special
situations." Special situation companies often have the potential for
significant future earnings growth but have not performed well in the
recent past. These situations may include management turnarounds, corporate
or asset restructurings, or significantly undervalued assets. These
investments form a comparatively small portion of the Fund's portfolio.
The Fund may invest up to 20% of its total assets in securities of foreign
companies. The Fund also may write covered call options and purchase call
options on equity securities to manage risk or enhance returns.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments among different equity investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in a single investment
style. The Fund currently invests in 12 Portfolios.
<PAGE>
24
The Fund's investments combine 5 different equity investment styles - an
index style, an income equity style, a large company style, a diversified
small cap style, and an international style. The Fund allocates the assets
dedicated to large company investments to 2 Portfolios, the assets
allocated to small company investments to 5 Portfolios and the assets
dedicated to international investments to 3 Portfolios. Because Diversified
Equity Fund blends 5 equity investment styles, it is anticipated that its
price and return volatility will be less than that of Growth Equity Fund,
which blends 3 equity investment styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Style Current Range of
----------------- Allocation Investment
------------ ------------
INDEX PORTFOLIO 25% 23.5% - 26.5%
INCOME EQUITY PORTFOLIO 25% 23.5% - 26.5%
LARGE COMPANY STYLE 25% 23.5% - 26.5%
LARGE COMPANY GROWTH PORTFOLIO 20% 18.5% - 21.5%
DISCIPLINED GROWTH PORTFOLIO 5% 3.5% - 6.5%
DIVERSIFIED SMALL CAP STYLE 10% 8.5% - 11.5%
SMALL CAP INDEX PORTFOLIO 2.0% 0.5% - 3.5%
SMALL COMPANY GROWTH PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY VALUE PORTFOLIO 2.4% 0.9% - 3.9%
SMALL COMPANY STOCK PORTFOLIO 1.6% 0.1% - 3.1%
SMALL CAP VALUE PORTFOLIO 1.6% 0.1% - 3.1%
INTERNATIONAL STYLE 15% 13.5% - 16.5%
INTERNATIONAL PORTFOLIO 11.0% 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
<PAGE>
25
GROWTH EQUITY FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide a high
level of long-term capital appreciation with moderate annual return
volatility by diversifying its investments among different equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to reduce the volatility and risk of investing in a single equity style.
The Fund currently invests in 9 Portfolios.
The Fund's investments combine 3 different equity styles - a large company
growth style, a diversified small cap style and an international style. The
Fund allocates the assets dedicated to small company investments to 5
Portfolios and the assets dedicated to international investments to 3
Portfolios. It is anticipated that the Fund's price and return volatility
will be somewhat greater than those of Diversified Equity Fund, which
blends 5 equity styles.
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range of
Investment Style Allocation Investment
---------------- ---------- ----------
LARGE COMPANY GROWTH PORTFOLIO 35% 33% - 37%
DIVERSIFIED SMALL CAP STYLE 35% 33% - 37%
SMALL CAP INDEX PORTFOLIO 7.0% 5.0% - 9.0%
SMALL COMPANY GROWTH PORTFOLIO 8.4% 8.5% - 12.5%
SMALL COMPANY VALUE PORTFOLIO 8.4% 8.5% - 12.5%
SMALL COMPANY STOCK PORTFOLIO 5.6% 3.6% - 7.6%
SMALL CAP VALUE PORTFOLIO 5.6% 3.6% - 7.6%
INTERNATIONAL STYLE 30% 28% - 32%
INTERNATIONAL PORTFOLIO 22.1% 17.0% - 25.3%
INTERNATIONAL EQUITY PORTFOLIO 6.8% 4.8% - 8.8%
SCHRODER EM CORE PORTFOLIO 1.2% 0% - 5.1%
---------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
<PAGE>
26
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market or other conditions. The Fund also may invest in
more or fewer Portfolios or invest directly in portfolio securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Rate Risk Foreign Risk Leverage Risk
Market Risk Small Company Risk
LARGE COMPANY GROWTH FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing primarily in large,
high-quality domestic companies that the Adviser believes have superior
growth potential.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
large, high-quality domestic companies that have superior growth potential.
The Adviser considers large companies to be those whose Market
Capitalization is greater than the median of the Russell 1000 Index 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 ICON]
Currency Risk Foreign Risk Leverage Risk
Market Risk
DIVERSIFIED SMALL CAP FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation with moderate annual return volatility by
diversifying its investments across different small capitalization equity
investment styles.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in small capitalization
equity securities. The Fund invests in several different small
capitalization equity styles in order to reduce the risk of price and
return volatility associated with reliance on a single investment style.
The Fund currently invests in 5 Portfolios.
<PAGE>
27
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range of
Investment Style Allocation Investment
---------------- ---------- ----------
SMALL CAP INDEX PORTFOLIO 20% 18.5% - 21.5%
SMALL COMPANY GROWTH PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY VALUE PORTFOLIO 24% 22.5% - 25.5%
SMALL COMPANY STOCK PORTFOLIO 16% 14.5% - 17.5%
SMALL CAP VALUE PORTFOLIO 16% 14.5% - 17.5%
------------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
SMALL COMPANY STOCK FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in the common stock of
small and medium-size domestic companies that have Market Capitalizations
well below that of the average company in the S&P 500 Index. The Adviser
considers small companies to be those companies whose Market
Capitalizations are less than the largest stock in the Russell 2000 Index
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 Fund, the Adviser seeks securities with
significant price appreciation potential and attempts to identify companies
that show above-average growth, as compared to long-term overall market
growth. The Fund invests in companies that may be in a relatively early
stage of development or may produce goods and services that have favorable
prospects for growth due to increasing demand or developing markets.
Frequently, such companies have a small management group and single product
or product line expertise, which, in the view of the Adviser, may result in
an enhanced entrepreneurial spirit and greater focus. The Adviser believes
that such companies may develop into significant business enterprises and
that an investment in these companies offers a greater opportunity for
capital appreciation than an investment in larger, more established
companies.
<PAGE>
28
The Fund may invest up to 20% of its total assets in the securities of
foreign companies. The Fund may also write covered call options and
purchase call options on equity securities to manage risk or enhance
returns.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL CAP OPPORTUNITIES FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide capital
appreciation. Current income will be incidental to the objective of capital
appreciation.
INVESTMENT POLICIES. The Fund invests primarily in equity securities of
U.S. companies that, at the time of purchase, have Market Capitalizations
of $1.5 billion or less.
The Adviser attempts to identify securities of companies that it believes
can generate above-average earnings growth and sell at favorable prices in
relation to book values and earnings. The Adviser's assessment of a
company's management's competence will be an important consideration. These
criteria are not rigid and the Fund may make other investments to achieve
its objective.
The Fund will invest principally in equity securities, including common
stocks, securities convertible into common stocks, or, subject to special
limitations, rights or warrants to subscribe for or purchase common stocks.
The Fund also may invest to a limited degree in non-convertible debt
securities and preferred stocks.
The Fund may use options and futures contracts to manage risk. The Fund
also may use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Small Company Risk
INTERNATIONAL FUND
[INVESTMENT ICON]
INVESTMENT OBJECTIVE. The Fund's investment objective is to provide
long-term capital appreciation by investing directly or indirectly in
high-quality companies based outside the United States.
INVESTMENT POLICIES. The Fund invests in a "multi-style" approach designed
to minimize the volatility and risk of investing in international
securities. The Fund's investment portfolio combines 2 different investment
styles - an international equity investment style and an international
emerging markets investment style. The Fund invests in 2 Portfolios.
