NORWEST
WEALTHBUILDER II
SEMI-ANNUAL
REPORT
NOVEMBER 30, 1997
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[Picture graphics of coins]
NORWEST
WEALTHBUILDER II
GROWTH PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH AND INCOME
PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH BALANCED
PORTFOLIO
Not FDIC Insured
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TABLE OF CONTENTS
A Message to Our Shareholders.............................................. 1
FINANCIAL STATEMENTS OF NORWEST ADVANTAGE FUNDS
Statements of Assets and Liabilities.............................. 2
Statements of Operations.......................................... 3
Statements of Changes in Net Assets............................... 4
Financial Highlights.............................................. 5
Notes to Financial Statements..................................... 6
Schedules of Investments
Norwest WealthBuilder II Growth Portfolio................... 9
Norwest WealthBuilder II Growth & Income Portfolio.......... 9
Norwest WealthBuilder II Growth Balanced Income Portfolio... 9
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NORWEST WEALTHBUILDER II
A MESSAGE TO OUR SHAREHOLDERS
January 21, 1998
Dear Shareholders,
We are pleased to present you with the Norwest WealthBuilder II
Semi-Annual Report. In this report you will find current financial information
on all three Norwest WealthBuilder II portfolios: the Norwest WealthBuilder II
Growth Portfolio, the Norwest WealthBuilder II Growth & Income Portfolio and the
Norwest WealthBuilder II Growth Balanced Portfolio.
Norwest WealthBuilder II, a new offering, opened in October, 1997. In
the few months since then, we have already seen the stock market experience some
turbulence due primarily to the Asian situation. You can have confidence that we
will continue to offer broad diversification and professional, experienced
financial management, that can help reduce your risk in times of uncertainty. We
appreciate the confidence you have in us, and look forward to continuing to
serve you in the future. If you have questions or need information, please call
us at (800) 338-1348 or (612) 667-8833.
Sincerely,
John Y. Keffer
Chairman, Norwest Advantage Funds
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NORWEST WEALTHBUILDER II
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
Norwest Norwest
Norwest WealthBuilder II WealthBuilder II
WealthBuilder II Growth & Growth
Growth Income Balanced
Portfolio Portfolio Portfolio
--------------- --------------- -----------------
ASSETS:
Investments (Note 2):
Investments at cost $ 693,844 $ 819,828 $ 1,471,731
Net unrealized appreciation (depreciation) 7,951 7,214 7,287
--------------- --------------- -----------------
Total investments at value 701,795 827,042 1,479,018
Other receivables 1,854 12,538 277,517
Receivable for Fund shares sold 26,808 34,467 98,515
Organization Costs, net of amortization (Note 2) 7,879 7,879 7,879
--------------- --------------- -----------------
TOTAL ASSETS 738,336 881,926 1,862,929
--------------- --------------- -----------------
LIABILITIES:
Accrued expenses and other liabilities 8,696 10,480 9,777
--------------- --------------- -----------------
TOTAL LIABILITIES 8,696 10,480 9,777
--------------- --------------- -----------------
NET ASSETS $ 729,640 $ 871,446 $ 1,853,152
=============== =============== =================
COMPONENTS OF NET ASSETS:
Paid-in capital $ 740,729 $ 872,816 $ 1,850,244
Undistributed (distribution in excess of ) net investment
income (551) (226) 612
Accumulated net realized gain (loss) (18,489) (8,358) (4,991)
Unrealized appreciation (depreciation) on investments 7,951 7,214 7,287
--------------- --------------- -----------------
NET ASSETS $ 729,640 $ 871,446 $ 1,853,152
=============== =============== =================
SHARES OF BENEFICIAL INTEREST 73,810 89,549 185,911
NET ASSET VALUE, AND REDEMPTION PRICE PER SHARE $ 9.89 $ 9.73 $ 9.97
OFFERING PRICE PER SHARE
(NAV / (1-MAXIMUM SALES LOAD) $ 10.04 $ 9.88 $ 10.12
MAXIMUM SALES LOAD 1.50% 1.50% 1.50%
</TABLE>
See Notes to Financial Statements. 2
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NORWEST WEALTHBUILDER II
STATEMENTS OF OPERATIONS
FOR THE TWO MONTH PERIOD ENDED
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
Norwest Norwest
Norwest WealthBuilder II WealthBuilder II
WealthBuilder II Growth & Growth
Growth Income Balanced
Portfolio (a) Portfolio (a) Portfolio (a)
---------------- ---------------- ------------------
INVESTMENT INCOME:
Income distributions from Underlying Funds $ 432 $ 582 $ 2,380
---------------- ---------------- ------------------
EXPENSES:
Advisory (Note 3) 275 226 495
Administration (Note 3) 78 64 142
Transfer agent (Note 3) 197 162 354
Custody (Note 3) 16 13 28
