<PAGE>
Norwest Select Funds is a family of open-end investment companies
commonly known as mutual funds. FORUM FINANCIAL SERVICES, INC. ("FFSI"),
MEMBER NASD, is the distributor of Norwest Select Funds. FFSI 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 INC., A
SUBSIDIARY 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 EACH 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 FFSI.
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. Shares of the Norwest Select
Funds are currently sold only to separate accounts ("Separate Accounts")
of certain insurance companies (the "Insurance Companies"), as each Fund
of the Trust serves as an investment medium for variable life insurance
policies and variable annuity contracts (collectively the "Contracts")
issued by the Insurance Companies.
<PAGE>
TABLE OF CONTENTS JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MESSAGE TO OUR CONTRACT HOLDERS........................................... 1
FINANCIAL STATEMENTS...................................................... 2
Statements of Assets and Liabilities............................... 2
Statements of Operations........................................... 3
Statements of Changes in Net Assets................................ 4
Financial Highlights............................................... 6
Notes to Financial Statements...................................... 8
Schedules of Investments........................................... 10
Income Fund................................................. 10
Income Equity Fund.......................................... 11
ValuGrowth Stock Fund....................................... 12
Small Company Stock Fund.................................... 13
Notes to Schedules of Investments........................... 14
</TABLE>
<PAGE>
MESSAGE TO OUR CONTRACT HOLDERS
- --------------------------------------------------------------------------------
August 13, 1998
Dear Norwest Passage Contract Owners,
We are pleased to provide you with the Norwest Select
Funds Semi-Annual Report. It covers the four Norwest
Select variable subaccounts available through your Norwest
Passage Variable Annuity.
While the first half of 1998 was relatively calm, the
market has been on a roller coaster ride since June 30.
Asia has dominated the news, with the fallout from the
region's financial meltdown affecting global markets.
Despite these events, the U.S. economy has proved
remarkably resilient in its ability to withstand the Asian
flu. The Dow Jones Industrial Average actually staged a
rally that sent the market to record highs in May. Since
June, investors have experienced dramatic market swings,
underscoring the reality of risk even during prosperous
times.
These economic conditions throughout the first two
quarters of 1998 also created strong demand for bonds,
with bond prices moving higher due to low interest rates
and an influx of foreign capital into U.S. markets.
While U.S. economic fundamentals remain solid --
characterized by strong consumer spending, low interest
rates, and the lowest unemployment in nearly three decades
-- investors should prepare to endure ongoing market
volatility. The question is not whether stocks are
overvalued and must "correct" to an appropriate level, but
whether a prolonged Asian crisis will slow U.S. growth.
Keep in mind that some market sectors, including
cyclical issues, commodity-related companies and the
semiconductor industry, are more influenced by Asia's
plight than others. Large cap stocks have generally
weathered the storm because of their ability to trim costs
and achieve economies of scale through mergers and
acquisitions.
While investment risk is always a reality, investors
can smooth out volatility by diversifying their holdings
among the subaccounts within the Norwest Passage Variable
Annuity. Because different types of investments often move
in opposite directions in response to changing market
conditions, declines in one asset class are offset by
increases in another, yielding more consistent returns
over time. That can give you peace of mind even during
these uncertain times. Thank you for choosing Norwest
Passage Variable Annuity.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer,
CHAIRMAN, NORWEST SELECT
FUNDS
1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME VALUGROWTH
INCOME EQUITY STOCK
FUND FUND FUND
---------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Investments (Note 2)
Investments at cost.............................................................. $13,678,394 $55,430,678 $24,151,268
Repurchase agreements at cost.................................................... - 4,108,773 -
Net unrealized appreciation...................................................... 207,681 10,507,498 7,295,092
---------- ---------- ------------
Total investments at value......................................................... 13,886,075 70,046,949 31,446,360
Receivable for interest, dividends and other receivables........................... 235,787 117,341 42,847
Receivable for Fund shares issued.................................................. 50,418 62,503 22,925
Receivable for investments sold.................................................... - - -
Organization costs, net of amortization (Note 2)................................... 9,082 - 9,082
---------- ---------- ------------
TOTAL ASSETS......................................................................... 14,181,362 70,226,793 31,521,214
---------- ---------- ------------
LIABILITIES
Payable for investments purchased.................................................. - 3,165,635 -
Payable to investment adviser...................................................... - 43,454 18,901
Accrued expenses and other liabilities............................................. 8,687 4,407 4,535
---------- ---------- ------------
TOTAL LIABILITIES.................................................................... 8,687 3,213,496 23,436
---------- ---------- ------------
NET ASSETS........................................................................... $14,172,675 $67,013,297 $31,497,778
---------- ---------- ------------
---------- ---------- ------------
COMPONENTS OF NET ASSETS
Paid-in capital.................................................................... $13,515,333 $56,022,957 $23,902,204
Undistributed net investment income................................................ 345,960 402,740 111,907
Net unrealized appreciation on investments......................................... 207,681 10,507,498 7,295,092
Accumulated net realized gain (loss) from investments sold......................... 103,701 80,102 188,575
---------- ---------- ------------
NET ASSETS........................................................................... $14,172,675 $67,013,297 $31,497,778
---------- ---------- ------------
---------- ---------- ------------
SHARES OF BENEFICIAL INTEREST, NO PAR VALUE.......................................... 1,232,030 4,318,756 1,608,135
---------- ---------- ------------
---------- ---------- ------------
NET ASSET VALUE PER SHARE (Net Assets divided by Shares of Beneficial Interest)...... $ 11.50 $ 15.52 $ 19.59
---------- ---------- ------------
---------- ---------- ------------
<CAPTION>
SMALL
COMPANY
STOCK
FUND
----------
<S> <C>
ASSETS
Investments (Note 2)
Investments at cost.............................................................. $13,138,278
Repurchase agreements at cost.................................................... -
Net unrealized appreciation...................................................... 524,537
----------
Total investments at value......................................................... 13,662,815
Receivable for interest, dividends and other receivables........................... 4,260
Receivable for Fund shares issued.................................................. 81,498
Receivable for investments sold.................................................... 238,387
Organization costs, net of amortization (Note 2)................................... -
