<PAGE>
PIMCO Funds Annual Report
[ARTWORK APPEARS HERE]
Making sure you own core stock and bond funds is vital in developing a solid
foundation for your investment portfolio. Story on page 4.
June 30, 1998
Multi-Manager Series
Equity Income
Value
Renaissance
Capital Appreciation
Growth
Mid-Cap Growth
Target
Small-Cap Value
Opportunity
International Developed
International
Emerging Markets
Innovation
Precious Metals
Balanced
Inside this report:
- --------------------------------------------------------------------------------
Page 2 Letter From PIMCO Funds' President
Where We've Been and What's Ahead
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Page 3 Market Review
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Page 4 Today's Investor
Building a Foundation for Your Portfolio
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Page 6 Fund Spotlight
PIMCO Tax-Efficient Equity and Value 25 Funds
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Page 7 Manager Spotlight
PIMCO Growth & Innovation Funds, Tony Rizza
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Page 8 In The News
Recent News on PIMCO Funds
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Page 9 Investor Services: PIMCO Funds Web Site Update, New Account Minimums
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Page 10 Overview: Comprehensive Fund Family
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Page 11 PIMCO Funds Financial Information
P I M C O
F U N D S
<PAGE>
President's
Letter
Dear Fellow Shareholder:
The financial markets continued their ascent during the last year, the magnitude
of which surprised many investors. For the one-year period ended June 30, 1998,
the stock market, as measured by the Standard & Poor's 500 Index of stocks, rose
30.2%. The overall bond market, as measured by the Lehman Aggregate Bond Index,
posted a 10.5% return.
A Rising Tide Investors have enjoyed a continuation of the bull market in
stocks that began nearly eight years ago. Since October 1990, the stock market
has more than tripled in value, with only one 10% correction. That setback
occurred last October, as the financial upheaval in Asia began to unfold.
However, individual investors viewed the market decline as a buying opportunity
and stock prices rebounded sharply during the first quarter of 1998. To a great
extent, stocks experienced a "cooling off" period during the second quarter, as
performance was mixed.
Turning to the bond market, the Asian crisis has been largely beneficial for
U.S. bonds. With the uncertainty surrounding the potential repercussions in
Asia, many domestic and foreign investors flocked to the relative security of
high quality U.S. fixed income securities. As a result, over the last year the
yield on 30-year Treasuries fell from 6.6% to 5.6%. This led to strong gains in
the prices of bonds, nearly across-the-board.
Looking Ahead As we head into the second half of the year, there are few signs
of a major reversal of fortune in our financial markets. However, it is unlikely
that the pace of the gains we have experienced in the last several years will
continue. While inflation is low and economic growth, while slowing, is still
running at a healthy pace, the lingering financial crisis in Asia may be a drag
on corporate profits going forward.
On the next pages you will find a more complete review of the stock and bond
markets, followed by a number of investment strategies to consider with your
financial advisor given today's market conditions. And on page 6 we provide
details on two new additions to the PIMCO Funds family--PIMCO Value 25 Fund
and PIMCO Tax-Efficient Equity Fund.
As always, we appreciate the trust you have placed in us, and we will continue
to work hard to help you meet your financial objectives. If you have any
questions regarding your investment, please contact your financial advisor. You
can also visit our Web site at www.pimcofunds.com, or call us at 1-800-426-0107.
Sincerely,
/s/ Stephen J. Treadway
Stephen J. Treadway
President
July 21, 1998
2
<PAGE>
Market Review
The Stock Market
The Bull Market Continues
Stocks rose sharply during the last year, due in large part to a rebound during
the first quarter of the year.
[LINE GRAPH APPEARS HERE]
S&P 500 INDEX
<TABLE>
<CAPTION>
DATE PRICE DATE PRICE DATE PRICE DATE PRICE
------ ------- ---- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
6/26 1133.20 3/27 1095.44 12/26 936.46 9/26 945.22
6/19 1100.65 3/20 1099.16 12/19 946.78 9/19 950.51
6/12 1098.84 3/13 1068.61 12/12 953.39 9/12 923.91
6/ 5 1113.86 3/ 6 1055.69 12/ 5 983.79 9/ 5 929.05
5/29 1090.82 2/27 1049.34 11/28 955.40 8/29 899.47
5/22 1110.47 2/20 1034.21 11/21 963.09 8/22 923.54
5/15 1108.73 2/13 1020.09 11/14 928.35 8/15 900.81
5/ 8 1108.14 2/ 6 1012.46 11/ 7 927.51 8/ 8 933.54
5/ 1 1121.00 8/ 1 947.14
4/24 1107.90 1/30 980.28 10/31 914.62 7/25 938.79
4/17 1122.72 1/23 957.59 10/24 941.64 7/18 915.30
4/10 1110.67 1/16 961.51 10/17 944.16 7/11 916.68
4/ 3 1122.70 1/ 9 927.69 10/10 966.98 7/ 4 916.92
1/ 2 975.04 10/ 3 965.03
</TABLE>
While the overall performance of the stock market is extremely positive, the
shorter-term performance of stocks seems to depend on which calendar quarter
you're looking at.
In the fourth quarter of 1997 stocks fell sharply from their record levels, in
response to the mounting Asian currency crisis. However, during the first
quarter of 1998, fears regarding the Asian situation were put on the back
burner, and the stock market increased 14%.
The second quarter of 1998 was mediocre at best. While large-cap stocks on the
whole posted gains, the best returns were mostly limited to the largest 50
companies, known as the "Nifty 50." On the other hand, many "smaller" large-
caps, mid-cap and small-cap stocks experienced losses during the quarter.
The superior returns of the largest-cap stocks has been somewhat of a
surprise. Since most of the largest-cap firms are multinational in nature, one
might expect them to be most susceptible to the weakened Asian economies.
Despite this, investors seemed comfortable with these firms' large size and
market presence.
Another important trend worth noting has been the strong results from
technology stocks. This was especially true among Internet firms that have been
benefiting from increased Web traffic and rising advertising revenues.
Turning to the international markets, many European countries have posted
extremely strong returns. However, the dramatic bear market taking place in Asia
has spread to many other emerging markets, including South America.
Looking ahead, we remain cautiously optimistic about the prospects for the
stock market. Yet, we caution investors to trim their expectations, especially
in light of the very strong performance from stocks over the last several years.
The Bond Market
Strong Returns Abound
Bond prices have risen in the last year, as interest rates have fallen.
[LINE GRAPH APPEARS HERE]
30 Year Treasury Rates
<TABLE>
<CAPTION>
DATE DATE DATE DATE
- ---- ----- ---- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
6/26 5.632 3/27 5.958 12/26 5.899 9/26 6.367
6/19 5.669 3/20 5.885 12/19 5.922 9/19 6.378
6/12 5.662 3/13 5.893 12/12 5.925 9/12 6.587
6/ 5 5.787 3/ 6 6.018 12/ 5 6.083 9/ 5 6.641
5/29 5.802 2/27 5.923 11/28 6.054 8/29 6.611
5/22 5.900 2/20 5.871 11/21 6.033 8/22 6.648
5/15 5.972 2/13 5.849 11/14 6.113 8/15 6.546
5/ 8 5.977 2/ 6 5.920 11/ 7 6.155 8/ 8 6.635
5/ 1 5.933 8/ 1 6.453
4/24 5.945 1/30 5.800 10/31 6.153 7/25 6.453
4/17 5.876 1/23 5.970 10/24 6.273 7/18 6.530
4/10 5.881 1/16 5.809 10/17 6.439 7/11 6.529
4/ 3 5.794 1/ 9 5.728 10/10 6.430 7/ 4 6.627
1/ 2 5.839 10/ 3 6.294
</TABLE>
Bonds have also been enjoying a continuation of their bull market. During the
last year, most sectors of the bond market posted double-digit gains.
There were several "sub-plots" that contributed to the market's solid
performance. These included the strong U.S. dollar, low inflation, the flight
to high quality U.S. debt, and the renewed popularity of bond funds, as equity
investors became cautious of an eventual market correction.
But perhaps the most important factor behind the bond market's rise was the
ongoing Asian financial crisis. As our bond market expert Bill Gross has said,
"It's almost as if Asia's loss has been our gain." When the crisis first took
shape late in 1997, U.S. interest rates began to fall, as investors flocked to
safer, more liquid fixed income securities. And during the second quarter of
this year, when it was apparent that the economic woes from Asia were not going
to simply disappear, bond prices again rose. In fact, during the second quarter
the bond market on the whole outperformed many sectors of the stock market.
As we look toward the rest of the year, the prospects for the U.S. economy
remain bright. And this could hold true for many European countries as well.
While our growth rate of exports is beginning to slow down, our imports are much
cheaper now than before, and the benefits of falling oil prices and declining
interest rates have benefited many investors.
There are certainly some threats. Six to twelve months of a less than
"exuberant" stock market may slow consumption for at least part of the next few
years. And, our skyrocketing dollar could lead to an un-healthy trade deficit.
But all told, with inflation under control in the 1-2% range, it appears we
have the ingredients for a continued bull market in bonds. Long-term Treasury
yields over the next few years could range between 4 1/2 and 6 1/2% with the 5%
"handle" containing most of the movement.
3
<PAGE>
Today's Investor
Building a Foundation for Your Portfolio
Start with a core stock and core bond fund
[GRAPHIC APPEARS HERE]
Whether you're an investment novice or a seasoned professional, the recent
gyrations in the financial markets may be unsettling. If this volatility has
caused you to wonder whether your investments can withstand the current
climate, you and your financial advisor should take a fresh look at your entire
portfolio. A key first step is to make sure you have a solid foundation of both
stock and bond fund investments.
A Variety of Investment Opportunities
Determining exactly which stock and bond funds to select as core investments is
not as simple as it may seem. Within the stock and bond security classes are any
number of sub-categories, each with its own potential risk and reward profile.
These sub-categories provide you with a wide variety of investment
opportunities.
The Bond Market
The bond market can be broadly dissected into four major sectors: government,
mortgage, corporate, and foreign. And securities within each sector are
typically available with varying maturities. Bonds are further divided according
to their credit quality--either investment grade or high yield.
Different bonds perform better in different economic conditions. And bonds that
invest in foreign countries often perform out of step with U.S. bonds.
Top-Performing Bond Sectors by Year
No single sector of the bond market consistently outperforms.
Government High Yield Foreign Short-Term
1997 9.6% 12.3% 11.1% 6.7%
1996 2.8% 11.1% 11.8% 5.1%
1995 18.3% 19.9% 17.9% 11.0%
1994 -3.4% -1.2% -4.0% 0.6%
1993 10.7% 17.2% 13.4% 5.6%
1992 7.2% 18.2% 8.0% 6.4%
1991 15.3% 34.5% 11.1% 11.8%
1990 8.7% -4.4% 3.3% 9.7%
Past performance is no guarantee of future results. "Government Bonds" based on
the return of the Lehman Government Bond Index. "Short-Term Bonds" based on the
return of the Lehman 1-3 Year Government/Corporate Index. "Foreign Bonds" based
on the return of the Salomon Brothers Currency Hedged Non-U.S. Bond Index. "High
Yield Bonds" based on the return of the Merrill Lynch High Yield Index. It is
not possible to invest directly in an unmanaged index. Source: Lipper Analytical
Services, Inc. Performance is not representative of any PIMCO Fund.
Building a Foundation With Bonds
An actively managed mutual fund that primarily invests in intermediate-term,
investment grade bonds is typically considered the foundation of the fixed
income portion of a portfolio.
However, the fund should also have the flexibility to invest in all sectors,
maturities and quality levels of the bond market. By adapting to changing
economic and market conditions, this type of fund can rotate sectors, lengthen
or shorten maturities, and adjust quality to maximize investment opportunities.
How Bonds of Various Maturities React to Changing Interest Rates
When interest rates fall, bond prices rise, and vice versa. The longer a bond's
maturity (date when it comes due), the more volatile its price will be when
interest rates rise or fall.
[BAR GRAPH APPEARS HERE]
Average Annual Changes in Price
<TABLE>
<CAPTION>
Short-Term Intermediate-Term Long-Term
Govt. Bond Govt. Bond Govt. Bond
<S> <C> <C> <C>
Declining Interest Rates 1.4% 3.7% 6.8%
Rising INterest Rates -0.4% -2.6% -5.3%
</TABLE>
Data from 1926-1996. Past performance is no guarantee of future results.
Source: Ibbotson Associates.
Build Around the Bond Core
After selecting a core bond fund, you may want to supplement your fixed income
portfolio with more sector-specific holdings, such as a high yield or foreign
bond fund. That way, you can tailor your investments to best achieve your
financial goals, and can further diversify your overall portfolio.
Building on the Bond Foundation
There is a variety of fixed income investment choices that can supplement a core
bond fund.
[ARTWORK APPEARS HERE]
4
<PAGE>
The Stock Market
Within the stock market, you have the option of investing in small-, medium- or
large-sized companies. Beyond the different size categories, you could invest in
domestic or international stocks, stocks issued by companies in relatively
stable industries (such as utilities), or stocks of companies in high growth and
high volatility industries (such as technology). As with bonds, returns in
stocks vary cyclically based on market conditions.
The Stock Foundation
Stocks of large-capitalization companies, or large-caps, are typically
considered the foundation of the equity portion of a portfolio. Large-cap
companies are generally household names, and they also make up the greatest
share of the overall U.S. equity market. As such, they are an important
cornerstone of the stock portion of your investment portfolio.
Large-Caps Constitute the Bulk of the Stock Market
While the total number of large-cap stocks is much less than the small- and mid-
cap stock universe, large-caps represent 75% of the capitalization of the
overall U.S. equity market.
[PIE CHART APPEARS HERE]
Small-Cap 7%
Mid-Cap 18%
Large-Cap 75%
Source: Russell Data Services.
Large-cap stocks are also a more conservative investment than small- and mid-cap
stocks, and their history of significant appreciation makes them competitive
with riskier small- and mid-caps.
Potential Risk and Reward by Company Size
Large-cap stocks have historically been less risky than small- and mid-cap
stocks, while providing solid returns (12/31/79-6/30/98).
[LINE GRAPH APPEARS HERE]
Potential Risk and Reward
<TABLE>
<CAPTION>
Return Risk
- --------------------------------------------------------------------------------------------
N Periods Geometric Arithmetic Standard T Statistic
Mean (%) Mean (%) Deviation
(%)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Large S&P 500 222 17.667 18.918 17.211 5.136
- --------------------------------------------------------------------------------------------
Mid Russell Mid-Cap 222 16.998 18.489 18.695 4.618
- --------------------------------------------------------------------------------------------
Small Russell 2000 222 14.432 16.419 21.226 3.591
- --------------------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future results. "Large-Cap Stocks"
represented by the S&P 500 Index, an unmanaged index of common stocks. "Mid-Cap
Stocks" represented by Russell Mid-Cap Index. "Small-Cap Stocks" represented by
Russell 2000 Index. It is not possible to invest in an unmanaged index.