Accounting (Note 3) 2,000 2,000 2,000
Audit 3,250 3,250 3,250
Registration 11,557 11,557 11,557
12b-1 Distribution fees (Note 3) 590 485 1,061
Amortization of organization costs (Note 2) 272 272 272
Miscellaneous 14 20 100
---------------- ---------------- ------------------
TOTAL EXPENSES 18,249 18,049 19,259
Fees waived and expenses reimbursed (Note 6) (17,266) (17,241) (17,491)
---------------- ---------------- ------------------
NET EXPENSES 983 808 1,768
---------------- ---------------- ------------------
NET INVESTMENT INCOME (LOSS) (551) (226) 612
---------------- ---------------- ------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3):
Net realized gain (loss) on investments sold (18,489) (8,358) (4,991)
Net change in unrealized appreciation (depreciation)
on investments 7,951 7,214 7,287
---------------- ---------------- ------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (10,538) (1,144) 2,296
---------------- ---------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (11,089) $ (1,370) $ 2,908
================ ================ ==================
</TABLE>
- --------------------------------------------------------------
(a) See Notes to Financial Statements for commencement of operations.
See Notes to Financial Statements. 3
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NORWEST WEALTHBUILDER II
STATEMENTS OF CHANGES IN NET ASSETS
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
Norwest Norwest
Norwest WealthBuilder II WealthBuilder II
WealthBuilder II Growth & Growth
Growth Income Balanced
Portfolio (a) Portfolio (a) Portfolio (a)
---------------- ---------------- -----------------
NET ASSETS - OCTOBER 1, 1997 $ 10 $ 10 $ 10
---------------- ---------------- -----------------
OPERATIONS:
Net investment income (loss) (551) (226) 612
Net realized gain (loss) on investments sold (18,489) (8,358) (4,991)
Net change in unrealized appreciation
(depreciation ) on investments 7,951 7,214 7,287
---------------- ---------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS (11,089) (1,370) 2,908
---------------- ---------------- -----------------
CAPITAL SHARE TRANSACTIONS (NOTE 5):
Sale of shares 740,719 872,849 1,850,234
Redemption of shares - (43) -
---------------- ---------------- -----------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS 740,719 872,806 1,850,234
---------------- ---------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS 729,630 871,436 1,853,142
---------------- ---------------- -----------------
NET ASSETS - NOVEMBER 30, 1997
(INCLUDING LINE A) $ 729,640 $ 871,446 $ 1,853,152
================ ================ =================
(A) Accumulated undistributed (distribution in excess of)
net investment income $ (551) $ (226) $ 612
================ ================ =================
SHARE TRANSACTIONS
Sale of shares 73,810 89,553 185,911
Redemption of shares - (4) -
---------------- ---------------- -----------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS 73,810 89,549 185,911
================ ================ =================
</TABLE>
- --------------------------------------------------------------
(a) See Notes to Financial Statements for commencement of operations.
See Notes to Financial Statements. 4
<PAGE>
NORWEST WEALTHBUILDER II
FINANCIAL HIGHLIGHTS (UNAUDITED)
Selected per share data and ratios for a share outstanding throughout the
period:
<TABLE>
<S> <C> <C> <C>
Norwest Norwest
Norwest WealthBuilder II WealthBuilder II
WealthBuilder II Growth & Growth
Growth Income Balanced
Portfolio Portfolio Portfolio
-------------- -------------- --------------
For the Two Month Period
Ended November 30, 1997
-------------------------------------------------------
Net Asset Value, Beginning of Period (a) $10.00 $10.00 $10.00
-------------- -------------- --------------
Investment Operations
Net Investment Income (Loss) (0.01) - -
Net Realized and Unrealized Gain (Loss) on Investments (0.10) (0.27) (0.03)
-------------- -------------- --------------
Total from Investment Operations (0.11) (0.27) (0.03)
-------------- -------------- --------------
Net Asset Value, End of Period $9.89 $9.73 $9.97
============== ============== ==============
Total Return (b)(c) (1.10)% (2.70)% (0.30)%
Ratio/Supplementary Data
Net Assets at End of Period (in thousands) $730 $871 $1,853
Ratios to Average Net Assets:
Expenses including reimbursement/waiver of fees (d) 1.27% 1.27% 1.27%
Expenses excluding reimbursement/waiver of fees (d) 23.60% 28.36% 13.84%
Net investment income (loss) including (0.71)% (0.36)% 0.44%
reimbursement/waiver of fees (d)
Portfolio Turnover Rate (e) 41.95% 15.81% 61.93%
</TABLE>
- ------------------------------------------------------
(a) See Notes to Financial Statements for commencement of operations.