----------
TOTAL ASSETS......................................................................... 13,986,960
----------
LIABILITIES
Payable for investments purchased.................................................. 101,121
Payable to investment adviser...................................................... 9,910
Accrued expenses and other liabilities............................................. 1,157
----------
TOTAL LIABILITIES.................................................................... 112,188
----------
NET ASSETS........................................................................... $13,874,772
----------
----------
COMPONENTS OF NET ASSETS
Paid-in capital.................................................................... $13,437,799
Undistributed net investment income................................................ 4,921
Net unrealized appreciation on investments......................................... 524,537
Accumulated net realized gain (loss) from investments sold......................... (92,485)
----------
NET ASSETS........................................................................... $13,874,772
----------
----------
SHARES OF BENEFICIAL INTEREST, NO PAR VALUE.......................................... 1,056,185
----------
----------
NET ASSET VALUE PER SHARE (Net Assets divided by Shares of Beneficial Interest)...... $ 13.14
----------
----------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME VALUGROWTH
INCOME EQUITY STOCK
FUND FUND FUND
--------- --------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income......................................................................... $ 380,324 $ 67,808 $ 54,353
Dividend income......................................................................... - 547,770 165,576
--------- --------- ------------
TOTAL INVESTMENT INCOME................................................................... 380,324 615,578 219,929
--------- --------- ------------
EXPENSES
Investment advisory (Note 3)............................................................ 34,384 213,103 108,133
Management and administration (Note 3).................................................. 5,730 26,638 13,516
Transfer agency (Note 3)................................................................ 4,584 21,310 10,813
Custody (Note 3)........................................................................ 1,146 5,327 2,703
Accounting (Note 3)..................................................................... 23,000 18,000 18,000
Legal................................................................................... 562 112 61
Audit................................................................................... 3,317 5,447 4,974
Trustees................................................................................ 67 309 161
Amortization of organization costs (Note 2)............................................. 4,954 - 4,954
Miscellaneous........................................................................... 2,465 2,217 2,618
--------- --------- ------------
TOTAL EXPENSES............................................................................ 80,209 292,463 165,933
Expenses reimbursed and fees waived (Note 5)............................................ (45,845) (79,625) (57,911)
--------- --------- ------------
NET EXPENSES.............................................................................. 34,364 212,838 108,022
--------- --------- ------------
NET INVESTMENT INCOME..................................................................... 345,960 402,740 111,907
--------- --------- ------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments sold................................................... 103,701 80,160 255,361
Net change in unrealized appreciation on investments.................................... 4,794 5,767,818 2,879,060
--------- --------- ------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................................... 108,495 5,847,978 3,134,421
--------- --------- ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS................................................ $ 454,455 $6,250,718 $3,246,328
--------- --------- ------------
--------- --------- ------------
<CAPTION>
SMALL
COMPANY
STOCK
FUND
-----------
<S> <C>
INVESTMENT INCOME
Interest income......................................................................... $ 34,873
Dividend income......................................................................... 24,441
-----------
TOTAL INVESTMENT INCOME................................................................... 59,314
-----------
EXPENSES
Investment advisory (Note 3)............................................................ 54,416
Management and administration (Note 3).................................................. 6,802
Transfer agency (Note 3)................................................................ 5,442
Custody (Note 3)........................................................................ 1,360
Accounting (Note 3)..................................................................... 20,000
Legal................................................................................... 31
Audit................................................................................... 5,490
Trustees................................................................................ 82
Amortization of organization costs (Note 2)............................................. -
Miscellaneous........................................................................... 2,808
-----------
TOTAL EXPENSES............................................................................ 96,431
Expenses reimbursed and fees waived (Note 5)............................................ (42,038)
-----------
NET EXPENSES.............................................................................. 54,393
-----------
NET INVESTMENT INCOME..................................................................... 4,921
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments sold................................................... 209,466
Net change in unrealized appreciation on investments.................................... 56,925
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................................... 266,391
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS................................................ $ 271,312
-----------
-----------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31,
1997
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME VALUGROWTH
INCOME EQUITY STOCK
FUND FUND FUND
---------- ---------- ------------
<S> <C> <C> <C>
NET ASSETS -- DECEMBER 31, 1996...................................................... $5,958,788 $9,415,236 $10,583,385
---------- ---------- ------------
OPERATIONS
Net investment income.............................................................. 444,351 399,846 138,270
Net realized gain on investments sold.............................................. 54,845 60,742 368,121
Net change in unrealized appreciation (depreciation) on investments................ 184,401 4,240,072 2,481,842
---------- ---------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 683,597 4,700,660 2,988,233
---------- ---------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income.............................................................. (442,578) (402,934) (138,437)
Net realized gain on investments................................................... (55,635) (60,744) (388,987)
Return of capital.................................................................. - - (50,858)
---------- ---------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.................................................. (498,213) (463,678) (578,282)
---------- ---------- ------------
CAPITAL SHARE TRANSACTIONS (A)
Sale of shares..................................................................... 3,364,950 26,014,466 8,661,580
Reinvestment of distributions...................................................... 499,587 464,753 579,726
