<PAGE>
ANNUAL REPORT
MAY 31, 1999
WEALTHBUILDER II
PORTFOLIOS
[Logo] NORWEST
WEALTHBUILDER II
NORWEST
WEALTHBUILDER II
GROWTH BALANCED
PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH AND INCOME
PORTFOLIO
NORWEST
WEALTHBUILDER II
GROWTH PORTFOLIO
Not FDIC Insured. -- No bank guarantee. -- May lose value.
<PAGE>
TABLE OF CONTENTS MAY 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
A MESSAGE TO OUR SHAREHOLDERS............................................. 1
INVESTMENT ADVISER'S REPORT AND PERFORMANCE DATA
Norwest WealthBuilder II Growth Balanced Portfolio................. 2
Norwest WealthBuilder II Growth and Income Portfolio............... 3
Norwest WealthBuilder II Growth Portfolio.......................... 4
INDEPENDENT AUDITORS' REPORT.............................................. 5
FINANCIAL STATEMENTS
Statements of Assets and Liabilities............................... 6
Statements of Operations........................................... 7
Statements of Changes in Net Assets................................ 8
Financial Highlights............................................... 9
Notes to Financial Statements...................................... 10
Supplementary Information (Unaudited).............................. 13
Schedules of Investments........................................... 14
Norwest WealthBuilder II Growth Balanced Portfolio............ 14
Norwest WealthBuilder II Growth and Income Portfolio.......... 14
Norwest WealthBuilder II Growth Portfolio..................... 14
</TABLE>
[LOGO]
<PAGE>
A MESSAGE TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------
July 16, 1999
Dear Valued Shareholders:
We are pleased to present the 1999 Annual Report for
Norwest WealthBuilder II Portfolios. This report includes
the Norwest WealthBuilder II Growth Balanced, Growth and
Income, and Growth Portfolios.
A period of relative calm returned to global markets
due to Asia's improving economic condition. After a brief
scare late last summer, U.S. financial markets shook off
any threats to domestic prosperity, with the Dow Jones
Industrial Average (DJIA) climbing 3,000 points from
October through April to peak at a record high 11,000.
Thanks to the combination of low unemployment, low
inflation and strong consumer spending, the nation's
"Goldilock's" economy seemed just right--at least until
May.
Recent events in the U.S. economy may signal a turning
point for domestic and international markets. Fear of
interest rate increases threw the DJIA into a spin during
May, and triggered a sell-off in the bond market that sent
yields on 30-Year Treasury bonds to the highest levels in
a year. We believe that bond yields--which move inversely
to bond prices--will not peak until the Fed raises rates
high enough to produce a meaningful economic slowdown.
Although higher interest rates will help cool the
nation's strong economic growth, economies from Asia to
Latin America are concerned about the prospect of a
tightening U.S. monetary policy. Higher interest rates
translate into higher bond yields, raising the debt
service burden throughout emerging markets. So while the
health of the world's economies remains questionable,
signs of optimism are emerging.
Whatever the market conditions, we recommend that you
continually review your investment portfolio with your
financial consultant to determine an appropriate mix of
investments to meet your ongoing needs. We appreciate your
business and strive to deliver personalized service along
with an array of investment options to help you achieve
your financial goals. If you have any questions or need
information, please contact us at 1-(800) 338-1348 or
(612) 667-8833, option 2.
Again, thank you for choosing Norwest WealthBuilder
II.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
CHAIRMAN, NORWEST ADVANTAGE
FUNDS
[LOGO]
1
<PAGE>
INVESTMENT ADVISER'S REPORT AND PERFORMANCE DATA MAY 31, 1999
- --------------------------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH BALANCED PORTFOLIO
The assets of the NORWEST WEALTHBUILDER II GROWTH BALANCED PORTFOLIO are
invested in eleven different stock and bond funds and experienced a return of
10.26% (does not include sales load) over the twelve months ended May 31, 1999.
The proportion of assets in stocks and bonds is determined by a proprietary
investment strategy called the Tactical Asset Allocation (TAA) Model, which
seeks to enhance performance by shifting between stocks and bonds depending upon
market conditions. At May 31, 1999, 34.0% of the Portfolio holdings were
invested in fixed income funds, while the remaining 66.0% were in equity funds.
The bond investing styles include government, agency, mortgage-backed, corporate
and international holdings. The equity styles are large cap growth, large cap
value, small company and international holdings. Of the eleven funds in the
Portfolio, two are Norwest Advantage Funds, three are portfolios of Core Trust
(Delaware) advised by Norwest Investment Management, Inc., two are from the
Putnam family, one is managed by AIM, two by Franklin/Templeton and one by
Massachusetts Financial Services (MFS).
Although we witnessed considerable volatility, the twelve-month period ended May
31, 1999 was another profitable time for investors in the large cap, domestic
equity market. A healthy economy, combined with low, stable inflation, has
continued to fuel the stock market rally. Large company stocks were the best
performers during the twelve months ended May 31, 1999, with the S&P 500 Index
of large cap stocks gaining 21.04%. Small cap stocks, represented by the Russell
2000 Index, have continued to struggle under the deflationary environment,
returning -2.62% over the same period. While foreign equity markets have
recovered following the massive monetary easing in the fourth quarter of 1998,
the strength of the dollar and the effects of the Asian crisis have limited the
returns from international equities over the past year. The Morgan Stanley
Capital International Europe, Australasia and Far East ("MSCI EAFE") Index of
international stocks gained 4.36% during the twelve months ended May 31, 1999.
The twelve months ended May 31, 1999 also proved to be a volatile environment
for bonds. Bond yields declined sharply early in the fiscal year as we witnessed
a flight to quality surrounding the Asian crisis and stock market correction in
August. Since September, 10-year Treasury bond yields have risen 150 basis
points (1.50%) and are now above the levels of a year ago. The Lehman Brothers
Intermediate Government/Corporate Index, which is commonly used as a measure of
the performance of intermediate maturity bonds, gained 4.78% during the twelve
months ended May 31, 1999.