(b) Not Annualized.
(c) Total return calculation does not include sales charge. Total return would
have been lower had certain expenses not been reduced during the period
shown (Note 6).
(d) Annualized.
(e) Portfolio turnover represents the rate of portfolio activity.
See Notes to Financial Statements. 5
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NORWEST WEALTHBUILDER II
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1997
NOTE 1. ORGANIZATION
Each of the Norwest WealthBuilder II portfolios is a diversified series of
Norwest Advantage Funds ("Trust") which is organized as a Delaware business
trust and is registered as an open-end management investment company. Norwest
WealthBuilder II Growth Portfolio, Norwest WealthBuilder II Growth & Income
Portfolio and Norwest WealthBuilder II Growth Balanced Portfolio (each a
"Portfolio" and collectively the "Portfolios") are separate investment
portfolios designed to offer you access to professionally managed mutual funds
from well-known fund groups. Under its Trust Instrument, the Trust is authorized
to issue an unlimited number of the shares of beneficial interest without par
value and the Portfolios commenced operations on October 1, 1997. Each Portfolio
seeks to achieve its objective by allocating its assets across asset classes of
stocks, bonds and money market instruments through a number of affiliated and
non-affiliated funds ("Underlying Funds"). The financial statements and
financial highlights for the Underlying Funds are presented in a separate
financial statement.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates.
The following represent significant accounting policies:
SECURITY VALUATION - The Trust determines the net asset value per share of the
as of the close of trading on the New York Stock Exchange on each Portfolio
business day (generally 4:00 p.m. Eastern time). Investments in the Underlying
Funds are valued at the closing net asset value per share of each Underlying
Fund on the day of valuation. Short-term investments having a maturity of 60
days or less are valued at amortized cost, which approximates market value.
FEDERAL TAXES - Each Portfolio intends to qualify and continue to qualify each
year as a regulated investment company and distribute all of its taxable income.
In addition, by distributing in each calendar year substantially all of its net
investment income, capital gain and certain other amounts, if any, each
Portfolio will not be subject to a federal excise tax. Therefore, no federal
income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends and capital gain distributions, if
any, are distributed to shareholders at least annually. Distributions are based
on amounts calculated in accordance with applicable federal income tax
regulations, which may differ from generally accepted accounting principles.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by the Portfolio, timing differences and
differing characterizations of distributions made by the Portfolio.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is recorded on an accrual basis. The Portfolios invest in
investment companies that are partnerships, thus each Portfolio records its pro
rata share of the underlying partnerships' net income and realized and
unrealized gain and loss daily. These amounts are included in each Portfolio's
Statement of Operations under the caption Income distributions from Underlying
Funds.
EXPENSE ALLOCATION - The Trust accounts separately for the assets and
liabilities and operation of each Portfolio. Expenses that are directly
attributable to more than one Portfolio are allocated among the respective
Portfolios.
ORGANIZATIONAL COSTS - Costs incurred by each Portfolio in connection with its
organization and initial registration are being amortized on a straight line
basis over a five year period.