Redemption of shares............................................................... (779,711) (243,189) (471,118)
---------- ---------- ------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........................... 3,084,826 26,236,030 8,770,188
---------- ---------- ------------
NET INCREASE IN NET ASSETS........................................................... 3,270,210 30,473,012 11,180,139
---------- ---------- ------------
NET ASSETS -- DECEMBER 31, 1997 (I).................................................. 9,228,998 39,888,248 21,763,524
---------- ---------- ------------
OPERATIONS
Net investment income.............................................................. 345,960 402,740 111,907
Net realized gain on investments sold.............................................. 103,701 80,160 255,361
Net change in unrealized appreciation on investments............................... 4,794 5,767,818 2,879,060
---------- ---------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 454,455 6,250,718 3,246,328
---------- ---------- ------------
CAPITAL SHARE TRANSACTIONS (B)
Sale of shares..................................................................... 4,763,869 21,193,531 7,384,600
Reinvestment of distributions...................................................... - - -
Redemption of shares............................................................... (274,647) (319,200) (896,674)
---------- ---------- ------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........................... 4,489,222 20,874,331 6,487,926
---------- ---------- ------------
NET INCREASE IN NET ASSETS........................................................... 4,943,677 27,125,049 9,734,254
---------- ---------- ------------
NET ASSETS -- JUNE 30, 1998 (UNAUDITED) (II)......................................... $14,172,675 $67,013,297 $31,497,778
---------- ---------- ------------
---------- ---------- ------------
(I) Includes undistributed (distributions in excess of) net investment income of..... $ (422) $ 90 $ 156
---------- ---------- ------------
---------- ---------- ------------
(II) Includes undistributed net investment income of................................. $ 345,960 $ 402,740 $ 111,907
---------- ---------- ------------
---------- ---------- ------------
(a) Shares Issued (Redeemed) - For the Year Ended December 31, 1997
Sale of shares................................................................... 304,026 2,037,173 518,411
Reinvestment of distributions.................................................... 45,212 34,503 34,243
Redemption of shares............................................................. (70,814) (19,482) (28,590)
---------- ---------- ------------
Net increase in shares outstanding............................................. 278,424 2,052,194 524,064
---------- ---------- ------------
---------- ---------- ------------
(b) Shares Issued (Redeemed) - For the Six Months Ended June 30, 1998
Sale of shares................................................................... 417,453 1,425,763 394,726
Redemption of shares............................................................. (19,667) (21,898) (47,700)
---------- ---------- ------------
Net increase in shares outstanding............................................. 397,786 1,403,865 347,026
---------- ---------- ------------
---------- ---------- ------------
<CAPTION>
SMALL
COMPANY
STOCK
FUND
----------
<S> <C>
NET ASSETS -- DECEMBER 31, 1996...................................................... $6,090,667
----------
OPERATIONS
Net investment income.............................................................. 6,153
Net realized gain on investments sold.............................................. 917,143
Net change in unrealized appreciation (depreciation) on investments................ (237,269)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 686,027
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income.............................................................. (6,441)
Net realized gain on investments................................................... (1,219,084)
Return of capital.................................................................. (291,400)
----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.................................................. (1,516,925)
----------
CAPITAL SHARE TRANSACTIONS (A)
Sale of shares..................................................................... 4,984,738
Reinvestment of distributions...................................................... 1,522,252
Redemption of shares............................................................... (284,927)
----------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........................... 6,222,063
----------
NET INCREASE IN NET ASSETS........................................................... 5,391,165
----------
NET ASSETS -- DECEMBER 31, 1997 (I).................................................. 11,481,832
----------
OPERATIONS
Net investment income.............................................................. 4,921
Net realized gain on investments sold.............................................. 209,466
Net change in unrealized appreciation on investments............................... 56,925
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 271,312
----------
CAPITAL SHARE TRANSACTIONS (B)
Sale of shares..................................................................... 4,309,715
Reinvestment of distributions...................................................... -
Redemption of shares............................................................... (2,188,087)
----------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........................... 2,121,628
----------
NET INCREASE IN NET ASSETS........................................................... 2,392,940
----------
NET ASSETS -- JUNE 30, 1998 (UNAUDITED) (II)......................................... $13,874,772
----------
----------
(I) Includes undistributed (distributions in excess of) net investment income of..... $ 32
----------
----------
(II) Includes undistributed net investment income of................................. $ 4,921
----------
----------
(a) Shares Issued (Redeemed) - For the Year Ended December 31, 1997
Sale of shares................................................................... 343,812
Reinvestment of distributions.................................................... 124,571
Redemption of shares............................................................. (20,356)
----------
Net increase in shares outstanding............................................. 448,027
----------
----------
(b) Shares Issued (Redeemed) - For the Six Months Ended June 30, 1998
Sale of shares................................................................... 323,838
Redemption of shares............................................................. (166,915)
----------
Net increase in shares outstanding............................................. 156,923
----------
----------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
(This page has been intentionally left blank.)
5
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED
BEGINNING AND DIVIDENDS DISTRIBUTIONS ENDING
NET ASSET NET UNREALIZED FROM NET FROM NET NET ASSET
VALUE PER INVESTMENT GAIN (LOSS) ON INVESTMENT REALIZED RETURN OF VALUE PER
SHARE INCOME INVESTMENTS INCOME GAINS CAPITAL SHARE
--------- ---------- -------------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998...... $11.06 $ 0.28 $ 0.16 $ - $ - $ - $11.50
January 1, 1997 to December 31,
1997................................ 10.72 0.56 0.41 (0.56) (0.07) - 11.06
January 1, 1996 to December 31,
1996................................ 10.98 0.50 (0.24) (0.50) (0.02) - 10.72
January 1, 1995 to December 31,
1995................................ 9.95 0.33 1.36 (0.66) - - 10.98
June 1, 1994(a) to December 31,
1994................................ 10.00 0.33 (0.38) - - - 9.95