The volatility in the stock and bond market over the past year created an
opportunity to add value with our TAA Model. Following the sharp correction in
stocks and the significant decline in bond yields last summer, the Model hit the
trigger point where we shifted 15% of the portfolio from bonds to stocks on
October 2. A combination of the strength in stock prices and the weakness in
bonds late last year allowed the Model to hit the trigger point to return to our
normal allocation between stocks and bonds on January 11. During the period when
we were over-weighted in stocks, the S&P 500 Index was up 28.4% and the 10-year
Treasury bond yield rose 67 basis points (0.67%). This very successful asset
shift toward stocks resulted in more than a 4% increase in the Growth Balanced
Portfolio return compared to a portfolio that remained at the neutral stock/bond
allocation. The Norwest WealthBuilder II Growth Balanced Portfolio significantly
outperformed the benchmark for the component portfolios over the twelve months
ending May 31, 1999.
THE OPINIONS EXPRESSED REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH MAY
31, 1999. THE MANAGER'S OPINIONS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER CONDITIONS. THE COMPOSITION, INDUSTRIES AND HOLDINGS OF THE
PORTFOLIO ARE SUBJECT TO CHANGE. HAD THE PERFORMANCE INCLUDED THE 1.50% SALES
LOAD, THE RETURN WOULD HAVE BEEN LOWER.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
NORWEST WEALTHBUILDER II GROWTH BALANCED PORTFOLIO ("PORTFOLIO") VS. STANDARD &
POOR'S 500 INDEX ("S&P INDEX"), RUSSELL 2000 INDEX ("RUSSELL INDEX"), MSCI EAFE
INDEX ("MSCI
INDEX"), AND FUND COMPOSITE BENCHMARK ("BENCHMARK")
- --------------------------------------------------------------------------------
The following chart reflects the value of a $10,000 investment in the Portfolio,
including reinvested dividends and distributions since inception. The result is
compared with three broad-based securities market indices and a peer based
average. The Portfolio's total return includes operating expenses and sales
charges that reduce returns, while the total returns of the Indices do not.
Total return of the Portfolio would have been lower had certain fees and
expenses not been voluntarily waived and/or reimbursed. The Portfolio is
professionally managed while the Indices are unmanaged and are not available for
investment. The Benchmark represents the appropriate base allocation percentages
applied to the Lipper Universe Averages. The Lipper Universe Averages do not
include sales charges but do include management fees and expenses. The Lipper
Universe Averages are calculated by taking arithmetic averages of the returns of
the funds in the groups. Lipper Analytical Services, Inc. is an independent
mutual fund rating service that ranks funds in various fund categories by making
comparative calculations using total returns. Although gathered from reliable
sources, data accuracy and completeness cannot be guaranteed. Investment return
and principal value of an investment in the Portfolio will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. PAST PERFORMANCE IS NOT PREDICTIVE NOR A GUARANTEE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF MAY 31, 1999
--------------------------------------------------
S&P RUSSELL MSCI
PORTFOLIO INDEX INDEX INDEX BENCHMARK
-------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
ONE YEAR 8.60 % 21.04% (2.62)% 4.36% 5.43%
SINCE INCEPTION 10.28 % 22.82% (0.75)% 6.28% 7.48%
INCEPTION DATE 10/1/97 9/30/97 9/30/97 9/30/97 9/30/97
VALUE MAY 31, 1999 $11,767 $14,084 $9,875 $11,067 $11,277
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH BALANCED S&P INDEX RUSSELL MSCI BENCHMARK
<S> <C> <C> <C> <C> <C>
9/30/97 9,850.00 10,000.00 10,000.00 10,000.00 10,000.00
10/31/97 9,810.60 9,666.40 9,555.50 9,231.40 9,738.99
11/30/97 9,820.45 10,113.50 9,490.45 9,137.33 9,809.95
12/31/97 9,911.68 10,287.06 9,660.80 9,217.03 9,918.51
1/31/98 9,970.97 10,400.72 9,513.67 9,638.56 9,983.37
2/28/98 10,386.02 11,150.43 10,227.03 10,257.03 10,440.94
3/31/98 10,702.24 11,720.98 10,656.77 10,572.86 10,771.72
4/30/98 10,810.94 11,838.86 10,715.31 10,656.55 10,851.49
5/31/98 10,672.59 11,635.58 10,140.43 10,604.82 10,696.73
6/30/98 10,761.53 12,107.85 10,169.45 10,685.10 10,812.77
7/31/98 10,554.01 11,979.26 9,339.01 10,793.42 10,633.69
8/31/98 9,417.58 10,249.46 7,528.18 9,456.12 9,526.98
9/30/98 9,714.04 10,906.11 8,110.66 9,166.19 9,833.84
10/31/98 10,356.37 11,792.44 8,443.38 10,121.68 10,216.49
11/30/98 10,909.76 12,506.86 8,889.18 10,640.22 10,627.86
12/31/98 11,418.98 13,227.11 9,444.14 11,059.98 11,019.62
1/31/99 11,667.65 13,780.01 9,566.65 11,027.32 11,161.78
2/28/99 11,309.56 13,351.87 8,795.87 10,764.54 10,787.86
3/31/99 11,607.97 13,885.92 8,931.47 11,213.87 11,041.37
4/30/99 11,956.11 14,423.66 9,730.78 11,668.24 11,427.82
5/31/99 11,767.12 14,083.55 9,874.68 11,067.33 11,276.97
</TABLE>
THE PORTFOLIO HAS A MAXIMUM 1.5% SALES CHARGE.
[LOGO]
2
<PAGE>
INVESTMENT ADVISER'S REPORT AND PERFORMANCE DATA MAY 31, 1999
- --------------------------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH AND INCOME PORTFOLIO
The assets of the NORWEST WEALTHBUILDER II GROWTH AND INCOME PORTFOLIO are
invested in seven different equity funds and experienced a return of 9.11% (does
not include sales load) over the twelve months ended May 31, 1999. The Portfolio
seeks enhanced performance with reduced volatility through diversification among
different equity investing styles. Accordingly, at May 31, 1999, 30.0% of the
assets were invested in the large cap growth style, 30.0% in large cap value,
20.0% in small company stocks and 20.0% in international funds. Of the seven
funds in the Portfolio, three are Portfolios of Core Trust (Delaware) advised by
Norwest Investment Management, Inc., two are from the Putnam family, one is
managed by AIM and one by Franklin/Templeton.