Volatility is measured by standard deviation of annual returns. Source: Ibbotson
Associates. Performance is not representative of any PIMCO Fund.
A side benefit of investing in large-cap U.S. stocks is that many of these
companies generate a significant portion of their sales in foreign countries. A
strong foreign presence can be similar to investing in an international stock
without actually owning one of those securities. For example, Coca-Cola's sales
in foreign countries accounted for 66% of its total sales in 1997.
One of the best ways to access large-caps is through actively managed stock
funds. Along with instant diversification, active management can be an added
benefit. Unlike an index stock fund that seeks to mirror a given index, such as
the S&P 500, an actively managed fund portfolio will be closely monitored and
adjusted to meet changing economic and market conditions.
Supplement the Stock Core
As with the bond portion of your portfolio, once your core stock fund is in
place you may want to supplement your equity investments with other types of
stock funds, such as a small-cap or international. Again, this can help you to
better aim towards your financial goals, and will diversify your overall
portfolio.
Building on the Stock Foundation
There is a variety of equity investment choices that can supplement a core stock
fund.
[ARTWORK APPEARS HERE]
Keeping Your Balance
With the abundance of stock and bond funds to choose from, how do you decide
which ones should anchor your portfolio? Given the fact that the bull market in
stocks is now in its eighth year, it may be tempting to invest the bulk of your
portfolio in the equity market. But a portfolio that's top-heavy in stocks could
feel the brunt of the decline if the stock market enters a correction. By
working with your financial advisor to build the foundation of your portfolio
with stock and bond funds, you can diversify your assets and help protect them
against the risk of loss.
Review Your Portfolio Regularly
After your portfolio is in place, you should still speak regularly with your
financial advisor to determine if any changes need to be made. Your advisor can
review all of your individual holdings to make sure that they remain consistent
with your overall investment goals. And your advisor can make adjustments to
your portfolio over time, especially to any sector-specific holdings.
5
<PAGE>
Fund
Spotlight
In July, PIMCO Funds introduced two new stock funds, Value 25 and Tax-Efficient
Equity Funds. Here are some details on these two new offerings.
PIMCO Tax-Efficient Equity Fund:
Tax-Bite Protection
[PHOTO APPEARS HERE]
With the financial markets posting such strong gains over the past several
years, many people have not spent a lot of time considering how taxes can take
a bite out of their investment returns. But taxes, more than almost any other
factor, can play a dramatic role in a mutual fund's performance.
That's why PIMCO Funds launched its Tax-Efficient Equity Fund. The Fund seeks
to provide investors with the benefits of stock fund investing while lessening
investment taxes. The Fund is managed by PIMCO Advisors' Parametric Portfolio
Associates. Parametric is a specialist in privately managed, tax-efficient
portfolios for taxable endowments, trusts and high net worth individuals. The
firm has developed an innovative approach to tax-sensitive investing, which it
utilizes in managing the Tax-Efficient Equity Fund.
Parametric starts by identifying stocks using its proprietary computer ranking
program. First, it seeks to identify companies that appear able to provide
sustained growth. Then it ranks these organizations based on a number of
factors, such as a company's past growth, current valuations, financial
soundness and volatility. Once the portfolio is in place, Parametric employs
numerous tax management techniques. These include using a low investment
turnover strategy, matching profits to losses when buying and selling
securities, and utilizing a low-dividend bias.
TAX-EFFICIENT EQUITY QUICK FACTS
- -------------------------------------
Objective
Maximum after-tax growth of capital
Primary Portfolio
A broadly diversified portfolio of large-cap stocks
PIMCO Advisors Manager
Parametric Portfolio Associates
Proposed Symbols
A Shares: PXTAX
B Shares: PXTBX
C Shares: PXTCX
PIMCO Value 25 Fund:
Focused Investing
[PHOTO OF BINOCULARS AND CASE APPEARS HERE]
With the explosive growth of the mutual fund industry, many stock funds have
grown to enormous proportions. According to Morningstar, as of December 31,
1997, the average stock fund had 142 securities in its portfolio, and the ten
largest held an average of 338 stocks each. Funds with an excessively large
number of holdings can expose shareholders to potential investment problems,
including diluted performance and a breakdown in investment quality.
When a stock fund holds several hundred securities, it's difficult for any
single holding to have a significant impact on its portfolio return. In
addition, the more stocks in a portfolio, the more difficult it can be for a
portfolio manager to adequately research and monitor its quality. Of course, a
large number of holdings could also offset a significant loss in any one
security.
In contrast to over-diversified stock funds, PIMCO introduced the Value 25
Fund--a focused, value-oriented mid-cap fund investing in only 25 stocks. The
Fund is managed by PIMCO Advisors' NFJ Investment Group--specialists in value
investing. NFJ's founding three partners have worked together for over 25 years.
And today, the firm has nearly $3 billion in assets under management.
With a smaller, select group of securities, the Fund seeks to provide long-
term growth of capital and income. To achieve this goal, the manager maintains
high investment standards, as it attempts to ensure that each of the Fund's
holdings offers the opportunity to significantly impact the Fund's total return.
VALUE 25 QUICK FACTS
- --------------------------
Objective
Long-term growth of capital and income
Primary Portfolio
25 mid-cap stocks that have below-average price-to-earnings ratios
PIMCO Advisors Manager
NFJ Investment Group
Proposed Symbols
A Shares: PTWAX
B Shares: PTWBX
C Shares: PTWCX
To learn more about PIMCO Value 25 Fund or Tax-Efficient Equity Fund, contact
your financial advisor. Or call 1-800-426-0107.
6
<PAGE>
Manager
Spotlight
PIMCO Growth and Innovation Funds
Tony Rizza
Thus far in 1998, two of the top PIMCO Funds are the Growth and Innovation
Funds. For the 1-year period ended June 30, 1998, the Growth Fund was ranked in
the top 5% of 884 Growth Funds tracked by Lipper. The high-tech Innovation Fund
has posted a 32% average annual return since its inception in 1994--ranking #3
of 33 Lipper Science and Technology Funds. A great deal of the success of these
Funds is due to portfolio manager, Tony Rizza. We recently spoke with him
regarding the two funds.
Q: Can you provide us some background on the two Funds?
A: The Growth Fund seeks long-term growth of capital through investment in
stocks of larger, well established companies. Innovation is a more aggressive
specialized fund that seeks capital appreciation through investment in stocks of
technology-related companies.
Q: Are there any similarities between the Funds?
[PHOTO APPEARS HERE]
A: Yes, both are managed using our proprietary investment strategy based on the
theory of "Positive Momentum & Positive Surprise." Briefly, the theory states
that good companies doing better than generally expected will experience a rise
in their stock price. There-fore, we look for growing companies that are
surprising the market with better-than-expected results.
Q: You've been a part of the Growth Fund management team for over a year. What
is the main reason behind the Fund's strong performance during that time?
A: We've pared the number of holdings from 70 to about 45. This has given us
increased agility and enabled us to have a more significant weighting in our
favorite securities.
Q: How are the Growth and Innovation Funds currently positioned?
A: The Innovation Fund's portfolio is primarily invested in technology-related
companies.
And as of June 30, 1998, the largest industry weighting of the Growth Fund was
also in technology.
Q: Are there particular areas of the technology sector that you are focusing on?
A: Companies with ties to the Internet were some of the best performing stocks
during the first half of 1998. The explosive growth of the Net is practically
unsurpassed. While it took radio 30 years to reach an audience of 50 million,
and television took 13, the Internet reached this critical mass in only four
years. With such fast growth we expect periods of short-term volatility.
However, we attempt to temper this risk by taking profits and trimming some of
our holdings when they become too large for a fund's portfolio.
Q: What are some of your favorite Internet stocks?
A: Both Funds currently hold America Online (AOL), which we first purchased in
late 1996. The firm's growth has skyrocketed since it introduced a flat rate for
unlimited monthly use of its service. AOL has worked to address customer service
problems by dramatically upgrading its technological capacity, and by adding
5,000 new customer service representatives. As home computers become more
affordable and Internet use expands, AOL should be in an outstanding position to
continue growing its business.
We have owned Yahoo in the Innovation Fund's portfolio now for about two years,
and it has been extremely successful. Yahoo, an Internet navigational service,
has a very strong story and position in that marketplace. The firm is benefiting
from an increase in Internet usage, which has allowed the firm to increase
advertising rates. Yahoo's fundamentals are in sharp contrast to some of the
recent Internet additions to the market that do not have earnings to back up
their stock movement.
Q: How does the Innovation Fund differ from other high-tech funds?
A: The Innovation Fund invests in both traditional technology stocks and in
companies in other industries that use innovative technology to advance their
business. This allows us to further diversify the Fund's portfolio and seek a
wide range of exciting investment opportunities.
Q: Can you give us an example of "non-traditional" holding in the Fund?
A: VISX, Inc. is a developer of technologies and systems for laser vision
correction, and a top holding in Innovation. The firm has seen its share price
soar, as demand for laser eye surgery has grown and the profit margins on laser
equipment have increased.
The views of Mr. Rizza are not indicative of any future performance of any PIMCO
Fund. Please refer to pages 16 and 24 for more complete performance information
on the Growth and Innovation Funds.
7
<PAGE>
In The
News
Recent News on PIMCO Funds
The PIMCO Funds and their institutional portfolio managers are regularly
featured in the press. Here is a sample of some recent articles:
The Stock Market
Headline
. The press is taking notice of PIMCO Innovation Fund. In June, Business Week,
Barron's and SmartMoney featured the Fund and portfolio manager Tony Rizza. And
in its May review of the Fund, Morningstar said it has "been able to avoid
meltdowns...and has so far succeeded at a tricky game."
. Pacific Investment Management Company, PIMCO Advisors' institutional bond
management firm, was featured in the June 6th issue of Morningstar Mutual Funds.
It said the firm has "made strategic use of emerging markets and high yield
issues within an overall strategy of risk control" and it is "in the best
position to wring whatever excess returns are available out of the market." Also
in June, Barron's said the firm is "one of the world's leading money-management
companies, with a terrific long-term record."
. CNBC interviewed Cliff Hoover, a portfolio manager of the PIMCO Equity Income
Fund, on June 10th. Mr. Hoover provided details on his investment strategy for
the Fund.
. In its July review of PIMCO Capital Appreciation Fund, Morningstar said it
"is built for consistency...the management team shoots for solid relative
returns, but won't make outlandish bets to get there."
. The insights of Bill Gross, manager of the PIMCO Total Return, Low Duration,
Short-Term and StocksPLUS Funds, continue to be sought out by the press. Over
the last three months his views appeared in The Wall Street Journal, The
Washington Post and Barron's.
Morningstar Inc., an independent organization, provides investors with
information regarding a wide range of investment products. One service offered
by Morningstar is assigning star ratings to the mutual funds it tracks. Funds
begin to be rated once they have a three-year record. The highest Morningstar
rating is five-stars, and the lowest rating is one-star. Following are the PIMCO
Fund family's five- and four-star rated Funds as of June 30, 1998.
- ----------------------------------------------------------
PIMCO STOCK FUNDS Overall 3 Year 5 Year 10 Year
- ----------------------------------------------------------
Equity Income **** 4 4 --
Renaissance **** 5 4 3
StocksPLUS ***** 5 5 --
Value **** 4 4 --
Capital Appreciation **** 5 4 --
Growth **** 3 3 4
Mid-Cap Growth **** 4 4 --
- ----------------------------------------------------------
PIMCO BOND FUNDS Overall 3 Year 5 Year 10 Year
- ----------------------------------------------------------
Foreign Bond ***** 5 5 --
High Yield ***** 5 5 --
Total Return ***** 4 4 5
Low Duration ***** 4 5 5
Short-Term **** 4 5 4
The chart above is based on June 30, 1998 Morningstar ratings. Overall rating is
a weighted average of a fund's 3-, 5- and 10-year ratings (when applicable).
During the 3-, 5- and 10-year periods there were 2,545, 1,462 and 707 domestic
equity funds and 1,468, 890 and 337 taxable bond funds rated, respectively.
Morningstar ratings reflect historical risk-adjusted performance and are subject
to monthly changes. Therefore, past ratings are not a guarantee of future
results. The ratings are calculated from a fund's average annual total return
with appropriate sales charge adjustment and a risk factor that reflects fund
performance relative to three-month Treasury bill returns. With the exception of
the Renaissance Fund C and Growth Fund C, ratings are based on institutional
class shares. Class A, B and C shares, which were initially offered on 1/17/97,
have not yet been rated by Morningstar. Had Class A, B and C shares been in
existence for the same time period as the institutional class shares, they may
have received different ratings due to Class A, B and C shares' higher expense
and sales charges. 5 star ratings are limited to the top 10% of funds in an
investment category, the next 22.5% earn 4 stars and the next 35% earn 3 stars.
Institutional class shares generally have a $5 million minimum investment. Under
special circumstances, institutional shares may be available. Call for details.
8
<PAGE>
Investor
Services
PIMCO Funds Is on the Web
www.pimcofunds.com
[GRAPHIC APPEARS HERE]
Have you had an opportunity to visit the PIMCO Funds Web site? If not, you're
missing the ability to access the most timely and comprehensive information
available on all of the PIMCO Funds. In addition, the site includes daily man-
ager commentary with insights on the economy and other factors affecting the
financial markets. We can be found on the worldwide web at www.pimcofunds.com.
The site is divided into three main sections:
Investment Insight provides complete details on each fund's investment manager,
including its process, biographies, a manager's update and more.
Fund Information contains profiles of all the PIMCO Funds, including performance
data, a summary of each fund's portfolio and daily fund share prices (NAVs).
[GRAPHIC APPEARS HERE]
Resources features a document library that contains prospectuses, applications
and other forms that you can view, print or order. It also has information about
our convenient shareholder services, and a listing of the retirement plans
offered by PIMCO Funds.
Track Your Portfolio
A new feature of the site is "My Portfolio"--which enables you to track the
market value of your investment portfolio. In addition to your PIMCO Funds
investments, you can track other funds, stocks, futures and options. To access
this unique service, simply click on "My Portfolio" on the Home page.
Questions?
We're sure you'll find the PIMCO Funds Web site to be an invaluable tool. If you
have any comments or questions about the site, please call us today at 1-800-
426-0107. Or use the e-mail feature of the site to contact us.
New Investment Minimums
Beginning April 1, 1998 new initial investment minimums went into effect for
PIMCO Funds (see table below). These changes were made in an effort to control
account maintenance expenses.