6
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NORWEST WEALTHBUILDER II
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1997
REPURCHASE AGREEMENTS - Each Fund along with certain other Norwest Advantage
Funds may transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements. The Funds, through
their custodian, receive delivery of the collateral, whose market value must
always equal or exceed the repurchase price. The investment adviser is
responsible for determining the value of the collateral at all times. In the
event of default, a Fund may have difficulties with the disposition of such
collateral.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser of the Portfolios is Norwest
Investment Management, Inc. ("Adviser"), a wholly owned subsidiary of Norwest
Bank Minnesota, N.A. ("Norwest"), a subsidiary of Norwest Corporation. In most
cases, affiliates of Norwest serve as investment subadviser for each affiliated
Underlying Fund. For its services with respect to allocating and monitoring the
investment of each Portfolio's assets in Underlying Funds and other investment
securities, the Adviser is paid an advisory fee directly by each Portfolio at an
annual rate of 0.35% of its average daily net assets.
ADMINISTRATIVE AND DISTRIBUTION - The administrator of the Portfolio's is Forum
Administrative Services, LLC ("FAS"). Forum Financial Services, Inc. ("FFSI"), a
registered broker-dealer and a member of the National Association of Securities
Dealers, Inc. serves as the Portfolio's manager and distributor of the
Portfolios' shares. FAS and FFSI each are entitled to receive a fee at an annual
rate of 0.05% of each Portfolio's average daily net assets.
TRANSFER AGENT, CUSTODIAN AND OTHER SERVICES - Norwest serves as transfer and
shareholder services agent for each Portfolio. For its services, Norwest is
entitled to receive a fee with respect to each Portfolio at an annual rate of
0.25% of its average daily net assets. Norwest also serves as each Portfolio's
custodian and may appoint subcustodians for any services and other assets held
in depositories. For its custodial services, Norwest is entitled to receive a
fee with respect to each Portfolio at an annual rate of: 0.02% of the first $100
million of a Portfolio's average daily net assets, 0.015% of the next $100
million of the Portfolio's average daily net assets and 0.01% of the Portfolio's
remaining average daily net assets. No fee is directly payable by a Portfolio to
the extent the Portfolio is invested in one or more Underlying Fund.
Pursuant to a separate agreement, Forum Accounting Services, LLC ("FAcS"),
provides portfolio accounting services to each Portfolio.
DISTRIBUTION PLAN - The Trust may compensate FFSI under a Distribution Plan (the
"Plan") adopted under Rule 12b-1 under the Investment Company Act of 1940 by the
Trust for the Portfolio's shares. FFSI, in turn, may use these payments to
compensate others for services provided, or to reimburse others for expenses
incurred, in connection with the distribution of shares. The Plan authorizes
monthly payments at an annual rate of up to 0.75% of the Portfolios' average
daily net assets. Unreimbursed distribution charges at November 30, 1997, for
Norwest WealthBuilder II Growth Portfolio, Norwest WealthBuilder II Growth &
Income Portfolio and Norwest WealthBuilder II Growth Balanced Portfolio were
$645, $531 and $1,161, respectively.
NOTE 4. SECURITIES TRANSACTIONS
The cost of purchases and the proceeds from sales (including maturities) of
securities (excluding short-term investments) for the period ended November 30,
1997 were as follows:
<TABLE>
<S> <C> <C>
COST OF PROCEEDS
PURCHASES FROM SALES
---------- ----------
Norwest WealthBuilder II Growth Portfolio $1,292,414 $ 584,514
Norwest WealthBuilder II Growth & Income Portfolio 1,290,895 84,169
Norwest WealthBuilder II Growth Balanced Portfolio 3,101,871 645,447
</TABLE>
7
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NORWEST WEALTHBUILDER II
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
NOVEMBER 30, 1997
NOTE 4. SECURITIES TRANSACTIONS (CONTINUED)
For federal income tax purposes, the tax basis of investment securities owned as
of November 30, 1997 and the aggregate gross unrealized appreciation and the
