<PAGE>
NORWEST PASSAGE-SM-
A VARIABLE ANNUITY
NORWEST SELECT FUNDS
SEMIANNUAL REPORT FOR:
INTERMEDIATE BOND FUND
INCOME EQUITY FUND
VALUGROWTH STOCK FUND
SMALL COMPANY STOCK FUND
JUNE 30, 1996
Norwest Bank Minnesota, N.A.
Investment Adviser
Transfer Agent
Custodian
Forum Financial Services, Inc.
Manager and Distributor
NORWEST SELECT FUNDS ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE SYSTEM, THE
U.S. GOVERNMENT, OR ANY OTHER GOVERNMENT
AGENCY; ARE NOT BANK DEPOSITS; ARE NOT
OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. Please see other side
for additional disclosure information.
<PAGE>
Norwest Select Funds is a family of open-end investment companies commonly known
as mutual funds. FORUM FINANCIAL SERVICES, INC., MEMBER NASD, is the manager
and distributor of Norwest Select Funds. Forum Financial Services, Inc. is not
affiliated with Norwest Corporation, Norwest Bank Minnesota, N.A. or Norwest
Investment Services, Inc. SHARES OF THE FUNDS ARE NOT INSURED OR GUARANTEED BY
OR ARE NOT OBLIGATIONS OF THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE SYSTEM, THE U.S. GOVERNMENT OR ANY GOVERNMENT AGENCY. EVEN THOUGH
NORWEST INVESTMENT MANAGEMENT, A PART OF NORWEST BANK MINNESOTA, N.A. (THE
"BANK") ACTS AS THE INVESTMENT ADVISER, AND THE BANK ACTS AS THE TRANSFER AGENT
AND CUSTODIAN OF NORWEST SELECT FUNDS AND RECEIVES FEES FOR SUCH SERVICES AS
DISCLOSED IN THE PROSPECTUS, SHARES OF THE FUNDS ARE NOT BANK DEPOSITS, AND ARE
NOT OBLIGATIONS OF, GUARANTEED OR ENDORSED BY THE BANK, ANY OTHER BANK, OR ANY
OF THE BANK'S AFFILIATES, INCLUDING NORWEST CORPORATION AND NORWEST INVESTMENT
SERVICES, INC.; NOR ARE THEY GUARANTEED BY OR DO THEY CONSTITUTE OBLIGATIONS OF
FORUM FINANCIAL SERVICES, INC.
INVESTMENT IN SHARES OF MUTUAL FUNDS IS SUBJECT TO RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL, THAT MAY CAUSE THE VALUE OF THE INVESTMENT AND THE INVESTMENT
RETURN TO FLUCTUATE. WHEN THE INVESTMENT IS SOLD, THE VALUE MAY BE HIGHER OR
LOWER THAN THE AMOUNT ORIGINALLY INVESTED.
Mutual funds are sold only by prospectus. Before you invest, please read the
prospectus for more information including information about sales charges,
deferred sales charges, management and other fees.
<PAGE>
August 15, 1996
Dear Shareholders:
Norwest Select Funds is pleased to present its Semi-Annual Report for the period
ending June 30, 1996. The Norwest Select Funds lineup continues to expand and
improve. In addition to ValuGrowth-SM- Stock Fund, Small Company Stock Fund,
and Intermediate Bond Fund, the Norwest Select family of funds now includes
Income Equity Fund. This Fund focuses on large well-managed companies that have
above-average dividend income and have potential for future growth in both
dividends and share price.
Over the past year, the stock market performed well with the Standard and Poor's
500 Stock Index returning 26.41% for the one year ending June 30, 1996, compared
to a 13.82% average annual return for the past 10 years. The bull market
appears to be continuing as baby boomers in their peak earnings years invest
more and more of their retirement savings in stock mutual funds. The bond
market did not fare well this year, with the Lehman Brothers Aggregate Bond
Index returning only 5.00% ending June 30, 1996, compared to 8.55% average
annual return over the past 10 years.
Norwest Select Funds experienced significant growth over the last year with net
assets in all funds increasing nearly threefold. This success is the result of
the continued positive performance of the Norwest Select Funds and the
confidence and support of you, the shareholders of the funds.
If you have any questions or would like additional information about Norwest
Select Funds, please call Norwest Shareholder Services at 800-338-1348 or 612-
667-8833 and press 2. Thank you for choosing to invest with Norwest Select
Funds.
Sincerely,
John Y. Keffer
Chairman
Norwest Select Funds
<PAGE>
TABLE OF CONTENTS
Intermediate Bond Fund - 1996 Performance Review . . . . . . . . . . . . . 1
Income Equity Fund - 1996 Performance Review . . . . . . . . . . . . . . . 2
ValuGrowth-SM- Stock Fund - 1996 Performance Review. . . . . . . . . . . . 3
Small Company Stock Fund - 1996 Performance Review . . . . . . . . . . . . 4
Intermediate Bond Fund - Schedule of Investments . . . . . . . . . . . . . 5
Income Equity Fund - Schedule of Investments . . . . . . . . . . . . . . . 8
ValuGrowth-SM- Stock Fund - Schedule of Investments. . . . . . . . . . . .11
Small Company Stock Fund - Schedule of Investments . . . . . . . . . . . .15
Statements of Assets and Liabilities . . . . . . . . . . . . . . . . . . .19
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . .20
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . . .21
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . .25
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
1996 SEMI-ANNUAL PERFORMANCE REVIEW
The six month period ended June 30, 1996 was another volatile time in the fixed
income markets. Bond yields had dropped during most of 1995, and continued to
drop into January of 1996. Yields then began to rise significantly, increasing
over 1.3% in the intermediate part of the yield curve in which this fund is
situated. The bulk of the yield increases occurred on the days that the monthly
employment statistics were released, breaking records for daily price declines.
All of this activity occurred in the absence of any rate increases by the
Federal Reserve Bank ("Fed"). Rather, the Fed seemed to be conducting monetary
policy through public statements made by Fed Chairman Greenspan and Federal Open
Market Committee members.
Our goal continues to be to provide a high level of income by utilizing a core
portfolio of U.S. Treasury and Agency Notes, supplemented with higher yielding
mortgage backed securities and corporate bonds. The corporate sector performed
well over the entire fiscal year and the mortgage backed sector has performed
well during 1996 as yields have risen.