INCOME EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998...... 13.68 0.09 1.75 - - - 15.52
January 1, 1997 to December 31,
1997................................ 10.91 0.14 2.79 (0.14) (0.02) - 13.68
May 6, 1996(a) to December 31, 1996... 10.00 0.08 0.92 (0.08) (0.01) - 10.91
VALUGROWTH STOCK FUND
- --------------------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998...... 17.26 0.07 2.26 - - - 19.59
January 1, 1997 to December 31,
1997................................ 14.36 0.11 3.26 (0.11) (0.32) (0.04) 17.26
January 1, 1996 to December 31,
1996................................ 12.04 0.11 2.32 (0.11) - - 14.36
January 1, 1995 to December 31,
1995................................ 9.81 0.07 2.30 (0.14) - - 12.04
June 1, 1994(a) to December 31,
1994................................ 10.00 0.07 (0.26) - - - 9.81
SMALL COMPANY STOCK FUND
- --------------------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998...... 12.77 - 0.37 - - - 13.14
January 1, 1997 to December 31,
1997................................ 13.50 0.01 1.24 (0.01) (1.59) (0.38) 12.77
January 1, 1996 to December 31,
1996................................ 11.21 0.02 3.51 (0.02) (1.22) - 13.50
May 1, 1995(a) to December 31, 1995... 10.00 0.06 1.54 (0.06) (0.33) - 11.21
(a) Commencement of operations
(b) Total return does not reflect any separate account charges under variable annuity
contracts or life policies
(c) Annualized
(d) For the fiscal years beginning after September 1, 1995, the Funds are required to disclose average commission per share paid
to brokers on the purchase or sale of equity securities
</TABLE>
See Notes to Financial Statements
6
<PAGE>
SELECTED DATA FOR A SHARE OUTSTANDING DURING THE PERIODS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
NET ASSETS AT
------------------------- END OF
NET PORTFOLIO PERIOD AVERAGE
NET GROSS INVESTMENT TOTAL TURNOVER (000'S COMMISSION
EXPENSES EXPENSES INCOME RETURN(b) RATE OMITTED) RATE(d)
------ ------ ------- ------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998............ 0.60%(c) 1.40%(c) 6.04% (c) 3.98% 88.13 % 14$,173 N/A
January 1, 1997 to December 31, 1997........ 0.60% 1.97% 6.00% 9.08% 179.37 % 9,229 N/A
January 1, 1996 to December 31, 1996........ 0.60% 2.52% 6.05% 2.37% 125.23 % 5,959 N/A
January 1, 1995 to December 31, 1995........ 0.60% 4.67% 6.33% 17.08% 54.04 % 3,090 N/A
June 1, 1994(a) to December 31, 1994........ 0.60%(c) 9.31%(c) 6.45% (c) (0.50% ) 52.61 % 1,255 N/A
INCOME EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998............ 0.80%(c) 1.10%(c) 1.51% (c) 13.45% 0.82 % 67,013 0.0754
January 1, 1997 to December 31, 1997........ 0.80% 1.34% 1.85% 26.90% 2.85 % 39,888 0.0884
May 6, 1996(a) to December 31, 1996......... 0.80%(c) 2.51%(c) 2.31% (c) 9.95% 4.20 % 9,415 0.0971
VALUGROWTH STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998............ 0.80%(c) 1.23%(c) 0.83% (c) 13.50% 10.03 % 31,498 0.0640
January 1, 1997 to December 31, 1997........ 0.80% 1.50% 0.87% 23.56% 34.58 % 21,764 0.0735
January 1, 1996 to December 31, 1996........ 0.80% 2.02% 1.08% 20.21% 37.57 % 10,583 0.0847
January 1, 1995 to December 31, 1995........ 0.80% 3.81% 1.24% 24.15% 25.44 % 4,793 N/A
June 1, 1994(a) to December 31, 1994........ 0.80%(c) 8.00%(c) 1.67% (c) (1.09% ) 16.77 % 1,910 N/A
SMALL COMPANY STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------
January 1, 1998 to June 30, 1998............ 0.80%(c) 1.42%(c) 0.07% (c) 2.98% 60.44 % 13,875 0.0536
January 1, 1997 to December 31, 1997........ 0.80% 1.88% 0.07% 9.87% 208.95 % 11,482 0.0633
January 1, 1996 to December 31, 1996........ 0.80% 2.82% 0.16% 31.47% 194.87 % 6,091 0.0590
May 1, 1995(a) to December 31, 1995......... 0.80%(c) 5.38%(c) 1.02% (c) 15.95% 51.16 % 2,027 N/A
</TABLE>
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1998
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Norwest Select Funds (the "Trust") was organized as a Delaware business trust on
December 7, 1993, and is registered as an open-end management investment company
under the Investment Company Act of 1940. The Trust currently has four
diversified investment portfolios (each a "Fund" and, collectively, the
"Funds"). Income Fund (renamed from Intermediate Bond Fund on May 1, 1998) and
ValuGrowth Stock Fund commenced operations on June 1, 1994. Small Company Stock
Fund commenced operations on May 1, 1995. Income Equity Fund commenced
operations on May 6, 1996.
Shares of the Trust's Funds 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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates. The following represents significant accounting policies of the
Funds:
SECURITY VALUATION--Securities purchased that mature in sixty days or less are
valued at amortized cost. Securities for which market 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 asked
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 asked 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 valued at fair value
determined in accordance with procedures adopted by the Board of Trustees.
INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
PREMIUM AMORTIZATION AND DISCOUNT ACCRETION--Fixed income investments with a
maturity greater than sixty days and purchased at a premium or discount (other
than original issue discount) are not amortized or accreted.
DISTRIBUTIONS TO SHAREHOLDERS--Dividends from net investment income and capital
gain distributions, if any, are distributed to shareholders at least annually.
Distributions are based on amounts calculated in accordance with applicable
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are due primarily to differing
treatments of income and gain on various investment securities held by a Fund,
timing differences and differing characterizations of distributions made by a
Fund.
FEDERAL TAXES--Each Fund intends to qualify, and continue 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, the Fund 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 operations of each Fund. Expenses that are directly attributable to more
than one Fund are allocated among the respective Funds.
REALIZED GAIN AND LOSS--Security transactions are recorded on a trade date
basis. Realized gain and loss on investments sold are recorded on the basis of
identified cost.
REPURCHASE AGREEMENTS--Each Fund may transfer uninvested cash balances into a
joint trading account. These balances are invested in one or more repurchase
agreements. The Funds, through their custodian, receive delivery of the
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
collateral at all times. In the event of default, a Fund may have difficulties
with the disposition of such collateral.
ORGANIZATION COSTS--The costs incurred by certain Funds in connection with their
organization and registration of shares have been capitalized and are being
amortized using the straight line method over a five-year period beginning with
the commencement of the respective Fund's operations.
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER--The investment adviser to each Fund is Norwest Investment
Management, Inc. ("Adviser"), a wholly owned subsidiary of Norwest Bank
Minnesota, N.A. ("the Bank"), which is a subsidiary of Norwest Corporation. The
Adviser receives an annual advisory fee from each Fund based on a percentage of
average daily net assets of the respective Fund at the following annual rates:
Income Fund -- 0.60%; Income Equity Fund, ValuGrowth Stock Fund, and Small
Company Stock Fund -- 0.80%.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1998
- --------------------------------------------------------------------------------
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
INVESTMENT SUBADVISER--To assist the Adviser in carrying out its obligations
under the investment advisory agreement with respect to Small Company Stock
Fund, Crestone Capital Management, Inc. ("Crestone"), an investment advisory
subsidiary of the Bank, acts as investment subadviser. The fee paid by the
Adviser to Crestone does not increase the amount paid by the Fund to the
Adviser.