<PAGE>
29
ALLOCATION. The current allocations and ranges of investments by the Fund
in each Portfolio are:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Current Range of
Investment Style Allocation Investment
----------------------------------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO 95% 80% - 100%
SCHRODER EM CORE PORTFOLIO 5% 0% - 20%
----------------------------------------------------------------------------------------------------------
TOTAL FUND ASSETS 100%
</TABLE>
The percentage of Fund assets invested in each Portfolio may temporarily
deviate from the current allocations due to changes in market values. The
Adviser will effect transactions daily to reestablish the current
allocations. The Adviser may make changes in the current allocations at any
time in response to market and other conditions. The Fund also may invest
in more or fewer Portfolios or invest directly in portfolio securities.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Leverage Risk
Geographic Concentration Risk Interest Rate Risk
Market Risk Foreign Risk
- --------------------------------------------------------------------------------
DESCRIPTIONS OF PORTFOLIOS
- --------------------------------------------------------------------------------
POSITIVE RETURN BOND PORTFOLIO
The Portfolio seeks positive total return each calendar year regardless of
general bond market performance by investing in a portfolio of U.S.
Government Securities and corporate fixed income securities. The
Portfolio's assets are divided into 2 components, short bonds with
maturities (or average life) of 2 years or less and long bonds with
maturities of 25 years or more. Shifts between short bonds and long bonds
are made based on movement in the prices of bonds rather than on the
Adviser's forecast of interest rates. During periods of falling prices
(generally, increasing interest rate environments) long bonds are sold to
protect capital and limit losses. Conversely, when bond prices rise, long
bonds are purchased. The average dollar-weighted maturity of the Portfolio
will vary between 1 and 30 years.
Under normal circumstances, the Portfolio invests at least 50% of its net
assets in U.S. Government Securities, including U.S. Treasury Securities.
The Portfolio only purchases securities that are rated, at the time of
purchase, within 1 of the 2 highest long-term rating categories assigned by
an NRSRO or that are unrated and determined by the Adviser to be of
comparable quality. The Portfolio may invest up to 25% of its assets in
securities rated in the second highest rating category. The Portfolio does
not invest more than 25% of its total assets in zero-coupon securities,
securities with variable or floating rates of interest or asset-backed
securities.
<PAGE>
30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk 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 2 and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to
not more than 65% of its total assets and its investment in other
asset-backed securities to not more than 25% of its net assets. In
addition, the Portfolio may not invest more than 30% of its total assets in
the securities issued or guaranteed by any single agency or instrumentality
of the U.S. Government, except the U.S. Treasury.
The Portfolio only purchases Investment Grade securities. The Portfolio
normally will have an average dollar-weighted portfolio maturity of between
3 and 12 years and a Duration of between 2 and 6 years.
The Portfolio also may invest up to 10% of its total assets in securities
issued or guaranteed by foreign governments the Adviser deems stable, or
their subdivisioins, agencies, or instrumentalities; loan or security
participations; securities of supranational organizations; and municipal
securities.
The Portfolio may use options, swap agreements, interest rate caps, floors,
and collars and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Foreign Risk Interest Rate Risk
Leverage Risk Market Risk Prepayment Risk
STRATEGIC VALUE BOND PORTFOLIO
The Portfolio seeks total return by investing primarily in income producing
securities. The Portfolio invests in a broad range of fixed income
instruments in order to create a strategically diversified portfolio of
fixed income investments.
<PAGE>
31
These investments include corporate bonds, mortgage- and other asset-backed
securities, U.S. Government Securities, preferred stock, convertible bonds
and foreign bonds.
The Adviser focuses on relative value as opposed to predicting the
direction of interest rates. In general, the Portfolio seeks higher current
income instruments such as corporate bonds and mortgage-and other
asset-backed securities in order to enhance returns. The Adviser believes
that this exposure enhances performance in varying economic and interest
rate cycles and avoids excessive risk concentrations. The Adviser's
investment process involves rigorous evaluation of each security, including
identifying and valuing cash flows, embedded options, credit quality,
structure, liquidity, marketability, current versus historical trading
relationships, supply and demand for the instrument, and expected returns
in varying economic/interest rate environments. The Adviser uses this
process to seek to identify securities which represent the best relative
economic value. The Adviser then evaluates the results of the investment
process against the Portfolio's objective and purchases those securities
that are consistent with the Portfolio's investment objective.
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio particularly seeks strategic diversification. The Portfolio
will not invest more than:
* 75% of its total assets in corporate bonds;
* 65% of its total assets in mortgage-backed securities;
* 50% of its total assets in asset-backed securities; or
* 25% of its total assets in a single industry of the corporate market.
The Portfolio may invest in U.S. Government Securities without restriction.
The Portfolio generally will not invest more than 5% of its total assets in
the corporate bonds of any single issuer.
The Portfolio will invest 65% of its total assets in fixed-income
securities rated, at the time of purchase, within the 3 highest rating
categories assigned by at least 1 NRSRO, or which are unrated and
determined by the Adviser to be of comparable quality. The Portfolio may
invest up to 20% of its total assets in Non-Investment Grade securities.
The average maturity of the Portfolio will vary between 5 and 15 years. In
the case of mortgage-backed and similar securities, the Portfolio uses the
security's average life in calculating the Portfolio's average maturity.
The Portfolio's Duration normally will vary between 3 and 8 years.
The Portfolio may use options, swap agreements, interest rate caps, floors,
and collars and futures contracts to manage risk. The Portfolio also may
use options to enhance return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
32
INDEX PORTFOLIO
The Portfolio is designed to replicate the return of the S&P 500 Index with
minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio holds stocks representing 100% of the
capitalization-weighted market values of the S&P 500 Index. The Adviser
generally executes portfolio transactions for the Portfolio only to
replicate the composition of the S&P 500 Index, to invest cash received
from portfolio security dividends or investments in the Portfolio, and to
raise cash to fund redemptions. The Portfolio may hold cash or cash
equivalents to facilitate payment of the Portfolio's expenses or
redemptions and may invest in index futures contracts to a limited extent.
For these and other reasons, the Portfolio's performance can be expected to
approximate but not equal the S&P 500 Index.
The S&P 500 Index tracks the total return performance of 500 common stocks
which are chosen for inclusion in the S&P 500 Index by S&P on a statistical
basis. The 500 securities, most of which trade on the New York Stock
Exchange, represent approximately 70% of the total market value of all U.S.
common stocks. Each stock in the S&P 500 Index is weighted by its market
value. Because of the market-value weighting, the 50 largest companies in
the S&P 500 Index currently account for approximately 47% of its value. The
S&P 500 Index emphasizes large capitalizations and, typically, companies
included in the S&P 500 Index are the largest and most dominant firms in
their respective industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 500 Index is a good investment, is accurate or
complete, or will track general stock market performance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Index Risk
INCOME EQUITY PORTFOLIO
The Income Equity Fund section of this prospectus describes this Portfolio.
LARGE COMPANY GROWTH PORTFOLIO
The Large Company Growth Fund section of this prospectus describes this
Portfolio.
DISCIPLINED GROWTH PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks of
larger companies. The Portfolio seeks higher long-term returns by investing
primarily in the common stock of companies that, in the view of the
Adviser, possess above average potential for growth. The Portfolio invests
in companies with average Market Capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level
of corporate earnings that exceed the level expected by investors. In
seeking these companies, the Adviser uses both quantitative and fundamental
analysis. The Adviser may consider,
<PAGE>
33
among other factors, changes of earnings estimates by investment analysts,
the recent trend of company earnings reports, and an analysis of the
fundamental business outlook for the company. The Adviser uses a variety of
valuation measures to determine whether or not the share price already
reflects any positive fundamentals identified by the Adviser. In addition
to approximately equal weighting of portfolio securities, the Adviser
attempts to constrain the variability of the investment returns by
employing risk control screens for price volatility, financial quality, and
valuation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk
[INVESTMENT OBJECTIVES AND POLICIES TAB]
SMALL CAP INDEX PORTFOLIO
The Portfolio seeks to replicate the return of the S&P Small Cap 600 Index
with minimum tracking error and to minimize transaction costs. Under normal
circumstances, the Portfolio will hold stocks representing 100% of the
capitalization-weighted market values of the S&P 600 Small Cap Index. The
Adviser generally executes portfolio transactions only to replicate the
composition of the S&P 600 Small Cap Index, to invest cash received from
portfolio security dividends or investments in the Portfolio, and to raise
cash to fund redemptions. The Fund may hold cash or cash equivalents to
facilitate payment of the Fund's expenses or redemptions and may invest in
index futures contracts. For these and other reasons, the Portfolio's
performance can be expected to approximate but not equal that of the S&P
600 Small Cap Index.
The S&P 600 Small Cap Index tracks the total return performance of 600
common stocks which are chosen for inclusion in the S&P 600 Small Cap Index
by S&P on a statistical basis. The 600 securities, most of which trade on
the New York Stock Exchange, represent 4% of the total market value of all
U.S. common stocks. Each stock in the S&P 600 Small Cap Index is weighted
by its market value. The S&P 600 Small Cap Index emphasizes smaller
capitalizations and typically, companies included in the S&P 600 Small Cap
Index may not be the largest nor most dominant firms in their respective
industries.