aggregate unrealized depreciation based on identified tax cost as of November
30, 1997 were as follows:
<TABLE>
<S> <C> <C> <C> <C>
NET
UNREALIZED
TAX UNREALIZED UNREALIZED APPRECIATION
COST BASIS APPRECIATION DEPRECIATION (DEPRECIATION)
---------- ------------ ------------- --------------
Norwest WealthBuilder II Growth Portfolio $ 693,844 $10,530 $2,579 $7,951
Norwest WealthBuilder II Growth & Income Portfolio 819,828 9,892 2,678 7,214
Norwest WealthBuilder II Growth Balanced Portfolio 1,471,731 12,915 5,628 7,287
</TABLE>
NOTE 6. VOLUNTARY WAIVERS AND REIMBURSEMENT OF EXPENSES
Norwest, FAS and FFSI have voluntarily waived a portion of their fees and have
reimbursed certain expenses of the Portfolios so that total expenses would not
exceed certain expense limitations established for each Portfolio. Norwest, FAS
and FFSI at their discretion, may revise or discontinue the voluntarily fee
waivers and expense reimbursements at any time. For the period ended November
30, 1997, fees waived and expenses reimbursed by the Trust's service providers
were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
TOTAL FEES
WAIVED AND
EXPENSES EXPENSES
FEES WAIVED REIMBURSED REIMBURSED
--------------------------- ---------- ----------
TRANSFER FAS/ ASSET
AGENT FFSI ALLOCATION FFSI
----- ---- ---------- ----
Norwest WealthBuilder II Growth Portfolio $197 $ 78 $275 $16,716 $17,266
Norwest WealthBuilder II Growth & Income Portfolio 162 64 226 16,789 17,241
Norwest WealthBuilder II Growth Balanced Portfolio 354 142 495 16,500 17,491
</TABLE>
8
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NORWEST WEALTHBUILDER II
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Face/Share Amounts Value (Note 2)
- ------------------ --------------
NORWEST WEALTHBUILDER II GROWTH PORTFOLIO
Underlying Funds (100.0%)
7,330 AIM Blue Chip Fund - Class A $ 235,308
1,276 Franklin Small Cap Growth Fund 30,997
N/A Income Equity Portfolio of Core Trust 116,792
N/A International Portfolio of Core Trust 30,004
9,024 Norwest Advantage ValuGrowth Stock Fund - Class A 225,782
2,036 Putnam International Growth Fund - Class A 35,659
N/A Schroder U.S. Smaller Companies Portfolio 27,253
--------------
Total Investments (100.0%) (cost $693,844) $ 701,795
==============
NORWEST WEALTHBUILDER II GROWTH & INCOME PORTFOLIO
Underlying Funds (99.4%)
3,787 AIM Blue Chip Fund - Class A $ 121,549
3,244 Franklin Small Cap Growth Fund 78,767
N/A Income Equity Portfolio of Core Trust 252,842
N/A International Portfolio of Core Trust 84,085
4,816 Norwest Advantage ValuGrowth Stock Fund - Class A 120,496
4,608 Putnam International Growth Fund - Class A 80,688
N/A Schroder U.S. Smaller Companies Portfolio 83,490
--------------
Total Underlying Funds (cost $ 814,703) 821,917
--------------
Repurchase Agreements (0.6%)
5,125 Bear, Stearns & Co., Inc., 5.72%, 12/1/97, to be repurchased at
$5,127. Bear, Stearns & Co., Inc., is a joint repurchase agreement.
Collateralized by multiple UST Strips 0%, 2/15/01 - 8/15/04,
Par $65,000,000. (cost $5,125) 5,125
--------------
Total Investments (100.0%) (cost $819,828) $ 827,042
==============
NORWEST WEALTHBUILDER II GROWTH BALANCED PORTFOLIO
Underlying Funds (100.0%)
4,607 AIM Blue Chip Fund - Class A $ 147,890
3,508 Franklin Small Cap Growth Fund 85,186
N/A Income Equity Portfolio of Core Trust 299,442
N/A International Portfolio of Core Trust 103,307
13,851 MFS High Income Fund - Class A 76,595
17,291 Norwest Advantage Intermediate Government Income Fund - Class A 192,968
5,278 Norwest Advantage ValuGrowth Stock Fund - Class A 132,068
25,038 Putnam Income Fund - Class A 178,024
5,051 Putnam International Growth Fund - Class A 88,439
N/A Schroder U.S. Smaller Companies Portfolio 101,065
7,517 Templeton Global Bond Fund - Class 1 74,034
--------------
Total Investments (100.0%) (cost $1,471,731) $ 1,479,018
==============
</TABLE>
See Notes to Financial Statements. 9
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Shareholder Services
Minneapolis/St. Paul 612-667-8833
Elsewhere 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 WealthBuilder II Semi-Annual Report
WBIIAAA 013 1/98
THIS REPORT IS FOR DISTRIBUTION ONLY TO SHAREHOLDERS AND MAY BE
DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS OF THE WEALTHBUILDER II PORTFOLIOS.
