<PAGE>
-----------------------------
-----------------------------
Norwest Passage-SM-
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A VARIABLE ANNUITY
-----------------------------
NORWEST SELECT FUNDS
ANNUAL REPORT FOR:
INTERMEDIATE BOND FUND
VALUGROWTH STOCK FUND
SMALL COMPANY STOCK FUND
DECEMBER 31, 1995
----------------------------
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>
February 14, 1996
Dear Shareholders:
Norwest Select Funds is pleased to present its 1995 Annual Report. The
stock and bond markets performed exceptionally well this year. The stock market
returned 37.53% in 1995 as measured by the Standard and Poor's 500 Stock Index
and the bond market returned 18.48% as measured by the Lehman Brothers Aggregate
Bond Index.
Some of the gains in stock prices in 1995 can be attributed to growth in
corporate earnings. Although the economy slowed this year, earnings were strong
due to corporate restructuring and increased productivity. Long-term interest
rates fell, causing bond prices to rise; and short-term interest rates rose,
making money market securities more attractive to investors.
After an exciting year in the stock and bond markets, more modest returns
are expected for 1996. Some feel that the upward trend will continue, while
others think a correction in the financial markets is imminent. Considering the
current wide gap between the inflation rate and short-term interest rates, the
Federal Reserve Bank may choose to lower long-term interest rates. If long-term
interest rates decrease, investors in search of higher yields may move some of
their cash from money market securities to stock and bond funds, pushing stock
and bond prices up further. On the other hand, stock prices may increase less
in 1996 because of flatter corporate earnings due to continued slow economic
growth and fewer opportunities to restructure and increase productivity.
Regardless of what occurs in the financial markets, Norwest Select Funds will
strive to be optimally positioned to take advantage of the opportunities
available.
Norwest Select Funds anticipates continued prosperity throughout the next
fiscal year and will strive for superior performance. If you have any questions
or need additional information about Norwest Select Funds, please call Norwest
Shareholder Services at 800-338-1348 or 612-667-8833. For variable annuity
information, please call Fortis Benefits Insurance Company at 800-780-7743.
Thank you for choosing to invest with Norwest Select Funds.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
Norwest Select Funds
<PAGE>
NORWEST SELECT FUNDS
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
Norwest Select Funds
We have audited the accompanying statements of assets and liabilities of
Intermediate Bond Fund, ValuGrowth Stock Fund and Small Company Stock Fund,
portfolios of Norwest Select Funds (the Funds), including the schedules of
investments, as of December 31, 1995, the related statements of operations for
the year ended December 31, 1995 for Intermediate Bond Fund and ValuGrowth Stock
Fund and the period from May 1, 1995 (commencement of operations) to December
31, 1995 for Small Company Stock Fund, and the statements of changes in net
assets and financial highlights for the year ended December 31, 1995 and the
period from June 1, 1994 (commencement of operations) to December 31, 1994 for
Intermediate Bond Fund and ValuGrowth Stock Fund and the period from May 1, 1995
(commencement of operations) to December 31, 1995 for Small Company Stock Fund.
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. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. 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
Intermediate Bond Fund, ValuGrowth Stock Fund and Small Company Stock Fund as of
December 31, 1995, and the results of their operations, changes in their net
assets, and financial highlights for the periods referred to above in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 8, 1996
<PAGE>
TABLE OF CONTENTS
Intermediate Bond Fund - 1995 Performance Review...........................1
ValuGrowth Stock Fund - 1995 Performance Review............................2
Small Company Stock Fund - 1995 Performance Review.........................3
Intermediate Bond Fund - Schedule of Investments...........................4
ValuGrowth Stock Fund - Schedule of Investments............................7
Small Company Stock Fund - Schedule of Investments........................10
Statements of Assets and Liabilities......................................13
Statements of Operations..................................................14
Statements of Changes in Net Assets.......................................15
Financial Highlights......................................................16
Notes to Financial Statements.............................................17
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
1995 PERFORMANCE REVIEW
The Norwest Select Intermediate Bond Fund performed very well in the midst of
the third best bond market in history. The year of 1995 was characterized by a
slowly growing economy and the lowest inflation in ten years, leading interest
rates to drop 2 percent from 1994 levels. The returns for the Fund were driven
by a high weighting in corporate bonds, a sector which outperformed the market
in 1995. The Fund also benefited from a minimal exposure to the mortgage backed
securities market which lagged other markets in 1995. The intermediate maturity
positioning of the Fund provided excellent returns while minimizing volatility
of the net asset value. We have begun putting new money to work in the U.S.