S&P does not sponsor, sell, promote, or endorse the Portfolio. S&P does not
warrant that the S&P 600 Small Cap Index is a good investment, is accurate
or complete, or will track general stock market performance.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Leverage Risk Market Risk Index Risk
SMALL COMPANY STOCK PORTFOLIO
The Small Company Stock Fund section of this prospectus describes this
Portfolio.
<PAGE>
34
SMALL COMPANY GROWTH PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
in smaller domestic companies. The Portfolio invests primarily in the
common stock of small and medium-sized domestic companies that are either
growing rapidly or completing a period of significant change. Small
companies are those companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index 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 5% of its total
assets in the securities of a single issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Currency Risk Foreign Risk Market Risk
Small Company Risk
SMALL COMPANY VALUE PORTFOLIO
The Portfolio seeks to provide long-term capital appreciation by investing
primarily in smaller companies whose Market Capitalization is less than the
largest stock in the Russell 2000 Index or approximately $1.4 billion. The
Adviser focuses on securities that are conservatively valued in the
marketplace relative to the stock of comparable companies, determined by
price/earnings ratios, cash flows, or other measures. Value investing
provides investors with a less aggressive way to take advantage of growth
opportunities of small companies. Value investing may reduce downside risk
and offer potential for capital appreciation as a stock gains favor among
other investors and its stock price rises.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
SMALL CAP VALUE PORTFOLIO
The Portfolio seeks capital appreciation by investing in common stocks
of smaller companies. The Portfolio will normally invest substantially all
of its assets in securities of companies with Market Capitalizations that
reflect the Market Capitalization of companies included in the Russell 2000
Index, which range from approximately $221.9 billion to $1.4 billion. The
Portfolio seeks higher growth rates and greater long-term returns by
investing primarily in the common stock of smaller
<PAGE>
35
companies that the Adviser believes to be undervalued and likely to report
a level of corporate earnings exceeding the level expected by investors.
The Adviser values companies based upon both the price-to-earnings ratio of
the company, and a comparison of the public market value of the company to
a proprietary model that values the company in the private market. In
seeking companies that will report a level of earnings exceeding that
expected by investors, the Adviser uses both quantitative and fundamental
analysis. Among other factors, the Adviser considers changes of earnings
estimates by investment analysts, the recent trend of company earnings
reports and the fundamental business outlook for the company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Market Risk Small Company Risk
INTERNATIONAL PORTFOLIO
[INVESTMENT OBJECTIVES AND POLICIES TAB]
The Portfolio seeks to provide long-term capital appreciation by investing
directly or indirectly in high-quality companies based outside the United
States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio also may invest in the securities of domestic closed-end
investment companies that invest primarily in foreign securities and may
invest in debt securities of foreign governments or their political
subdivisions, agencies, or instrumentalities, of supranational
organizations, and of foreign corporations. The Portfolio's investments are
generally diversified among securities of issuers in foreign countries
including, but not limited to, Japan, Germany, the United Kingdom, France,
the Netherlands, Hong Kong, Singapore, and Australia. In general, the
Portfolio will invest only in securities of companies and governments in
countries that the Adviser, in its judgment, considers both politically and
economically stable. The Fund may invest more than 25% of its total assets
in investments in a particular country, region or type of investment.
The Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The Portfolio also may enter into
foreign exchange contracts, including forward contracts to purchase or sell
foreign currencies, in anticipation of its currency requirements and to
protect against possible adverse movements in foreign exchange rates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk
INTERNATIONAL EQUITY PORTFOLIO
The Portfolio seeks to earn total return, with an emphasis on capital
appreciation, over the long-term, by investing primarily in equity securities of
non-United States 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 of the world. 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
<PAGE>
36
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 applies a fundamentals-driven, value-oriented analysis to identify
companies with above-average potential for long-term growth. The Adviser
examines financial data including 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 factors such as economic growth prospects, monetary and fiscal
policies, political stability, currency trends, market liquidity and investor
sentiment.
[RISK ICON]
Currency Rate Risk Foreign Risk Geographic Concentration Risk
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.
The Fund may invest up to 35% of its total assets in Non-Investment Grade
fixed income securities. The Fund may enter into foreign exchange
contracts, including forward contracts, in anticipation of its currency
requirements and to protect against possible adverse movements in foreign
exchange rates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[RISK ICON]
Credit Risk Currency Rate Risk Foreign Risk
Geographic Concentration Risk Interest Rate Risk Leverage Risk
Market Risk Prepayment Risk
<PAGE>
37
- --------------------------------------------------------------------------------
RISK CONSIDERATIONS [PC MONITORS]
- --------------------------------------------------------------------------------
This section describes the principal risks that may apply to the Funds. Each
Fund's exposure to these risks depends upon its specific investment profile. The
Fund's description in INVESTMENT OBJECTIVES AND POLICIES lists the Fund's
principal risks.
CREDIT RISK
[RISK ICON]
The risk that the issuer of a security, or the counterparty to a contract,
will default or otherwise be unable to honor a financial obligation. This
risk is greater for Non-Investment Grade securities.
CURRENCY RATE RISK
[RISK ICON]
The risk that fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect a Fund's investments.
FOREIGN INVESTMENT RISK
[RISK ICON]
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization,
increased taxation or confiscation of investors' assets. Also, the risk
that the price of a foreign issuer's securities may not reflect the
issuer's condition because there is not sufficient publicly available
information about the issues. This risk may be greater for investments in
issuers in emerging or developing markets.
[RISK CONSIDERATIONS TAB]
GEOGRAPHIC CONCENTRATION RISK
[RISK ICON]
The risk that factors adversely affecting a Fund's investments in issuers
located in a state, country, or region will affect the Fund's net asset
value more than would be the case if the Fund had made more geographically
diverse investments.
INDEX RISK
[RISK ICON]
The risk that a Fund designed to replicate the performance of an index of
securities will replicate the performance of the index during adverse
market conditions because the portfolio manager is not permitted to take a
temporary defensive position or otherwise vary the Fund's investments to
respond to the adverse market conditions.
INTEREST RATE RISK
[RISK ICON]
The risk that changes in interest rates may affect the value of your
investment. With fixed-rate securities, including U.S. Government
Securities, an increase in interest rates typically causes the value of a
Fund's securities to fall, while a decline in interest rates may produce an
increase in the market value of the securities. Because of this risk, an
investment in a Fund that invests in fixed income securities is subject to
risk even if all the fixed income securities in
<PAGE>
38
the Fund's portfolio are paid in full at maturity. Changes in interest rates
will affect the value of longer-term fixed income securities more than
shorter-term securities.
LEVERAGE RISK
[RISK ICON]
The risk that some transactions may multiply smaller market movements into
large changes in a Fund's net asset value. This risk may occur when a Fund
borrows money or enters into transactions that have a similar economic
effect, such as short sales or forward commitment transactions. This risk
also may occur when a Fund makes investments in derivatives, such as
options or futures contracts.