Although we witnessed considerable volatility, the twelve-month period ended May
31, 1999 was another profitable time for investors in the large cap, domestic
equity market. A healthy economy, combined with low, stable inflation, has
continued to fuel the stock market rally. Large company growth stocks were the
best performers during the twelve months ended May 31, 1999, with the Russell
1000 Growth Index gaining 26.22%. Large company value stocks, represented by the
Russell 1000 Value Index, returned 14.53% over the same period. Small cap
stocks, represented by the Russell 2000 Index, have continued to struggle under
the deflationary environment, returning -2.62% over the past year. While foreign
equity markets have recovered following the massive monetary easing in the
fourth quarter of 1998, the strength of the dollar and the effects of the Asian
crisis have limited the returns from international equities over the past year.
The Morgan Stanley Capital International Europe, Australasia and Far East ("MSCI
EAFE") Index of international stocks gained 4.36% during the twelve months ended
May 31, 1999.
The Norwest WealthBuilder II Growth and Income Portfolio outperformed the Fund
Composite Benchmark for the component portfolios over the twelve months ending
May 31, 1999.
THE OPINIONS EXPRESSED REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH MAY
31, 1999. THE MANAGER'S OPINIONS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER CONDITIONS. THE COMPOSITION, INDUSTRIES AND HOLDINGS OF THE
PORTFOLIO ARE SUBJECT TO CHANGE. HAD THE PERFORMANCE INCLUDED THE 1.50% SALES
LOAD, THE RETURN WOULD HAVE BEEN LOWER.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
NORWEST WEALTHBUILDER II GROWTH AND INCOME PORTFOLIO ("PORTFOLIO") VS. STANDARD
POOR'S 500 INDEX ("S&P INDEX"), RUSSELL&2000 INDEX ("RUSSELL INDEX"), MSCI EAFE
INDEX ("MSCI
INDEX"), AND FUND COMPOSITE BENCHMARK ("BENCHMARK")
- --------------------------------------------------------------------------------
The following chart reflects the value of a $10,000 investment in the Portfolio,
including reinvested dividends and distributions since inception. The result is
compared with three broad-based securities market indices and a peer based
average. The Portfolio's total return includes operating expenses and sales
charges that reduce returns, while the total returns of the Indices do not.
Total return of the Portfolio would have been lower had certain fees and
expenses not been voluntarily waived and/or reimbursed. The Portfolio is
professionally managed while the Indices are unmanaged and are not available for
investment. The Benchmark represents the appropriate base allocation percentages
applied to the Lipper Universe Averages. The Lipper Universe Averages do not
include sales charges but do include management fees and expenses. The Lipper
Universe Averages are calculated by taking arithmetic averages of the returns of
the funds in the groups. Lipper Analytical Services, Inc. is an independent
mutual fund rating service that ranks funds in various fund categories by making
comparative calculations using total returns. Although gathered from reliable
sources, data accuracy and completeness cannot be guaranteed. Investment return
and principal value of an investment in the Portfolio will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. PAST PERFORMANCE IS NOT PREDICTIVE NOR A GUARANTEE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF MAY 31, 1999
--------------------------------------------------
S&P RUSSELL MSCI
PORTFOLIO INDEX INDEX INDEX BENCHMARK
-------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
ONE YEAR 7.47 % 21.04% (2.62)% 4.36% 6.53%
SINCE INCEPTION 10.44 % 22.82% (0.75)% 6.28% 8.63%
INCEPTION DATE 10/1/97 9/30/97 9/30/97 9/30/97 9/30/97
VALUE MAY 31, 1999 $11,795 $14,084 $9,875 $11,067 $11,479
</TABLE>
<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH AND INCOME S&P INDEX RUSSELL MSCI BENCHMARK
<S> <C> <C> <C> <C> <C>
9/30/97 9,850.00 10,000.00 10,000.00 10,000.00 10,000.00
10/31/97 9,446.15 9,666.40 9,555.50 9,231.40 9,550.60
11/30/97 9,584.05 10,113.50 9,490.45 9,137.33 9,639.33
12/31/97 9,726.70 10,287.06 9,660.80 9,217.03 9,758.13
1/31/98 9,835.10 10,400.72 9,513.67 9,638.56 9,787.26
2/28/98 10,455.95 11,150.43 10,227.03 10,257.03 10,472.90
3/31/98 10,928.98 11,720.98 10,656.77 10,572.86 10,957.17
4/30/98 11,066.95 11,838.86 10,715.31 10,656.55 11,055.73
5/31/98 10,810.73 11,635.58 10,140.43 10,604.82 10,774.64
6/30/98 10,948.69 12,107.85 10,169.45 10,685.10 10,926.78
7/31/98 10,603.78 11,979.26 9,339.01 10,793.42 10,636.07
8/31/98 8,948.17 10,249.46 7,528.18 9,456.12 8,953.23
9/30/98 9,293.09 10,906.11 8,110.66 9,166.19 9,298.15
10/31/98 9,963.21 11,792.44 8,443.38 10,121.68 9,893.47
11/30/98 10,584.07 12,506.86 8,889.18 10,640.22 10,442.70
12/31/98 11,154.38 13,227.11 9,444.14 11,059.98 11,019.40
1/31/99 11,479.84 13,780.01 9,566.65 11,027.32 11,202.33
2/28/99 11,085.35 13,351.87 8,795.87 10,764.54 10,734.07
3/31/99 11,509.43 13,885.92 8,931.47 11,213.87 11,078.63
4/30/99 12,002.55 14,423.66 9,730.78 11,668.24 11,634.78
5/31/99 11,795.44 14,083.55 9,874.68 11,067.33 11,478.87
</TABLE>
THE PORTFOLIO HAS A MAXIMUM 1.5% SALES CHARGE.
[LOGO]
3
<PAGE>
INVESTMENT ADVISER'S REPORT AND PERFORMANCE DATA MAY 31, 1999
- --------------------------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH PORTFOLIO
The assets of the NORWEST WEALTHBUILDER II GROWTH PORTFOLIO are invested in
seven different equity funds and experienced a return of 14.94% (does not
include sales load) over the twelve months ended May 31, 1999. The proportion of
assets in different equity styles is determined by a proprietary investment
strategy called the Tactical Equity Allocation Model (TEA), which seeks to
enhance performance by shifting emphasis between equity styles depending upon
market conditions. Accordingly, at May 31, 1999, 66.9% of the assets were
invested in the large cap growth style, 17.9% in large cap value, 6.5% in small
company stocks and 8.7% in international funds. Of the seven mutual funds in the
Portfolio, three are Portfolios of Core Trust (Delaware) advised by Norwest
Investment Management, Inc., two are from the Putnam family, one is managed by
AIM and one by Franklin/Templeton.