Treasury note market as the yield advantage in the corporate market has slowly
decreased over the year.
Although the fundamentals for the bond market are still positive for 1996, we do
not expect the same kind of performance we received in 1995. We will continue
to increase the core holding of government bonds and decrease the weighting in
corporates. We will begin to increase our mortgage backed exposure as we are
comfortable with prepayment expectations.
INTERMEDIATE BOND FUND VS. LEHMAN INTERMEDIATE
GOVERNMENT/CORPORATE INDEX
VALUE ON 12/31/95
Intermediate Bond Fund $11,649
Lehman Intermediate Gov't/Corp. Index $11,616
AVERAGE ANNUAL TOTAL RETURN
1 YEAR SINCE INCEPTION ON 6/1/94
------ -------------------------
Intermediate Bond Fund 17.08% 10.12%
Lehman Intermediate Gov't/Corp. Index 15.33% 9.92%
[GRAPH]
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. 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
VALUGROWTH STOCK FUND
1995 PERFORMANCE REVIEW
Although Norwest Select ValuGrowth Stock Fund's absolute performance was
positive, its performance relative to the S&P 500 and the Russell 1000 Growth
Stock Index was disappointing. In part, the Fund's relative performance
reflects the narrowness of the market and its strong performance bias toward
only the largest capitalization companies. In a market where the top 20
performing stocks in the S&P 500 contributed 10 percentage points to its total
return and over 70% of the stocks on the NYSE lagged the S&P 500's return, issue
selection and sector concentration were critical to performance. While the Fund
had its successes and was exposed to the strongest sectors - technology,
financial services, health care, and utilities, it also held full weightings in
sectors that lagged the market. In particular, the Fund's consumer cyclical and
basic materials holdings hurt performance.
Fourth quarter performance did show relative improvement and we believe the Fund
remains well positioned for the upcoming economic environment. The Fund is
balanced neutrally with regard to economic activity. It does have a global bias
with its strong representation in the stocks of companies with global franchises
and international distribution. In addition, the Fund is focused on companies
that have either new products, rising product demand, financial cost
restructuring or a combination of these factors such that their earnings should
continue to grow and meet expectations in either a slow economy or modest
recession. Therefore, the Fund's holdings should experience accelerating
relative earnings momentum. We believe that this, combined with diversification
and compelling values, will continue to make the Fund an attractive investment
opportunity.
VALUGROWTH STOCK FUND VS. S&P 500 INDEX
VALUE ON 12/31/95
ValueGrowth Stock Fund $12,179
S&P 500 Index $14,069
AVERAGE ANNUAL TOTAL RETURN
1 YEAR SINCE INCEPTION ON 6/1/94
------ -------------------------
ValuGrowth Stock Fund 24.15% 13.26%
S&P 500 Index 37.53% 24.06%
[GRAPH]
This chart reflects a comparison of the change in value of a $10,000 investment
in ValuGrowth Stock Fund compared to the performance of the S&P 500 Index. 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.
2
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
1995 PERFORMANCE REVIEW
The Norwest Select Small Company Stock Fund commenced operations on May 1, 1995
and produced a return of slightly less than 16% for its inaugural year. This
was a credible return considering that the startup date was subsequent to four
good months of stock gains. June and July were particularly strong months for
gains in the small capitalization world; as the Fund was invested fairly quickly
after its startup, it was fortunate to participate.