MARKET RISK
[RISK ICON]
The risk that the market value of a Fund's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a
single issuer, industry, or section of the economy or may affect the market
as a whole.
PREPAYMENT RISK
[RISK ICON]
The risk that issuers will prepay fixed rate securities when interest rates
fall, forcing the Fund to invest in securities with lower interest rates
than the prepaid securities. For a Fund investing in mortgage- and other
asset-backed securities, this is also the risk that a decline in interest
rates may result in holders of the assets backing the securities to prepay
their debts, resulting in potential losses in these securities' values and
yield. Alternatively, rising interest rates may reduce the amount of
prepayments on the assets backing these securities, causing the Fund's
average maturity to rise and increasing the Fund's sensitivity to rising
interest rates and potential for losses in value.
SMALL COMPANY RISK
[RISK ICON]
The risk that investments in smaller companies may be more volatile than
investments in larger companies. Smaller companies may have higher failure
rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the
demand for the securities of smaller companies may have a disproportionate
effect on their market price, tending to make prices of these securities
fall more in response to selling pressure.
<PAGE>
39
- --------------------------------------------------------------------------------
COMMON POLICIES [PC MONITORS]
- --------------------------------------------------------------------------------
Except as otherwise indicated, the Board may change the Fund's investment
policies without shareholder approval. The Funds' investment objectives are
Fundamental.
VOTING ISSUES
In determining the outcome of shareholder votes, Norwest Advantage Funds
normally counts votes on a share-by-share basis. This means that
shareholders of Funds with comparatively high net asset values will have a
comparatively smaller impact on the outcome of votes by all of the Funds
than do shareholders of Funds with comparatively low net asset values.
DOWNGRADED SECURITIES
Each Fund may retain a security whose rating has been lowered (or a
security of comparable quality to a security whose rating has been lowered)
below the Fund's lowest permissible rating category if the Fund's Adviser
determines that retaining the security is in the best interests of the
Fund. Because a downgrade often results in a reduction in the market price
of the security, sale of a downgraded security may result in a loss.
TEMPORARY DEFENSIVE POSITION
[COMMON POLICIES TAB]
To respond to adverse market, economic, political, or other conditions,
each Fund may assume a temporary defensive position and invest without
limit in cash and cash equivalents. When a Fund makes temporary defensive
investments, it may not pursue its investment objective and is likely that
its shareholders may be subject to federal and applicable state incoome
taxes on a greater portion of the fund's income distributions.
PORTFOLIO TURNOVER
From time to time, a Fund may engage in active short-term trading to take
advantage of price movements affecting individual issues, groups of issues,
or markets. Higher portfolio turnover rates may result in increased
brokerage costs and a possible increase in short-term capital gains or
losses. The FINANCIAL HIGHLIGHTS table lists the Funds' portfolio turnover
rate.
YEAR 2000 AND EURO
The Funds could be adversely affected if the computer systems used by the
Advisers and other service providers (and in particular, foreign service
providers) to the Funds do not properly process and calculate date-related
information and data from and after January 1, 2000 or information
regarding the new common currency of the European Union. The Year 2000 and
Euro issues also may adversely affect the Funds' investments.
Norwest and Forum Financial Group are taking steps to address the Year 2000
and Euro issues for their computer systems and to obtain reasonable
assurances that comparable steps are being taken by the Funds' other major
service providers. While the Funds do not anticipate any adverse effect on
their computer systems from the Year 2000 and Euro issues, there can be no
assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
<PAGE>
40
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
NORWEST INVESTMENT MANAGEMENT, INC. is the investment adviser for each Fund
and each Portfolio, except the Portfolios advised by Schroder and 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 Schroder U.S. Smaller Companies Portfolio, International Portfolio, and
Schroder EM Core Portfolio. In this capacity, Schroder makes investment
decisions for and administers those Portfolios' investment programs.
Schroder Capital Management International Inc.'s address is 787 Seventh
Avenue, 34th Floor, New York, NY 10019.
WELLS FARGO BANK, N.A. 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 supervises 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, provides investment advisory services to various bank and
thrift institutions, investment companies, pension and profit sharing
plans, trusts, estates,
<PAGE>
41
corporations and other 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, Schroder or Wells Fargo Bank by the Fund and by
any Portfolios in which it invests. The list states the investment advisory
fees on an annualized basis as a percentage of a Fund's or Portfolio's
average daily net assets. Descriptions of the portfolio managers' recent
experience follow the list of portfolio managers and advisory fees.
How investment advisory fees are paid depends on whether or not a Fund invests
in Portfolios.
* If a Fund invests directly in a portfolio of securities, Norwest receives
an investment advisory fee directly from the Fund.
* If a Fund invests in a single Portfolio, Norwest, Schroder or Wells Fargo
Bank receives an investment advisory fee from the Portfolio.
* If a Fund invests in more than 1 Portfolio, Norwest, Schroder or Wells
Fargo Bank receives an investment advisory fee from each of those
Portfolios. In addition, Norwest receives a fee from each Fund for the
"asset allocation services" of determining the Funds' investments in the
Portfolios and how much of the Fund's assets to invest in each Portfolio.
If a Fund invests in more than 1 Portfolio, the total amount of the investment
advisory fee paid to Norwest, Schroder or Wells Fargo Bank 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.
[MANAGEMENT OF THE FUNDS TAB]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GROWTH BALANCED FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: POSITIVE RETURN BOND PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: William D. Giese, CFA (1994) and Patricia Burns (1998).
ADVISORY FEE: 0.35%
PORTFOLIO: STRATEGIC VALUE BOND PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1997), John Huber (1998), and David Yim
(1998).
ADVISORY FEE: 0.50%
<PAGE>
42
GROWTH BALANCED FUND - CONTINUED
PORTFOLIO: MANAGED FIXED INCOME PORTFOLIO
SUBADVISER: GALLIARD
PORTFOLIO MANAGERS: Richard Merriam, CFA (1995) and Ajay Mirza (1998).
ADVISORY FEE: 0.35%
PORTFOLIO: INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996).
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994).
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998).
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO AND SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: DISCIPLINED GROWTH PORTFOLIO: 0.90%
SMALL CAP VALUE PORTFOLIO: 0.95%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998).
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998).
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997).
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
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 MANAGER: Katherine Schapiro, CFA (1999) and Stacey Ho, CFA (1999)
ADVISORY FEE: 1.20%
</TABLE>
<PAGE>
43
<TABLE>
<S> <C> <C>
GROWTH BALANCED 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%
INCOME EQUITY FUND
PORTFOLIO: INCOME EQUITY PORTFOLIO
PORTFOLIO MANAGER: David L. Roberts, CFA (1994) and Gary J.Dunn (1994).
ADVISORY FEE: 0.50%.
VALUGROWTH STOCK FUND
PORTFOLIO MANAGER: Charles J. Meyer, CFA (1998)
ADVISORY FEE: 0.80% - first $300 million; 0.76% - next $400 million; 0.72% -
remaining.
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INDEX PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGERS: David D. Sylvester (1996) and Laurie R. White (1996)
ADVISORY FEE: 0.15%
PORTFOLIO: INCOME EQUITY PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY)
PORTFOLIO MANAGER: David L. Roberts, CFA (1994)and Gary J. Dunn (1994)
ADVISORY FEE: 0.50%
PORTFOLIO: LARGE COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
PORTFOLIOS: DISCIPLINED GROWTH PORTFOLIO (DIVERSIFIED EQUITY FUND ONLY) AND
SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith (1997)
ADVISORY FEE: Disciplined Growth Portfolio: 0.90%
Small Cap Value Portfolio 0.95%
[MANAGEMENT OF THE FUNDS TAB]
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
44
<TABLE>
<S> <C> <C>
DIVERSIFIED EQUITY FUND
GROWTH EQUITY FUND - CONTINUED
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1997)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
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 MANAGER: 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 MANAGER: John S. Dale, CFA (1994) and Gary E. Nussbaum, CFA (1998)
ADVISORY FEE: 0.65%
DIVERSIFIED SMALL CAP FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: SMALL CAP INDEX PORTFOLIO
PORTFOLIO MANAGERS: David D. Sylvester (1998) and Laurie R. White (1998)
ADVISORY FEE: 0.25%
PORTFOLIO: SMALL COMPANY GROWTH PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Robert B. Mersky, CFA (1994) and Paul E. von Kuster, CFA (1998)
ADVISORY FEE: 0.90%
PORTFOLIO: SMALL COMPANY VALUE PORTFOLIO
SUBADVISER: PEREGRINE
PORTFOLIO MANAGERS: Tasso H. Coin, Jr. (1995) and Douglas G. Pugh (1998)
ADVISORY FEE: 0.90%
</TABLE>
<PAGE>
45
<TABLE>
<S> <C> <C>
SDIVERSIFIED SMALL CAP FUND - CONTINUED
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%.