Although we witnessed considerable volatility, the twelve-month period ended May
31, 1999 was another profitable time for investors in the large cap, domestic
equity market. A healthy economy, combined with low, stable inflation, has
continued to fuel the stock market rally. Large company growth stocks were the
best performers during the twelve months ended May 31, 1999, with the Russell
1000 Growth Index gaining 26.22%. Large company value stocks, represented by the
Russell 1000 Value Index, returned 14.53% over the same period. Small cap
stocks, represented by the Russell 2000 Index, have continued to struggle under
the deflationary environment, returning -2.62% over the past year. While foreign
equity markets have recovered following the massive monetary easing in the
fourth quarter of 1998, the strength of the dollar and the effects of the Asian
crisis have limited the returns from international equities over the past year.
The Morgan Stanley Capital International Europe, Australasia and Far East ("MSCI
EAFE") Index of international stocks gained 4.36% during the twelve months ended
May 31, 1999.
The TEA Model continued to favor domestic, large company, growth stocks
throughout the past 12 months, which significantly enhanced performance relative
to a portfolio that is more diversified among the four equity styles. The
Norwest WealthBuilder II Growth Portfolio significantly outperformed the Fund
Composite Benchmark for the component portfolios over the twelve months ending
May 31, 1999.
THE OPINIONS EXPRESSED REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH MAY
31, 1999. THE MANAGER'S OPINIONS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER CONDITIONS. THE COMPOSITION, INDUSTRIES AND HOLDINGS OF THE
PORTFOLIO ARE SUBJECT TO CHANGE. HAD THE PERFORMANCE INCLUDED THE 1.50% SALES
LOAD, THE RETURN WOULD HAVE BEEN LOWER.
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
NORWEST WEALTHBUILDER II GROWTH PORTFOLIO ("PORTFOLIO") VS. STANDARD & POOR'S
500
INDEX ("S&P INDEX"), RUSSELL 2000 INDEX ("RUSSELL INDEX"), MSCI EAFE INDEX
("MSCI
INDEX"), AND FUND COMPOSITE BENCHMARK ("BENCHMARK")
- --------------------------------------------------------------------------------
The following chart reflects the value of a $10,000 investment in the Portfolio,
including reinvested dividends and distributions since inception. The result is
compared with three broad-based securities market indices and a peer based
average. The Portfolio's total return includes operating expenses and sales
charges that reduce returns, while the total returns of the Indices do not.
Total return of the Portfolio would have been lower had certain fees and
expenses not been voluntarily waived and/or reimbursed. The Portfolio is
professionally managed while the Indices are unmanaged and are not available for
investment. The Benchmark represents the appropriate base allocation percentages
applied to the Lipper Universe Averages. The Lipper Universe Averages do not
include sales charges but do include management fees and expenses. The Lipper
Universe Averages are calculated by taking arithmetic averages of the returns of
the funds in the groups. Lipper Analytical Services, Inc. is an independent
mutual fund rating service that ranks funds in various fund categories by making
comparative calculations using total returns. Although gathered from reliable
sources, data accuracy and completeness cannot be guaranteed. Investment return
and principal value of an investment in the Portfolio will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. PAST PERFORMANCE IS NOT PREDICTIVE NOR A GUARANTEE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF MAY 31, 1999
--------------------------------------------------
S&P RUSSELL MSCI
PORTFOLIO INDEX INDEX INDEX BENCHMARK
-------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
ONE YEAR 13.22 % 21.04% (2.62%) 4.36% 5.01%
SINCE INCEPTION 14.21 % 22.82% (0.75%) 6.28% 7.48%
INCEPTION DATE 10/1/97 9/30/97 9/30/97 9/30/97 9/30/97
VALUE MAY 31, 1999 $12,473 $14,084 $ 9,875 $11,067 $ 11,277
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALANCED S&P INDEX RUSSELL MSCI BENCHMARK
<S> <C> <C> <C> <C> <C>
9/30/1997 9,850.00 10,000.00 10,000.00 10,000.00 10,000.00
10/31/1997 9,623.45 9,666.40 9,555.50 9,231.40 9,509.00
11/30/1997 9,741.65 10,113.50 9,490.45 9,137.33 9,563.20
12/31/1997 9,826.44 10,287.06 9,660.80 9,217.03 9,674.13
1/31/1998 9,925.00 10,400.72 9,513.67 9,638.56 9,721.54
2/28/1998 10,506.50 11,150.43 10,227.03 10,257.03 10,401.07
3/31/1998 10,959.88 11,720.98 10,656.77 10,572.86 10,888.88
4/30/1998 11,117.57 11,838.86 10,715.31 10,656.55 10,993.42
5/31/1998 10,851.46 11,635.58 10,140.43 10,604.82 10,738.37
6/30/1998 11,107.72 12,107.85 10,169.45 10,685.10 10,855.42
7/31/1998 10,782.47 11,979.26 9,339.01 10,793.42 10,604.66
8/31/1998 9,106.95 10,249.46 7,528.18 9,456.12 8,928.06
9/30/1998 9,609.60 10,906.11 8,110.66 9,166.19 9,189.65
10/31/1998 10,329.09 11,792.44 8,443.38 10,121.68 9,780.55
11/30/1998 11,038.73 12,506.86 8,889.18 10,640.22 10,322.39
12/31/1998 11,890.03 13,227.11 9,444.14 11,059.98 10,867.41
1/31/1999 12,393.68 13,780.01 9,566.65 11,027.32 11,028.25
2/28/1999 11,969.04 13,351.87 8,795.87 10,764.54 10,570.58
3/31/1999 12,541.81 13,885.92 8,931.47 11,213.87 10,907.78
4/30/1999 12,808.45 14,423.66 9,730.78 11,668.24 11,455.35
5/31/1999 12,472.69 14,083.55 9,874.68 11,067.33 11,276.65
</TABLE>
THE PORTFOLIO HAS A MAXIMUM 1.5% SALES CHARGE.