Per Fund Minimum Minimum Subsequent
Account Type Initial Investment Investments
Regular $2,500 $100
- --------------------------------------------------------------------------
IRA 1,000 100
- --------------------------------------------------------------------------
UGMA 1,000 100
- --------------------------------------------------------------------------
Auto-Invest 1,000 50
- --------------------------------------------------------------------------
Certain Qualified Plans* 50 50
*Employer-sponsored plans, including SIMPLE IRAs, SEPs, SAR-SEPs and 401(k)s.
Direct Account Low Balance Fee
To help partially offset the relatively higher costs of servicing smaller
accounts, a quarterly fee of $4 (up to $16 annually) will now be applied to
direct accounts with balances that fall below our new investment minimums. A
direct account is an account where the shareholder receives statements directly
from PIMCO Funds.
The valuation of accounts and the deduction are expected to take place during
the last five business days of each calendar quarter--beginning in late
September. In summary:
. No fee will be charged on accounts with balances at or above the initial
investment minimums.
. No fee will be charged on accounts that fall below the minimum due solely to
market declines.
. No fee will be charged on any account of a shareholder if the aggregate value
of all the shareholder's PIMCO Funds direct accounts is at least $50,000.
. The fee will not apply to employer-sponsored retirement plan accounts or
403(b)(7) custodial accounts.
If you have any questions regarding these changes, please contact your financial
advisor, or call us at 1-800-426-0107.
9
<PAGE>
The PIMCO Funds Family
PIMCO Funds offers unique access to the institutional investment capabilities of
PIMCO Advisors L.P., manager of over $229 billion. PIMCO Advisors owns seven
independent investment firms, each seeking the highest caliber performance in a
specific discipline. Six of these firms currently manage PIMCO Funds. Together,
their superior standard of expertise has attracted many prestigious clients,
including 46 of the 100 largest U.S. corporations. To learn more about any of
the PIMCO Funds, please call us at 1-800-227-7337.
<TABLE>
<CAPTION>
Stock Funds Objective Primary Portfolio Composition PIMCO Advisors Manager
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Total return Stocks, bonds and money market Cadence/NFJ/Pacific
instruments Investment Management
- --------------------------------------------------------------------------------------------------------------------------------
Equity Income Current income and long-term Stocks of companies with NFJ Investment Group
growth below-average P/Es and above-
average dividends
- --------------------------------------------------------------------------------------------------------------------------------
Value Long-term growth of capital Stocks of companies with NFJ Investment Group
and income below-average P/Es
- --------------------------------------------------------------------------------------------------------------------------------
Renaissance Long-term growth of capital Stocks of companies with Columbus Circle Investors
and income below-average valuations
- --------------------------------------------------------------------------------------------------------------------------------
Tax-Efficient Equity Maximum after-tax growth of Stocks of larger-capitalized Parametric Portfolio
capital companies Associates
- --------------------------------------------------------------------------------------------------------------------------------
StocksPLUS Total return exceeding the S&P 500 stock index futures backed Pacific Investment
S&P 500 Index by a portfolio of short-term, Management Company
fixed-income securities
- --------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Growth of capital Stocks of larger-capitalized Cadence Capital Management
companies the manager believes
are reasonably priced
- --------------------------------------------------------------------------------------------------------------------------------
Growth Long-term growth of capital Stocks of larger-capitalized Columbus Circle Investors
companies
- --------------------------------------------------------------------------------------------------------------------------------
Value 25 Long-term growth of capital 25 stocks of medium-capitalized NFJ Investment Group
and income companies with below-average P/Es
- --------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Growth of capital Stocks of medium-capitalized Cadence Capital Management
companies the manager believes
are reasonably priced
- --------------------------------------------------------------------------------------------------------------------------------
Target Capital appreciation Stocks of medium-capitalized Columbus Circle Investors
companies
- --------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Long-term growth of capital Stocks of smaller-capitalized NFJ Investment Group
and income companies with below-average P/Es
- --------------------------------------------------------------------------------------------------------------------------------
Opportunity Capital appreciation Stocks of smaller-capitalized Columbus Circle Investors
companies
- --------------------------------------------------------------------------------------------------------------------------------
International Developed Long-term growth of capital Stocks of non-U.S. companies in Blairlogie Capital
developed markets Management
- --------------------------------------------------------------------------------------------------------------------------------
International Capital appreciation Stocks of non-U.S. companies in Blairlogie Capital
developed and emerging markets Management
- --------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Long-term growth of capital Stocks of non-U.S. companies in Blairlogie Capital
emerging markets Management
- --------------------------------------------------------------------------------------------------------------------------------
Innovation Capital appreciation Stocks of technology-related Columbus Circle Investors
companies
- --------------------------------------------------------------------------------------------------------------------------------
Precious Metals Capital appreciation Stocks of precious metals-related Van Eck Associates*
companies
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Bond Funds Objective Primary Portfolio Composition PIMCO Advisors Manager
<S> <C> <C> <C>
Long-Term U.S. Maximum total return Long-term U.S. government bonds Pacific Investment
Government (8+ year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Municipal Bond High current income exempt Investment grade municipal bonds Pacific Investment
from federal income tax (3-10 year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Maximum total return Emerging market bonds Pacific Investment
Bond (0-8 year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Foreign Bond Maximum total return Intermediate-term, investment grade Pacific Investment
foreign bonds (3-6 year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Global Bond II Maximum total return Intermediate-term, investment grade Pacific Investment
U.S. and foreign bonds (3-6 year Management Company
duration)
- --------------------------------------------------------------------------------------------------------------------------------
High Yield Maximum total return High-yield bonds (2-6 year duration) Pacific Investment
Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Total Return Maximum total return Intermediate-term, investment grade Pacific Investment
bonds (3-6 year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Real Return Bond Maximum real return Inflation-indexed government bonds Pacific Investment
Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Low Duration Maximum total return Shorter-term, investment grade bonds Pacific Investment
(1-3 year duration) Management Company
- --------------------------------------------------------------------------------------------------------------------------------
Short-Term Maximum current income Money market securities and Pacific Investment
consistent with short-term bonds Management Company
preservation of capital and (up to 1 year duration)
daily liquidity
- --------------------------------------------------------------------------------------------------------------------------------
Money Market Maximum current income Short-term money market Pacific Investment
consistent with instruments (duration less Management Company
preservation of capital than 1 year)
and daily liquidity
</TABLE>
*Van Eck Associates serves as a sub-advisor to the Fund and is unaffiliated
with PIMCO Advisors L.P.
10
<PAGE>
The Stock Market
Headline
PIMCO Funds Financial Information
We are pleased to present an in-depth review of the PIMCO Multi-Manager Series
Funds as of June 30, 1998. In order to help analyze, compare and contrast the
Funds, the report is broken down into a number of sections. Listed below are a
table of contents and descriptions of the various sections.
Pages 12-27 Fund Summaries
A summary of a Fund's performance record and portfolio composition, and a review
from the Fund's investment manager.
Pages 28-49 Schedule of Investments
The schedule of investments includes a listing of securities in the Fund's
portfolio as of June 30, 1998, including the number of shares or principal
amount and value as of that date.
Schedule of
Fund Name Fund Summary Investments
Equity Income Fund Page 12 Page 28
Value Fund Page 13 Page 29
Renaissance Fund Page 14 Page 30
Capital Appreciation Fund Page 15 Page 31
Growth Fund Page 16 Page 32
Mid-Cap Growth Fund Page 17 Page 33
Target Fund Page 18 Page 35
Small-Cap Value Fund Page 19 Page 36
Opportunity Fund Page 20 Page 38
International Developed Fund Page 21 Page 39
International Fund Page 22 Page 41
Emerging Markets Fund Page 23 Page 44
Innovation Fund Page 24 Page 46
Precious Metals Fund Page 25 Page 47
Balanced Fund Page 26 Page 48
Pages 50-57 Financial Highlights
This chart shows a per share breakdown of the factors that affect a Fund's NAV
for the current and past reporting periods. In addition to showing total return,
the chart reports distributions, asset size, expense ratios and portfolio
turnover rate.
Pages 58-59 Statement of Assets and Liabilities
A "balance sheet" of a Fund as of the last day of the fiscal period. It includes
the Fund's Class level NAVs per share by dividing the Fund's Class level net
assets (assets minus liabilities) by the number of Class level shares
outstanding.
Pages 60-61 Statement of Operations
This statement lists a Fund's income, expenses, and gains and losses on
securities and currency transactions, and appreciation or depreciation from
portfolio holdings.
Pages 62-65 Statement of Changes in Net Assets
This reports the increase or decrease in a Fund's net assets during the
reporting period. Changes in net assets are due to a variety of factors,
including investment operations, dividends, distributions and capital share
transactions.
Pages 66-72 Notes to Financial Statements
These contain description of the significant accounting policies of the funds,
and detailed information about the schedules and tables that appear in the
report.
11
<PAGE>
PIMCO Equity Income Fund
OBJECTIVE
Current income as a primary objective and long-term growth of capital.
PORTFOLIO
Primarily common stocks with below-average price-to-earnings ratios and higher
dividend yields relative to their industry groups.
TOTAL NET ASSETS
$202 million
NUMBER OF SECURITIES
IN THE
PORTFOLIO
47 (not including short-term instruments)
PIMCO ADVISORS
INSTITUTIONAL
MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
(INCEP. 3/8/91) (INCEP. 3/8/91) (INCEP. 3/8/91) S&P 500 Equity Inc.
Adjusted Adjusted Adjusted Index Fund Avg.
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 21.4% 14.7% 20.5% 15.5% 19.5% 30.2% 20.9%
3 years 24.3% 22.0% 23.4% 22.7% 23.4% 30.2% 23.1%
5 years 17.7% 16.3% 16.8% 16.6% 16.8% 23.1% 17.5%
Inception 17.0% 16.1% 16.2% 16.2% 16.2% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EQUITY INCOME EQUITY INCOME EQUITY INCOME S&P 500
CLASS A B C INDEX
INCEPTION 3/8/91 3/8/91 3/8/91
========= ============= ============= ============= ===========
<S> <C> <C> <C> <C>
03/31/91 9,450.00 10,000.00 10,000.00 10,000.00
04/30/91 9,512.29 10,059.84 10,059.84 10,024.00
05/31/91 10,047.51 10,619.43 10,619.43 10,457.04
06/30/91 9,694.84 10,240.19 10,240.19 9,978.10
07/31/91 10,233.91 10,803.23 10,803.23 10,443.08
08/31/91 10,382.92 10,953.60 10,953.60 10,690.59
09/30/91 10,436.62 11,003.62 11,003.62 10,512.05
10/31/91 10,506.51 11,070.44 11,070.44 10,652.91
11/30/91 10,083.65 10,617.91 10,617.91 10,223.60
12/31/91 10,968.45 11,542.85 11,542.85 11,393.18
01/31/92 11,236.83 11,818.02 11,818.02 11,181.27
02/29/92 11,518.57 12,107.38 12,107.38 11,326.62
03/31/92 11,327.78 11,899.12 11,899.12 11,105.76
04/30/92 11,527.69 12,101.77 12,101.77 11,432.26
05/31/92 11,543.65 12,110.80 12,110.80 11,488.28
06/30/92 11,549.83 12,109.84 12,109.84 11,317.34
07/31/92 12,063.31 12,640.40 12,640.40 11,779.65
08/31/92 11,709.11 12,261.26 12,261.26 11,538.52
09/30/92 11,805.25 12,354.35 12,354.35 11,674.10
10/31/92 11,816.51 12,358.48 12,358.48 11,714.37
11/30/92 12,169.76 12,720.31 12,720.31 12,113.25
12/31/92 12,535.82 13,094.77 13,094.77 12,261.88
01/31/93 12,596.20 13,149.35 13,149.35 12,364.39
02/28/93 12,854.13 13,411.02 13,411.02 12,532.91
03/31/93 13,144.13 13,704.99 13,704.99 12,797.36
04/30/93 12,882.80 13,424.04 13,424.04 12,488.05
05/31/93 12,977.23 13,513.95 13,513.95 12,822.10
06/30/93 13,203.62 13,741.36 13,741.36 12,859.67
07/31/93 13,178.00 13,705.87 13,705.87 12,807.97
08/31/93 13,638.19 14,175.69 14,175.69 13,293.91
09/30/93 13,622.64 14,150.80 14,150.80 13,191.94
10/31/93 13,728.42 14,251.68 14,251.68 13,464.89
11/30/93 13,586.18 14,095.15 14,095.15 13,336.57
12/31/93 13,543.28 14,041.69 14,041.69 13,497.81
01/31/94 13,988.70 14,494.72 14,494.72 13,956.73
02/28/94 13,682.45 14,168.95 14,168.95 13,577.95
03/31/94 13,131.84 13,589.71 13,589.71 12,985.95
04/30/94 13,230.59 13,683.59 13,683.59 13,152.43
05/31/94 13,308.14 13,754.93 13,754.93 13,368.26
06/30/94 13,116.68 13,548.50 13,548.50 13,040.60
07/31/94 13,544.37 13,981.70 13,981.70 13,468.85
08/31/94 14,094.86 14,540.92 14,540.92 14,021.08
09/30/94 13,830.46 14,259.22 14,259.22 13,678.26
10/31/94 13,989.84 14,414.59 14,414.59 13,985.61
11/30/94 13,235.09 13,628.06 13,628.06 13,476.26
12/31/94 13,272.77 13,657.96 13,657.96 13,676.11
01/31/95 13,701.40 14,090.33 14,090.33 14,030.73
02/28/95 14,143.09 14,536.58 14,536.58 14,577.51
03/31/95 14,547.01 14,942.43 14,942.43 15,007.69
04/30/95 14,919.66 15,316.13 15,316.13 15,449.67
05/31/95 15,464.42 15,865.65 15,865.65 16,067.19
06/30/95 15,509.16 15,901.91 15,901.91 16,440.43
07/31/95 16,047.11 16,443.57 16,443.57 16,985.60
08/31/95 16,268.28 16,659.82 16,659.82 17,028.23
09/30/95 16,691.16 17,082.53 17,082.53 17,746.82
10/31/95 16,620.74 16,999.56 16,999.56 17,683.46
11/30/95 17,186.81 17,567.93 17,567.93 18,459.77
12/31/95 17,645.20 18,025.06 18,025.06 18,815.30
01/31/96 17,903.83 18,277.86 18,277.86 19,455.78
02/29/96 18,136.47 18,504.20 18,504.20 19,636.13
03/31/96 18,493.09 18,856.52 18,856.52 19,825.23
04/30/96 18,953.42 19,314.01 19,314.01 20,117.45
05/31/96 19,253.49 19,607.20 19,607.20 20,636.28
06/30/96 19,288.74 19,630.69 19,630.69 20,714.90
07/31/96 18,395.69 18,709.28 18,709.28 19,799.72
08/31/96 19,020.70 19,332.87 19,332.87 20,217.30
09/30/96 19,670.64 19,981.29 19,981.29 21,355.13
10/31/96 20,110.83 20,415.68 20,415.68 21,944.10
11/30/96 21,619.76 21,934.98 21,934.98 23,602.85
12/31/96 21,350.66 21,647.89 21,647.89 23,135.28
01/31/97 21,819.07 22,115.33 22,115.33 24,580.77
02/28/97 22,433.00 22,721.65 22,721.65 24,773.49
03/31/97 21,681.20 21,951.27 21,946.00 23,755.54
04/30/97 22,473.06 22,721.37 22,731.95 25,173.75
05/31/97 23,866.69 24,117.23 24,127.76 26,706.33
06/30/97 24,528.84 24,790.82 24,783.84 27,902.77
07/31/97 26,074.75 26,339.31 26,331.89 30,123.00
08/31/97 25,485.17 25,710.27 25,719.15 28,435.51
09/30/97 27,068.39 27,286.49 27,286.99 29,992.92
10/31/97 26,218.63 26,427.51 26,428.62 28,991.15
11/30/97 27,292.99 27,496.90 27,497.66 30,333.15
12/31/97 27,943.55 28,126.12 28,120.84 30,853.98
01/31/98 28,035.62 28,219.10 28,213.55 31,195.22
02/28/98 29,691.35 29,852.62 29,845.79 33,445.02
03/31/98 31,073.63 31,212.26 31,215.74 35,157.74
04/30/98 30,612.09 30,747.35 30,732.74 35,511.43
05/31/98 30,427.44 30,524.09 30,528.09 34,900.98
06/30/98 29,767.04 29,865.14 29,867.31 36,318.66
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
3/8/91), adjusted for retail class fees and expenses. Past performance is not an
indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
SUPERVALU, Inc. 4.0%
Large food wholesaler; retail
- --------------------------------------------------------------------------------
PNC Bank Corp. 3.7%
Commercial banking
- --------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 3.6%
Tobacco/food products manufacturer
- --------------------------------------------------------------------------------
Ford Motor Co. 2.6%
Automaker
- --------------------------------------------------------------------------------
Atlantic Richfield Co. 2.4%
Integrated oil enterprise
- --------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 2.2%
R & D pharmaceutical/health care products
- --------------------------------------------------------------------------------
American Home Products Corp. 2.2%
Healthcare and agricultural products
- --------------------------------------------------------------------------------
Deluxe Corp. 2.1%
Paper-based/electronic payment services
- --------------------------------------------------------------------------------
Union Carbide Corp. 2.1%
Chemicals and plastics
- --------------------------------------------------------------------------------
Peoples Energy Corp. 2.1%
Gas utility
- --------------------------------------------------------------------------------
Top Ten Total 27.0%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 16.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 16.1%
- --------------------------------------------------------------------------------
Utilities 11.9%
- --------------------------------------------------------------------------------
Energy 11.1%
- --------------------------------------------------------------------------------
Materials & Processing 9.5%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96%
- --------------------------------------------------------------------------------
Cash Equivalents 4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the year ended June 30, 1998, the Equity Income Fund's performance was
solid, with Class A shares returning 21.4%, Class B shares returning 20.5% and
Class C shares returning 19.5%. While these returns trailed the S&P 500 Index,
they were comparable to the average return of funds with the same objective (as
measured by the Lipper Equity Income Fund Average).