DIVERSIFIED SMALL CAP FUND - CONTINUED
PORTFOLIOS: SMALL CAP VALUE PORTFOLIO
SUBADVISER: SMITH
PORTFOLIO MANAGER: Stephen S. Smith, CFA (1997)
ADVISORY FEE: Small Cap Value Portfolio: 0.95%
SMALL COMPANY STOCK FUND
PORTFOLIO: SMALL COMPANY STOCK PORTFOLIO
PORTFOLIO MANAGER: Kenneth Lee (1999) and Thomas Zeifang (1999)
ADVISORY FEE: 0.90%
SMALL CAP OPPORTUNITIES FUND
PORTFOLIO: SCHRODER U.S. SMALLER COMPANIES PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Ira Unschuld (1998)
ADVISORY FEE: 0.60%
INTERNATIONAL FUND
FUND ADVISORY FEE: 0.25%
PORTFOLIO: INTERNATIONAL PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: Michael Perelstein (1997)
ADVISORY FEE: 0.45%
PORTFOLIO: SCHRODER EM CORE PORTFOLIO
ADVISER: SCHRODER
PORTFOLIO MANAGER: John A. Troiano (1997) Heather Crighton (1997) and Mark
Bridgeman (1997)
ADVISORY FEE: 1.00%
</TABLE>
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
46
PORTFOLIO MANAGERS
NORWEST PORTFOLIO MANAGERS:
PATRICIA BURNS, associated with Norwest of its affiliates since 1983. Ms.
Burns is a Senior Vice President of Peregrine and has been a portfolio
manager at Peregrine for more than ten years.
TASSO H. COIN, JR., associated with Norwest or its affiliates since 1995.
Mr. Coin has been a Senior Vice President of Peregrine since 1995. From
1992 to 1995, Mr. Coin was a research officer at Lord Asset Management.
JOHN S. DALE, associated with Norwest or its affiliates since 1968. Mr.
Dale is a Senior Vice President of Peregrine.
GARY J. DUNN, associated with Norwest or its affiliates since 1979. Mr.
Dunn is a Director of Institutional Investments of Norwest.
WILLIAM D. GIESE, associated with Norwest or its affiliates since 1982. Mr.
Giese is a Senior Vice President of Peregrine, has been a portfolio manager
at Peregrine for more than ten years, and has more than 20 years'
experience in fixed income securities management.
JOHN HUBER, associated with Norwest or its affiliates since 1990. Mr. Huber
has been a Portfolio Manager and Corporate Trading Specialist at Galliard
since 1995 and has been in investment management since 1990.
KENNETH LEE, associated with Norwest or its affiliates since 1999. Mr. Lee
also provides fundamental security analysis and portfolio management at
WCM.
RICHARD MERRIAM, associated with Norwest or its affiliates since 1995. Mr.
Merriam has been a managing partner of Galliard since 1995 and is
responsible for investment process and strategy. Mr. Merriam was previously
Chief Investment Officer of Insight Investment Management.
ROBERT B. MERSKY, associated wtih Norwest or its affiliates since 1968. Mr.
Mersky is the President of Peregrine.
CHARLES J. MEYER, CFA, associated with Norwest or its affiliates since
1998. My. Meyer is a Director - Institutional Portfolio Management. From
1992 to 1998, Mr. Meyer was a portfolio manager for Montana Board of
Investments.
AJAY MIRZA, associated with Norwest or its affiliates since 1995. Mr. Mirza
has been a Portfolio Manager and Mortgage Specialist with Galliard since
1995. Before joining Galliard, Mr. Mirza was a research analyst at Insight
Investment Management and at Lehman Brothers.
GARY E. NUSSBAUM, associated with Norwest or its affiliates since 1990. Mr.
Nussbaum is a Senior Vice President of Peregrine.
DOUGLAS G. PUGH, associated with Norwest or its affiliates since 1997. Mr.
Pugh is a Senior Vice President of Peregrine. Before joining Peregrine, Mr.
Pugh was a senior equity analyst and portfolio manager for Advantus Capital
Management and an analyst with Kemper Corporation.
<PAGE>
47
DAVID L. ROBERTS, associated with Norwest or its affiliates since 1972. Mr.
Roberts is a Managing Director, Equities of Norwest.
STEPHEN S. SMITH, associated with Norwest or its affiliates sine 1997. Mr.
Smith has been a Chief Investment Officer and principal of the Smith Group
since 1995. Mr. Smith previously served as senior portfolio manager with
NationsBank and in several capacities with AIM Management Company's Summit
Fund.
DAVID D. SYLVESTER, associated with Norwest or its affiliates since 1979.
Mr. Sylvester currently is a Managing Director - Reserve Asset Management.
PAUL E. VON KUSTER, associated with Norwest or its affiliates since 1972.
Mr. Von Kuster is a Senior Vice President of Peregrine.
LAURIE R. WHITE, associated with Norwest or its affiliates since 1991. Ms.
White is a Director-Reserve Asset Management.
DAVID YIM, associated wtih Norwest or its affiliates since 1995. Mr. Yim
has been a Portfolio Manager and Credit Research Specialist of Galliard
since 1995 and previously worked for American Express Financial Advisors as
a Research Analyst.
THOMAS ZEIFANG, associated with Norwest or its affiliates since 1999. Mr.
Zeifang is also a portfolio manager at WCM. Prior to 1995, he served as an
analyst at Fleet Investment Advisors.
Schroders Portfolio Managers:
MARK BRIDGEMAN, associated with Schroders or its affiliates since 1990. Mr.
Bridgeman is a Vice President of Schroders.
HEATHER CRIGHTON, associated with Schroders or its affiliates since 1992.
Ms Crighton is a Vice President of Schroders.
MICHAEL PERELSTEIN, associated with Schroders or its affiliates since 1997.
Mr. Perelstein has been a Senior Vice President of Schroders since January
1997. Previously Mr. Perelstein was a Managing Director at MacKay Shields.
JOHN A. TROIANO, associated with Schroders or its affiliates since 1981.
Mr. Troiano has been Chief Executive Officer of Schorders since April 1,
1997 and a Managing Director of Schroders since October 1995.
IRA UNSCHULD, associated with Schroders or its affiliates since 1990. Mr.
Unschuld is a Group Vice President.
WCM PORTFOLIO MANAGERS:
Stacey Ho, associated with Wells Fargo Bank since 1997. Prior thereto, she
was associated with Clemente Capital Management (1995 - 1996) and Edison
International (1990 - 1995.)
Katherine Schapiro, CFA, associated with Wells Fargo Bank since 1992. Ms.
Schapiro is President of the Security Analysts of San Francisco. 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.
[MANAGEMENT OF THE FUNDS TAB]
<PAGE>
48
DORMANT INVESTMENT ADVISORY ARRANGEMENTS
Norwest has been retained as a "dormant" or "back-up" investment adviser to
manage any assets redeemed and invested directly by a Fund that invests in
1 or more Portfolios. Norwest does not receive any compensation under this
arrangement as long as a Fund invests entirely in Portfolios. If a Fund
redeems assets from a Portfolio and invests them directly, Norwest receives
an investment advisory fee from the Fund for the management of those
assets.