[LOGO]
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders
Norwest Advantage Funds
We have audited the accompanying statements of assets and liabilities of Norwest
WealthBuilder II Growth Balanced Portfolio, Norwest WealthBuilder II Growth and
Income Portfolio and Norwest WealthBuilder II Growth Portfolio, portfolios of
Norwest Advantage Funds (collectively the "Funds"), including the schedules of
investments, as of May 31, 1999, and the related statements of operations for
the year then ended, statements of changes in net assets and financial
highlights for the year then ended and for the period from October 1, 1997
(commencement of operations) to May 31, 1998. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of May 31, 1999, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of May 31, 1999, the results of their operations, changes in their net
assets and financial highlights for each of the years or periods indicated in
the first paragraph above, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Boston, Massachusetts
July 16, 1999
[LOGO]
5
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES MAY 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORWEST NORWEST
WEALTHBUILDER II WEALTHBUILDER II NORWEST
GROWTH GROWTH AND WEALTHBUILDER II
BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS
Investments (Note 2)
Investments at cost............................... $22,008,346 $ 9,215,673 $11,188,922
Net unrealized appreciation....................... 1,734,260 1,464,865 1,855,014
----------------- ----------------- -----------------
TOTAL INVESTMENTS AT VALUE........................ 23,742,606 10,680,538 13,043,936
Cash................................................ 37,965 1,986 6,075
Receivable for dividends, interest and other
receivables....................................... 31,439 31 282
Receivable for Fund shares issued................... 70,915 - 51,727
Organization costs, net of amortization (Note 2).... 5,858 5,858 5,858
----------------- ----------------- -----------------
TOTAL ASSETS.......................................... 23,888,783 10,688,413 13,107,878
----------------- ----------------- -----------------
LIABILITIES
Payable for Fund shares redeemed.................... 512,515 4,211 145,013
Payable to investment adviser and affiliates (Note
3)................................................ 413 184 223
Payable to other related parties (Note 3)........... 6,267 - -
Accrued expenses and other liabilities.............. 33,745 27,005 20,975
----------------- ----------------- -----------------
TOTAL LIABILITIES..................................... 552,940 31,400 166,211
----------------- ----------------- -----------------
NET ASSETS............................................ $23,335,843 $10,657,013 $12,941,667
----------------- ----------------- -----------------
----------------- ----------------- -----------------
COMPONENTS OF NET ASSETS
Paid in capital..................................... $21,371,517 $ 9,269,312 $11,261,748
Undistributed net investment income................. 145,554 2,133 265
Accumulated net realized gain (loss) from
investments....................................... 84,512 (79,297) (175,360)
Net unrealized appreciation on investments.......... 1,734,260 1,464,865 1,855,014
----------------- ----------------- -----------------
NET ASSETS............................................ $23,335,843 $10,657,013 $12,941,667
----------------- ----------------- -----------------
----------------- ----------------- -----------------
SHARES OF BENEFICIAL INTEREST......................... 1,972,803 891,200 1,024,811
NET ASSET VALUE PER SHARE AND REDEMPTION PRICE PER
SHARE................................................ $ 11.83 $ 11.96 $ 12.63
OFFERING PRICE PER SHARE
(Net Asset Value Per Share/(1-Maximum Sales Load of
1.50%))........................................... $ 12.01 $ 12.14 $ 12.82
</TABLE>
[LOGO]
See Notes to Financial Statements
6
<PAGE>
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MAY 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORWEST NORWEST
WEALTHBUILDER II WEALTHBUILDER II NORWEST
GROWTH GROWTH AND WEALTHBUILDER II
BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income (Note 2)............................ $ 1,036 $ 80 $ 125
Dividend income..................................... 371,863 54,833 17,794
Net investment income allocated from affiliated Core
Portfolios(a) (Note 2)............................ 39,967 34,765 19,345
----------------- ----------------- -----------------
TOTAL INVESTMENT INCOME............................... 412,866 89,678 37,264
----------------- ----------------- -----------------
EXPENSES
Advisory (Note 3)................................... 57,033 36,303 31,672
Management and Administration (Note 3).............. 16,296 10,372 9,050
Transfer agent (Note 3)............................. 40,738 25,931 22,623
Custody (Note 3).................................... 3,259 2,074 1,810
Accounting (Note 3)................................. 13,500 13,500 13,500
Legal............................................... 161 109 90
Registration........................................ 13,493 10,288 10,838
Audit............................................... 6,700 6,700 6,700
Trustees............................................ 164 118 93
Reporting........................................... 25,489 16,995 14,263
Distribution fees (Note 3).......................... 122,213 77,793 67,869
Amortization of organization costs (Note 2)......... 1,757 1,757 1,757
Miscellaneous....................................... 704 659 523
----------------- ----------------- -----------------
TOTAL EXPENSES........................................ 301,507 202,599 180,788
Fees waived and expenses reimbursed (Note 4)........ (97,939) (73,040) (67,768)
----------------- ----------------- -----------------
NET EXPENSES.......................................... 203,568 129,559 113,020
----------------- ----------------- -----------------
NET INVESTMENT INCOME (LOSS).......................... 209,298 (39,881) (75,756)
----------------- ----------------- -----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) from
Non-affiliated Underlying Funds................... (52,261) (38,940) 1,948
Allocations from affiliated Core Portfolios (Note
1).............................................. (37,019) (186,302) (214,478)
Foreign currency transactions allocated from
affiliated Core Portfolios...................... (5,500) (5,708) (1,805)
Realized gain distributions from non-affiliated
Underlying Funds (Notes 1 and 2)................ 178,753 147,583 43,214
----------------- ----------------- -----------------
Net Realized Gain (Loss) from Investments........... 83,973 (83,367) (171,121)
----------------- ----------------- -----------------
Net Change in Unrealized Appreciation of
Non-affiliated Underlying Funds................... 307,855 248,904 444,913
Allocations from affiliated Core Portfolios (Note
1).............................................. 1,125,717 867,328 1,154,577
Foreign currency transactions allocated from
affiliated Core Portfolios...................... 3,388 1,491 975
----------------- ----------------- -----------------
Net Change in Unrealized Appreciation of
Investments....................................... 1,436,960 1,117,723 1,600,465
----------------- ----------------- -----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS....... 1,520,933 1,034,356 1,429,344
----------------- ----------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................... $ 1,730,231 $ 994,475 $ 1,353,588
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(a) Net of foreign withholding taxes of $3,150, $2,671 and $1,007, respectively.