The Fund found strength throughout much of the year from its consumer-
oriented holdings. A strong domestic economy, including high employment, low
interest rates and low inflation, spurred consumer spending. As a result, many
consumer cyclicals had banner years. Consider, for example, Ford Motor Co.,
which was a particularly strong performer during the period. Like other American
automakers, Ford's truck and sports-utility vehicle sales have greatly
increased. But in addition, Ford's European operations and auto parts division
had an increase in earnings. And at the same time, the company cut $900 million
in costs. As a result, Ford's stock price increased substantially in the first
six months of 1998.
Chrysler Corp. was also a standout performer for the Fund this year. Like
Ford, Chrysler benefited from the generally strong economy and made deep
cost-cutting efforts. In addition, luxury German automaker Daimler-Benz
announced a merger with Chrysler in May, which catapulted the company's stock
price.
Also in the consumer cyclicals sector, the Fund saw contributions from
American Home Products Corp., a drug and consumer products company. While this
company had some setbacks during the year, including the withdrawal of two of
its prescription drugs from the market, it also had some very positive news in
the form of an announced merger with Monsanto. Industry analysts applauded this
merger and investors must have agreed, as American Home Product's stock price
climbed significantly over the year.
One significant disappointment for the Fund very recently was Capstead
Mortgage Corp. Capstead is a Real Estate Investment Trust (REIT) which took a
large write-off in its portfolio during the second quarter of 1998. As a result,
the company was forced to cut its dividend and watch its stock price fall
sharply in June. This price drop in turn caused the portfolio to lose over 1%
for the month and the quarter ended June 30, 1998.
In planning for the coming months the Fund's manager does not presently
anticipate any radical changes to the current positioning. Believing that the
continued over-valuation of large-cap growth stocks will eventually turn
investors back to fundamentals and value holdings, the manager sees the Fund as
a particularly timely investment opportunity.
See page 28 for financial details.
12
<PAGE>
June 30, 1998
PIMCO Value Fund
OBJECTIVE
Long-term growth of capital and current income.
PORTFOLIO
Primarily stocks the manager believes are undervalued and/or offer above-average
dividend yields.
TOTAL NET ASSETS
$239 million
NUMBER OF SECURITIES IN THE PORTFOLIO
51 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper Gr.
(INCEP. 12/30/91) (INCEP. 12/30/91) (INCEP. 12/30/91) S&P 500 & Income
Adjusted Adjusted Adjusted Index Fund Avg.
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 18.9% 12.3% 18.0% 13.0% 17.0% 30.2% 22.9%
3 years 23.6% 21.3% 22.7% 22.0% 22.7% 30.2% 24.7%
5 years 18.6% 17.2% 17.7% 17.5% 17.7% 23.1% 18.9%
Inception 17.4% 16.4% 16.5% 16.5% 16.5% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
VALUE VALUE VALUE S&P 500
CLASS A B C INDEX
INCEPTION 12/30/91 12/30/91 12/30/91
========= ========== ========== ========== =========
<S> <C> <C> <C> <C>
12/31/91 9,450.00 10,000.00 10,000.00 10,000.00
01/31/92 9,719.88 10,279.37 10,279.37 9,814.00
02/29/92 10,045.54 10,617.63 10,617.63 9,941.58
03/31/92 9,816.81 10,369.04 10,369.04 9,747.72
04/30/92 9,858.14 10,406.24 10,406.24 10,034.30
05/31/92 9,769.63 10,306.19 10,306.19 10,083.47
06/30/92 9,558.30 10,076.99 10,076.99 9,933.43
07/31/92 9,894.34 10,424.83 10,424.83 10,339.21
08/31/92 9,605.34 10,113.66 10,113.66 10,127.57
09/30/92 9,735.46 10,244.41 10,244.41 10,246.57
10/31/92 9,794.28 10,299.81 10,299.81 10,281.92
11/30/92 10,317.22 10,843.50 10,843.50 10,632.02
12/31/92 10,649.84 11,185.99 11,185.99 10,762.47
01/31/93 10,870.93 11,411.09 11,411.09 10,852.44
02/28/93 10,985.16 11,524.39 11,524.39 11,000.36
03/31/93 11,323.99 11,872.59 11,872.59 11,232.47
04/30/93 11,122.85 11,654.52 11,654.52 10,960.98
05/31/93 11,276.62 11,808.11 11,808.11 11,254.19
06/30/93 11,351.69 11,879.34 11,879.34 11,287.16
07/31/93 11,294.06 11,811.32 11,811.32 11,241.79
08/31/93 11,903.91 12,441.70 12,441.70 11,668.30
09/30/93 11,929.72 12,460.97 12,460.97 11,578.81
10/31/93 12,339.60 12,881.14 12,881.14 11,818.37
11/30/93 12,211.34 12,739.31 12,739.31 11,705.74
12/31/93 12,348.17 12,873.72 12,873.72 11,847.27
01/31/94 12,916.39 13,457.93 13,457.93 12,250.07
02/28/94 12,702.78 13,227.64 13,227.64 11,917.61
03/31/94 12,017.13 12,505.28 12,505.28 11,398.00
04/30/94 11,867.36 12,341.62 12,341.62 11,544.12
05/31/94 11,863.30 12,329.66 12,329.66 11,733.56
06/30/94 11,586.68 12,034.64 12,034.64 11,445.97
07/31/94 12,067.44 12,526.22 12,526.22 11,821.86
08/31/94 12,572.30 13,042.31 13,042.31 12,306.55
09/30/94 12,186.63 12,634.14 12,634.14 12,005.66
10/31/94 12,312.40 12,756.64 12,756.64 12,275.42
11/30/94 11,690.17 12,104.10 12,104.10 11,828.35
12/31/94 11,797.75 12,207.89 12,207.89 12,003.77
01/31/95 12,115.09 12,528.46 12,528.46 12,315.02
02/28/95 12,653.31 13,077.77 13,077.77 12,794.94
03/31/95 12,998.23 13,425.77 13,425.77 13,172.52
04/30/95 13,345.79 13,776.38 13,776.38 13,560.45
05/31/95 13,849.78 14,287.98 14,287.98 14,102.46
06/30/95 14,087.46 14,524.29 14,524.29 14,430.06
07/31/95 14,703.82 15,150.39 15,150.39 14,908.56
08/31/95 14,881.27 15,323.72 15,323.72 14,945.98
09/30/95 15,290.13 15,735.13 15,735.13 15,576.70
10/31/95 15,329.66 15,765.72 15,765.72 15,521.09
11/30/95 15,985.38 16,430.26 16,430.26 16,202.47
12/31/95 16,324.61 16,768.56 16,768.56 16,514.53
01/31/96 16,786.63 17,232.57 17,232.57 17,076.68
02/29/96 17,149.55 17,594.97 17,594.97 17,234.98
03/31/96 17,284.71 17,722.27 17,722.27 17,400.96
04/30/96 17,506.61 17,938.92 17,939.06 17,657.45
05/31/96 17,856.08 18,285.86 18,285.77 18,112.83
06/30/96 17,772.83 18,189.55 18,189.46 18,181.84
07/31/96 16,810.95 17,193.60 17,193.51 17,378.57
08/31/96 17,461.26 17,847.57 17,847.49 17,745.08
09/30/96 17,934.17 18,319.61 18,319.52 18,743.78
10/31/96 18,185.82 18,565.09 18,565.00 19,260.73
11/30/96 19,740.65 20,140.91 20,140.81 20,716.65
12/31/96 19,567.94 19,951.75 19,951.65 20,306.25
01/31/97 20,226.07 20,618.48 20,618.38 21,574.99
02/28/97 20,571.19 20,954.99 20,954.89 21,744.13
03/31/97 19,841.45 20,199.75 20,198.82 20,850.67
04/30/97 20,609.33 20,966.19 20,965.22 22,095.45
05/31/97 21,828.72 22,192.17 22,191.14 23,440.62
06/30/97 22,366.76 22,731.28 22,732.20 24,490.76
07/31/97 23,847.95 24,221.25 24,222.23 26,439.49
08/31/97 23,349.10 23,683.85 23,684.81 24,958.35
09/30/97 24,735.20 25,082.95 25,083.19 26,325.32
10/31/97 23,492.57 23,806.48 23,806.70 25,446.06
11/30/97 24,068.47 24,375.31 24,375.54 26,623.95
12/31/97 24,598.02 24,901.92 24,887.14 27,081.09
01/31/98 24,699.61 24,970.42 24,973.00 27,380.60
02/28/98 26,154.47 26,444.25 26,429.82 29,355.29
03/31/98 27,195.81 27,489.75 27,475.44 30,858.58
04/30/98 26,670.42 26,924.12 26,926.94 31,169.02
05/31/98 26,551.63 26,787.13 26,789.94 30,633.22
06/30/98 26,584.18 26,818.31 26,819.86 31,877.54
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/13/97) and the prior
performance of the Fund's institutional class shares (for the period from
12/30/91), adjusted for retail class fees and expenses. Past performance is not
an indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
DTE Energy Co. 3.2%
Electric and steam utility
- --------------------------------------------------------------------------------
Nicor, Inc. 3.2%
Utility holding/natural gas
- --------------------------------------------------------------------------------
Public Service Enterprise Group. Inc. 3.2%
Electric/gas services
- --------------------------------------------------------------------------------
Southern New England 3.0%
Telecommunications Corp.
Telecommunication services
- --------------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 3.0%
Largest U.S. brewer:baking
- --------------------------------------------------------------------------------
SUPERVALU, Inc. 3.0%
Large food wholesaler; retail
- --------------------------------------------------------------------------------
Harris Corp. 3.0%
Diversified electronic products/services
- --------------------------------------------------------------------------------
Chase Manhattan Corp. 3.0%
Commercial banking
- --------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 2.9%
R & D pharmaceutical/health care products
- --------------------------------------------------------------------------------
Repsol SA AP-ADR 2.9%
Integrated oil company
- --------------------------------------------------------------------------------
Top Ten Total 30.4%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 13.5%
- --------------------------------------------------------------------------------
Financial & Business Services 13.5%
- --------------------------------------------------------------------------------
Consumer Staples 11.7%
- --------------------------------------------------------------------------------
Energy 10.0%
- --------------------------------------------------------------------------------
Technology 9.6%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 97%
- --------------------------------------------------------------------------------
Cash Equivalents 3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The Value Fund posted solid results for the year ended June 30, 1998, with
Class A shares returning 18.9%, Class B shares returning 18.0% and Class C
shares returning 17.0%. In general, the market's continued focus on large caps
and more growth-oriented holdings meant it was a difficult year for value
investors.
Much of the Fund's success during this period can be traced to its financial
and consumer cyclical holdings--two sectors that benefited from the growing
domestic economy. Within the financial sector, the Fund saw significant
contributions from banks, such as Chase Manhattan Corp., which was one of the
Fund's largest holdings over the year and also one of its best performers. The
bank reported large trading profits and growing fee income from securities
processing, trust revenues, mortgage banking and bank card fees.
In the consumer cyclicals area, Chrysler Corp. was a standout holding for the
Fund. An announced merger with German luxury automaker Daimler-Benz greatly
improved Chrysler's outlook for global growth. Also, profits from the company's
truck sales soared while management implemented a deep cost-cutting program. As
a result, Chrysler's second quarter 1998 earnings were more than double earnings
for the same three-month period in 1997.