[GRAPH]
INTERMEDIATE BOND FUND VS. LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE
INDEX
FUND NAME: INTERMEDIATE BOND FUND
INDEX NAME: LEHMAN INTERMEDIATE GOV'T/CORP. INDEX
DATE FUND INDEX
---- ---- ----
1-Jun-94 $10,000 $10,000
Jun-94 $ 9,880 $10,001
DATES Jul-94 $10,010 $10,145
CHART DATE 1: 6/30/96 Aug-94 $10,030 $10,177
Chart Date 2: 6/30/96 Sep-94 $ 9,930 $10,083
INCEPTION DATE: 6/1/94 Oct-94 $ 9,910 $10,082
Nov-94 $ 9,890 $10,036
TOTAL RETURN Dec-94 $ 9,950 $10,072
Jan-95 $10,090 $10,242
Feb-95 $10,280 $10,454
Mar-95 $10,350 $10,514
Apr-95 $10,460 $10,644
May-95 $10,880 $10,965
CHART TEXT Jun-95 $10,970 $11,039
Jul-95 $10,930 $11,040
Aug-95 $11,040 $11,141
Sep-95 $11,140 $11,222
Oct-95 $11,300 $11,347
Nov-95 $11,480 $11,496
Dec-95 $11,649 $11,616
Jan-96 $11,684 $11,713
Feb-96 $11,482 $11,576
Mar-96 $11,397 $11,517
Apr-96 $11,313 $11,477
May-96 $11,291 $11,468
Jun-96 $11,419 $11,589
VALUE ON 6/30/96
- ----------------
Intermediate Bond Fund $11,419
Lehman Intermediate Gov't/Corp. Index $11,589
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
1 YEAR SINCE INCEPTION ON 6/1/94
------ -------------------------
Intermediate Bond Fund 4.07% 6.37%
Lehman Intermediate Gov't/Corp. Index 5.00% 7.10%
This chart reflects a comparison of the change in value of a $10,000 investment
in Intermediate Bond Fund compared to the performance of the Lehman Int.
Gov't/Corp. Index for the one year period ending 6/30/96. It is important to
keep in mind that the Lehman Int. Gov't./Corp. Index excludes the effect of any
fees. Total return for the fund includes reinvestment of dividends and
distributions. It does not reflect charges for the variable annuity and
variable life contracts or certificates thereunder whose proceeds are invested
in the Fund. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1
<PAGE>
NORWEST SELECT FUNDS
INCOME EQUITY FUND
1996 SEMI-ANNUAL PERFORMANCE REVIEW
Norwest Select Income Equity Fund opened the first week of May, 1996. For the
two months ended June 30, 1996 we saw significant cash flows into the Fund. The
initial portfolio structure emphasized high quality growth companies with an
overall portfolio dividend yield higher than the market, with investments
diversified among nine separate market sectors. The portfolio has an emphasis
on capital goods companies such as General Electric Company, Emerson Electric
Company, Honeywell, Incorporated, United Technologies Corporation, and WMX
Technologies, Incorporated. The energy sector is currently emphasized with
holdings in both domestic and international oil companies and Schlumberger, Ltd.
in the oil service industry. We also anticipate increasing our emphasis in
consumer cyclical stocks, especially retailers such as May Department Stores
Company, J.C. Penney Company, Incorporated, and Dayton Hudson Corporation.
Overall, the portfolio emphasizes very high quality, stable companies that have
demonstrated more consistent earnings and dividend growth than the market
averages.
2
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH-SM- STOCK FUND
1996 SEMI-ANNUAL PERFORMANCE REVIEW
Although the ValuGrowth-SM- Stock Fund's absolute performance was strong during
the six month period ended June 30, 1996, its performance relative to the
Standard & Poor's 500 Index, was disappointing. The Fund's underperformance
during the first six months of the fiscal year reflects three factors. First,
our corporate profits were very strong, especially cyclical and lower quality
stocks. In periods of time when profits, are plentiful, quality growth
companies often underperform, and 1995 was no exception. Second, market
leadership was extremely narrow. Financial, healthcare, and technology stocks
were particularly strong, accounting for a disproportionate share of the markets
rise. While ValuGrowth-SM- held a number of these issues, the Fund was not
overweight relative to the market in these sectors and had full exposure to
other sectors that lagged in the market. Finally, ValuGrowth-SM- held too many
stocks that trailed the market while we waited for fundamentals to improve.
During previous years, patience has been rewarded. In the momentum driven
market we experienced this past year, patience was penalized.
Relative performance improved considerably during the semi-annual period.
Slower profit growth has resulted in a shift toward high quality growth
companies and companies with stable earnings. In addition, a large number of
the issuers we patiently held while they underperformed earlier this fiscal
year, began to generate the above market performance we anticipated. Finally,
we made certain strategic shifts in ValuGrowth's sector weightings intended to
increase diversification and move the Fund toward a more economically neutral
position.
Looking forward, we believe ValuGrowth-SM- is well positioned for the economic
and market environment we foresee. The Fund continues to be biased toward
companies with global franchises and international distribution. In addition,
ValuGrowth-SM- is focused on companies with new products, rising demand,
financial or operational restructuring or a combination of these factors. We
believe that the companies that are currently held in the Fund will be able to
generate earnings that meet or exceed expectations regardless of the economic
environment. We believe that attractive relative earnings momentum, combined
with diversification and compelling relative value, continue to make
ValuGrowth-SM- an attractive investment opportunity.