</TABLE>
[LOGO]
See Notes to Financial Statements
7
<PAGE>
FOR THE PERIOD ENDED MAY 31, 1998 AND
STATEMENTS OF CHANGES IN NET ASSETS THE YEAR ENDED MAY 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORWEST NORWEST
WEALTHBUILDER II WEALTHBUILDER II NORWEST
GROWTH GROWTH AND WEALTHBUILDER II
BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- -----------------
<S> <C> <C> <C>
NET ASSETS, BEGINNING OF PERIOD(e)................ $ - $ - $ -
----------------- ----------------- -----------------
OPERATIONS
Net investment income (loss).................... 42,131 (9,239) (8,441)
Net realized gain from investments.............. 9,156 7,763 13,287
Net change in unrealized appreciation of
investments................................... 297,299 347,143 254,547
----------------- ----------------- -----------------
Net increase in net assets resulting from
operations.................................... 348,586 345,667 259,393
----------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (7,570) (734) (777)
----------------- ----------------- -----------------
CAPITAL SHARE TRANSACTIONS (a)
Sale of shares.................................. 9,510,370 8,483,267 5,553,468
Reinvestment of distributions................... 7,570 734 777
Redemption of shares............................ (559,312) (206,147) (117,627)
----------------- ----------------- -----------------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS...... 8,958,628 8,277,854 5,436,618
----------------- ----------------- -----------------
NET INCREASE IN NET ASSETS........................ 9,299,644 8,622,787 5,695,234
----------------- ----------------- -----------------
NET ASSETS--MAY 31, 1998 (b)...................... 9,299,644 8,622,787 5,695,234
----------------- ----------------- -----------------
OPERATIONS
Net investment income (loss).................... 209,298 (39,881) (75,756)
Net realized gain (loss) from investments....... 83,973 (83,367) (171,121)
Net change in unrealized appreciation of
investments................................... 1,436,960 1,117,723 1,600,465
----------------- ----------------- -----------------
Net increase in net assets resulting from
operations.................................... 1,730,231 994,475 1,353,588
----------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (93,210) (733) (777)
Net realized gain from investments.............. (12,759) (8,125) (18,171)
----------------- ----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (105,969) (8,858) (18,948)
----------------- ----------------- -----------------
CAPITAL SHARE TRANSACTIONS(c)
Sale of shares.................................. 21,034,423 5,051,725 7,731,462
Reinvestment of distributions................... 174 8,578 19,076
Redemption of shares............................ (8,622,660) (4,011,694) (1,838,745)
----------------- ----------------- -----------------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS...... 12,411,937 1,048,609 5,911,793
----------------- ----------------- -----------------
NET INCREASE IN NET ASSETS........................ 14,036,199 2,034,226 7,246,433
----------------- ----------------- -----------------
NET ASSETS, MAY 31, 1999 (d)...................... $23,335,843 $10,657,013 $12,941,667
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(a)Shares Issued (Redeemed)
Sale of shares.................................. 915,734 804,995 527,897
Reinvestment of distributions................... 764 76 79
Redemption of shares............................ (55,111) (19,019) (10,670)
----------------- ----------------- -----------------
NET INCREASE FROM SHARE TRANSACTIONS.............. 861,387 786,052 517,306
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(b)Includes undistributed net investment income,
May 31, 1998................................... $ 35,998 $ - $ -
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(c)Shares Issued (Redeemed)
Sale of shares.................................. 1,852,950 446,691 655,532
Reinvestment of distributions................... 15 777 1,578
Redemption of shares............................ (741,549) (342,320) (149,605)
----------------- ----------------- -----------------
NET INCREASE FROM SHARE TRANSACTIONS.............. 1,111,416 105,148 507,505
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(d)Includes undistributed net investment income,
May 31, 1999................................... $ 145,554 $ 2,133 $ 265
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(e)The Portfolios commenced operations on October
1, 1997.
</TABLE>
[LOGO]
See Notes to Financial Statements
8
<PAGE>
SELECTED DATA FOR A SHARE OUTSTANDING DURING
FINANCIAL HIGHLIGHTS THE YEAR ENDED MAY 31, 1999 AND THE PERIOD ENDED MAY 31,
1998 (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORWEST NORWEST
WEALTHBUILDER II WEALTHBUILDER II NORWEST
GROWTH GROWTH AND WEALTHBUILDER II
BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------ ------------------------------ ------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ --------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............ $ 10.80 $10.00 $ 10.97 $10.00 $11.01 $10.00
------------ ------ ------------ ------ ------------ ------
Investment Operations
Net Investment Income
(Loss)...................... 0.10 0.07 (0.04) - (0.07) (0.01)
Net Realized and Unrealized
Gain on Investments......... 1.01 0.76 1.04 0.97 1.71 1.03
------------ ------ ------------ ------ ------------ ------
Total from Investment
Operations..................... 1.11 0.83 1.00 0.97 1.64 1.02
------------ ------ ------------ ------ ------------ ------
Distributions From
Net Investment Income......... (0.07) (0.03) - - - (0.01)
Net Realized Gain............. (0.01) - (0.01) - (0.02) -
------------ ------ ------------ ------ ------------ ------
Total Distributions............. (0.08) (0.03) (0.01) - (0.02) (0.01)
------------ ------ ------------ ------ ------------ ------
Net Asset Value, End of
Period......................... $ 11.83 $10.80 $ 11.96 $10.97 $12.63 $11.01
------------ ------ ------------ ------ ------------ ------
------------ ------ ------------ ------ ------------ ------
Total Return(b)................. 10.26% 8.35% 9.11% 9.75% 14.94% 10.17%
Ratio/Supplementary Data
Net Assets at End of Period
(in thousands).............. $23,336 $9,300 $10,657 $8,623 $12,942 $5,695
Ratios to Average Net Assets(d)
Expenses including
reimbursement/waiver of
fees........................ 1.25% 1.25%(c) 1.25% 1.25%(c) 1.25% 1.25%(c)
Expenses excluding
reimbursement/waiver of
fees........................ 1.85% 2.64%(c) 1.95% 2.90%(c) 2.00% 3.32%(c)
Net investment income (loss)
including
reimbursement/waiver of
fees........................ 1.28% 0.02%(c) (0.38)% (0.41)%(c) (0.84)% (0.50)%(c)
Portfolio Turnover Rate......... 59.17% 20.20% 31.60% 7.19% 31.21% 15.60%
</TABLE>
(a) The Portfolios commenced operations on October 1, 1997.
(b) Total return calculations do not include sales charges. Total return would
have been lower had certain expenses not been reimbursed or waived during
the period shown (Note 4).
(c) Annualized.
(d) These ratios do not include expenses from non-affiliated funds.