One sector that did not do as well for the Fund this year was basic
industries, which includes steel. The steel industry was hit hard by
deteriorating fundamentals over the last six months, the result of rising supply
and softening demand. With predictions of further demand declines in the air,
steel company stock prices began dropping. Fund holding USX-U.S. Steel Group,
Inc. was no exception to this trend, seeing its price decline over the year
ended June 30, 1998.
Although value stocks have trailed growth stocks for much of the year, the
Fund's manager currently sees signs that the tide may turn. More favorable
valuations and lower volatility should make value stocks a more attractive
investment in these increasingly uncertain markets.
See page 29 for financial details. 13
<PAGE>
- -------------
June 30, 1998
- -------------
PIMCO Renaissance Fund
OBJECTIVE
Long-term growth of capital and current income.
PORTFOLIO
Primarily common stocks with below-average valuations that have improving
business fundamentals.
TOTAL NET ASSETS
$657 million
NUMBER OF SECURITIES IN THE PORTFOLIO
50 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Columbus Circle Investors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Return For periods ended 6/30/98
A Shares B Shares C Shares Lipper
(INCEP. 4/18/88) (INCEP. 4/18/88) (INCEP. 4/18/88) S&P 500 Equity Inc.
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 31.0% 23.8% 30.0% 25.0% 29.0% 30.2% 20.9%
5 years 21.7% 20.3% 20.8% 20.6% 20.8% 23.1% 17.5%
10 years 15.3% 14.7% 14.5% 14.5% 14.5% 18.6% 14.6%
Inception 15.3% 14.7% 14.4% 14.4% 14.4% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
RENAISSANCE RENAISSANCE RENAISSANCE S&P 500
CLASS A B C INDEX
INCEPTION 4/18/88 4/18/88 4/18/88
========= =========== =========== =========== ===========
<S> <C> <C> <C> <C>
04/30/88 9,450.00 10,000.00 10,000.00 10,000.00
05/31/88 9,459.62 9,999.99 9,999.99 10,087.00
06/30/88 9,671.29 10,219.76 10,219.76 10,549.99
07/31/88 9,651.99 10,189.82 10,189.82 10,509.90
08/31/88 9,515.81 10,038.22 10,038.22 10,152.57
09/30/88 9,652.44 10,180.01 10,180.01 10,585.07
10/31/88 9,769.54 10,291.38 10,291.38 10,879.33
11/30/88 9,710.52 10,230.13 10,230.13 10,723.76
12/31/88 10,029.60 10,561.21 10,561.21 10,911.42
01/31/89 10,339.59 10,872.46 10,872.46 11,710.14
02/28/89 10,279.61 10,810.23 10,810.23 11,418.56
03/31/89 10,379.91 10,903.78 10,903.78 11,684.61
04/30/89 10,652.80 11,186.88 11,186.88 12,291.04
05/31/89 10,956.05 11,501.44 11,501.44 12,788.83
06/30/89 11,036.43 11,574.14 11,574.14 12,715.93
07/31/89 11,251.38 11,797.12 11,797.12 13,864.18
08/31/89 11,599.49 12,147.53 12,147.53 14,135.92
09/30/89 11,465.40 11,997.80 11,997.80 14,077.96
10/31/89 11,258.23 11,772.30 11,772.30 13,751.35
11/30/89 11,237.48 11,750.84 11,750.84 14,031.88
12/31/89 11,239.72 11,741.47 11,741.47 14,368.64
01/31/90 10,689.51 11,159.63 11,159.63 13,404.51
02/28/90 10,689.51 11,159.60 11,159.60 13,577.42
03/31/90 10,966.70 11,435.27 11,435.27 13,937.23
04/30/90 10,637.50 11,082.36 11,082.36 13,588.80
05/31/90 11,296.00 11,764.70 11,764.70 14,913.70
06/30/90 11,249.44 11,704.51 11,704.51 14,812.29
07/31/90 10,947.25 11,382.70 11,382.70 14,764.89
08/31/90 10,198.97 10,596.04 10,596.04 13,430.14
09/30/90 9,477.52 9,836.97 9,836.97 12,776.10
10/31/90 9,093.29 9,427.10 9,427.10 12,721.16
11/30/90 9,396.01 9,740.51 9,740.51 13,542.95
12/31/90 9,575.19 9,925.95 9,925.95 13,920.79
01/31/91 9,882.56 10,231.97 10,231.97 14,527.74
02/28/91 10,485.42 10,843.91 10,843.91 15,566.47
03/31/91 10,728.60 11,095.65 11,095.65 15,943.18
04/30/91 10,847.80 11,206.76 11,206.76 15,981.45
05/31/91 11,408.05 11,786.83 11,786.83 16,671.85
06/30/91 11,012.91 11,365.31 11,365.31 15,908.27
07/31/91 11,421.66 11,776.10 11,776.10 16,649.60
08/31/91 11,890.53 12,249.11 12,249.11 17,044.20
09/30/91 12,075.31 12,438.95 12,438.95 16,759.56
10/31/91 12,330.88 12,689.97 12,689.97 16,984.14
11/30/91 11,941.40 12,288.30 12,288.30 16,299.68
12/31/91 12,863.97 13,225.78 13,225.78 18,164.36
01/31/92 13,086.33 13,454.40 13,454.40 17,826.50
02/29/92 13,358.23 13,708.54 13,708.54 18,058.25
03/31/92 13,098.46 13,435.11 13,435.11 17,706.11
04/30/92 13,110.93 13,447.87 13,447.87 18,226.67
05/31/92 13,247.81 13,575.61 13,575.61 18,315.98
06/30/92 13,097.42 13,415.06 13,415.06 18,043.44
07/31/92 13,410.41 13,723.19 13,723.19 18,780.51
08/31/92 13,235.15 13,530.57 13,530.57 18,396.08
09/30/92 13,368.84 13,664.89 13,664.89 18,612.23
10/31/92 13,330.84 13,626.06 13,626.06 18,676.44
11/30/92 13,685.03 13,975.49 13,975.49 19,312.37
12/31/92 13,978.82 14,254.06 14,254.06 19,549.34
01/31/93 14,183.32 14,462.67 14,462.67 19,712.77
02/28/93 14,055.53 14,332.20 14,332.20 19,981.45
03/31/93 14,605.73 14,873.95 14,873.95 20,403.06
04/30/93 14,489.99 14,742.95 14,742.95 19,909.92
05/31/93 14,837.12 15,083.69 15,083.69 20,442.51
06/30/93 15,134.29 15,379.77 15,379.77 20,502.41
07/31/93 15,470.59 15,722.05 15,722.05 20,419.99
08/31/93 16,479.53 16,722.75 16,722.75 21,194.72
09/30/93 16,753.19 16,994.36 16,994.36 21,032.16
10/31/93 16,987.37 17,232.42 17,232.42 21,467.32
11/30/93 16,571.21 16,782.78 16,782.78 21,262.73
12/31/93 17,068.60 17,280.69 17,280.69 21,519.80
01/31/94 17,563.24 17,768.24 17,768.24 22,251.47
02/28/94 17,376.23 17,565.21 17,565.21 21,647.57
03/31/94 16,421.98 16,592.69 16,592.69 20,703.73
04/30/94 16,314.47 16,470.24 16,470.24 20,969.15
05/31/94 16,233.77 16,388.56 16,388.56 21,313.26
06/30/94 15,856.08 15,999.92 15,999.92 20,790.87
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class A and B shares commenced operations after the inception date
shown. Total return for the periods shown before the inception of Class A and B
shares reflects the performance for this Fund's oldest class of shares (Class
C), restated to reflect the appropriate operating expenses for those shares. Had
Class A share returns been restated on the basis of different sales charges, but
without regard to the lower operating expenses of Class A shares, the adjusted
total return figures for the 10-year and since inception periods would have been
lower, namely 14.5% and 14.4%, respectively. Past performance is not an
indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Sears Roebuck & Co. 4.4%
Merchandise/services retailer
- --------------------------------------------------------------------------------
Tandy Corp. 3.6%
Consumer electronics retailer
- --------------------------------------------------------------------------------
Equitable Cos., Inc. 3.6%
Insurance/financial services
- --------------------------------------------------------------------------------
Enron Corp. 3.2%
National gas pipeline systems
- --------------------------------------------------------------------------------
MediaOne Group, Inc. 3.1%
Communications
- --------------------------------------------------------------------------------
Lafarge Corp. 3.0%
Cement producer
- --------------------------------------------------------------------------------
Hasbro, Inc. 3.0%
Toy/game manufacturer
- --------------------------------------------------------------------------------
Philip Morris Cos., Inc. 2.9%
Tobacco/food products manufacturer
- --------------------------------------------------------------------------------
Martin Marietta Materials, Inc. 2.8%
Aggregates/building materials
- --------------------------------------------------------------------------------
Atlantic Richfield Co. 2.7%
Integrated oil enterprise
- --------------------------------------------------------------------------------
Top Ten Total 32.3%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 18.0%
- --------------------------------------------------------------------------------
Consumer Discretionary 17.1%
- --------------------------------------------------------------------------------
Materials & Processing 8.8%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Technology 7.8%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95%
- --------------------------------------------------------------------------------
Convertible Bonds & Notes 1%
- --------------------------------------------------------------------------------
Cash Equivalents 4%
- --------------------------------------------------------------------------------
================================================================================
PORTFOLIO INSIGHTS
================================================================================
For the year ended June 30, 1998, the Renaissance Fund posted excellent results,
returning 31.0% for Class A shares, 30.0% for Class B shares and 29.0% for Class
C shares. These returns were in line with the Fund's benchmark and far surpassed
an average of funds with the same objective (as measured by the Lipper Equity
Income Fund Average).
As a risk-sensitive investment, the Fund has sought to avoid exposure to
companies connected to the Asian markets. Instead, the Renaissance Fund has
emphasized domestic and interest-sensitive companies--companies that should
benefit from the strong economy. As a result, the Fund has held significant
positions during the year in both the finance and consumer discretionary
sectors.
Holdings in the finance sector were among some of the best performers for the
Fund this year, thanks in large part to unprecedented strength in the stock
market. For example, The Equitable Cos., Inc., a large financial-services
company, was a major contributor to the Fund's success. The company's earnings
were stronger than expected this year because of booming revenues from two of
its units: Donaldson, Lufkin and Jenrette, a broker/dealer; and Alliance
Capital, an investment management firm. And The Equitable saw very strong sales
in its variable annuity products over the last six months, despite changes in
tax laws that are generally considered unfavorable to annuities.
A standout in the consumer discretionary sector was Sears Roebuck & Co.
Purchased by the Fund in the first quarter, the stock had been out of favor and
analysts had low expectations for it because of previous losses in its credit
card division. However, the Fund manager believed Sears' improving quality in
its credit card division and the strong economy made it an attractive buying
opportunity. Sears' comparable store sales rose in the second quarter, as did
its revenue, which pushed the stock price up significantly in the first half of
1998.
The transportation sector proved to be one of the few disappointments for the
portfolio this year, due almost entirely to poor performance from one company,
Trinity Industries, Inc., a railroad car manufacturer. While the company's
fundamentals remained strong, the stock price dropped significantly because
investors were concerned about the Asian currency crisis and the potential
negative effect on exports carried to ports by rail. Despite this price drop,
the Fund's manager believes the company is well-positioned to ride out this
period of investor anxiety, supported by a large order backlog.
Looking ahead, the Fund manager presently intends to maintain the Fund's
current positioning, waiting out the unstable global environment. The manager
will also continue to pursue value companies involved in corporate
restructurings and consolidations --situations that can provide opportunities
for positive surprises and the resulting stock price increase.
14 See page 30 for financial details.
<PAGE>
June 30, 1998
PIMCO Capital Appreciation Fund
OBJECTIVE
Long-term growth of capital and current income.
PORTFOLIO
Primarily common stocks of companies with market capitalizations of at least
$100 million that have improving fundamentals and whose stock is reasonably
valued by the market.
TOTAL NET ASSETS
$1,124 million
NUMBER OF SECURITIES IN THE PORTFOLIO
79 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper Cap.
(INCEP. 3/8/91) (INCEP. 3/8/91) (INCEP. 3/8/91) S&P 500 App. Fund
Adjusted Adjusted Adjusted Index Avg.