[GRAPH]
VALUGROWTH STOCK FUND VS. S&P 500 INDEX
FUND NAME: VALUGROWTH STOCK FUND
INDEX NAME: S&P 500 INDEX
DATE FUND INDEX
---- ---- -----
1-Jun-94 $10,000 $10,000
Jun-94 $ 9,550 $ 9,755
DATES Jul-94 $ 9,990 $10,075
CHART DATE 1: 6/30/96 Aug-94 $10,034 $10,488
Chart Date 2: 6/30/96 Sep-94 $10,007 $10,231
INCEPTION DATE: 6/1/94 Oct-94 $10,021 $10,461
Nov-94 $ 9,780 $10,080
TOTAL RETURN Dec-94 $ 9,810 $10,230
Jan-95 $ 9,950 $10,495
Feb-95 $10,300 $10,903
Mar-95 $10,520 $11,224
Apr-95 $10,710 $11,555
May-95 $10,910 $12,016
CHART TEXT Jun-95 $11,210 $12,294
Jul-95 $11,510 $12,702
Aug-95 $11,500 $12,734
Sep-95 $11,740 $13,271
Oct-95 $11,520 $13,223
Nov-95 $12,230 $13,803
Dec-95 $12,179 $14,069
Jan-96 $12,312 $14,549
Feb-96 $12,677 $14,685
Mar-96 $12,869 $14,826
Apr-96 $13,071 $15,043
May-96 $13,314 $15,430
Jun-96 $13,233 $15,489
VALUE ON 6/30/96
- ----------------
S&P 500 Index $13,233
ValuGrowth Stock Fund $15,489
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
1 YEAR SINCE INCEPTION ON 6/1/94
------ -------------------------
S&P 500 Index 18.03% 14.39%
ValuGrowth Stock Fund 25.98% 26.41%
This chart reflects a comparison of the change in value of a $10,000 investment
in ValuGrowth-SM- Stock Fund compared to the performance of the S&P 500 Index
for the one year period ending 6/30/96. It is important to keep in mind that
the S&P 500 Index excludes the effect of any fees. Total return for the fund
includes reinvestment of dividends and distributions. It does not reflect
charges for the variable annuity and variable life contracts or certificates
thereunder whose proceeds are invested in the Fund. PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE PERFORMANCE.
3
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
1996 SEMI-ANNUAL PERFORMANCE REVIEW
From June 30, 1995 to June 30, 1996, the Select Small Company Stock Fund enjoyed
both orderly growth in size and outperformance of its bench mark; the Russell
2000 Index. As with most small-cap funds, the pattern of the last twelve months
was: outperformance in the summer of 1995 as technology stocks dominated, under
performance in the fall of 1995 as small-caps corrected, renewed outperformance
in the late winter and spring of 1996 as small-caps surged past the big-cap
world, and the beginning of another correction in June of 1996. This fund
quadrupled in size over the last period from June 1995 to June 1996 while
outperforming its bench mark, creating what would have to be called a successful
year.
[GRAPH]
SMALL COMPANY STOCK FUND VS. RUSSELL 2000 INDEX
FUND NAME: SMALL COMPANY STOCK FUND
INDEX NAME: RUSSELL 2000 INDEX
DATES FUND INDEX
----- ----- -----
1-May-95 $10,000 $10,000
May-95 $10,040 $10,172
Jun-95 $10,670 $10,700
CHART DATE 1: 6/30/96 Jul-95 $11,740 $11,316
Chart Date 2: 6/30/96 Aug-95 $11,970 $11,550
INCEPTION DATE: 5/1/95 Sep-95 $11,920 $11,756
Oct-95 $11,280 $11,231
TOTAL RETURN Nov-95 $11,590 $11,702
Dec-95 $11,595 $12,011
Jan-96 $11,636 $12,592
Feb-96 $11,957 $12,709
Mar-96 $12,484 $12,831
Apr-96 $13,891 $13,019
CHART TEXT May-96 $14,419 $13,354
Jun-96 $13,406 $13,405
VALUE ON 6/30/96
- ----------------
Small Company Stock Fund $13,406
Russell 2000 Index $13,405
CUMULATIVE TOTAL RETURN
- -----------------------
SINCE INCEPTION ON 5/1/95
-------------------------
Small Company Stock Fund 28.58%
Russell 2000 Index 26.41%
This chart reflects a comparison of the change in value of a $10,000 investment
in Small Company Stock Fund compared to the performance of the Russell 2000
Index for the one year period ending 6/30/96. It is important to keep in mind
that the Russell 2000 Index excludes the effect of any fees. Total return for
the fund includes reinvestment of dividends and distributions. It does not
reflect charges for the variable annuity and variable life contracts or
certificates thereunder whose proceeds are invested in the Fund. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
4
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
FACE
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------------------- ---------
CORPORATE BONDS AND NOTES (42.1%)
$125,000 Beneficial Corporation,
8.40%, due 5/15/08 $139,206
100,000 Costco Wholesale Corporation,
5.75%, due 5/15/02 92,000
200,000 E.I. du Pont de Nemours & Company,
8.50%, due 2/15/03 212,250
185,000 General Electric Capital Corporation,
7.875%, due 12/1/06 195,175
75,000 Great Western Bank,
9.875%, due 6/15/01 83,813
150,000 International Lease Finance,
6.50%, due 7/15/97 150,630
100,000 Philip Morris Companies,
9.00%, due 5/15/98 104,227
200,000 Procter & Gamble Company,
8.00%, due 11/15/03 211,750
185,000 Salomon Incorporated,
6.75%, due 8/15/03 175,287
100,000 Snap-On, Incorporated,
6.625%, due 10/1/05 97,250
75,000 Southwest Airlines Company,
8.00%, due 3/1/05 77,343
100,000 UNUM Corporation,
6.56%, due 5/27/97 100,571
160,000 Witco Corporation,
6.125%, due 2/1/06 148,000
-----------
Total Corporate Bonds and Notes
(Cost $1,772,660) 1,787,502
-----------
See accompanying notes to financial statements.
(continued)
5
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
FACE
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------------------- ---------
GOVERNMENT AGENCY NOTES (9.3%)
$300,000 Federal Home Loan Bank,
6.69%, due 9/6/05 $293,733
100,000 Federal Home Loan Mortgage Corporation,
8.05%, due 5/19/97 100,194
-----------
Total Government Agency Notes
(Cost $418,316) 393,927
-----------
U.S. TREASURY OBLIGATIONS (46.1%)
300,000 U.S. Treasury Notes,
6.00%, due 11/15/05 282,750
165,000 U.S. Treasury Notes,
6.50%, due 5/15/97 166,063
200,000 U.S. Treasury Notes,
5.13%, due 2/28/98 197,198
200,000 U.S. Treasury Notes,
7.875%, due 4/15/98 206,072
250,000 U.S. Treasury Notes,
5.00%, due 1/31/99 242,808
150,000 U.S. Treasury Notes,
6.125%, due 7/31/00 148,422
300,000 U.S. Treasury Notes,
6.25%, due 4/30/01 297,264
100,000 U.S. Treasury Notes,
7.50%, due 5/15/02 104,806
See accompanying notes to financial statements.