Small caps began a correction in mid-September that continued through the rest
of the year and affected different sectors by varying degrees. Technology,
which led the market higher, corrected in October and even more seriously in
December. Energy, health care, and financials all fared relatively well
compared to other, more cyclical groups. As 1995 ended, the Fund was
"overweighted" in energy, technology, basic materials and consumer staples. The
Fund was likewise "underweighted" in capital goods, consumer cyclicals,
financials and utilities.
Looking ahead to 1996 we are bullish on small stocks for a number of reasons.
Small company earnings growth has now been doubling the pace of large company
growth for over two years, yet large stocks have appreciated faster than small
stocks. This will not continue much longer. In a scenario of falling interest
rates, a stable dollar, an election year, and modest economic growth, small
stocks should emerge as the place to be.
SMALL COMPANY STOCK FUND VS. RUSSELL 2000 INDEX
VALUE ON 12/31/95
Small Company Stock Fund $11,595
Russell 2000 Index $12,011
CUMULATIVE TOTAL RETURN
SINCE INCEPTION ON 5/1/95
-------------------------
Small Company Stock Fund 15.95%
Russell 2000 Index 10.11%
[GRAPH]
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 eight month period ended 12/31/95. 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.
3
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY DESCRIPTION VALUE
- ---------- ---------------------------------------------------- --------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (2.3%)
$67,300 Federal National Mortgage Association
Series 1992 200 SB, 11.50%, due 11/25/22
(Cost $53,854) $70,665
--------
CORPORATE BONDS AND NOTES (57.1%)
100,000 Costco Wholesale Corporation
5.75%, due 5/15/02 95,500
160,000 Deere & Company
8.95%, due 6/15/19 196,800
100,000 First Bank Systems, Incorporated
6.875%, due 9/15/07 104,500
100,000 Florida Power & Light Company
6.625%, due 2/1/03 101,978
100,000 Ford Motor Credit Company
7.75%, due 10/1/99 106,194
85,000 General Electric Capital Corporation
7.875%, due 12/1/06 97,432
75,000 Great Western Bank
9.875%, due 6/15/01 88,406
125,000 Lehman Brothers Holdings, Incorporated
8.875%, due 3/1/02 139,531
125,000 Paine Webber, Incorporated
9.25%, due 12/15/01 141,563
100,000 Philip Morris Companies
9.00%, due 5/15/98 106,989
75,000 RJR Nabisco, Incorporated
8.75%, due 8/15/05 77,063
85,000 Salomon Incorporated
6.75%, due 8/15/03 83,406
(continued)
4
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SECURITY DESCRIPTION VALUE
------------------------------------------------ ----------
<C> <S> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
$100,000 Sears Roebuck Company
7.75%, due 2/27/97 $102,375
100,000 Snap-On, Incorporated
6.625%, due 10/1/05 104,750
75,000 Southwest Airlines Company
8.00%, due 3/1/05 82,969
100,000 UNUM Corporation
6.56%, due 5/27/97 101,375
----------
Total Corporate Bonds and Notes (Cost $1,635,428) 1,730,831
----------
GOVERNMENT AGENCY NOTES (3.4%)
100,000 Federal Home Loan Mortgage Corporation
8.05%, due 5/19/04 (Cost $101,148) 103,739
----------
RECEIVABLES BACKED SECURITIES (3.4%)
100,000 Standard Credit Card Master Trust
Series 1992-1 B, 6.25%, due 9/7/98
(Cost $100,000) 101,001
----------
U.S. TREASURY OBLIGATIONS (25.3%)
165,000 U.S. Treasury Notes
6.50%, due 5/15/97 167,851
150,000 U.S. Treasury Notes
6.125%, due 7/31/00 154,535