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 32.4% 25.1% 31.4% 26.4% 30.4% 30.2% 22.1%
3 years 29.2% 26.8% 28.2% 27.6% 28.2% 30.2% 20.4%
5 years 21.7% 20.3% 20.8% 20.6% 20.8% 23.1% 16.0%
Inception 20.3% 19.4% 19.4% 19.4% 19.4% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CAPITAL CAPITAL CAPITAL S&P 500
APPRECIATION APPRECIATION APPRECIATION INDEX
CLASS A B C
INCEPTION 3/8/91 3/8/91 3/8/91
========= ============ ============ ============ =========
<S> <C> <C> <C> <C>
03/31/91 9,450.00 10,000.00 10,000.00 10,000.00
04/30/91 9,171.65 9,699.17 9,699.17 10,024.00
05/31/91 9,622.01 10,169.28 10,169.28 10,457.04
06/30/91 9,100.72 9,612.10 9,612.10 9,978.10
07/31/91 9,748.62 10,290.38 10,290.38 10,443.08
08/31/91 10,051.40 10,603.33 10,603.33 10,690.59
09/30/91 9,909.07 10,446.57 10,446.57 10,512.05
10/31/91 10,245.16 10,794.39 10,794.39 10,652.91
11/30/91 9,944.30 10,470.67 10,470.67 10,223.60
12/31/91 11,322.50 11,915.13 11,915.13 11,393.18
01/31/92 11,210.85 11,789.98 11,789.98 11,181.27
02/29/92 11,328.27 11,906.55 11,906.55 11,326.62
03/31/92 10,952.15 11,503.69 11,503.69 11,105.76
04/30/92 10,924.77 11,467.91 11,467.91 11,432.26
05/31/92 10,967.74 11,505.74 11,505.74 11,488.28
06/30/92 10,618.81 11,132.57 11,132.57 11,317.34
07/31/92 10,924.67 11,446.15 11,446.15 11,779.65
08/31/92 10,649.78 11,150.80 11,150.80 11,538.52
09/30/92 10,926.72 11,433.96 11,433.96 11,674.10
10/31/92 11,304.06 11,821.74 11,821.74 11,714.37
11/30/92 11,962.40 12,502.84 12,502.84 12,113.25
12/31/92 12,124.22 12,664.13 12,664.13 12,261.88
01/31/93 12,532.35 13,082.34 13,082.34 12,364.39
02/28/93 12,377.78 12,913.50 12,913.50 12,532.91
03/31/93 12,945.75 13,497.94 13,497.94 12,797.36
04/30/93 12,624.40 13,154.64 13,154.64 12,488.05
05/31/93 13,193.13 13,738.80 13,738.80 12,822.10
06/30/93 13,399.79 13,945.47 13,945.47 12,859.67
07/31/93 13,205.60 13,734.65 13,734.65 12,807.97
08/31/93 13,684.33 14,223.75 14,223.75 13,293.91
09/30/93 14,082.34 14,628.53 14,628.53 13,191.94
10/31/93 14,112.53 14,650.74 14,650.74 13,464.89
11/30/93 13,825.78 14,344.04 14,344.04 13,336.57
12/31/93 14,214.64 14,738.11 14,738.11 13,497.81
01/31/94 14,710.82 15,243.39 15,243.39 13,956.73
02/28/94 14,507.06 15,023.29 15,023.29 13,577.95
03/31/94 13,778.32 14,259.12 14,259.12 12,985.95
04/30/94 13,826.04 14,299.66 14,299.66 13,152.43
05/31/94 13,810.77 14,274.72 14,274.72 13,368.26
06/30/94 13,417.61 13,859.61 13,859.61 13,040.60
07/31/94 13,741.22 14,184.98 14,184.98 13,468.85
08/31/94 14,147.24 14,594.98 14,594.98 14,021.08
09/30/94 13,763.64 14,190.26 14,190.26 13,678.26
10/31/94 14,075.41 14,502.52 14,502.52 13,985.61
11/30/94 13,427.23 13,825.54 13,825.54 13,476.26
12/31/94 13,555.44 13,948.75 13,948.75 13,676.11
01/31/95 13,542.65 13,926.46 13,926.46 14,030.73
02/28/95 14,215.01 14,609.96 14,609.96 14,577.51
03/31/95 14,833.78 15,236.55 15,236.55 15,007.69
04/30/95 15,339.46 15,746.75 15,746.75 15,449.67
05/31/95 15,895.64 16,307.88 16,307.88 16,067.19
06/30/95 16,578.85 16,998.65 16,998.65 16,440.43
07/31/95 17,494.12 17,926.30 17,926.30 16,985.60
08/31/95 17,658.05 18,082.84 18,082.84 17,028.23
09/30/95 18,352.78 18,782.99 18,782.99 17,746.82
10/31/95 18,003.45 18,414.03 18,414.03 17,683.46
11/30/95 18,550.39 18,962.05 18,962.05 18,459.77
12/31/95 18,517.99 18,916.96 18,916.96 18,815.30
01/31/96 19,134.88 19,535.26 19,535.26 19,455.78
02/29/96 19,853.96 20,257.50 20,257.50 19,636.13
03/31/96 19,884.78 20,276.14 20,276.14 19,825.23
04/30/96 20,128.09 20,511.66 20,511.66 20,117.45
05/31/96 20,631.77 21,011.76 21,011.76 20,636.28
06/30/96 20,586.59 20,952.99 20,952.99 20,714.90
07/31/96 19,544.60 19,879.25 19,879.25 19,799.72
08/31/96 20,379.49 20,715.61 20,715.61 20,217.30
09/30/96 21,623.20 21,966.88 21,966.88 21,355.13
10/31/96 22,161.10 22,499.44 22,499.44 21,944.10
11/30/96 23,766.94 24,115.64 24,115.64 23,602.85
12/31/96 23,387.45 23,715.18 23,715.18 23,135.28
01/31/97 24,752.11 25,086.06 25,086.06 24,580.77
02/28/97 24,484.39 24,814.73 24,801.81 24,773.49
03/31/97 23,591.57 23,884.03 23,883.97 23,755.54
04/30/97 24,331.17 24,620.92 24,620.86 25,173.75
05/31/97 25,874.22 26,171.62 26,171.56 26,706.33
06/30/97 26,983.48 27,270.33 27,270.26 27,902.77
07/31/97 29,890.98 30,178.08 30,178.01 30,123.00
08/31/97 28,755.96 29,015.20 29,015.13 28,435.51
09/30/97 30,490.31 30,759.68 30,759.61 29,992.92
10/31/97 29,929.57 30,165.31 30,165.24 28,991.15
11/30/97 30,682.23 30,902.07 30,902.00 30,333.15
12/31/97 31,275.08 31,488.72 31,482.15 30,853.98
01/31/98 30,780.30 30,959.86 30,967.79 31,195.22
02/28/98 33,032.90 33,214.14 33,205.37 33,445.02
03/31/98 34,859.62 35,023.38 35,026.59 35,157.74
04/30/98 34,873.25 35,023.52 35,013.10 35,511.43
05/31/98 34,269.28 34,397.51 34,401.25 34,900.98
06/30/98 35,725.07 35,830.69 35,832.86 36,318.66
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
3/8/91), adjusted for retail class fees and expenses. Past performance is not an
indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Capital One Financial Corp. 2.1%
Bank card issuer/services
- --------------------------------------------------------------------------------
Cognizant Corp. 1.9%
Information services
- --------------------------------------------------------------------------------
Costco Cos., Inc. 1.9%
Wholesale cash and carry mdsg
- --------------------------------------------------------------------------------
Safeway, Inc. 1.8%
Food supermarket chain
- --------------------------------------------------------------------------------
Carnival Corp. "A" 1.8%
Cruise ships
- --------------------------------------------------------------------------------
Omnicom Group 1.8%
Major international advertising company
- --------------------------------------------------------------------------------
TJX Cos., Inc. 1.7%
Off-price specialty stores
- --------------------------------------------------------------------------------
Jones Apparel Group, Inc. 1.7%
Women's apparel designer/dstr
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1.6%
Computer network products
- --------------------------------------------------------------------------------
Dayton Hudson Corp. 1.4%
General merchandise retailer
- --------------------------------------------------------------------------------
Top Ten Total 17.7%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 27.7%
- --------------------------------------------------------------------------------
Consumer Discretionary 13.5%
- --------------------------------------------------------------------------------
Technology 9.8%
- --------------------------------------------------------------------------------
Health Care 9.5%
- --------------------------------------------------------------------------------
Consumer Services 8.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 93%
- --------------------------------------------------------------------------------
Cash Equivalents 7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the twelve-month period ended June 30, 1998, the Capital Appreciation Fund
posted outstanding returns of 32.4% for Class A shares, 31.4% for Class B shares
and 30.4% for Class C shares. The results allowed the Fund to not only
outperform the market in general (as measured by the S&P 500 Index), but also
surpass the 22.1% average return of funds with the same objective (as measured
by the Lipper Capital Appreciation Fund Average). In addition, the Fund outpaced
the Lipper Average for the 3-, 5-year and since inception periods ended June 30,
1998.
Strong performance from the Fund's technology holdings were instrumental in
achieving these impressive returns. In general, the sector saw rapid growth in
the networking and the Internet areas. In addition, computer companies were
aided by lower cost components (many of which are supplied by Asian
manufacturers) and robust demand from both North America and Europe.
Cisco Systems, Inc. is a perfect example of a technology holding that rode
this technology wave. Cisco Systems is a leader in the networking industry. But
more than just taking its share of the industry-wide growth, Cisco Systems has
gone beyond many of its competitors and been chosen supplier by such major
companies as Kaiser Permanente, the world's largest HMO. Cisco also benefited
from an announced partnership with Dell Computer Corp. and IBM Corp. which will
allow the networking company to provide Internet access at much faster speeds
than are currently available.
Another top performer for the Fund during the year was Dell Computer. Dell
Computer is the leading direct computer systems provider. Much of the company's
success can be traced to its business practice of only manufacturing products
upon order, which means no inventory and greatly reduced overhead costs. Dell
has also seen significant advantages from its strategy of focusing on government
and corporate clients, rather than the home computer market.
Tempering the Fund's results this year were most of its energy holdings.
Energy was a major contributor to the portfolio in 1997, with the bulk of the
holdings in the drilling industry. Unfortunately, a drop in the demand for oil
(in part due to reduced needs in the Pacific Rim) and a dramatic fall in the
price of crude oil meant oil companies were not hiring drillers, lowering their
day rates and negatively affecting profits. The end result was damaging to the
Fund's energy stocks.
Since these problems in the energy sector erupted, the manager cut back
energy-related holdings from approximately 10% of assets to 2.6%. The Fund's
manager currently does not expect to be making any other significant changes to
the portfolio's breakdown, believing there are still more opportunities in the
current positions. Specifically, the Fund remains positive on both financial and
technology-related holdings at this time.
See page 31 for financial details. 15
<PAGE>
June 30, 1998
OBJECTIVE
Long-term growth of capital; income is incidental.
PORTFOLIO
Primarily stocks of larger, well-established companies.
TOTAL NET ASSETS
$2,114 million
NUMBER OF SECURITIES IN THE PORTFOLIO
48 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Columbus Circle Investors
PIMCO Growth Fund
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
(INCEP. 2/24/84) (INCEP. 2/24/84) (INCEP. 2/24/84) S&P 500 Growth
Adjusted Adjusted Adjusted Index Fund Avg.
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 41.0% 33.3% 40.0% 35.0% 39.0% 30.2% 25.4%
5 years 20.3% 18.9% 19.4% 19.2% 19.4% 23.1% 18.9%
10 years 18.2% 17.5% 17.3% 17.3% 17.3% 18.6% 16.1%
Inception 18.8% 18.3% 17.9% 17.9% 17.9% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
GROWTH GROWTH GROWTH S&P 500
CLASS A B C INDEX
INCEPTION 2/24/84 2/24/84 2/24/84
========= ========== ========== ========== ==========
<S> <C> <C> <C> <C>
02/29/84 9,450.00 10,000.00 10,000.00 10,000.00
03/31/84 9,693.23 10,250.00 10,250.00 10,180.00
04/30/84 9,755.95 10,310.00 10,310.00 10,251.34
05/31/84 9,421.49 9,949.98 9,949.98 9,708.01
06/30/84 9,645.42 10,180.32 10,180.32 9,911.79
07/31/84 9,718.37 10,250.89 10,250.89 9,763.24
08/31/84 10,498.68 11,067.28 11,067.28 10,866.25
09/30/84 10,428.34 10,986.40 10,986.40 10,877.25
10/31/84 10,521.72 11,077.73 11,077.73 10,909.97
11/30/84 10,448.76 10,994.08 10,994.08 10,800.80
12/31/84 10,661.68 11,210.94 11,210.94 11,081.54
01/31/85 11,421.52 12,002.82 12,002.82 11,947.02
02/28/85 11,517.36 12,096.65 12,096.65 12,095.06
03/31/85 11,564.42 12,138.37 12,138.37 12,103.50
04/30/85 11,510.90 12,074.75 12,074.75 12,092.51
05/31/85 12,129.38 12,715.76 12,715.76 12,790.01
06/30/85 12,477.64 13,073.12 13,073.12 12,975.89
07/31/85 12,495.22 13,083.19 13,083.19 12,957.74
08/31/85 12,432.30 13,009.08 13,009.08 12,847.54
09/30/85 12,075.41 12,627.67 12,627.67 12,449.18
10/31/85 12,573.19 13,140.19 13,140.19 13,021.91
11/30/85 13,267.10 13,857.32 13,857.32 13,920.38
12/31/85 14,017.60 14,632.23 14,632.23 14,588.48
01/31/86 14,349.09 14,968.58 14,968.58 14,670.17
02/28/86 15,509.23 16,170.20 16,170.20 15,767.50
03/31/86 16,235.22 16,916.86 16,916.86 16,647.33
04/30/86 16,256.05 16,928.31 16,928.31 16,459.22
05/31/86 16,953.67 17,643.91 17,643.91 17,334.84
06/30/86 17,257.08 17,948.83 17,948.83 17,627.81
07/31/86 16,873.83 17,538.73 17,538.73 16,642.41
08/31/86 17,837.90 18,529.36 18,529.36 17,877.28
09/30/86 16,770.12 17,408.94 17,408.94 16,398.83
10/31/86 17,584.01 18,242.66 18,242.66 17,345.04
11/30/86 17,895.71 18,554.90 18,554.90 17,766.52
12/31/86 17,396.58 18,025.56 18,025.56 17,313.48
01/31/87 19,736.59 20,438.57 20,438.57 19,645.60
02/28/87 21,025.80 21,762.13 21,762.13 20,421.60
03/31/87 21,434.78 22,171.48 22,171.48 21,011.79