(continued)
6
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
FACE/
SHARES
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS (CONTINUED)
$300,000 U.S. Treasury Notes,
7.25%, due 5/15/04 $310,828
------------
Total U.S. Treasury Obligations
(Cost $1,999,345) 1,956,211
------------
SHORT-TERM HOLDINGS (2.5%)
891 Dreyfus Cash Management Fund, Class A 891
104,853 Federated Treasury Obligations Fund, Institutional
Shares 104,853
------------
Total Short-Term Holdings (Cost $105,744) 105,744
------------
TOTAL INVESTMENTS (100.0%)
(Cost $4,296,065) $4,243,384
------------
------------
See accompanying notes to financial statements.
7
<PAGE>
NORWEST SELECT FUNDS
INCOME EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- -------- --------------------------------------------------- ------------
COMMON STOCKS (69.8%)
BASIC MATERIALS (3.7%)
630 E.I. du Pont de Nemours & Company $49,848
810 Morton International, Incorporated 30,172
------------
80,020
------------
CAPITAL GOODS (9.5%)
320 Emerson Electric Company 28,920
395 General Electric Company 34,168
810 Honeywell, Incorporated 44,145
440 United Technologies Corporation 50,600
1,520 WMX Technologies, Incorporated 49,780
------------
207,613
------------
CONSUMER CYCLICAL (10.6%)
220 Dayton Hudson Corporation 22,689
660 Deluxe Corporation 23,430
840 Dun & Bradstreet Corporation 52,500
530 Eastman Kodak Company 41,208
440 J.C. Penney Company, Incorporated 23,100
830 May Department Stores Company 36,312
350 McDonald's Corporation 16,363
310 Sears Roebuck and Company 15,073
------------
230,675
------------
CONSUMER STAPLES (14.6%)
1,060 American Brands, Incorporated 48,097
640 American Home Products Corporation 38,480
570 Johnson & Johnson 28,215
500 Merck & Company, Incorporated 32,312
630 PepsiCo, Incorporated 22,286
See accompanying notes to financial statements.
(continued)
8
<PAGE>
NORWEST SELECT FUNDS
INCOME EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------------------- ------------
CONSUMER STAPLES (CONTINUED)
395 Pfizer, Incorporated $28,193
395 Philip Morris Companies, Incorporated 41,080
350 Procter & Gamble Company 31,718
1,460 Sara Lee Corporation 47,267
------------
317,648
------------
ENERGY (8.6%)
285 Atlantic Richfield Company 33,773
660 Chevron Corporation 38,940
350 Exxon Corporation 30,406
200 Mobil Corporation 22,425
155 Royal Dutch Petroleum Company 23,832
440 Schlumberger, Ltd. 37,070
------------
186,446
------------
FINANCIAL (8.1%)
280 Allstate Corporation 12,775
570 American Express Company 25,436
750 American General Corporation 27,282
740 First Bank System, Incorporated 42,920
440 J.P. Morgan & Company, Incorporated 37,235
395 Transamerica Corporation 31,995
------------
177,643
------------
MISCELLANEOUS (2.1%)
660 Minnesota Mining & Manufacturing Company 45,540
------------
TECHNOLOGY (6.7%)
1,100 AT&T Corporation 68,200
770 Hewlett-Packard Company 76,711
------------
144,911
------------
See accompanying notes to financial statements.
(continued)
9
<PAGE>
NORWEST SELECT FUNDS
INCOME EQUITY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- -------- ------------------------------------------------------ ------------
UTILITIES (5.9%)
550 Consolidated Natural Gas Company $28,737
290 FPL Group, Incorporated 13,340
840 GTE Corporation 37,590
640 Pacific Gas & Electric Company 14,881
750 Public Service Enterprise Group, Incorporated 20,532
330 Texas Utilities Company 14,107
------------
129,187
------------
Total Common Stocks (Cost $1,509,628) 1,519,683
------------
REPURCHASE AGREEMENTS (30.2%)
656,835 Lehman Brothers, Incorporated, 5.47%, due 7/1/96,
collateralized by $70,200,000 Federal Home Loan
Mortgage Discount Notes, 5.45%, due 12/24/96;
$18,000,000 Federal Farm Credit Bank Discount
Notes, 5.45%, due 9/11/96; $20,000,000 Federal Farm
Credit Bank Discount Notes, 5.45%, due 3/21/97;
$45,000,000 Federal Home Loan Mortgage Discount
Notes, 5.45%, due 3/20/97; $42,000,000 Federal Home
Loan Mortgage Discount Notes, 5.45%, due 9/25/96;
$15,000,000 Federal National Mortgage Association
Discount Notes, 5.45%, due 9/18/96 $656,835
------------
Total Investments (100.0%)
(Cost $2,166,463) $2,176,518
------------
------------
See accompanying notes to financial statements.
10
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH-SM- STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------------------- -----------
COMMON STOCKS (94.5%)
BASIC MATERIALS (6.5%)
1,600 E.I. du Pont de Nemours & Company $126,600
2,450 Hercules, Incorporated 135,363
3,250 Morton International, Incorporated 121,062
3,200 Witco Corporation 110,000
------------
493,025
------------
CAPITAL GOODS (10.5%)
1,550 Emerson Electric Company 140,081
1,600 General Electric Company 138,400
3,200 Honeywell, Incorporated 174,400
3,150 Thermo Electron Corporation (a) 131,119
2,600 USA Waste Services, Incorporated 77,025
2,700 York International Corporation 139,725
------------
800,750
------------
CONSUMER CYCLICAL (9.4%)
4,200 Black & Decker Corporation 162,225
1,300 Home Depot, Incorporated 70,200
2,000 Lowe's Companies, Incorporated 72,250
3,000 May Department Stores Company 131,250
5,100 Newell Company 156,188
1,900 The Walt Disney Company 119,462
------------
711,575
------------
CONSUMER STAPLES (23.9%)
3,500 Albertson's, Incorporated 144,812
2,400 American Home Products Corporation 144,300
3,044 Columbia HCA Healthcare Corporation 162,474
2,850 Crown Cork & Seal Company, Incorporated (a) 128,250
See accompanying notes to financial statements.