ADMINISTRATOR, MANAGER AND OTHER SERVICES--Forum Financial Services, Inc.
("FFSI") supervises the overall management of the Trust other than investment
advisory services. FFSI is entitled to receive an annual fee of 0.05% of the
average daily net assets of each Fund. Forum Administrative Services, LLC
("FAdS") is the administrator to the Trust and receives a fee at an annual rate
of 0.05% of the average daily net assets of each Fund.
Forum Accounting Services, LLC ("FAcS") provides fund accounting services to the
Funds. For these services, FAcS is entitled to receive 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 Bank serves as the Trust's transfer agent, dividend disbursing agent and
custodian. For these services, the Bank is entitled to receive a fee at an
annual rate of 0.10% of the average daily net assets attributable to each Fund.
NOTE 4. SECURITIES TRANSACTIONS
The cost of securities purchased and the proceeds from sales of securities
(excluding short-term securities) for the six months ended June 30, 1998, were
as follows:
<TABLE>
<CAPTION>
FUND COST OF PURCHASES PROCEEDS FROM SALES
- ---------------------------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Income Fund............................................................................. $14,212,995 $ 9,715,668
Income Equity Fund...................................................................... 21,965,525 424,352
ValuGrowth Stock Fund................................................................... 8,034,454 2,535,496
Small Company Stock Fund................................................................ 8,882,575 7,445,851
</TABLE>
For federal income tax purposes, the tax cost of investment securities owned and
the aggregate gross unrealized appreciation and the aggregate gross unrealized
depreciation as of June 30, 1998, were as follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED NET UNREALIZED
FUND APPRECIATION DEPRECIATION APPRECIATION TAX COST
- ---------------------------------------------------------------------- ------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
Income Fund........................................................... $ 219,601 $ 11,920 $ 207,681 $13,678,394
Income Equity Fund.................................................... 11,752,082 1,244,584 10,507,498 59,539,451
ValuGrowth Stock Fund................................................. 8,232,994 937,902 7,295,092 24,151,268
Small Company Stock Fund.............................................. 1,438,866 914,329 524,537 13,138,278
</TABLE>
NOTE 5. VOLUNTARY FEE WAIVERS AND EXPENSE REIMBURSEMENTS
For the six months ended June 30, 1998, the Trust's service providers
voluntarily waived and/or reimbursed certain fees or expenses incurred by the
Funds as follows:
<TABLE>
<CAPTION>
FEES WAIVED
--------------------------------------------------
CUSTODIAN AND
FUND TRANSFER AGENT ADVISER FADS FFSI
- ------------------------------------------------------------ --------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Income Fund................................................. $ 5,731 $ 34,384 $ 2,865 $ 2,865
Income Equity Fund.......................................... 26,638 26,349 13,319 13,319
ValuGrowth Stock Fund....................................... 13,518 30,877 6,758 6,758
Small Company Stock Fund.................................... 6,802 28,434 3,401 3,401
<CAPTION>
TOTAL FEES WAIVED AND
FUND EXPENSES REIMBURSED
- ------------------------------------------------------------ -----------------------
<S> <C>
Income Fund................................................. $ 45,845
Income Equity Fund.......................................... 79,625
ValuGrowth Stock Fund....................................... 57,911
Small Company Stock Fund.................................... 42,038
</TABLE>
9
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
INCOME FUND
- -----------------------------------------------------------------
CORPORATE BONDS & NOTES (42.6%)
200,000 AMBAC, Inc., 9.38%, 8/1/11 $ 253,996
200,000 American Home Products Corp., 7.25%,
3/1/23 221,718
200,000 Atlantic Richfield Co., 9.00%, 4/1/21 260,662
450,000 Clear Channel Communications, Inc.,
7.25%, 10/15/27 474,323
200,000 Dillard Department Stores, Inc., 9.13%,
8/1/11 249,200
500,000 Fleet Financial Group, Inc., 6.88%,
1/15/28 517,090
185,000 General Electric Capital Corp., 7.88%,
12/1/06 207,355
400,000 General Motors Corp., 6.75%, 5/1/28 405,632
200,000 Gruma SA de CV, 7.63%, 10/15/07 196,908
125,000 Lehman Brothers Holdings, 6.63%,
12/27/02 126,996
250,000 Merck & Co., Inc., 6.40%, 3/1/28 257,408
255,000 News America Holdings, 8.88%, 4/26/23 307,415
350,000 Oracle Corp., 6.72%, 2/15/04 359,310
500,000 PNC Bank Corp., 6.50%, 5/1/08 507,180
400,000 Royal Carribbean Cruises, 7.25%, 8/15/06 420,448
200,000 Tosco Corp., 7.80%, 1/1/27 226,138
400,000 Worldcom Inc., 7.75%, 4/1/07 434,560
500,000 Yorkshire Power Finance, 6.15%, 2/25/03
(b) 498,240
---------------
TOTAL CORPORATE BONDS & NOTES (COST $5,778,728) 5,924,579