OTHER FUND SERVICES
The FORUM FINANCIAL GROUP of companies provide managerial, administrative,
and underwriting services to the Funds. NORWEST BANK acts as the Funds'
transfer agent, dividend disbursing agent, and custodian.
<PAGE>
49
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS [PC MONITORS]
- --------------------------------------------------------------------------------
Sales charges and fees vary considerably between a Fund's classes. Consider
the differences in the classes' fee structures carefully before choosing
which class to purchase. In particular, consider how long you intend to
invest in the Fund and whether during that period it would be more
advantageous to invest in a class with an initial sales charge and
comparatively low expenses, a class with no sales charge but with a CDSC
and distribution and shareholder servicing fees or a class with a
comparatively low initial sales charge, a comparatively low CDSC, and a
distribution fee. Also, consider whether you might qualify for a reduced
sales charge on A Shares and whether any difference in total expenses
between classes would be offset by A Shares' higher yield. The SAI has more
information about ways to qualify for reduced sales charges and how reduced
sales charge alternatives operate.
A SHARES
The Funds offers A Shares at their next-determined net asset value plus the
following initial sales charge (no sales charge applies to reinvestments of
distributions):
<TABLE>
<S> <C> <C> <C>
SALES CHARGE
AS A PERCENTAGE OF*
AMOUNT OF PURCHASE OFFERING PRICE+ NET ASSET VALUE
Less than $50,000............... 5.50% 5.82%
$50,000 to $99,999.............. 4.50% 4.71%
$100,000 to $249,000............ 3.50% 3.63%
$250,000 to $499,000............ 2.50% 2.56%
$500,000 to $999,000............ 2.00% 2.04%
Over $1,000,000................. 0.00% 0.00%
*Rounded to the nearest one-hundredth percent.
+The amount of the initial sales charge is included in the offering price.
</TABLE>
If you redeem A Shares purchased with a reduced sales charge, the Funds may
impose a charge on the redemption depending on how long you have held the
shares.
A Shares for Growth Balanced Fund, Large Company Growth Fund, and
Diversified Small Cap Fund have disbribtuion fees of 0.10% under a Rule
12b-1 distribution plan. Because distribution fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the
cost of your investment.
[CHOOSING A SHARE CLASS TAB]
B SHARES
The Funds offer B Shares at their net asset value per share. B Shares have
distribution and shareholder servicing fees of 1.00% of the average daily
net assets of the class under a Rule 12b-1 distribution plan. Because
distribution fees are paid out of the Funds' assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
more than paying a front-end sales charge.
<PAGE>
50
CONTINGENT DEFERRED SALES CHARGE
If you redeem B Shares within 6 years of purchase, there will be a CDSC on
the redemption in the amount indicated below. The amount of the CDSC will
vary depending on the number of years between the payment for the purchase
of the shares and their redemption. You will pay the CDSC on the lesser of
the cost of the B Shares redeemed and their net asset value upon
redemption. The Funds do not impose a CDSC on B Shares purchased through
reinvestments of distributions.
<TABLE>
<S> <C> <C>
YEAR SINCE PURCHASE CHARGE FOR EACH FUND
4.0%
First.................................................
3.0%
Second................................................
3.0%
Third.................................................
2.0%
Fourth................................................
2.0%
Fifth.................................................
1.0%
Sixth.................................................
None
Seventh...............................................
</TABLE>
The Funds will redeem shares in the manner that results in the imposition
of the lowest CDSC. The Funds will automatically redeem shares first from
any A Shares of the Fund, second from B Shares and C Shares of the Fund
acquired pursuant to reinvestment of distributions, third from B Shares and
C Shares of the Fund held for more than 6 years or 1 year, fourth from B
Shares held for 5 years and C Shares held for less than 1 year, and fifth
from the longest outstanding B Shares of the Fund held for less than 5
years.
CONVERSION FEATURE
B Shares will automatically convert to A Shares 7 years from the end of the
calendar month in which the Fund accepted your purchase. The conversion
will be on the basis of the relative net asset values of the shares,
without the imposition of any sales load, fee, or other charge. For
purposes of conversion, the Funds will consider B Shares purchased through
the reinvestment of distributions to be held in a separate sub-account.
Each time any B Shares in your account (other than those in the
sub-account) convert, a corresponding pro rata portion of the shares in the
sub-account will also convert. The Funds may suspend the conversion feature
in the future; in that event, B Shares might continue to pay their
distribution fee indefinitely.
C SHARES
The Funds offer C Shares at their next-determined net asset value. There is
no sales charge on reinvestments of distributions. C Shares have
distribution fees of 0.75% of the average daily net assets of the class
under a Rule 12b-1 distribution plan. Because distribution fees are paid
out of the Funds' assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost more than paying a
front-end sales charge.
<PAGE>
51
CONTINGENT DEFERRED SALES CHARGE
If you redeem C Shares within a year of purchase, there will be a 1.0% CDSC
on the redemption. You will pay the CDSC on the lesser of the cost of the C
Shares redeemed and their net asset value upon redemption. The Funds do not
impose a CDSC on C Shares purchased through reinvestments of distributions.
The Funds will redeem shares in the manner that results in the imposition
of the lowest CDSC. The Funds will automatically redeem shares first from
any A Shares of the Fund, second from B Shares and C Shares of the Fund
acquired pursuant to reinvestment of distributions, third from B Shares and
C Shares of the Fund held for more than 6 years or 1 year, fourth from B
Shares held for 5 years and C Shares held for less than 1 year, and fifth
from the longest outstanding B Shares of the Fund held for less than 5
years.
[CHOOSING A SHARE CLASS TAB]
<PAGE>
52
- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES [PC MONITORS]
- --------------------------------------------------------------------------------
You may purchase Fund shares on "Fund Business Days" at their net asset
value next determined after receipt of your purchase order in proper form
plus, in the case of A Shares and C Shares, any applicable sales charge.
Fund Business Days are all weekdays except generally observed national
holidays (New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas) and
Good Friday.
GENERAL PURCHASE INFORMATION
You may purchase shares directly or through a financial institution. The
Fund's transfer agent processes all transactions in Fund shares.
All of the Funds require a minimum initial investment of $1,000 and minimum
subsequent investments of $100. The Funds may waive their investment
minimums. Your shares become eligible to receive distributions the Fund
Business Day after your purchase order is received in proper form.
The Funds reserve the right to reject any subscription for the purchase of
shares, including subscriptions by market timers. You will receive share
certificates for your shares only if you request them in writing. No
certificates are issued for fractional shares.
PURCHASE PROCEDURES
DIRECT PURCHASES
You may obtain an account application by writing Norwest Advantage Funds at
the following address:
NORWEST ADVANTAGE FUNDS
[NAME OF FUND]
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT
733 MARQUETTE AVENUE
MINNEAPOLIS, MN 55479-0040
When you sign an application for a new Fund account, you are certifying
that your Social Security number or other taxpayer identification number is
correct and that you are not subject to backup withholding. If you violate
certain federal income tax provisions, the Internal Revenue Service can
require the Funds to withhold 31% of your distributions and redemptions.
You must pay for your shares in U.S. dollars by check or money order drawn
on a U.S. bank, by bank or federal funds wire transfer, or by electronic
bank transfer. Cash cannot be accepted.
Call or write the transfer agent if you wish to participate in shareholder
services not offered on the account application or change information on
your account (such as
<PAGE>
53
addresses). Norwest Advantage Funds may in the future modify, limit or
terminate any shareholder privilege upon appropriate notice and may charge
a fee for certain shareholder services, although no such fees are currently
contemplated. You may terminate your participation in any shareholder
program by writing to Norwest Advantage Funds.