(continued)
11
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH-SM- STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------------------- -----------
CONSUMER STAPLES (CONTINUED)
3,500 Duracell International, Incorporated $150,937
2,200 Gillette Company 137,225
3,900 IVAX Corporation 61,911
5,500 Mylan Laboratories 94,876
4,800 PepsiCo, Incorporated 169,800
1,800 Procter & Gamble Company 163,125
4,605 Sonoco Products Company 130,667
3,400 The Coca-Cola Company 166,175
5,400 Vencor, Incorporated (a) 164,700
------------
1,819,252
------------
ENERGY (5.4%)
1,500 Chevron Corporation 88,500
800 Mobil Corporation 89,700
700 Royal Dutch Petroleum Company 107,625
1,500 Schlumberger, Ltd. 126,375
------------
412,200
------------
FINANCIAL (11.6%)
1,700 American International Group 167,662
3,000 Chubb Corporation 149,626
2,400 First Union Corporation 146,100
2,000 Franklin Resources, Incorporated 122,000
2,650 State Street Boston Corporation 135,150
2,925 SunAmerica, Incorporated 165,262
------------
885,800
------------
MISCELLANEOUS (2.1%)
3,500 Alco Standard Corporation 158,375
------------
See accompanying notes to financial statements.
(continued)
12
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH-SM- STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- ------- --------------------------------------------------- -----------
TECHNOLOGY (16.4%)
1,500 Cabletron Systems, Incorporated (a) $102,937
2,400 Electronic Data Systems Corporation 129,000
5,000 EMC Corporation (a) 93,125
1,850 First Data Corporation 147,306
1,300 Hewlett-Packard Company 129,513
1,700 Intel Corporation 124,844
4,000 Telefonaktiebolaget LM Ericsson, Series B,
Sponsored ADR 86,000
1,050 Microsoft Corporation (a) 126,131
1,200 Motorola, Incorporated 75,450
3,900 Silicon Graphics, Incorporated (a) 93,600
2,700 Xerox Corporation 144,450
------------
1,252,356
------------
TRANSPORTATION AND PROFESSIONAL SERVICES ( 1.7%)
2,000 Conrail, Incorporated 132,750
------------
UTILITIES (7.0%)
2,900 American Electric Power Company 123,613
2,400 Consolidated Natural Gas 125,400
6,100 DPL, Incorporated 148,689
3,200 Texas Utilities Company 136,800
------------
534,502
------------
Total Common Stocks (Cost $6,112,647) 7,200,585
------------
See accompanying notes to financial statements.
(continued)
13
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH-SM- STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- --------- ------------------------------------------------- ------------
SHORT-TERM HOLDINGS (5.5%)
211,533 Dreyfus Cash Management Fund, Class A $211,533
211,441 Provident Institutional Funds, TempFund Fund 211,441
------------
Total Short-Term Holdings (Cost $422,974) 422,974
------------
TOTAL INVESTMENTS (100.0%)
(Cost $6,535,621) $7,623,559
------------
------------
(a) Non-income producing security.
See accompanying notes to financial statements.
14
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- -------- --------------------------------------------------- -----------
COMMON STOCKS (88.2%)
BASIC MATERIALS (11.1%)
1,850 Chemed Corporation $68,912
3,300 Ciber, Incorporated 72,600
3,400 GMIS, Incorporated 40,800
1,000 Keane, Incorporated (a) 36,875
3,600 Kentek, Information Systems, Incorporated (a) 38,250
1,950 OM Group, Incorporated 76,537
2,400 STB Systems, Incorporated 41,100
4,450 Tetra Technologies, Incorporated (a) 77,319
1,900 Zitel Corporation (a) 26,125
------------
478,518
------------
CAPITAL GOODS (6.2%)
1,300 Dreco Energy Services Limited (a) 35,750
3,300 Maverick Tube Corporation 38,775
4,300 Softkey International, Incorporated (a) 81,431
2,100 Varco International, Incorporated (a) 38,063
3,000 Vitesse Semiconductor Corporation (a) 72,000
------------
266,019
------------
CONSUMER CYCLICAL (8.0%)
4,600 Friedman's Incorporated, Class A (a) 117,300
1,300 Harman International Industries, Incorporated 64,025
6,100 NHP, Incorporated (a) 125,812
2,500 Sport-Haley, Incorporated (a) 36,563
------------
343,700
------------
CONSUMER STAPLES (8.7%)
1,250 BMC Industries, Incorporated 35,938
5,950 Circon Corporation (a) 69,913
See accompanying notes to financial statements.
(continued)
15
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- --------- ------------------------------------------------- ------------
CONSUMER STAPLES (CONTINUED)
3,000 DII Group, Incorporated $76,500
3,050 Empi, Incorporated 39,650
3,300 Fischer Imaging Corporation (a) 39,600
2,000 Inphynet Medical Management, Incorporated (a) 37,500
2,500 Sierra Health Services, Incorporated (a) 78,750
------------
377,851
------------
ENERGY (19.1%)
4,300 Box Energy Corporation (a) 39,238
4,700 Digicon, Incorporated (a) 78,725
7,600 Global Natural Resources, Incorporated (a) 124,450
2,900 Lomak Petroleum, Incorporated 41,325
3,650 Nuevo Energy Company (a) 117,712
3,150 Parker & Parsley Petroleum Company 87,412
2,800 Pride Petroleum Services, Incorporated (a) 39,900
7,350 Tuboscope Vetco International Corporation (a) 81,768
5,700 Unit Corporation 37,963
2,650 United Meridian Corporation (a) 95,400
3,150 Vintage Petroleum, Incorporated 80,325
------------
824,218
------------
FINANCIAL (15.9%)
5,700 AmeriCredit Corporation (a) 89,063
4,500 Bank Plus Corporation (a) 39,375
2,400 Coast Savings Financial (a) 78,600
2,600 Felcor Suite Hotels, Incorporated 79,300
2,900 First Colorado Bancorp, Incorporated 38,425
3,950 Imperial Credit Industries, Incorporated 119,487
2,500 Imperial Credit Mortgage Holdings 40,000
2,200 IPC Information Systems, Incorporated (a) 38,500
1,300 Long Island Bancorp, Incorporated 39,731
See accompanying notes to financial statements.