---------------
GOVERNMENT AGENCY BONDS & NOTES (13.3%)
FEDERAL HOME LOAN BANK (2.9%)
400,000 FHLB, 5.63%, 3/19/01 (cost $399,938) 399,312
---------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (4.5%)
300,000 FHLMC, 5.75%, 7/15/03 300,378
300,000 FHLMC, 7.10%, 4/10/07 325,629
---------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST
$622,446) 626,007
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (5.9%)
300,000 FNMA, 6.50%, 7/16/07 313,746
500,000 FNMA, 6.00%, 5/15/08 507,020
---------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST
$811,590) 820,766
---------------
TOTAL GOVERNMENT AGENCY BONDS & NOTES (COST $1,833,974)
1,846,085
---------------
MORTGAGE BACKED SECURITIES (3.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (1.8%)
255,197 FHLMC, Gold Pool D70924, 6.50%, 5/1/26
(cost $245,750) 255,276
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
INCOME FUND (continued)
- -----------------------------------------------------------------
</TABLE>
MORTGAGE BACKED SECURITIES (continued)
<TABLE>
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (1.9%)
252,707 GNMA, Pool 445071, 7.50%, 1/15/27
(cost $252,782) $ 260,288
---------------
TOTAL MORTGAGE BACKED SECURITIES (COST $498,532) 515,564
---------------
MUNICIPAL NOTES (1.5%)
200,000 Denver, CO, City and County SD #1,
Educational Facilities, Revenue Bonds,
Taxable Pension, School Facilities
Lease, AMBAC insured, 6.49%, 12/15/02
(cost $200,000) 203,994
---------------
U.S. TREASURY OBLIGATIONS (35.8%)
U.S. TREASURY NOTES (29.7%)
50,000 5.88%, 8/15/98 50,031
250,000 5.88%, 7/31/99 250,933
600,000 5.38%, 1/31/00 598,752
250,000 7.13%, 2/29/00 256,298
300,000 5.50%, 4/15/00 300,174
100,000 8.50%, 11/15/00 106,553
500,000 6.38%, 3/31/01 510,715
400,000 7.88%, 8/15/01 426,283
400,000 7.50%, 11/15/01 423,652
300,000 7.88%, 11/15/04 336,978
400,000 7.00%, 7/15/06 436,920
200,000 6.50%, 10/15/06 212,328
200,000 6.63%, 5/15/07 214,742
---------------
TOTAL U.S. TREASURY NOTES (COST $4,106,981) 4,124,359
---------------
U.S. TREASURY STRIPS (2.9%)
900,000 5.87%, 8.71% yield, 11/15/12 (cost
$397,656) 399,033
---------------
U.S. TREASURY BONDS (3.2%)
200,000 11.25%, 2/15/15 320,284
100,000 7.50%, 11/15/24 124,076
---------------
TOTAL U.S. TREASURY BONDS (COST $434,422) 444,360
---------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $4,939,059) 4,967,752
---------------
SHORT-TERM HOLDINGS (3.1%)
102,537 Dreyfus Cash Management Fund 102,537
325,564 Federated Treasury Obligations Fund 325,564
---------------
TOTAL CASH MANAGEMENT ACCOUNTS (COST $428,101) 428,101
---------------
TOTAL INVESTMENTS (100.0%) (COST $13,678,394) $ 13,886,075
---------------
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
10
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
INCOME EQUITY FUND
- -----------------------------------------------------------------
COMMON STOCK (94.1%)
BASIC MATERIALS (6.5%)
28,270 Du Pont (E.I.) de Nemours & Co. $ 2,109,649
16,400 Minnesota Mining & Manufacturing Co. 1,347,875
43,300 Morton International, Inc. 1,082,500
---------------
4,540,024
---------------
CAPITAL GOODS (7.8%)
19,840 Emerson Electric Co. 1,197,840
17,050 General Electric Co. 1,551,550
19,130 Honeywell, Inc. 1,598,551
11,780 United Technologies Corp. 1,089,650
---------------
5,437,591
---------------
CONSUMER CYCLICAL (15.6%)
20,910 Cognizant Corp. (a) 1,317,330
32,340 Dayton Hudson Corp. 1,568,490
16,270 Deluxe Corp. 582,669
52,130 Dun & Bradstreet Corp. 1,883,196
18,945 Eastman Kodak Co. 1,384,169
21,155 J.C. Penney Co., Inc. 1,529,771
24,405 May Department Stores Co. 1,598,528
17,990 Sears, Roebuck & Co. 1,098,514
---------------
10,962,667
---------------
CONSUMER STAPLES (23.0%)
31,660 American Home Products Corp. 1,638,405
51,180 Fortune Brands, Inc. 1,967,231
17,310 Johnson & Johnson 1,276,613
18,860 McDonald's Corp. 1,301,340
10,130 Merck & Co., Inc. 1,354,888
46,150 PepsiCo, Inc. 1,900,803
16,590 Pfizer, Inc. 1,803,126
41,820 Philip Morris Cos., Inc. 1,646,663
17,970 Procter & Gamble Co. 1,636,393
28,985 Sara Lee Corp. 1,621,347
---------------
16,146,809
---------------
ENERGY (9.4%)
18,300 Atlantic Richfield Co. 1,429,688
15,245 Chevron Corp. 1,266,288
16,750 Exxon Corp. 1,194,484
12,390 Mobil Corp. 949,384
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
INCOME EQUITY FUND (continued)
- -----------------------------------------------------------------
</TABLE>
COMMON STOCK (continued)
ENERGY (continued)
<TABLE>
<C> <S> <C>
13,640 Royal Dutch Petroleum Co., ADR $ 747,643
14,300 Schlumberger Ltd. 976,868
---------------
6,564,355
---------------
FINANCIAL (11.3%)
13,340 American Express Co. 1,520,760
22,470 American General Corp. 1,599,583
12,795 J.P. Morgan & Co., Inc. 1,498,615
15,290 Transamerica Corp. 1,760,261
36,080 U.S. Bancorp 1,551,440
---------------
7,930,659
---------------
TECHNOLOGY (8.6%)
53,310 AMP, Inc. 1,832,531
36,975 AT&T Corp. 2,112,197
35,100 Hewlett-Packard Co. 2,101,613
---------------
6,046,341