PURCHASES BY MAIL
You may send a check or money order along with a completed account
application to Norwest Advantage Funds at the address listed above. Checks
and money orders are accepted at full value subject to collection. Payment
by a check drawn on any member of the Federal Reserve System can normally
be converted into federal funds within 2 business days after receipt of the
check. Checks drawn on some non-member banks may take longer. If your check
does not clear, the purchase order will be canceled and you will be liable
for any losses or fees incurred by Norwest Advantage Funds, the transfer
agent or the distributor.
To purchase shares for individual or Uniform Gift to Minors Act accounts,
you must write a check or purchase a money order payable to Norwest
Advantage Funds or endorse a check made out to you to Norwest Advantage
Funds. For corporation, partnership, trust, 401(k) plan or other
non-individual type accounts, make the check used to purchase shares
payable to Norwest Advantage Funds. No other methods of payment by check
will be accepted for these types of accounts.
PURCHASES BY BANK WIRE
You must first telephone the Funds' transfer agent at 1-612-667-8833 or
1-800-338-1348 to obtain an account number before making an initial
investment in a Fund by bank wire. Then instruct your bank to wire your
money immediately to:
NORWEST BANK MINNESOTA, N.A.
A091 000 019
FOR CREDIT TO: NORWEST ADVANTAGE FUNDS 0844-131
RE: [NAME OF FUND][CLASS OF SHARES]
ACCOUNT NO.:
ACCOUNT NAME:
Complete and mail the account application promptly. Your bank may charge
for transmitting the money by wire. The Funds do not charge for the receipt
of wire transfers. The Funds treat payment by bank wire as a federal funds
payment when received.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks,
and other financial institutions. When you purchase a Fund's shares through
a financial institution, the shares may be held in your name or in the name
of the financial institution. Subject to your institution's procedures, you
may have Fund shares held in the name of your financial institution
transferred into your name. If your shares are held in the name of your
financial institution, you must contact the financial institution on
matters involving your shares. Your financial institution may charge you
for purchasing, redeeming, or exchanging shares.
<PAGE>
54
SUBSEQUENT PURCHASES OF SHARES
You may make subsequent purchases by mailing a check, by sending a bank
wire, or through a financial institution as indicated above. All payments
should clearly indicate your name and account number.
GENERAL REDEMPTION INFORMATION
You may redeem a Fund's shares as of the next determination of the Fund's
net asset value following receipt by the transfer agent of your redemption
order in proper form subject to, in the case of B Shares and C Shares, a
CDSC imposed on most redemptions made within 6 years or 1 year of purchase.
Redeemed shares are not entitled to receive distributions after the day on
which the redemption is effective.
Normally, redemption proceeds are paid immediately following receipt of a
redemption order in proper form. In any event, you will be paid within 7
days, unless: (1) your bank has not cleared the check to purchase the
shares (which may take up to 15 days), (2) the New York Stock Exchange is
closed (or trading is restricted) for any reason other than normal weekend
or holiday closings, (3) there is an emergency in which it is not practical
for the Fund to sell its portfolio securities or for the Fund to determine
its net asset value, or (4) the SEC deems it inappropriate for redemption
proceeds to be paid. You can avoid the delay of waiting for your bank to
clear your check by paying for shares with wire transfers. Unless otherwise
indicated, redemption proceeds normally are paid by check mailed to your
record address.
To protect against fraud, the following must be in writing with a signature
guarantee: (1) endorsement on a share certificate; (2) instruction to
change your record name; (3) modification of a designated bank account for
wire redemptions; (4) instruction regarding an Automatic Investment Plan or
Automatic Withdrawal Plan; (5) distribution elections; (6) election of
telephone redemption privileges; (7) election of exchange or other
privileges in connection with your account; (8) written instruction to
redeem shares whose value exceeds $50,000; (9) redemption in an account
when the account address has changed within the last 30 days; (10)
redemption when the proceeds are deposited in a Norwest Advantage Funds
account under a different account registration; and (11) the payment of
redemption proceeds to any address, person, or account for which there are
not established standing instructions.
You may obtain signature guarantees at any of the following types of
organizations: authorized banks, broker-dealers, national securities
exchanges, credit unions, savings associations, or other eligible
institutions. The specific institution providing the guarantee must be
acceptable to the transfer agent. Whenever a signature guarantee is
required, the signature of each person required to sign for the account
must be guaranteed.
The Funds and the transfer agent will use reasonable procedures to verify
that telephone requests are genuine, including recording telephone
instructions and sending written confirmations of the transactions. Such
procedures are necessary because the Funds and transfer agent could be
liable for losses due to unauthorized or fraudulent telephone instructions.
You should verify the accuracy of a telephone instruction as soon as you
receive the confirmation statement. Telephone redemption and exchanges may
be difficult to implement in times of drastic economic or market changes.
If you cannot reach the transfer agent by telephone, you may mail or
hand-deliver requests to the transfer agent.
<PAGE>
55
Because of the cost of maintaining smaller accounts, Norwest Advantage
Funds may redeem, upon not less than 60 days' written notice, any account
with a net asset value of less than $1,000 immediately following any
redemption.
REDEMPTION PROCEDURES
If you have invested directly in a Fund you may redeem your shares as
described below. If you have invested through a financial institution you
may redeem shares through the financial institution. If you wish to redeem
shares by telephone or receive redemption proceeds by bank wire you should
complete the appropriate sections of the account application. These
privileges may not be available until several weeks after the application
is received. You may not redeem shares by telephone if you have
certificates for those shares.
REDEMPTION BY MAIL
You may redeem shares by sending a written request to the transfer agent
accompanied by any share certificate you have been issued. Sign all
requests and endorse all certificates with signature guaranteed.
REDEMPTION BY TELEPHONE
If you have elected telephone redemption privileges, you may redeem shares
by telephoning the transfer agent at 1-800-338-1348 or 1-612-667-8833 and
providing your shareholder account number, the exact name in which the
shares are registered, and your Social Security number or other taxpayer
identification number. Norwest Advantage Funds will mail a check to your
record address or, if you have chosen wire redemption privileges, wire the
proceeds.
REDEMPTION BY BANK WIRE
If you have elected wire redemption privileges, you may request a Fund to
transmit redemption proceeds of more than $5,000 by federal funds wire to a
bank account you have designated in writing. You must have chosen the
telephone redemption privilege to request bank redemptions by telephone.
Redemption proceeds are wired on the Fund Business Day after the transfer
agent receives a redemption request in proper form.
[HOW TO BUY AND SELL SHARES TAB]
EXCHANGES
You may exchange A Shares and B Shares for A Shares and B Shares,
respectively, of the Funds and of other funds of Norwest Advantage Funds
that offer those classes of shares. You may exchange C Shares of a Fund for
C Shares of the other Funds. You may also exchange your shares for some
classes of certain money market funds of Norwest Advantage Funds. Call or
write the transfer agent for both a list of funds that offer shares
exchangeable with those of the Funds and for prospectuses of those funds.
<PAGE>
56
The Funds do not charge for exchanges, and there is currently no limit on
the number of exchanges you may make. The Funds, however, may limit your
ability to exchange shares if you exchange too often. Exchanges are subject
to the fees (other than CDSCs) charged by, and the limitations (including
minimum investment restrictions) of, the fund into which you are
exchanging.
You may only exchange shares into a pre-existing account if that account is
identically registered. You must submit a new account application if you
wish to exchange shares into an account registered differently or with
different shareholder privileges. You may exchange into a fund only if that
fund's shares may legally be sold in your state of residence.
The Funds and federal tax law treat an exchange as a redemption and a
purchase of shares. The Funds may amend or terminate exchange procedures on
60 days' notice.
SALES CHARGES
Some exchanges of A Shares may require a sales charge in addition to the
sales charge you paid to purchase the shares. If you exchange into a fund
that imposes an initial sales charge greater than the sales charge you
paid, you must pay the difference between the sales charge of the fund you
are exchanging into and your Fund. For example, if you paid a 2% initial
sales charge on a purchase of shares and then exchanged those shares for
shares of another fund with a 3% initial sales charge, you would pay an
additional 1% sales charge on the exchange. The Funds deem A Shares
acquired through the reinvestment of distributions to have been acquired
with a sales charge equal to the maximum sales charge of the Fund.