100,000 U.S. Treasury Notes
7.50%, due 5/15/02 110,954
300,000 U.S. Treasury Notes
7.25%, due 5/15/04 333,000
----------
Total U.S. Treasury Obligations (Cost $745,611) 766,340
----------
(continued)
5
<PAGE>
NORWEST SELECT FUNDS
INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
SHORT-TERM HOLDINGS (8.5%)
$28,000 Dreyfus Cash Management Fund $28,000
230,284 Federal Farm Credit Bank Master Note 230,284
---------
Total Short-Term Holdings (Cost $258,284) 258,284
---------
TOTAL INVESTMENTS (100.0%)
(Cost $2,894,325) $3,030,860
----------
----------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
COMMON STOCKS (92.4%)
BASIC MATERIALS (8.7%)
1,500 Great Lakes Chemical Corporation $108,000
1,850 Hercules, Incorporated 104,293
2,850 Morton International, Incorporated 102,243
3,400 Witco Corporation 99,450
----------
413,986
----------
CAPITAL GOODS (10.9%)
1,250 Emerson Electric Company 102,188
1,400 General Electric Company 100,800
2,300 Honeywell, Incorporated 111,837
2,000 Thermo Electron Corporation (a) 104,000
2,100 York International Corporation 98,700
----------
517,525
----------
CONSUMER CYCLICAL (14.8%)
2,900 Black & Decker Corporation 102,225
2,300 Home Depot, Incorporated 110,112
3,300 Lowe's Companies, Incorporated 110,550
3,800 Newell Company 98,325
4,200 Sensormatic Electronics Corporation 72,975
3,900 Singer Company 108,712
1,700 Walt Disney Company 100,300
----------
703,199
----------
CONSUMER STAPLES (17.6%)
1,100 American Home Products Corporation 106,700
1,300 Coca-Cola Company 96,525
2,044 Columbia/HCA Healthcare Corporation 103,733
2,650 Crown Cork & Seal Company, Incorporated (a) 110,638
(continued)
7
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
CONSUMER STAPLES (CONTINUED)
2,200 Duracell International, Incorporated $113,850
2,000 Gillette Company 104,250
1,200 Procter & Gamble Company 99,600
3,905 Sonoco Products Company 102,507
----------
837,803
----------
ENERGY (7.8%)
1,500 Chevron Corporation 78,750
800 Mobil Corporation 89,600
3,100 Repsol, S.A. ADR 101,912
700 Royal Dutch Petroleum Company 98,787
----------
369,049
----------
FINANCIAL (6.8%)
1,200 American International Group, Incorporated 111,000
2,250 State Street Boston Corporation 101,250
2,325 SunAmerica, Incorporated 110,438
----------
322,688
----------
MISCELLANEOUS (2.4%)
2,500 Alco Standard Corporation 114,062
----------
TECHNOLOGY (16.9%)
1,650 First Data Corporation 110,343
2,100 General Motors Corporation, Class E 109,200
1,800 Intel Corporation 102,150
5,000 L.M. Ericsson Telephone Company, ADR 97,500
1,150 Microsoft Corporation (a) 100,913
1,800 Motorola, Incorporated 102,600
3,100 Silicon Graphics, Incorporated (a) 85,250
700 Xerox Corporation 95,900
----------
803,856
----------
(continued)
8
<PAGE>
NORWEST SELECT FUNDS
VALUGROWTH STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
TRANSPORTATION AND PROFESSIONAL SERVICES ( 2.2%)
1,500 Conrail, Incorporated $105,000
----------
UTILITIES (4.3%)
2,300 Consolidated Natural Gas Company 104,365
4,100 DPL, Incorporated 101,475
----------
205,840
----------
Total Common Stocks (Cost $3,776,654) 4,393,008
----------
SHORT-TERM HOLDINGS (7.6%)
178,435 Dreyfus Cash Management Fund 178,435
181,344 Provident Institutional Funds, TempFund Fund 181,344
----------
Total Short-Term Holdings (Cost $359,779) 359,779
----------
TOTAL INVESTMENTS (100.0%)
(Cost $4,136,433) $4,752,787
----------
----------
</TABLE>
(a) Non-income producing security.