---------------
UTILITIES & TELECOMMUNICATIONS (11.9%)
15,690 Consolidated Natural Gas Co. 923,749
25,330 GTE Corp. 1,408,981
24,790 Lucent Technologies, Inc. 2,062,218
27,120 Pacific Gas & Electric Co. 855,975
22,460 Public Service Enterprise Group, Inc. 773,467
28,240 Texas Utilities Co. 1,175,490
31,710 Waste Management, Inc. 1,109,850
---------------
8,309,730
---------------
TOTAL COMMON STOCK (COST $55,430,678) 65,938,176
---------------
REPURCHASE AGREEMENTS (5.9%)
4,108,773 Goldman Sachs, 6.25%, due 7/1/98 to be
repurchased at $4,109,477
(Collateralized by multiple FNMA ARMS,
7.27% to 7.76%, 8/1/33 to 8/1/37, par
203,502,302; FNMA, 6.50%, 12/1/12, par
100,896,853; and FHLMC ARM, 6.17%,
9/1/24, par 77,884,168) (cost
$4,108,773) 4,108,773
---------------
TOTAL INVESTMENTS (100.0%) (COST $59,539,451) $ 70,046,949
---------------
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
11
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
VALUGROWTH STOCK FUND
- -----------------------------------------------------------------
COMMON STOCK (91.5%)
BASIC MATERIALS (7.8%)
10,500 Cabot Corp. $ 339,281
6,000 Du Pont (E.I.) de Nemours & Co. 447,750
15,500 Ecolab, Inc. 480,500
6,100 Monsanto Co. 340,837
10,600 Newell Co. 528,013
8,400 Parker-Hannifin Corp. 320,250
---------------
2,456,631
---------------
CAPITAL GOODS (6.0%)
6,600 Emerson Electric Co. 398,475
5,600 General Electric Co. 509,600
6,600 Honeywell, Inc. 551,513
5,100 Philips Electronics NV 433,500
---------------
1,893,088
---------------
CONSUMER CYCLICAL (11.1%)
14,800 Billing Information Concepts (a) 229,400
6,000 Black & Decker Corp. 366,000
5,200 Callaway Golf Co. 102,375
4,300 Consolidated Stores Corp. (a) 155,875
4,400 Gartner Group, Inc. (a) 154,000
15,400 Gentex Corp. (a) 279,125
13,000 IKON Office Solutions, Inc. 189,313
13,100 Mattel, Inc. 554,293
6,800 May Department Stores Co. 445,400
3,900 National Data Corp. 170,625
6,100 Sears, Roebuck & Co. 372,481
4,600 Walt Disney Co. 483,287
---------------
3,502,174
---------------
CONSUMER STAPLES (19.2%)
11,000 American Home Products Corp. 569,250
9,300 Baxter International, Inc. 500,456
7,700 Becton, Dickinson & Co. 597,712
4,400 Coca-Cola Co. 376,200
10,000 ConAgra, Inc. 316,875
8,568 Gillette Co. 485,699
14,100 International Home Foods, Inc. (a) 320,775
6,200 Johnson & Johnson 457,250
9,300 Kimberly-Clark Corp. 426,638
7,200 Medtronic, Inc. 459,000
4,700 Merck & Co., Inc. 628,625
10,100 PepsiCo, Inc. 415,995
5,200 Procter & Gamble Co. 473,525
---------------
6,028,000
---------------
ENERGY (6.1%)
4,000 Chevron Corp. 332,250
10,100 Dresser Industries, Inc. 445,031
5,000 Mobil Corp. 383,125
5,400 Royal Dutch Petroleum Co. 295,988
6,600 Schlumberger, Ltd. 450,863
---------------
1,907,257
---------------
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
VALUGROWTH STOCK FUND (continued)
- -----------------------------------------------------------------
</TABLE>
COMMON STOCK (continued)
<TABLE>
<C> <S> <C>
FINANCIAL (19.1%)
4,800 Allstate Corp. $ 439,500
4,350 American International Group, Inc. 635,100
6,200 BankAmerica Corp. 535,913
6,000 Chase Manhattan Corp. 453,000
5,000 Chubb Corp. 401,875
16,909 Equity Office Properties Trust 479,792
7,500 First Union Corp. 436,875
8,600 Federal National Mortgage Association 522,450
7,500 Franklin Resources, Inc. 405,000
9,300 H&R Block, Inc. 391,762
21,000 Patriot American Hospitality, Inc. 502,688
6,100 State Street Corp. 423,950
6,825 SunAmerica, Inc. 392,010
---------------
6,019,915
---------------
TECHNOLOGY (17.2%)
16,100 American Power Conversion Corp. (a) 483,000
6,600 Cerner Corp. (a) 186,862
3,200 CIENA Corp. (a) 222,800
6,525 Cisco Systems, Inc. (a) 600,708
18,200 Compaq Computer Corp. 516,425
8,850 Computer Associates International, Inc. 491,729
19,500 Electronics for Imaging, Inc. (a) 411,938
10,200 EMC Corp. (a) 457,088
4,100 HNC Software, Inc. (a) 167,330
3,300 Intel Corp. 244,613
4,400 Jabil Circuit, Inc. (a) 145,475
8,600 Legato Systems, Inc. (a) 335,400
2,400 Microsoft Corp. (a) 260,100
11,850 Thermo Electron Corp. (a) 405,120
4,700 Xerox Corp. 477,638
---------------
5,406,226
---------------
TRANSPORTATION (1.0%)
7,300 CNF Transportation, Inc. 310,250
---------------
UTILITIES & TELECOMMUNICATIONS (4.0%)
9,000 Consolidated Natural Gas Co. 529,875
9,400 Telfonakriebolaget LM Ericsson, Series B
ADR 269,075
11,100 Texas Utilities Co. 462,038
---------------
1,260,988
---------------
TOTAL COMMON STOCK (COST $21,489,437) 28,784,529
---------------
SHORT TERM HOLDINGS (8.5%)
1,325,467 Dreyfus Cash Management Fund 1,325,467
1,336,364 Institutional Funds Group, TempFund Fund 1,336,364
---------------
TOTAL SHORT TERM HOLDINGS (COST $2,661,831) 2,661,831
---------------
TOTAL INVESTMENTS (100.0%) (COST $24,151,268) $ 31,446,360
---------------
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
12
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
SMALL COMPANY STOCK FUND
- -----------------------------------------------------------------