(continued)
16
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- -------- ---------------------------------------------------- ------------
FINANCIAL (CONTINUED)
2,150 Southern Pacific Funding Corporation (a) $37,625
3,600 Sunstone Hotel Investors, Incorporated 39,151
2,000 WFS Financial, Incorporated 45,000
------------
684,257
------------
MISCELLANEOUS (2.2%)
3,250 Tech-Sym Corporation (a) 96,687
------------
TECHNOLOGY (13.3%)
2,000 Altron, Incorporated (a) 40,500
4,600 American Business Information, Incorporated (a) 83,950
4,250 InterVoice, Incorporated (a) 84,468
3,600 Powell Industries, Incorporated (a) 41,850
6,400 Smartflex Systems, Incorporated (a) 96,000
4,500 Stormedia, Incorporated (a) 48,937
8,300 Symantec Corporation (a) 103,750
2,700 SymmetriCom, Incorporated (a) 36,450
3,000 Tekelec (a) 39,375
------------
575,280
------------
TRANSPORTATION AND PROFESSIONAL SERVICES ( 2.9%)
700 Atlas Air, Incorporated (a) 40,250
2,550 Covenant Transportation, Incorporated (a) 43,350
2,100 Swift Transportation, Incorporated (a) 40,163
------------
123,763
------------
UTILITIES (0.8%)
1,000 Newpark Resources, Incorporated (a) 36,750
------------
Total Common Stocks (Cost $3,555,573) $3,807,043
------------
See accompanying notes to financial statements.
(continued)
17
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
SHARES SECURITY DESCRIPTION VALUE
- --------- ---------------------------------------------------- ------------
OTHER INVESTMENTS (11.8%)
113,964 Dreyfus Treasury Cash Management Fund, Class A $113,964
110,640 Federated Trust for Government Cash Reserves 110,640
115,833 Fidelity Institutional Cash Portfolio;
Money Market Class 1 115,833
169,661 Provident Institutional Funds, TempFund Fund 169,661
------------
Total Other Investments (Cost $510,098) 510,098
------------
TOTAL INVESTMENTS (100.0%)
(Cost $4,065,671) $4,317,141
------------
(a) Non-income producing security.
See accompanying notes to financial statements.
18
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
SMALL
INTERMEDIATE INCOME VALUGROWTH COMPANY
BOND EQUITY STOCK STOCK
FUND FUND FUND FUND
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments at value (a) $4,243,384 $2,176,518 $7,623,559 $4,317,141
Receivable for securities sold -- -- 24,816 --
Interest, dividends and other receivables 62,836 3,860 16,157 11,484
Organization costs, net of amortization 28,896 -- 28,896 --
---------- ---------- ---------- ----------
Total Assets 4,335,116 2,180,378 7,693,428 4,328,625
---------- ---------- ---------- ----------
LIABILITIES
Payable for securities purchased -- 116,207 144,274 352,129
Accrued fees and expenses 3,438 1,334 11,552 7,003
---------- ---------- ---------- ----------
Total Liabilities 3,438 117,541 155,826 359,132
---------- ---------- ---------- ----------
NET ASSETS $4,331,678 $2,062,837 $7,537,602 $3,969,493
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
COMPONENTS OF NET ASSETS
Capital paid in $4,253,229 $2,049,360 $6,521,186 $3,490,745
Undistributed net investment income 105,630 3,422 36,502 3,076
Unrealized appreciation /(depreciation) (52,681) 10,055 1,087,938 251,470
Accumulated net realized gain/(loss) 25,500 -- (108,024) 224,202
---------- ---------- ---------- ----------
NET ASSETS $4,331,678 $2,062,837 $7,537,602 $3,969,493
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
SHARES OUTSTANDING 402,686 204,022 576,277 306,318
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET ASSET VALUE PER SHARE $10.76 $10.11 $13.08 $12.96
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
(a) Cost of investments $4,296,065 $2,166,463 $6,112,647 $4,065,671
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
SMALL
INTERMEDIATE INCOME VALUGROWTH COMPANY
BOND EQUITY STOCK STOCK
FUND FUND FUND FUND
(a)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income $116,425 $1,562 $8,086 $7,428
Dividend income -- 3,191 53,384 7,194
---------- ---------- ---------- ----------
Total income 116,425 4,753 61,470 14,622
---------- ---------- ---------- ----------
EXPENSES
Advisory 10,931 1,253 24,914 11,528
Management 3,644 313 6,229 2,882
Transfer Agent 1,457 125 2,491 1,153
Custodian 364 31 623 288
Accounting 18,000 5,516 19,000 23,000
Professional Services 1,582 13 2,655 1,174
Audit and Tax Reporting 213 -- 347 848
Trustees 42 -- 71 32
Amortization of Organization Costs 4,954 -- 4,954 --
Valuation Services 2,297 270 1,343 1,339
Other 114 -- 598 144
---------- ---------- ---------- ----------
Total Expenses 43,598 7,521 63,225 42,388
Expenses reimbursed and fees waived (32,638) (6,190) (38,257) (30,842)
---------- ---------- ---------- ----------
Net Expenses 10,960 1,331 24,968 11,546
---------- ---------- ---------- ----------
NET INVESTMENT INCOME 105,465 3,422 36,502 3,076
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain/(loss) on investments 23,117 -- (11,264) 226,595
Change in unrealized
appreciation/(depreciation) (189,216) 10,055 471,584 139,588
---------- ---------- ---------- ----------
NET GAIN ON INVESTMENTS (166,099) 10,055 460,320 366,183
---------- ---------- ---------- ----------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS ($60,634) $13,477 $496,822 $369,259
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(a) See Note 1 of notes to financial statements for commencement of operations.
See accompanying notes to financial statements.