See accompanying notes to financial statements.
9
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
COMMON STOCKS (89.7%)
BASIC MATERIALS (7.7%)
1,600 Chemed Corporation $62,200
1,250 OM Group, Incorporated 41,406
750 Synalloy Corporation 15,843
2,350 Tetra Technologies, Incorporated (a) 40,831
----------
160,280
----------
CAPITAL GOODS (5.3%)
800 AGCO Corporation 40,800
1,400 Baldor Electric Company 28,175
3,450 Insituform Technologies Incorporated, Class A (a) 40,106
----------
109,081
----------
CONSUMER CYCLICAL (10.4%)
700 Consolidated Graphics, Incorporated (a) 18,200
3,150 Friedman's Incorporated, Class A (a) 60,639
3,500 NHP, Incorporated (a) 64,750
3,037 Paxar Corporation (a) 40,240
1,000 Sodak Gaming, Incorporated (a) 20,625
2,900 Sun Television & Appliances, Incorporated 11,963
----------
216,417
----------
CONSUMER STAPLES (10.9%)
950 BMC Industries, Incorporated 22,087
2,350 Hudson Foods, Incorporated, Class A 40,538
1,700 Lincare Holdings, Incorporated (a) 42,500
1,300 MediSense, Incorporated (a) 41,112
1,300 Sierra Health Services, Incorporated (a) 41,275
1,400 Verifone, Incorporated (a) 40,075
----------
227,587
----------
(continued)
10
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
ENERGY (11.3%)
1,400 Cairn Energy USA, Incorporated (a) $19,600
750 Landmark Graphics Corporation (a) 17,438
2,700 Neuvo Energy Company (a) 60,414
2,800 Parker & Parsley Petroleum Company 61,600
1,800 Pride Petroleum Services, Incorporated (a) 19,125
2,200 Tejas Power Corporation (a) 20,075
2,100 United Meridian Corporation (a) 36,488
----------
234,740
----------
FINANCIAL & REAL ESTATE INVESTMENT TRUSTS (11.3%)
700 Cullen/Frost Bankers, Incorporated 35,000
1,550 Felcor Suite Hotels, Incorporated 43,013
1,600 Imperial Thrift & Loan Association (a) 19,600
1,200 IPC Information Systems, Incorporated (a) 19,800
950 Mountain Parks Financial Corporation (a) 21,138
2,650 RFS Hotel Investors, Incorporated 40,744
1,900 Roosevelt Financial Group, Incorporated 36,813
1,900 Sunstone Hotel Investors, Incorporated 19,475
----------
235,583
----------
MISCELLANEOUS (4.7%)
3,500 Sheldahl, Incorporated(a) 63,437
1,100 Tech-Sym Corporation (a) 34,787
----------
98,224
----------
TECHNOLOGY (21.1%)
2,000 Colonial Data Technologies Corporation (a) 41,000
1,750 Credence Systems Corporation (a) 40,031
2,600 Dynatech Corporation (a) 44,200
800 Electroglas, Incorporated (a) 19,600
2,650 Gasonics International Corporation (a) 35,775
(continued)
11
<PAGE>
NORWEST SELECT FUNDS
SMALL COMPANY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- ---------- ------------------------------------------------ ----------
<C> <S> <C>
TECHNOLOGY (CONTINUED)
2,050 InterVoice, Incorporated (a) $38,950
300 Kent Electronics Corporation (a) 17,512
750 Kulicke & Soffa Industries, Incorporated (a) 17,437
1,400 LTX Corporation (a) 12,775
2,600 Smartflex Systems, Incorporated (a) 46,150
1,250 Stormedia, Incorporated (a) 45,625
1,700 Zilog, Incorporated (a) 62,262
750 Zygo Corporation (a) 18,843
----------
440,160
----------
TRANSPORTATION AND PROFESSIONAL SERVICES (5.1%)
3,550 Covenant Transportation, Incorporated(a) 42,600
1,500 Kirby Corporation(a) 24,375
2,500 Swift Transportation, Incorporated (a) 38,125
----------
105,100
----------
UTILITIES (1.9%)
1,900 Lincoln Telecommunications Company 40,137
----------
Total Common Stocks (Cost $1,755,427) 1,867,309
----------
SHORT-TERM HOLDINGS (10.3%)
16,655 Dreyfus Treasury Prime Cash Management Fund 16,655
198,739 Federal Farm Credit Bank Master Note 198,739
----------
Total Short-Term Holdings (Cost $215,394) 215,394
----------
TOTAL INVESTMENTS (100.0%)
(Cost $1,970,821) $2,082,703
----------
----------
</TABLE>
(a) Non-income producing security.