You may exchange B Shares and C Shares without paying a CDSC. If you redeem
B Shares or C Shares you received in an exchange, the CDSC will be
calculated as if you never exchanged the shares you originally purchased. B
Shares acquired through an exchange will convert to A Shares when the B
Shares originally purchased would convert to A Shares.
EXCHANGES BY MAIL
You may make an exchange by sending a written request to the transfer agent
accompanied by any share certificates for the shares to be exchanged. Sign
all written requests and endorse all certificates with signature
guaranteed.
EXCHANGES BY TELEPHONE
If you have telephone exchange privileges, you may make a telephone
exchange by calling the transfer agent at 1-800-338-1348 or 1-612-667-8833
and giving your account number, the exact name in which the shares are
registered and your Social Security number or other taxpayer identification
number.
<PAGE>
57
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAX MATTERS [OFFICE, WALL STREET JOURNAL]
- --------------------------------------------------------------------------------
DISTRIBUTIONS
The Funds declare and pay distributions of net investment income as
follows:
Declared and paid quarterly: Income Equity Fund, ValuGrowth Stock
Fund, and Small Company Stock Fund.
Declared and paid annually Each other Fund.
Each Fund distributes net capital gain, if any, at least annually.
You have 3 choices for receiving distributions: the Reinvestment Option,
the Cash Option and the Directed Dividend Option.
* Under the Reinvestment Option, all distributions of a Fund are
automatically invested in additional shares of that Fund. You are
automatically assigned this option unless you select another option.
* Under the Cash Option, you are paid all distributions in cash.
* Under the Directed Dividend Option, if you own $10,000 or more of a
Fund's shares in a single account, you can have that Fund's
distributions reinvested in shares of another fund of Norwest
Advantage Funds. Call or write the transfer agent for more information
about the Directed Dividend Option.
All distributions are treated in the same manner for federal income tax
purposes whether received in cash or reinvested in shares of a fund. All
distributions reinvested in a fund are reinvested at the fund's net asset
value as of the payment date of the distribution
TAX MATTERS
The Funds are managed so that they do not owe federal income or excise
taxes. Distributions paid by a Fund out of its net investment income
(including net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions of net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) are taxable as
long-term capital gain, regardless of how long a shareholder has held
shares in the Fund. Distributions of net capital gain may be taxable at
different rates depending on the length of time the Fund holds its assets.
If shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any
distribution of net capital gain received on those shares.
Distributions reduce the net asset value of the Fund paying the
distribution by the amount of the distribution. Furthermore, a distribution
made shortly after you purchase shares, although in effect a return of
capital to you, is taxable.
[DISTRIBUTIONS AND TAX MATTERSTAB]
<PAGE>
58
If a Fund receives investment income from sources within foreign countries,
that income may be subject to foreign income or other taxes. International
Fund intends, if eligible to do so, to permit its shareholders to take a
credit (or a deduction) for foreign income and other taxes paid by
International Portfolio and Schroder EM Core Portfolio. If you own shares
of International Fund, you will be notified of your share of those foreign
taxes and will be required to treat the amount of the foreign taxes as
additional income. In that event, you may be entitled to claim a credit or
deduction for those taxes on your federal tax return.
<PAGE>
59
- --------------------------------------------------------------------------------
OTHER INFORMATION [PC MONITORS]
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
Each Fund determines its net asset value at 4:00 p.m., Eastern Time on each
Fund Business Day by dividing the value of its net assets (i.e., the value
of its securities and other assets less its liabilities) by the number of
shares outstanding at the time the determination is made. The Funds value
portfolio securities at current market value if market quotations are
readily available. If market quotations are not readily available, the
Funds value those securities at fair value as determined by or under
procedures adopted by the Board.
European, Far Eastern, and other international securities exchanges and
over-the-counter markets normally complete trading well before the close of
business on each Fund Business Day. Trading in foreign securities, however,
may not take place on all Fund Business Days or may take place on days that
are not Fund Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities.
If events occur that affect the securities' value after the close of the
markets on which they trade, the Funds may make an adjustment to the value
of the securities for purposes of determining net asset value.
For purposes of determining net asset value, the Funds convert all assets
and liabilities denominated in foreign currencies into U.S. dollars at the
mean of the bid and asked prices of such currencies against the U.S. dollar
last quoted by a major bank prior to the time of conversion.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Each Fund reserves the right to invest in 1 or more Portfolios. Each Fund
bears its pro rata share of the expenses of any Portfolio in which it
invests. The Board may redeem a Fund's investment in a Portfolio at any
time. The Fund could then invest directly in portfolio securities or could
re-invest in 1 or more different Portfolios that could have different fees
and expenses. A Fund might redeem, for example, if other investors had
sufficient voting power to change the investment objectives or policies of
the Portfolio in a manner detrimental to the Fund.
BROKER-DEALER REALLOWANCES
The Funds' distributor may pay a "broker-dealer's" reallowance to certain
financial intermediaries purchasing shares as principal or agent. Normally,
the distributor will reallow the amounts indicated below, although it may
at times reallow the entire sales charge. The distributor also may make
additional payments to certain intermediaries out of its own resources of
up to 1.00% of the net asset value of Fund shares purchased. Norwest
Advantage Funds may change the amount of the reallowance.
In addition, at its own expense, the distributor may provide compensation,
including financial assistance, to financial intermediaries in connection
with their conferences, employee sales or training programs, public
seminars, advertising campaigns or other special events. The distributor
may, for example, compensate the intermediaries with
[OTHER INFORMATION TAB]
<PAGE>
60
travel arrangements and lodging, tickets for entertainment events, and
merchandise. The distributor may make this compensation available only to
intermediaries that have sold or are expected to sell significant amounts
of Fund shares or who charge an asset based fee, whether or not they have a
fiduciary relationship with their clients.
Amount of Purchase Broker-Dealers' Reallowance
as a Percentage of Offering
Price
Less than $50,000............... 5.00%
$50,000 to $99,999.............. 4.00%
$100,000 to $249,000............ 3.00%
$250,000 to $499,000............ 2.25%
$500,000 to $999,000............ 1.80%
$1,000,000 to 2,499,999......... 1.00%
$2,500,000 to 4,999,999......... 0.50%
Over $5,000,000................. 0.25%
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI, AND
THE FUNDS' OFFICIAL SALES LITERATURE. ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
If you would like more information about the Funds and their investments,
you may want to read the following documents:
STATEMENT OF ADDITIONAL INFORMATION. A Fund's statement of additional
information, or "SAI," contains detailed information about the Funds, such
as its investments, management, and organization. It is incorporated into
this Prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. Additional Information about each Fund's
investments is available in its annual and semi-annual reports to
shareholders. In the annual report, each Fund's portfolio manager discusses
the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
You may obtain free copies of the SAI, annual report, and semi-annual
report by contacting your investment representative or by contacting
Norwest Advantage Funds, 733 Marquette Avenue, Minneapolis, Minnesota 55479
or by calling 1-800-338-1348 or 1-612-667-8833.
The Funds' reports and statement of additional information are available
from the Securities and Exchange Commission in Washington, D.C. You may
obtain copies of these documents, upon payment of a duplicating fee, by
writing the Public Reference Section of the SEC, Washington D.C.
20549-6009. Please call 1-800-SEC-0330 for information about the operation
of the SEC's public reference room. The Fund's reports and other
information are also available on the SEC's Web Site at http://
www.sec.gov.
The SEC's Investment Company Act file number for the Funds is 811-4881.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
Norwest Advantage Funds
733 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhwere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
(c) 1998 NORWEST ADVANTAGE FUNDS
NWSFP 02/99 [LOGO]
<PAGE>