20
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
INTERMEDIATE INCOME
BOND EQUITY
FUND FUND
--------------------------- --------------------------------
Amount Shares Amount Shares
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS - December 31, 1994 $ 1,255,171 --
------------ ------------
OPERATIONS
Net investment income $ 131,801 --
Realized gain on investments 10,898 --
Change in unrealized appreciation 174,654 --
------------
317,353 --
------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (174,448) --
Realized gain on investments -- --
------------
(174,448) --
------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 2,603,356 242,293 -- --
Proceeds from shares reinvested 174,503 15,954 -- --
Payments for shares redeemed (1,086,022) (102,837) -- --
------------ ------------
1,691,837 155,410 -- --
------------ ------------
NET ASSETS - December 31, 1995 $ 3,089,913 --
------------ ------------
OPERATIONS
Net investment income $ 105,465 $ 3,422
Realized gain on investments 23,117 --
Change in unrealized appreciation /(depreciation) (189,216) 10,055
------------ ------------
(60,634) 13,477
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,582,019 146,977 2,049,360 204,002
Payments for shares redeemed (279,620) (25,832) -- --
------------ ----------- ------------ ------------
1,302,399 121,145 2,049,360 204,002
------------ ----------- ------------ ------------
NET ASSETS - June 30, 1996 $ 4,331,678 $ 2,062,837
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
SMALL
VALUGROWTH COMPANY
STOCK GROWTH
FUND FUND
--------------------------- --------------------------------
Amount Shares Amount Shares
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS - December 31, 1994 $ 1,910,104 --
------------ ------------
OPERATIONS
Net investment income $ 37,370 $ 9,729
Realized gain/(loss) on investments (77,676) 54,909
Change in unrealized appreciation 646,711 111,882
------------ ------------
606,405 176,520
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (51,011) (9,738)
Realized gain on investments -- (57,306)
------------ ------------
(51,011) (67,044)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 3,071,041 274,670 1,854,563 175,170
Proceeds from shares reinvested 51,056 4,293 67,046 6,002
Payments for shares redeemed (794,583) (75,453) (3,587) (314)
------------ ------------ ------------ ------------
2,327,514 203,510 1,918,022 180,858
------------ ------------ ------------ ------------
NET ASSETS - December 31, 1995 $ 4,793,012 $ 2,027,498
------------ ------------
------------ ------------
OPERATIONS
Net investment income $ 36,502 $ 3,076
Realized gain/(loss) on investments (11,264) 226,595
Change in unrealized appreciation /(depreciation) 471,584 139,588
------------ ------------
496,822 369,259
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 2,460,037 194,585 1,594,805 127,462
Payments for shares redeemed (212,269) (16,383) (22,069) (1,988)
------------ ------------ ------------ ------------
2,247,768 178,202 1,572,736 125,474
------------ ------------ ------------ ------------
NET ASSETS - June 30, 1996 $ 7,537,602 $ 3,969,493
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
NORWEST SELECT FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING DURING THE PERIOD
<TABLE>
<CAPTION>
INTERMEDIATE INCOME
BOND EQUITY
FUND(c) FUND(c)
------------------------------------------ ------------
Period Ended Year Ended Period Ended Period Ended
6/30/96 12/31/95 12/31/94 6/30/96
<S> <C> <C> <C> <C>
Beginning net asset value per share $ 10.98 $ 9.95 $ 10.00 $ 10.00
Net investment income 0.27 0.33 0.33 0.02
Net realized and unrealized
gain/(loss) on securities (0.49) 1.36 (0.38) 0.09
Dividends from Net Investment Income -- (0.66) -- --
Dividends from net realized gains -- -- -- --
---------- ---------- ---------- ----------
Ending net asset value per share $ 10.76 $ 10.98 $ 9.95 $ 10.11
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Ratios to average net assets:
Expenses (a): 0.60 % (b) 0.60 % 0.60 % (b) 0.85 % (b)
Net investment income 5.79 % (b) 6.33 % 6.45 % (b) 2.04 % (b)
Total return (2.00)% 17.08 % (0.50)% 1.10 %
Portfolio turnover rate 31.69 % 54.04 % 52.61 % 51.16 %
Net assets at end of period
(000's omitted) $ 4,332 $ 3,090 $ 1,255 $ 2,063
Average Commission Rate (d): N/A --
(a) During the period, various fees
and expenses were waived and
reimbursed, respectively. Had
such waivers and reimbursements
not occurred, the ratio of expenses
to average net assets would have
been: 2.39 % (b) 4.67 % 9.31 % (b) 4.80 % (b)
(b) Annualized.
(c) See Note 1 of notes to financial statements for commencement of operations.
(d) Amount represents the average commission per share paid to brokers on the purchase or sale of equity securities.
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
NORWEST SELECT FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING DURING THE PERIOD
<TABLE>
<CAPTION>
SMALL
VALUGROWTH COMPANY
STOCK STOCK
FUND(c) FUND(c)
------------------------------------------- ---------------------------
Period Ended Year Ended Period Ended Period Ended Period Ended
6/30/96 12/31/95 12/31/94 6/30/96 12/31/95
<S> <C> <C> <C> <C> <C>
Beginning net asset value per share $ 12.04 $ 9.81 $ 10.00 $ 11.21 $ 10.00
Net investment income 0.06 0.07 0.07 0.01 0.06
Net realized and unrealized
gain/(loss) on securities 0.98 2.30 (0.26) 1.74 1.54
Dividends from Net Investment Income -- (0.14) -- -- (0.06)
Dividends from net realized gains -- -- -- -- (0.33)
-------- -------- -------- -------- --------
Ending net asset value per share $ 13.08 $ 12.04 $ 9.81 $ 12.96 $ 11.21
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios to average net assets:
Expenses (a): 0.80% (b) 0.80% 0.80% (b) 0.80% (b) 0.80% (b)
Net investment income 1.17% (b) 1.24% 1.67% (b) 0.02% (b) 1.02% (b)
Total return 8.64% 24.15% (1.90)% 15.61% 15.95%
Portfolio turnover rate 21.75% 25.44% 16.77% 57.19% 51.16%
Net assets at end of period
(000's omitted) $ 7,538 $ 4,793 $ 1,910 $ 3,969 $ 2,027
Average Commission Rate (d): $ 0.894 $ 0.554
(a) During the period, various fees
and expenses were waived and
reimbursed, respectively. Had
such waivers and reimbursements
not occurred, the ratio of expenses
to average net assets would have
been: 2.03% (b) 3.81% 8.00% (b) 2.94% (b) 5.38% (b)
(b) Annualized.
(c) See Note 1 of notes to financial statements for commencement of operations.
(d) Amount represents the average commission per share paid to brokers on the purchase or sale of equity securities.
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
NORWEST SELECT FUNDS
JUNE 30, 1996
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Norwest Select Funds (the "Trust") is registered as an open-end management
investment company. The Trust currently has four diversified investment
portfolios (each a "Fund" and collectively the "Funds"). Intermediate Bond Fund
and ValuGrowth-SM- Stock Fund commenced operations on June 1, 1994, Income
Equity Fund commenced operations on May 1, 1996, and Small Company Stock Fund
commenced operations on May 1, 1995.
Shares of the Trust may be sold only to separate accounts of insurance companies
to serve as an investment medium for variable life insurance policies and
variable annuity contracts issued by the insurance companies.