See accompanying notes to financial statements.
12
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
----------------------------------------------
SMALL
INTERMEDIATE VALUGROWTH COMPANY
BOND STOCK STOCK
FUND FUND FUND
----------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments at value (a) $3,030,860 $4,752,787 $2,082,703
Receivable for shares issued -- 1,882 167
Interest, dividends and other receivables 40,765 6,833 2,310
Organization costs, net of amortization 33,850 33,850 --
------------ ------------ ------------
Total Assets 3,105,475 4,795,352 2,085,180
------------ ------------ ------------
LIABILITIES
Payable for securities purchased -- -- 56,325
Payable for shares redeemed 14,930 -- --
Accrued fees and expenses 632 2,340 1,357
------------ ------------ ------------
Total Liabilities 15,562 2,340 57,682
------------ ------------ ------------
NET ASSETS $3,089,913 $4,793,012 $2,027,498
------------ ------------ ------------
------------ ------------ ------------
COMPONENTS OF NET ASSETS
Capital paid in $2,950,832 $4,273,418 $1,918,009
Undistributed net investment income 163 -- --
Unrealized appreciation 136,535 616,354 111,882
Accumulated net realized gain/(loss) 2,383 (96,760) (2,393)
------------ ------------ ------------
NET ASSETS $3,089,913 $4,793,012 $2,027,498
------------ ------------ ------------
------------ ------------ ------------
SHARES OUTSTANDING 281,541 398,232 180,858
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE PER SHARE $10.98 $12.04 $11.21
------------ ------------ ------------
------------ ------------ ------------
(a) Cost of investments $2,894,325 $4,136,433 $1,970,821
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
------------------------------------------------
SMALL
INTERMEDIATE VALUGROWTH COMPANY
BOND STOCK STOCK
FUND FUND FUND
(a)
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $144,296 $7,969 $9,646
Dividend income -- 53,521 7,742
------------ ------------ ------------
Total income 144,296 61,490 17,388
------------ ------------ ------------
EXPENSES
Advisory 12,501 24,138 7,663
Management 4,167 6,035 1,916
Transfer Agent 1,667 2,414 766
Custodian 417 603 192
Accounting 38,000 38,000 25,000
Professional Services 8,612 12,929 2,526
Audit and Tax Reporting 11,995 10,993 11,997
Trustees 3,648 5,552 13
Amortization of Organization Costs 9,907 9,907 --
Other 6,399 4,405 1,426
------------ ------------ ------------
Total Expenses 97,313 114,976 51,499
Expenses reimbursed and fees waived (84,818) (90,856) (43,840)
------------ ------------ ------------
Net Expenses 12,495 24,120 7,659
------------ ------------ ------------
NET INVESTMENT INCOME 131,801 37,370 9,729
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS
Realized gain/(loss) on investments 10,898 (77,676) 54,909
Change in unrealized appreciation 174,654 646,711 111,882
------------ ------------ ------------
NET GAIN ON INVESTMENTS 185,552 569,035 166,791
------------ ------------ ------------
INCREASE IN NET ASSETS FROM
OPERATIONS $317,353 $606,405 $176,520
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
(a) See Note 1 of notes to financial statements for commencement of operations.