COMMON STOCK (91.0%)
BASIC MATERIALS (3.4%)
200 Hauser, Inc. (a) $ 1,163
5,945 Quanex Corp. 180,208
2,665 Shaw Group, Inc. (a) 69,290
9,450 Titanium Metals Corp. (a) 208,491
---------------
459,152
---------------
CAPITAL GOODS (3.1%)
10,300 Lithia Motors, Inc. (a) 151,925
3,400 Orbital Sciences Corp. (a) 127,075
9,500 OEA, Inc. 152,000
---------------
431,000
---------------
COMMUNICATIONS (1.4%)
6,610 COMSAT Corp. 187,146
---------------
CONSUMER CYCLICAL (22.1%)
10,850 CHS Electronics, Inc. (a) 193,944
6,400 Dress Barn, Inc. (a) 159,200
6,500 Dycom Industries, Inc. (a) 219,375
10,800 EFTC Corp. (a) 140,400
9,850 Funco, Inc. (a) 139,131
8,900 Guitar Center, Inc. (a) 268,113
9,385 Keystone Automotive Industries, Inc. (a) 217,028
775 Mapics, Inc. (a) 15,258
7,100 Mecklermedia Corp. (a) 158,863
10,250 Rainforest Cafe, Inc. (a) 142,219
8,655 SCP Pool Corp. (a) 212,048
12,150 Schlotzsky's, Inc. (a) 194,400
2,415 Showbiz Pizza Time, Inc. (a) 97,355
2,865 Stage Stores, Inc. (a) 129,641
6,200 Stein Mart, Inc. (a) 83,700
6,850 Stericycle, Inc. (a) 99,325
7,630 Sykes Enterprises, Inc. (a) 153,077
7,112 Tetra Tech, Inc. (a) 172,465
5,650 Valassis Communications, Inc. (a) 217,878
---------------
3,013,420
---------------
CONSUMER STAPLES (16.7%)
7,950 AC Nielson Corp. (a) 200,738
3,600 Celestial Seasonings, Inc. (a) 178,200
11,900 Foodmaker, Inc. (a) 200,813
8,500 Fresh America Corp. (a) 157,250
9,600 Ivex Packaging Corp. (a) 223,200
7,450 Mail-Well, Inc. (a) 161,572
5,325 Michael Foods, Inc. 156,422
4,950 Oshkosh B'Gosh, Inc. 220,275
6,155 QuadraMed Corp. (a) 168,108
11,135 Rayovac Corp. (a) 252,625
4,715 Wild Oats Markets, Inc. (a) 143,218
6,180 Windmere-Durable Holdings, Inc. (a) 221,321
---------------
2,283,742
---------------
ENERGY (6.3%)
3,200 Atwood Oceanics, Inc. (a) 127,400
7,135 Basin Exploration, Inc. (a) 125,754
900 Callon Petroleum Co. (a) 12,881
9,250 EEX Corp. (a) 86,719
10,780 Marine Drilling Co., Inc. (a) 172,480
<CAPTION>
FACE/SHARE SECURITY
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
- -----------------------------------------------------------------
SMALL COMPANY STOCK FUND (continued)
- -----------------------------------------------------------------
</TABLE>
COMMON STOCK (continued)
ENERGY (continued)
<TABLE>
<C> <S> <C>
8,730 Snyder Oil Corp. $ 174,054
5,900 Stolt Comex Seaway, S.A. (a) 114,313
2,950 Stolt Comex Seaway, S.A. ADR (a) 51,625
---------------
865,226
---------------
FINANCIAL (16.4%)
9,450 American Capital Strategies Ltd. 216,169
7,900 Consolidated Capital Corp. (a) 177,627
6,243 Downey Financial Corp. 204,068
7,000 First Sierra Financial, Inc. (a) 213,500
10,100 Franchise Mortgage Acceptance Co. LLC
(a) 263,231
6,240 Imperial Credit Industries, Inc. (a) 146,640
7,500 Leasing Solutions, Inc. (a) 215,625
11,750 Medallion Financial Corp. 323,125
3,895 Peoples Bank 134,864
15,600 Sunstone Hotel Investors, Inc. 207,675
4,120 Webster Financial Corp. 136,990
---------------
2,239,514
---------------
HEALTH CARE (6.2%)
4,600 Access Health, Inc. (a) 117,300
11,415 Graham-Field Health Products, Inc. (a) 64,209
12,850 Lifecore Biomedical, Inc. (a) 212,025
7,150 Maxxim Medical, Inc. (a) 207,350
15,550 Specialty Care Network, Inc. (a) 104,963
4,100 Trigon Healthcare, Inc. (a) 148,369
---------------
854,216
---------------
TECHNOLOGY (13.3%)
22,080 Accelr8 Technology Corp. (a) 270,480
12,300 Barringer Technologies, Inc. (a) 116,081
4,770 Ciber, Inc. (a) 181,260
5,526 Computer Horizons Corp. (a) 204,807
5,325 Computer Task Group, Inc. 178,388
13,700 FARO Technologies, Inc. (a) 144,706
4,120 Mercury Interactive Corp. (a) 183,855
220 Metro Information Services, Inc. (a) 8,608
15,200 SEEC, Inc. (a) 165,300
6,650 SPR, Inc. (a) 206,981
15,970 Tava Technologies, Inc. (a) 157,703
---------------
1,818,169
---------------
TRANSPORTATION (2.1%)
7,250 Covenant Transportation, Inc. (a) 141,375
12,650 Jevic Transportation, Inc. (a) 143,893
---------------
285,268
---------------
TOTAL COMMON STOCK (COST $11,912,316) 12,436,853
---------------
SHORT-TERM HOLDINGS (9.0%)
612,981 Fidelity Money Market Fund 612,981
612,981 Provident Federal Trust 612,981
---------------
TOTAL SHORT-TERM HOLDINGS (COST $1,225,962) 1,225,962
---------------
TOTAL INVESTMENTS (100.0%) (COST $13,138,278) $ 13,662,815
---------------
---------------
</TABLE>
See Notes to Schedules of Investments and Notes to Financial Statements
13
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS (UNAUDITED) JUNE 30, 1998
- --------------------------------------------------------------------------------
(a) Non-income producing security
(b) Securities that may be resold to "qualified institutional buyers" under rule
144A or securities offered pursuant to 4(2) of the Securities Act of 1933,
as amended. The Board of Trustees has deemed these securities to be liquid
at June 30, 1998.
ABBREVIATIONS
<TABLE>
<S> <C>
ADR American Depositary Receipts
AMBAC American Municipal Bond Assurance Corporation
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
</TABLE>
14