[LOGO]
See Notes to Financial Statements
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 under the
Investment Company Act of 1940 (the "Act"). Norwest WealthBuilder II Growth
Balanced Portfolio, Norwest WealthBuilder II Growth and Income Portfolio and
Norwest WealthBuilder II Growth Portfolio (individually, a "Portfolio" and,
collectively, the "Portfolios") are separate investment portfolios designed to
offer access to professionally managed mutual funds from well-known fund groups.
The Portfolios commenced operations on October 1, 1997. Each Portfolio seeks to
achieve its investment objective by allocating its assets across asset classes
of stocks, bonds and money market instruments by investing in a number of
affiliated and non-affiliated funds ("Underlying Funds"). The Underlying Funds
incur expenses in seeking to achieve their investment objectives. The financial
statements and financial highlights for the Underlying Funds are presented in
separate financial statements and may be obtained from Norwest Shareholders
Services. Under its Trust Instrument, the Trust is authorized to issue an
unlimited number of shares of beneficial interest without par value.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles. These principles 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 summarizes the significant accounting policies of the
Portfolios:
SECURITY VALUATION--Each Portfolio determines its net asset value as of 4:00 PM
Eastern Time on each Portfolio business day. Investments in the Underlying Funds
are valued at the closing net asset value per share of each Underlying Fund on
the valuation date. The Portfolios' investments in the Underlying Funds
structured as partnerships (the "Core Portfolios") are valued daily based upon
each Portfolio's proportionate share of each Core Portfolio's net assets, which
are also valued daily. Short-term securities that mature in sixty days or less
are valued at amortized cost which approximates value.
SECURITY TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on an accrual basis and includes amortization
of premiums and accretion of discounts. Identified cost of investments sold is
used to determine realized gains and losses for both financial statement and
federal income tax purposes. Each Portfolio records its pro-rata share of the
Core Portfolios' net investment income and realized and unrealized gain and loss
daily. These amounts are included in each Portfolio's Statement of Operations
under the captions Net investment income allocated from affiliated Core
Portfolios, Net realized gain (loss) allocations from affiliated Core Portfolios
and Net change in unrealized appreciation of allocations from affiliated Core
Portfolios, respectively.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders of net investment
income and net capital gain, if any, are made 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 each Portfolio, timing differences and
differing characterizations of distributions made by the Portfolio.
FEDERAL TAXES--Each Portfolio intends to qualify each year as a regulated
investment company and distribute all its taxable income. In addition, by
distributing in each calendar year substantially all 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.
EXPENSE ALLOCATION--The Trust accounts separately for the assets and liabilities
and the operations of each Portfolio. Expenses that are directly attributable to
more than one Portfolio are allocated among the respective Portfolios.
[LOGO]
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ORGANIZATION COSTS--The costs incurred by the Portfolios in connection with
their organization and registration of shares have been capitalized and are
being amortized using the straight-line basis over a five-year period, beginning
on the commencement of the Portfolios' operations.
REPURCHASE AGREEMENTS--Each Portfolio, 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
Portfolios, through their custodian, receive delivery of the underlying
collateral, whose market value must always exceed the repurchase price. In the
event of default, a Portfolio may have difficulties with the disposition of the
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"). Norwest is a subsidiary of Wells Fargo &
Company. In most cases, affiliates of Norwest serve as investment subadviser for
each affiliated Core Portfolio. The Adviser receives an advisory fee directly
from each Portfolio at an annual rate of 0.35% of its average daily net assets.
MANAGEMENT, ADMINISTRATION AND DISTRIBUTION SERVICES--The administrator of each
Portfolio is Forum Administrative Services, LLC ("FAdS"). Forum Financial
Services, Inc. ("FFSI"), a registered broker-dealer and a member of the National
Association of Securities Dealers, Inc., serves as each Portfolio's manager and
distributor of the Portfolio's shares. For their administrative and management
services, FAdS and FFSI are each entitled to receive a fee at an annual rate of
0.05% of each Portfolio's average daily net assets. FFSI receives no fee for its
distribution services.
TRANSFER AGENT, CUSTODIAN AND OTHER SERVICES--Norwest serves as the Portfolio's
transfer agent and shareholder servicing agent. For these services, Norwest
receives a fee at an annual rate of 0.25% of each Portfolio's average daily net
assets. Norwest also serves as the Portfolios' custodian and may appoint
subcustodians for any services and other assets held in depositories. For its
custody 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 each
Portfolio's average daily net assets; 0.015% of the next $100 million of each
Portfolio's average daily net assets; and 0.01% of each Portfolio's remaining
average daily net assets.
OTHER SERVICE PROVIDERS--Forum Accounting Services, LLC ("FAcS"), an affiliate
of FFSI, provides portfolio accounting services to each Portfolio.
DISTRIBUTION PLAN--The Trust may compensate FFSI under a Distribution Plan (the
"Plan") adopted by the Trust for each Portfolio's shares under Rule 12b-1 of the
Act. 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 each Portfolio's average daily net assets.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Norwest, FAdS and FFSI have voluntarily waived a portion of their fees and have
reimbursed certain expenses so that total expenses would not exceed 1.25% of
each Portfolio's average daily net assets. Norwest, FAdS and FFSI, at their
discretion,
[LOGO]
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES (CONTINUED)
may revise or discontinue the voluntary fee waivers at any time. For the year
ended May 31, 1999, fees waived and expenses reimbursed by the Trust's service
providers were as follows:
<TABLE>
<CAPTION>
FEES WAIVED TOTAL FEES
--------------------------------------- EXPENSES WAIVED AND
TRANSFER REIMBURSED EXPENSES
AGENT FADS/FFSI ADVISER FADS/FFSI REIMBURSED
----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Norwest WealthBuilder II Growth Balanced Portfolio..... $ 40,738 $ 8,764 $ 48,437 $ -- $ 97,939
Norwest WealthBuilder II Growth and Income Portfolio... 25,931 9,833 32,146 5,130 73,040
Norwest WealthBuilder II Growth Portfolio.............. 22,623 9,048 31,609 4,488 67,768
</TABLE>
NOTE 5. SECURITIES TRANSACTIONS
The cost of purchases and the proceeds from sales (including maturities) of
securities (excluding short-term investments) for the year ended May 31, 1999,
were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
---------- -----------
<S> <C> <C>
Norwest WealthBuilder II Growth Balanced Portfolio..... $19,991,630 $9,530,930
Norwest WealthBuilder II Growth and Income Portfolio... 4,091,988 3,244,071
Norwest WealthBuilder II Growth Portfolio.............. 4,468,546 2,805,220
</TABLE>
For federal income tax purposes, the tax cost of investment securities owned as
of May 31, 1999, and the aggregate gross unrealized appreciation and the
aggregate gross unrealized depreciation based on identified tax cost as of May
31, 1999, were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Norwest WealthBuilder II Growth Balanced Portfolio........ $22,014,682 $2,034,928 $ 307,004 $1,727,924
Norwest WealthBuilder II Growth and Income Portfolio...... 9,218,988 1,482,451 20,901 1,461,550
Norwest WealthBuilder II Growth Portfolio................. 11,196,182 1,888,007 40,253 1,847,754
</TABLE>
NOTE 6. FUND REORGANIZATIONS
On March 25, 1999, the Board of Trustees approved the reorganization of each
series of the Trust into a new portfolio of Wells Fargo Funds Trust. The
reorganizations are part of a plan to consolidate the Stagecoach and Norwest
Advantage Funds families following last November's merger of Wells Fargo &
Company and Norwest Corporation. The Trust will present each proposed
reorganization to the Portfolio's shareholders for their approval at a special
shareholders' meeting that is planned for August 1999.