See accompanying notes to financial statements.
14
<PAGE>
NORWEST SELECT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
----------------------------------------------------------------
SMALL
INTERMEDIATE VALUGROWTH COMPANY
BOND STOCK STOCK
FUND FUND FUND
----------------------------------------------------------------
1994(a) AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 41,197 $ 13,074 -
Realized loss on investments (8,515) (19,129) -
Change in unrealized depreciation (38,119) (30,357) -
--------- ---------
(5,437) (36,412) -
--------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,540,087 154,377 2,236,660 223,715 - -
Payments for shares redeemed (279,479) (28,246) (290,144) (28,993) - -
--------- -------- --------- --------
1,260,608 126,131 1,946,516 194,722 - -
--------- -------- --------- --------
NET ASSETS - DECEMBER 31, 1994 $ 1,255,171 $ 1,910,104 -
--------- ---------
1995(a)
OPERATIONS
Net investment income $ 131,801 $ 37,370 $ 9,729
Realized gain/(loss) on investments 10,898 (77,676) 54,909
Change in unrealized appreciation 174,654 646,711 111,882
---------- ---------- ----------
317,353 606,405 176,520
---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (174,448) (51,011) (9,738)
Realized gain on investments -- -- (57,306)
---------- ---------- ----------
(174,448) (51,011) (67,044)
---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 2,603,356 242,293 3,071,041 274,670 1,854,563 175,170
Proceeds from shares reinvested 174,503 15,954 51,056 4,293 67,046 6,002
Payments for shares redeemed (1,086,022) (102,837) (794,583) (75,453) (3,587) (314)
--------- -------- --------- ------- --------- -------
1,691,837 155,410 2,327,514 203,510 1,918,022 180,858
--------- -------- --------- ------- --------- -------
NET ASSETS - DECEMBER 31, 1995 $ 3,089,913 $ 4,793,012 $ 2,027,498
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(a) See Note 1 of notes to financial statements for commencement of operations.
See accompanying notes to financial statements.
15
<PAGE>
NORWEST SELECT FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING DURING THE PERIOD
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
SMALL
INTERMEDIATE VALUGROWTH COMPANY
BOND STOCK STOCK
FUND FUND FUND
--------------------------------------------------------------------------
Year Ended Period Ended Period Ended Period Ended Period Ended
12/31/95 12/31/94 12/31/95 12/31/94(c) 12/31/95(c)
<S> <C> <C> <C> <C> <C>
Beginning net asset value per share $ 9.95 $ 10.00 $ 9.81 $ 10.00 $ 10.00
Net investment income 0.33 0.33 0.07 0.07 0.06
Net realized and unrealized
gain/(loss) on securities 1.36 (0.38) 2.30 (0.26) 1.54
Distributions from net investment income (0.66) -- (0.14) -- (0.06)
Distributions from net realized gains -- -- -- -- (0.33)
-------- ---------- --------- -------- -----------
Ending net asset value per share $ 10.98 $ 9.95 $ 12.04 $ 9.81 $ 11.21
-------- ---------- --------- -------- -----------
-------- ---------- --------- -------- -----------
Ratios to average net assets:
Expenses (a): 0.60% 0.60%(b) 0.80% 0.80%(b) 0.80%(b)
Net investment income 6.33% 6.45%(b) 1.24% 1.67%(b) 1.02%(b)
Total return 17.08% (0.50)% 24.15% (1.90)% 15.95%
Portfolio turnover rate 54.04% 52.61% 25.44% 16.77% 51.16%
Net assets at end of period
(000's omitted) $ 3,090 $ 1,255 $ 4,793 $ 1,910 $ 2,027
(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: 4.67% 9.31%(b) 3.81% 8.00%(b) 5.38%(b)
</TABLE>
(b) Annualized.