The Trust Instrument authorizes the issuance of an unlimited number of shares of
beneficial interest without par value.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust's financial statements are prepared in accordance with generally
accepted accounting principles which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent asset 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 and are expected to be immaterial to the net assets of the Funds. The
following represents significant accounting policies of the Fund.
SECURITY VALUATION -Securities purchased that mature in 60 days or less are
valued at amortized cost. Securities for which quotations are readily available
are valued using the last reported sales price provided by independent pricing
services. If no sales are reported, the mean of the last bid and ask price is
used. Fixed income securities and other securities traded on an exchange for
which market quotations are readily available are valued at the mean of the last
bid and ask price provided by independent pricing services. If no mean price is
available, the last bid price is used. In the absence of readily available
market quotations, securities are based on interest rates quoted by independent
brokers on the date of valuation.
INTEREST AND DIVIDEND INCOME - Interest income is accrued as earned. Dividends
on securities held by the Funds are recorded on ex-dividend date.
DIVIDENDS TO SHAREHOLDERS - Dividends to shareholders of net investment income
are declared and paid annually by each Fund. Net capital gains are distributed
to shareholders at least annually. Distributions from net investment income and
realized capital gain are based on amounts calculated in accordance with
applicable income tax regulations. Any differences between financial statement
amounts available for distribution and distributions made in accordance with
income tax regulations are primarily attributable to wash sales and capital loss
carry forwards.
PREMIUM AMORTIZATION AND DISCOUNT ACCRETION - Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
ORGANIZATIONAL COSTS - The costs incurred by each Fund other than Small Company
Stock Fund in connection with their organization and registration of shares, in
the amount of $49,537 each, have been capitalized and are being amortized using
the straight-line method over a five year period beginning on the commencement
of the Funds' operations.
25
<PAGE>
FEDERAL INCOME TAX - Each Fund has qualified, and intends to continue to
qualify, as a regulated investment company and distributes all of its taxable
income. Therefore, no Federal income tax provision is required.
REPURCHASE AGREEMENTS - Each Fund may purchase portfolio securities from
financial institutions deemed to be creditworthy by the Fund's investment
adviser subject to the seller's agreement to resell such securities. Securities
received as collateral in connection with the repurchase agreements are
maintained by the Trust and must have, at all times, an aggregate market value
greater than or equal to the repurchase price plus accrued interest. It the
value of the underlying securities falls below the value of the repurchase price
plus accrued interest, the Fund's require the seller to deposit additional
collateral by the next business day. In the event that the seller under the
agreement defaults on its repurchase obligation or fails to deposit sufficient
collateral, the Funds have the contractual right, subject to the requirements of
applicable bankruptcy and insolvency laws, to sell the underlying securities at
market value and may claim any resulting loss from the seller. For certain
demand agreements, there is no agreed upon repurchase date and interest payments
are calculated daily, often based upon the prevailing overnight repurchase rate.
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser of each Fund is Norwest Investment Management, a part of
Norwest Bank Minnesota, N.A. (the "Adviser"). Norwest Bank Minnesota, N.A. is a
subsidiary of Norwest Corporation. The Adviser receives from the Trust, with
respect to each Fund, an advisory fee based on average daily net assets of the
respective fund at the following annual rates: Intermediate Bond Fund - 0.60%;
Income Equity Fund - 0.85%; ValuGrowth-SM- Stock Fund - 0.80%; and Small Company
Stock Fund - 0.80%.
Norwest Bank Minnesota, N.A. serves as the Trust's transfer agent, dividend
disbursing agent and custodian, and is compensated for those services at an
aggregate annual rate of up to 0.10% of the average daily net assets of each
Fund.
Forum Financial Corp. provides fund accounting services to the Trust. For these
services, Forum Financial Corp. receives a fee of $36,000 per year per Fund plus
certain amounts based upon the number and types of portfolio transactions within
each Fund.
The manager of the Trust is Forum Financial Services, Inc. ("Forum"), a
registered broker-dealer. Forum receives a management fee from each Fund at an
annual rate of 0.20% of the average daily net assets of each Fund. Forum and
Forum Financial Corp. are affiliates.
For the semi-annual period ended June 30, 1996, fees waived and expenses
reimbursed by the Trust's custodian and transfer agent, the adviser and Forum
were as follows:
FEES WAIVED EXPENSES REIMBURSED
Custodian
and Transfer
Agent Adviser Forum Forum
------------ ------- ----- -----
Bond Fund $1,821 $10,931 $ 6,644 $13,242
Income Equity Fund 157 1,253 1,233 3,547
ValuGrowth-SM-
Stock Fund 3,114 24,914 10,229 --
Small Company
Stock Fund 1,441 11,528 10,882 6,991
26
<PAGE>
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales (including maturities) of securities
(excluding short-term investments) during the year or period were as follows:
COST OF PURCHASES PROCEEDS FROM SALES
----------------- -------------------
Intermediate Bond Fund $2,627,716 $1,091,233
Income Equity Fund 8,645,884 --
ValuGrowth-SM- Stock Fund 3,646,112 1,298,855
Small Company Stock Fund 3,504,074 2,077,595
The cost basis for federal income tax purposes is the same as for financial
accounting purposes except for ValuGrowth-SM- Stock Fund and Small Company
Stock Fund whose tax cost of securities is $6,554,107 and $4,066,749,
respectively. Unrealized appreciation and depreciation based on identified tax
cost as of June 30, 1996 were as follows:
NET
UNREALIZED UNREALIZED APPRECIATION/
FUND APPRECIATION (DEPRECIATION) (DEPRECIATION)
---- ------------ -------------- --------------
Intermediate Bond Fund -- $ (52,681) $ (52,681)
Income Equity Fund $ 10,055 -- 10,055
ValuGrowth-SM- Stock Fund 1,192,718 123,266 1,069,452
Small Company Stock Fund 437,735 187,343 250,392
Realized gains and losses on investments sold are recorded on the basis of
identified cost.
As of December 31, 1995, ValuGrowth-SM- Stock Fund has capital loss carryovers
available to offset future capital gains as follows:
FUND CARRYOVER AMOUNT
---- ----------------
ValuGrowth-SM- Stock Fund (expires 2002-3) $48,334
Additionally, ValuGrowth-SM- Stock Fund and Small Company Stock Fund incurred
capital losses from November 1, 1995 to December 31, 1995 of $36,955 and $1,576,
respectively, which are treated for tax purposes as occurring on January 1,
1996.
27