If shareholders approve the reorganizations, each Norwest Advantage Fund will
reorganize into a corresponding Wells Fargo Funds Trust portfolio that has
substantially similar investment objectives and investment policies. In general,
the Wells Fargo Funds Trust portfolios will not combine with other funds of the
Stagecoach or Norwest Advantage fund families.
[LOGO]
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
NOTE 7. FEDERAL INCOME TAXES
As of May 31, 1999, the Portfolios had capital loss carryovers available to
offset future capital gains as follows:
<TABLE>
<CAPTION>
YEAR OF
EXPIRATION
-----------
2007
-----------
<S> <C>
Norwest WealthBuilder II Growth Balanced Portfolio.......................................... $ --
Norwest WealthBuilder II Growth and Income Portfolio........................................ 75,981
Norwest WealthBuilder II Growth Portfolio................................................... 168,101
</TABLE>
SUPPLEMENTARY INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
CAPITAL GAIN DISTRIBUTIONS
During the fiscal year ended May 31, 1999, Norwest WealthBuilder II Growth
Balanced Portfolio, Norwest WealthBuilder II Growth and Income Portfolio and
Norwest WealthBuilder II Growth Portfolio distributed long-term capital gains of
$12,757, $8,858 and $18,948, respectively.
FEDERAL TAX STATUS OF DIVIDENDS DECLARED
For federal income tax purposes, dividends from short-term capital gain are
classified as ordinary income. The percentage of qualifying dividends eligible
for the corporate dividends received deduction for Norwest WealthBuilder II
Growth Balanced Portfolio was 100%.
[LOGO]
13
<PAGE>
SCHEDULES OF INVESTMENTS MAY 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH BALANCED PORTFOLIO
- -----------------------------------------------------------------
56,636 AIM Blue Chip Fund - Class A $ 2,421,727
129,860 Franklin Small Cap Growth Fund 3,188,077
291,594 Norwest Income Fund 2,764,368
N/A Income Equity Portfolio of Core Trust
(Delaware)(a) 2,346,223
N/A Large Company Growth Portfolio of Core
Trust (Delaware)(a) 2,219,065
271,339 Norwest Intermediate Government Income
Fund 2,995,654
N/A International Portfolio of Core Trust
(Delaware)(a) 1,675,401
221,431 MFS High Income Fund 1,152,695
108,812 Putnam Growth & Income Fund 2,391,717
70,627 Putnam International Growth Fund - Class
A 1,433,706
127,823 Templeton Global Bond 1,153,973
---------------
TOTAL INVESTMENTS (100.0%) (COST $22,008,346) $ 23,742,606
---------------
---------------
- -----------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------
37,084 AIM Blue Chip Fund - Class A $ 1,586,473
88,536 Franklin Small Cap Growth Fund 2,173,585
N/A Income Equity Portfolio of Core Trust
(Delaware)(a) 1,597,925
N/A Large Company Growth Portfolio of Core
Trust (Delaware)(a) 1,607,237
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH AND INCOME PORTFOLIO (continued)
- -----------------------------------------------------------------
N/A International Portfolio of Core Trust
(Delaware)(a) $ 1,061,534
72,431 Putnam Growth & Income Fund 1,592,759
52,241 Putnam International Growth Fund - Class
A 1,061,025
---------------
TOTAL INVESTMENTS (100.0%) (COST $9,215,673) $ 10,680,538
---------------
---------------
- -----------------------------------------------------------------
NORWEST WEALTHBUILDER II GROWTH PORTFOLIO
- -----------------------------------------------------------------
102,998 AIM Blue Chip Fund - Class A $ 4,395,950
34,457 Franklin Small Cap Growth Fund 844,855
N/A Income Equity Portfolio of Core Trust
(Delaware)(a) 1,840,712
N/A Large Company Growth Portfolio of Core
Trust (Delaware)(a) 4,335,087
N/A International Portfolio of Core Trust
(Delaware)(a) 507,348
22,731 Putnam Growth & Income Fund 498,716
30,662 Putnam International Growth Fund - Class
A 621,268
---------------
TOTAL INVESTMENTS (100.0%) (COST $11,188,922) $ 13,043,936
---------------
---------------
</TABLE>
N/A - Core Portfolios are partnership investments which do not issue shares.
(a) Represents less than 2% of the net assets of the affiliated Core Portfolios
that are advised by Norwest Investment Management, Inc.
[LOGO]
See Notes to Financial Statements
14
<PAGE>
Norwest Advantage Funds
510 Marquette Avenue
Minneapolis, MN 55479-0040
Shareholder Services
Minneapolis/St. Paul 1-612-667-8833
Elsewhere 1-800-338-1348
Norwest Investment Management, Inc.
Investment Adviser
Norwest Bank Minnesota, N.A.
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
- -C- 1999 NORWEST ADVANTAGE FUNDS
NW WB AR (7/99)
This report is for distribution only to shareholders and may
be distributed to others only if preceded or accompanied
by current prospectuses of the Norwest Advantage Funds.
[Logo] NORWEST
ADVANTAGE FUNDS-R-