(c) See Note 1 of notes to financial statements for commencement of operations.
See accompanying notes to financial statements.
16
<PAGE>
NORWEST SELECT FUNDS
DECEMBER 31, 1995
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Norwest Select Funds (the "Trust") is registered as an open-end management
investment company. The Trust currently has three diversified investment
portfolios (each a "Fund" and collectively the "Funds"). Intermediate Bond Fund
and ValuGrowth Stock Fund commenced operations on June 1, 1994. Small Company
Stock Fund commenced operations on May 1, 1995.
The investment objective of the Intermediate Bond Fund is to provide stable
current income and competitive total return over an interest rate cycle.
ValuGrowth Stock Fund's investment objective is to provide capital appreciation
and Small Company Stock Fund's is to provide capital appreciation.
Another portfolio of the Trust, Adjustable U.S. Government Reserve Fund,
liquidated all of its securities in 1995 and discontinued operations as of
November 7, 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 based upon the following significant accounting
policies.
SECURITY VALUATION - Fixed income securities, other than short-term, held by the
Funds for which market quotations are readily available are valued using mean of
the bid and ask prices provided by independent pricing services. If no mean
price is available, the last bid price is used. Equity securities held by the
Funds for which market quotations are readily available are valued using the
last reported sales price provide by independent pricing services. If no sales
are reported, the last bid price is used. In the absence of readily available
market quotations, securities are valued at fair value determined by the Board
of Trustees. Short-term securities, having a maturity of 60 days or less, are
valued at amortized cost.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
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 period. Actual results could differ from those estimates
and any differences are expected to be immaterial.
INTEREST AND DIVIDEND INCOME AND DIVIDENDS TO SHAREHOLDERS - Interest income is
accrued as earned. Dividend income is recorded on ex-dividend date. 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.
Discounts and premiums on securities purchased are amortized over the life of
the respective securities.
17
<PAGE>
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.
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.
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%;
ValuGrowth Stock Fund 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 and a member of the National Association of Securities
Dealers, Inc. 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 fiscal year ended December 31, 1995, fees waived and expenses reimbursed
by the Trust's custodian and transfer agent, the adviser and Forum were as
follows:
<TABLE>
<CAPTION>
FEES WAIVED EXPENSES REIMBURSED
----------- -------------------
Custodian
and Transfer
Agent Adviser Forum Forum
--------- ------- -------- -----
<S> <C> <C> <C> <C>
Intermediate Bond Fund $2,084 $12,501 $12,166 $58,067
ValuGrowth Stock Fund $3,017 $24,138 $14,035 $49,666
Small Company Stock Fund $ 958 $ 7,663 $ 6,916 $28,303
</TABLE>
18
<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 $2,467,191 $1,014,750
ValuGrowth Stock Fund $2,865,912 $ 726,745
Small Company Stock Fund $2,385,820 $ 685,295
The cost basis for federal income tax purposes is the same as for financial
accounting purposes except for ValuGrowth Stock Fund and Small Company Stock
Fund whose tax cost of securities is $4,147,949 and $1,971,640, respectively.
Unrealized appreciation and depreciation based on identified tax cost as of
December 31, 1995 were as follows:
UNREALIZED UNREALIZED NET
FUND APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ ------------
Intermediate Bond Fund $136,535 -- $136,535
ValuGrowth Stock Fund $685,079 $80,241 $604,838
Small Company Stock Fund $173,649 $62,586 $111,063
Realized gains and losses on investments sold are recorded on the basis of
identified cost.
As of December 31, 1995, ValuGrowth Stock Fund has capital loss carryovers
available to offset future capital gains as follows:
FUND CARRYOVER AMOUNT
---- ----------------
ValuGrowth Stock Fund (expires 2002-3) $48,334
Additionally, ValuGrowth 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.
19