04/30/87 21,395.27 22,116.74 22,116.74 20,824.78
05/31/87 21,606.74 22,321.27 22,321.27 21,005.96
06/30/87 22,544.63 23,276.45 23,276.45 22,066.76
07/31/87 23,338.61 24,081.58 24,081.58 23,185.54
08/31/87 24,014.63 24,763.45 24,763.45 24,050.36
09/30/87 23,910.22 24,640.42 24,640.42 23,523.66
10/31/87 18,490.30 19,040.20 19,040.20 18,456.66
11/30/87 17,226.82 17,727.93 17,727.93 16,935.84
12/31/87 18,858.76 19,396.18 19,396.18 18,224.65
01/31/88 18,651.36 19,170.58 19,170.58 18,991.91
02/29/88 19,818.97 20,359.35 20,359.35 19,876.93
03/31/88 19,553.08 20,073.48 20,073.48 19,262.74
04/30/88 19,726.57 20,239.13 20,239.13 19,476.55
05/31/88 19,900.58 20,404.52 20,404.52 19,646.00
06/30/88 21,086.79 21,608.25 21,608.25 20,547.75
07/31/88 20,703.77 21,201.99 21,201.99 20,469.67
08/31/88 19,627.88 20,087.02 20,087.02 19,773.70
09/30/88 20,538.77 21,006.91 21,006.91 20,616.06
10/31/88 20,684.82 21,142.78 21,142.78 21,189.19
11/30/88 20,314.11 20,750.79 20,750.79 20,886.18
12/31/88 20,780.52 21,213.74 21,213.74 21,251.69
01/31/89 22,156.40 22,604.85 22,604.85 22,807.31
02/28/89 21,739.44 22,166.48 22,166.48 22,239.41
03/31/89 22,672.67 23,104.01 23,104.01 22,757.59
04/30/89 24,318.86 24,767.24 24,767.24 23,938.71
05/31/89 26,131.52 26,596.78 26,596.78 24,908.23
06/30/89 25,803.31 26,246.42 26,246.42 24,766.25
07/31/89 28,027.40 28,491.53 28,491.53 27,002.64
08/31/89 28,880.75 29,341.04 29,341.04 27,531.89
09/30/89 29,451.29 29,902.19 29,902.19 27,419.01
10/31/89 28,558.56 28,976.95 28,976.95 26,782.89
11/30/89 29,144.35 29,553.45 29,553.45 27,329.26
12/31/89 28,774.22 29,159.80 29,159.80 27,985.16
01/31/90 26,670.42 27,009.82 27,009.82 26,107.36
02/28/90 27,340.33 27,672.34 27,672.34 26,444.14
03/31/90 28,028.70 28,351.11 28,351.11 27,144.91
04/30/90 27,869.98 28,173.55 28,173.55 26,466.29
05/31/90 30,829.77 31,147.49 31,147.49 29,046.75
06/30/90 31,363.55 31,666.91 31,666.91 28,849.24
07/31/90 30,804.00 31,081.77 31,081.77 28,756.92
08/31/90 28,536.85 28,774.66 28,774.66 26,157.29
09/30/90 27,297.73 27,507.20 27,507.20 24,883.43
10/31/90 27,247.64 27,442.33 27,442.33 24,776.43
11/30/90 28,619.06 28,823.56 28,823.56 26,376.99
12/31/90 29,057.94 29,245.80 29,245.80 27,112.91
01/31/91 30,456.81 30,652.90 30,652.90 28,295.03
02/28/91 32,752.83 32,926.06 32,926.06 30,318.13
03/31/91 33,685.86 33,846.47 33,846.47 31,051.83
04/30/91 33,362.92 33,503.75 33,503.75 31,126.35
05/31/91 35,174.25 35,325.78 35,325.78 32,471.01
06/30/91 33,431.41 33,555.60 33,555.60 30,983.84
07/31/91 35,715.07 35,816.51 35,816.51 32,427.68
08/31/91 37,513.08 37,589.22 37,589.22 33,196.22
09/30/91 37,099.76 37,154.91 37,154.91 32,641.84
10/31/91 38,322.56 38,366.50 38,366.50 33,079.24
11/30/91 36,829.67 36,847.37 36,847.37 31,746.15
12/31/91 41,485.01 41,492.24 41,492.24 35,377.91
01/31/92 40,522.77 40,491.33 40,491.33 34,719.88
02/29/92 40,811.05 40,761.16 40,761.16 35,171.24
03/31/92 39,907.08 39,837.10 39,837.10 34,485.40
04/30/92 39,695.42 39,586.77 39,586.77 35,499.27
05/31/92 40,311.05 40,182.95 40,182.95 35,673.22
06/30/92 39,060.60 38,913.00 38,913.00 35,142.40
07/31/92 40,272.77 40,106.19 40,106.19 36,577.97
08/31/92 38,771.68 38,566.88 38,566.88 35,829.22
09/30/92 39,945.58 39,721.41 39,721.41 36,250.21
10/31/92 40,600.16 40,337.57 40,337.57 36,375.27
11/30/92 42,408.58 42,108.19 42,108.19 37,613.85
12/31/92 42,694.62 42,355.87 42,355.87 38,075.37
01/31/93 43,758.78 43,400.24 43,400.24 38,393.68
02/28/93 42,852.72 42,473.65 42,473.65 38,916.99
03/31/93 43,837.81 43,419.96 43,419.96 39,738.14
04/30/93 41,887.43 41,469.06 41,469.06 38,777.67
05/31/93 44,054.97 43,578.42 43,578.42 39,814.97
06/30/93 44,429.62 43,932.80 43,932.80 39,931.63
07/31/93 44,488.84 43,952.35 43,952.35 39,771.10
08/31/93 45,986.29 45,410.82 45,410.82 41,280.02
09/30/93 47,029.72 46,416.17 46,416.17 40,963.40
10/31/93 46,890.28 46,257.34 46,257.34 41,810.93
11/30/93 46,114.62 45,440.99 45,440.99 41,412.47
12/31/93 46,996.52 46,303.41 46,303.41 41,913.15
01/31/94 49,247.32 48,470.69 48,470.69 43,338.20
02/28/94 48,338.85 47,560.55 47,560.55 42,162.00
03/31/94 46,153.70 45,392.93 45,392.93 40,323.74
04/30/94 45,525.87 44,742.14 44,742.14 40,840.69
05/31/94 46,326.94 45,501.19 45,501.19 41,510.88
06/30/94 45,179.98 44,352.51 44,352.51 40,493.45
07/31/94 46,305.41 45,414.84 45,414.84 41,823.25
08/31/94 48,599.06 47,647.93 47,647.93 43,538.01
09/30/94 47,625.76 46,650.85 46,650.85 42,473.50
10/31/94 49,378.58 48,341.29 48,341.29 43,427.88
11/30/94 47,063.07 46,021.73 46,021.73 41,846.24
12/31/94 47,001.04 45,958.18 45,958.18 42,466.82
01/31/95 47,344.25 46,256.77 46,256.77 43,567.98
02/28/95 48,763.77 47,611.44 47,611.44 45,265.83
03/31/95 49,862.27 48,644.71 48,644.71 46,601.62
04/30/95 51,488.08 50,206.10 50,206.10 47,974.04
05/31/95 53,090.39 51,745.27 51,745.27 49,891.56
06/30/95 55,219.47 53,789.06 53,789.06 51,050.54
07/31/95 57,142.05 55,627.03 55,627.03 52,743.38
08/31/95 57,645.58 56,086.12 56,086.12 52,875.76
09/30/95 58,904.62 57,280.36 57,280.36 55,107.12
10/31/95 59,133.35 57,440.80 57,440.80 54,910.39
11/30/95 60,621.91 58,864.76 58,864.76 57,320.95
12/31/95 60,367.72 58,581.68 58,581.68 58,424.95
01/31/96 63,095.74 61,199.99 61,199.99 60,413.74
02/29/96 64,279.35 62,288.79 62,288.79 60,973.77
03/31/96 64,356.49 62,341.18 62,341.18 61,560.95
04/30/96 65,179.93 63,092.83 63,092.83 62,468.36
05/31/96 66,672.62 64,493.17 64,493.17 64,079.42
06/30/96 65,797.47 63,611.94 63,611.94 64,323.56
07/31/96 61,988.59 59,879.51 59,879.51 61,481.75
08/31/96 63,583.99 61,382.90 61,382.90 62,778.40
09/30/96 68,395.13 65,997.42 65,997.42 66,311.57
10/31/96 69,501.08 67,033.78 67,033.78 68,140.44
11/30/96 73,540.28 70,870.66 70,870.66 73,291.18
12/31/96 71,489.90 68,848.51 68,848.51 71,839.28
01/31/97 74,921.99 72,120.67 72,120.67 76,327.80
02/28/97 72,868.00 70,098.12 70,098.12 76,926.20
03/31/97 68,967.09 66,291.65 66,291.65 73,765.31
04/30/97 71,871.15 69,057.27 69,057.27 78,169.10
05/31/97 77,121.55 74,053.08 74,053.08 82,928.03
06/30/97 79,291.76 76,076.06 76,076.06 86,643.21
07/31/97 87,681.62 84,076.15 84,076.15 93,537.40
08/31/97 82,166.71 78,752.19 78,752.19 88,297.44
09/30/97 87,506.80 83,807.30 83,807.30 93,133.49
10/31/97 85,012.60 81,368.25 81,368.25 90,022.83
11/30/97 85,747.10 82,023.19 82,023.19 94,189.99
12/31/97 87,761.13 83,881.75 83,881.75 95,807.23
01/31/98 89,716.36 85,708.53 85,708.53 96,866.86
02/28/98 96,539.29 92,169.58 92,169.58 103,852.90
03/31/98 103,051.93 98,348.72 98,348.72 109,171.20
04/30/98 105,075.25 100,175.84 100,175.84 110,269.47
05/31/98 103,634.04 98,771.88 98,771.88 108,373.93
06/30/98 111,828.38 106,495.94 106,495.94 112,776.08
</TABLE>
* The adjusted returns above include the effect of paying the applicable sales
charges. Class A and B shares commenced operations after the inception date
shown. Total return for the periods shown before the inception of Class A and B
shares reflects the performance for this Fund's oldest class of shares (Class
C), restated to reflect the appropriate operating expenses for those shares.
Had Class A share returns been restated on the basis of different sales
charges, but without regard to the lower operating expenses of Class A shares,
the adjusted total return figures for the 10-year and since inception periods
would have been lower, namely 17.3% and 17.9%, respectively. Past performance
is not an indication of future results. See page 27 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
HBO & Co. 4.4%
Hospital information systems
- --------------------------------------------------------------------------------
Federal Home Loan Bank Corp. 4.3%
Residential mortgage funds provider
- --------------------------------------------------------------------------------
Sears Roebuck & Co. 3.9%
Merchandise/services retailer
- --------------------------------------------------------------------------------
America Online, Inc. 3.5%
Online service provider
- --------------------------------------------------------------------------------
Warner-Lambert Co. 3.4%
Drugs, toiletries, etc.
- --------------------------------------------------------------------------------
Safeway, Inc. 3.0%
Food supermarket chain
- --------------------------------------------------------------------------------
Capital One Financial Corp. 3.0%
Bank card issuer/services
- --------------------------------------------------------------------------------
Microsoft Corp. 3.0%
Computer software
- --------------------------------------------------------------------------------
Pfizer, Inc. 2.7%
Healthcare services
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter, 2.7%
Discover and Co.
Financial services
- --------------------------------------------------------------------------------
Top Ten Total 33.9%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 19.1%
- --------------------------------------------------------------------------------
Technology 17.8%
- --------------------------------------------------------------------------------
Health Care 16.6%
- --------------------------------------------------------------------------------
Financial & Business Services 13.2%
- --------------------------------------------------------------------------------
Consumer Staples 6.5%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95%
- --------------------------------------------------------------------------------
Cash Equivalents 5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the year ended June 30, 1998, the Growth Fund overwhelmingly outperformed
the market (as measured by the S&P 500 Index). During this period, the Fund's
Class A shares returned 41.0%, Class B shares returned 40.0% and Class C shares
returned 39.0%, compared to 30.2% for the market. The Fund's outstanding returns
also allowed it to greatly outpace an average of funds with the same objective
(as measured by the Lipper Growth Fund Average).
Supporting the Fund's success during the year were strong performances from
the consumer staples and consumer discretionary sectors. Both of these sectors
benefited from the continuing economic growth in the U.S. High employment rates,
low inflation and low interest rates provided consumers with the confidence and
the assets to spend. These sectors were led by Sears Roebuck & Co., Home Depot,
Inc. and TJX Cos., Inc.
TJX Cos. is a chain of discount clothing and accessory stores. The company
merged its operations with Marshall's several years ago and is still reaping the
benefits. Not only did the merger reduce the number of competitors in the
off-price segment of the retail market, but it also allowed TJX Cos. to reduce
costs by consolidating TJ Maxx and Marshall's stores in close proximity to one
another. When combined with increased consumer spending, these factors were
enough to raise revenues and drive up TJX's stock price.
Another major success story for the Fund during this period was America
Online, Inc. --a particularly important success given that it was also one of
the Fund's largest holdings. America Online is the largest provider of online
services in the world. The company had reported weak results in 1997, largely
due to poor service. In 1998, however, it expanded its networking capabilities
and saw a resulting jump in subscribers. By also increasing monthly subscription
rates from $19.95 to $21.95, the company was able to dramatically increase
revenue.
One of the few disappointing holdings for the Fund this year was Oxford
Healthcare. Oxford Healthcare did not have the appropriate computer systems in
place to maintain strong financial accounting. As a result, claims against
Oxford Healthcare were larger than had been anticipated, causing the company to
take a large write-off. In response to this deteriorating performance, the Fund
sold its position in Oxford Healthcare.
Looking forward, the manager currently anticipates maintaining the Fund's
focus on domestic companies whose successes are closely tied to the economy. In
addition, the manager plans to monitor consumer spending trends closely,
watching for any changing conditions that could affect consumer staple and
consumer discretionary holdings.
16 See page 32 for financial details.
<PAGE>
June 30, 1998
PIMCO Mid-Cap Growth Fund
OBJECTIVE
Growth of capital.
PORTFOLIO
Primarily common stocks of companies with medium capitalizations that have
improving fundamentals and whose stock is reasonably valued.
TOTAL NET ASSETS
$794 million
NUMBER OF SECURITIES IN THE PORTFOLIO
91 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
(INCEP. 8/26/91) (INCEP. 8/26/91) (INCEP. 8/26/91) S&P Mid- Mid-Cap
Adjusted Adjusted Adjusted Cap Index Fund Avg.
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 25.7% 18.8% 24.8% 19.8% 23.7% 27.1% 22.2%
3 years 25.6% 23.2% 24.6% 24.0% 24.6% 24.0% 20.4%
5 years 19.8% 18.4% 18.9% 18.7% 18.9% 18.5% 16.7%
Inception 19.1% 18.1% 18.2% 18.2% 18.2% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MID-CAP MID-CAP MID-CAP S&P 500
GROWTH GROWTH GROWTH MID-CAP
CLASS A B C INDEX
INCEPTION 8/26/91 8/26/91 8/26/91
========= ========= ========= ========= =========
<S> <C> <C> <C> <C>
08/31/91 9,450.00 10,000.00 10,000.00 10,000.00
09/30/91 9,399.57 9,940.38 9,940.38 9,967.45
10/31/91 9,740.67 10,294.67 10,294.67 10,357.92
11/30/91 9,462.70 9,994.60 9,994.60 10,008.88
12/31/91 10,693.64 11,288.31 11,288.31 11,191.96
01/31/92 10,701.94 11,289.90 11,289.90 11,389.96
02/29/92 10,802.97 11,389.72 11,389.72 11,571.19
03/31/92 10,476.53 11,038.33 11,038.33 11,135.40
04/30/92 10,403.77 10,954.71 10,954.71 11,002.40
05/31/92 10,409.70 10,954.03 10,954.03 11,106.57
06/30/92 10,131.07 10,654.08 10,654.08 10,789.48
07/31/92 10,406.07 10,936.50 10,936.50 11,325.11
08/31/92 10,098.41 10,606.27 10,606.27 11,054.23
09/30/92 10,427.53 10,945.53 10,945.53 11,208.93
10/31/92 10,764.97 11,292.86 11,292.86 11,477.21
11/30/92 11,409.81 11,962.32 11,962.32 12,118.62
12/31/92 11,628.73 12,184.26 12,184.26 12,525.27
01/31/93 12,055.69 12,623.91 12,623.91 12,681.89
02/28/93 11,680.02 12,223.24 12,223.24 12,504.48
03/31/93 12,152.78 12,710.25 12,710.25 12,936.20
04/30/93 11,815.71 12,349.94 12,349.94 12,597.71
05/31/93 12,317.63 12,866.70 12,866.70 13,171.58
06/30/93 12,695.15 13,253.28 13,253.28 13,237.63
07/31/93 12,534.85 13,077.33 13,077.33 13,212.21
08/31/93 13,151.14 13,711.95 13,711.95 13,757.69
09/30/93 13,499.84 14,067.16 14,067.16 13,903.11
10/31/93 13,358.58 13,911.09 13,911.09 13,948.52
11/30/93 12,981.29 13,509.52 13,509.52 13,639.97
12/31/93 13,409.82 13,946.87 13,946.87 14,273.20
01/31/94 13,683.11 14,222.05 14,222.05 14,605.21
02/28/94 13,659.83 14,189.64 14,189.64 14,397.96
03/31/94 13,157.45 13,658.82 13,658.82 13,731.08
04/30/94 13,200.75 13,695.41 13,695.41 13,833.24
05/31/94 12,957.03 13,433.65 13,433.65 13,702.29
06/30/94 12,522.11 12,974.44 12,974.44 13,230.40
07/31/94 12,800.99 13,255.22 13,255.22 13,678.39
08/31/94 13,466.95 13,936.34 13,936.34 14,394.76
09/30/94 13,117.92 13,566.55 13,566.55 14,126.14
10/31/94 13,378.15 13,827.03 13,827.03 14,280.59
11/30/94 12,741.66 13,160.83 13,160.83 13,636.47
12/31/94 13,040.58 13,461.12 13,461.12 13,761.63
01/31/95 12,911.74 13,319.51 13,319.51 13,904.89
02/28/95 13,693.26 14,117.97 14,117.97 14,634.47
03/31/95 14,129.02 14,558.35 14,558.35 14,888.42
04/30/95 14,443.32 14,873.37 14,873.37 15,187.34
05/31/95 14,936.34 15,371.71 15,371.71 15,553.70
06/30/95 15,812.21 16,263.84 16,263.84 16,186.88
07/31/95 17,299.04 17,782.43 17,782.43 17,031.31
08/31/95 17,427.21 17,903.01 17,903.01 17,346.29
09/30/95 17,670.48 18,141.91 18,141.91 17,766.75
10/31/95 17,393.34 17,845.85 17,845.85 17,309.61
11/30/95 17,722.92 18,172.93 18,172.93 18,065.61
12/31/95 17,834.10 18,275.41 18,275.41 18,020.66
01/31/96 18,181.06 18,619.35 18,619.35 18,282.10
02/29/96 18,616.48 19,054.07 19,054.07 18,903.47
03/31/96 18,843.58 19,274.32 19,274.32 19,130.01
04/30/96 19,231.36 19,658.77 19,658.77 19,714.26
05/31/96 19,549.70 19,971.52 19,971.52 19,980.88
06/30/96 19,146.21 19,546.92 19,546.92 19,681.07
07/31/96 18,223.92 18,592.54 18,592.54 18,349.56
08/31/96 19,212.09 19,588.84 19,588.84 19,407.84
09/30/96 20,554.21 20,945.04 20,945.04 20,254.02
10/31/96 20,684.79 21,065.03 21,065.03 20,312.96
11/30/96 21,936.95 22,327.25 22,327.25 21,457.19
12/31/96 21,913.80 22,289.49 22,289.49 21,481.00
01/31/97 22,809.49 23,183.46 23,195.99 22,287.40
02/28/97 22,415.61 22,783.29 22,782.93 22,104.20
03/31/97 21,775.96 22,107.72 22,107.38 21,161.90
04/30/97 22,231.10 22,558.10 22,557.75 21,710.20
05/31/97 23,756.49 24,096.94 24,096.57 23,608.54
06/30/97 24,900.81 25,235.45 25,247.57 24,271.94
07/31/97 27,201.38 27,562.79 27,562.14 26,675.11
08/31/97 27,164.22 27,500.44 27,499.79 26,643.10
09/30/97 29,058.92 29,402.26 29,401.57 28,175.07
10/31/97 28,443.77 28,751.53 28,750.85 26,949.46
11/30/97 28,628.57 28,926.63 28,938.45 27,348.31
12/31/97 29,282.56 29,577.22 29,576.37 28,409.42
01/31/98 28,760.54 29,021.05 29,020.21 27,869.65
02/28/98 30,442.81 30,703.05 30,702.17 30,177.25
03/31/98 31,368.94 31,617.27 31,616.36 31,538.25
04/30/98 31,812.37 32,041.44 32,053.77 32,115.40
05/31/98 30,716.43 30,928.52 30,927.69 30,670.20
06/30/98 31,303.49 31,485.17 31,484.32 30,863.43
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/13/97) and the prior
performance of the Fund's institutional class shares (for the period from
8/26/91), adjusted for retail class fees and expenses. Past performance is not
an indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Unisys Corp. 1.6%
Business info. systems manufacturer
- --------------------------------------------------------------------------------
Compuware Corp. 1.5%
Systems software products developer
- --------------------------------------------------------------------------------
Borders Group, Inc. 1.5%
Book superstores
- --------------------------------------------------------------------------------
Network Associates, Inc. 1.5%
Network/security software
- --------------------------------------------------------------------------------
Providian Financial Corp. 1.4%
Consumer loans/services
- --------------------------------------------------------------------------------
Royal Caribbean Cruises Limited 1.4%
Cruise ships
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1.3%
Client/server software
- --------------------------------------------------------------------------------
Waters Corp. 1.3%
Liquid chromatography instrument manufacturer
- --------------------------------------------------------------------------------
Ambac, Inc. 1.2%
Municipal bond insurance
- --------------------------------------------------------------------------------
Proffitts, Inc. 1.2%
Specialty department stores
- --------------------------------------------------------------------------------
Top Ten Total 13.9%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & business Services 25.3%
- --------------------------------------------------------------------------------
Technology 15.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.1%
- --------------------------------------------------------------------------------
Health Care 9.2%
- --------------------------------------------------------------------------------
Consumer Staples 7.1%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94%
- --------------------------------------------------------------------------------
Cash Equivalents 6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
With results of 25.7% for Class A shares, 24.8% for Class B shares and 23.7% for
Class C shares, the Mid-Cap Growth Fund had an excellent year ended June 30,
1998. And, while mid-cap stocks in general did well during this period, the Fund
was still able to clearly outperform the 22.2% average return for funds with the
same objective (as measured by the Lipper Mid-Cap Fund Average).
Leading the Fund's success during this period was the financial sector,
including banks and securities companies. This sector was supported by the
generally strong economy, allowing increased revenue and stock price growth.
Another sector that made significant contributions more recently was
technology, which was underweighted in this area relative to its index, but
still saw excellent performance from its selected holdings, including Unisys
Corp. and Compuware Corp. Unisys Corp., a provider of information technology
solutions, had at one time been primarily focused on the mainframe business but
has been moving towards the computer services business. This change in strategy
has been well received by industry analysts who recognize that Unisys was not a
significant player in the mainframe arena but that it has the opportunity for
attractive growth in services. In addition, the service business provides a more
predictable revenue stream. By augmenting this new strategy with efforts to
reduce debt and improve the balance sheet, the company was able to boost its
stock price significantly.
Compuware was also an outstanding holding for the Fund this year. This
software provider has been a particular favorite among investors during this
time because of its role in the "year 2000" solution. Compuware has developed
software that can diagnose a system's vulnerability to this problem and also
provide measures to correct it. As a result, the company's stock has been
getting a great deal of attention and the price has climbed.
The Fund saw much less success from its holdings in the energy sector. While
energy was the Fund's best sector during the second and third quarters of 1997,
by June 30, 1998 almost all of the Fund's energy holdings had become a drag on
performance. The manager traces a portion of the problems in this sector to the
Asian crisis. The Pacific Rim had been expected to consume a certain amount of
oil to sustain its economic growth. But, the collapse of that economy meant the
demand disappeared. At the same time, the price of crude oil fell dramatically
in the fourth quarter of 1997 and the first quarter of 1998. The end result was
a hard hit to energy related stocks, especially drilling concerns such as Fund
holding TransOcean Offshore, Inc. To limit the Fund's exposure to any further
problems in this sector, the manager has trimmed back its holdings in this area.
In the months to come, the Fund's manager expects to see a slowing of the
global markets. In addition, the manager does not see any fast resolution to the
problems in Asia, and in fact would not be surprised if the worst was yet to
come. As a result, the Fund currently plans to maintain a more domestic-oriented
exposure, continuing for the foreseeable future to concentrate on technology and
financial services.
See page 33 for financial details.
17
<PAGE>
June 30, 1998
PIMCO Target Fund
OBJECTIVE
Capital appreciation; no consideration given to income.
PORTFOLIO
Primarily common stocks of companies with medium-sized capitalizations.
TOTAL NET ASSETS
$1,186 million
NUMBER OF SECURITIES IN THE PORTFOLIO
56 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Columbus
Circle Investors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Return For periods ended 6/30/98
A Shares B Shares C Shares S&P Lipper
(INCEP. 12/17/92) (INCEP. 12/17/92) (INCEP. 12/17/92) Mid-Cap Mid-Cap
Adjusted Adjusted Adjusted Index Fund Avg.
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 27.5% 20.5% 26.5% 21.7% 25.6% 27.2% 22.2%
3 years 21.7% 19.4% 20.8% 20.1% 20.8% 24.0% 20.4%
5 years 19.4% 18.0% 18.5% 18.3% 18.5% 18.5% 16.7%
Inception 20.2% 19.0% 19.3% 19.2% 19.3% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TARGET TARGET TARGET S&P 500
CLASS A B C MID-CAP
INCEPTION 12/17/92 12/17/92 12/17/92 INDEX
========= ========= ========= ========= =========
<S> <C> <C> <C> <C>
12/31/92 9,450.00 10,000.00 10,000.00 10,000.00
01/31/93 9,571.52 10,118.70 10,118.70 10,125.04
02/28/93 9,515.41 10,049.49 10,049.49 9,983.40
03/31/93 9,982.79 10,544.02 10,544.02 10,328.08
04/30/93 9,749.11 10,286.90 10,286.90 10,057.83
05/31/93 10,375.34 10,949.63 10,949.63 10,516.00
06/30/93 10,674.44 11,256.23 11,256.23 10,568.74
07/31/93 10,964.25 11,543.02 11,543.02 10,548.44
08/31/93 11,758.69 12,373.91 12,373.91 10,983.95
09/30/93 11,889.52 12,512.37 12,512.37 11,100.05
10/31/93 11,982.94 12,591.44 12,591.44 11,136.30
11/30/93 11,403.40 11,978.25 11,978.25 10,889.95
12/31/93 11,860.45 12,452.13 12,452.13 11,395.52
01/31/94 12,162.31 12,761.61 12,761.61 11,660.59
02/28/94 11,945.37 12,521.91 12,521.91 11,495.13
03/31/94 11,567.96 12,122.51 12,122.51 10,962.70
04/30/94 11,841.58 12,402.06 12,402.06 11,044.26
05/31/94 11,605.65 12,142.38 12,142.38 10,939.71
06/30/94 11,181.08 11,693.06 11,693.06 10,562.96
07/31/94 11,869.84 12,412.00 12,412.00 10,920.63
08/31/94 12,539.72 13,101.08 13,101.08 11,492.57
09/30/94 12,388.83 12,931.41 12,931.41 11,278.11
10/31/94 12,634.08 13,181.04 13,181.04 11,401.42
11/30/94 12,181.23 12,701.80 12,701.80 10,887.16
12/31/94 12,318.38 12,837.00 12,837.00 10,987.09
01/31/95 12,079.54 12,584.07 12,584.07 11,101.47
02/28/95 12,777.18 13,292.20 13,292.20 11,683.95
03/31/95 13,226.29 13,757.61 13,757.61 11,886.70
04/30/95 13,379.13 13,909.28 13,909.28 12,125.35
05/31/95 13,340.99 13,858.65 13,858.65 12,417.85
06/30/95 14,353.94 14,900.64 14,900.64 12,923.37
07/31/95 15,290.51 15,871.83 15,871.83 13,597.56
08/31/95 15,252.28 15,811.17 15,811.17 13,849.03
09/30/95 15,672.86 16,246.28 16,236.16 14,184.72
10/31/95 15,892.77 16,458.85 16,458.63 13,819.74
11/30/95 16,064.71 16,620.75 16,620.53 14,423.32
12/31/95 16,166.54 16,728.07 16,727.85 14,387.44
01/31/96 16,006.58 16,546.91 16,546.69 14,596.17
02/29/96 16,540.20 17,090.47 17,090.25 15,092.26
03/31/96 17,020.37 17,566.13 17,565.90 15,273.13
04/30/96 17,788.70 18,359.07 18,347.50 15,739.59
05/31/96 18,706.42 19,299.02 19,287.40 15,952.45
06/30/96 18,354.25 18,913.79 18,913.69 15,713.08
07/31/96 16,294.87 16,784.51 16,784.42 14,650.03
08/31/96 17,116.59 17,611.18 17,611.09 15,494.94
09/30/96 18,258.36 18,777.80 18,777.70 16,170.52
10/31/96 18,279.60 18,789.24 18,777.81 16,217.57
11/30/96 19,015.86 19,525.30 19,525.42 17,131.11
12/31/96 18,853.24 19,350.18 19,350.29 17,150.13
01/31/97 19,456.58 19,954.76 19,954.87 17,793.94
02/28/97 18,623.84 19,092.89 19,093.00 17,647.68
03/31/97 17,935.91 18,385.16 18,372.39 16,895.36
04/30/97 18,141.17 18,578.15 18,565.38 17,333.11
05/31/97 19,650.03 20,109.15 20,109.26 18,848.72
06/30/97 20,301.78 20,765.46 20,752.69 19,378.37
07/31/97 21,701.89 22,180.75 22,180.70 21,297.02
08/31/97 22,172.48 22,644.06 22,631.15 21,271.47
09/30/97 23,415.86 23,904.83 23,891.82 22,494.58
10/31/97 22,136.28 22,579.53 22,579.37 21,516.06
11/30/97 22,100.22 22,528.04 22,527.89 21,834.50
12/31/97 21,940.61 22,338.31 22,338.16 22,681.68
01/31/98 21,449.87 21,841.80 21,824.54 22,250.73
02/28/98 23,270.42 23,673.39 23,673.10 24,093.09
03/31/98 24,520.93 24,923.11 24,922.80 25,179.68
04/30/98 25,328.36 25,744.62 25,744.31 25,640.47
05/31/98 24,204.41 24,580.50 24,580.20 24,486.65
06/30/98 25,882.33 26,158.05 26,257.72 24,640.92
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class B shares commenced operations after the inception date shown.
Total return for the periods shown before the inception of Class B shares
reflects the performance for one of this Fund's oldest classes of shares (Class
C), restated to reflect the appropriate operating expenses for those shares.
Past performance is not an indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Federal Home Loan Bank Corp. 6.4%
Residential mortgage funds provider
- --------------------------------------------------------------------------------
Providian Financial Corp. 3.7%
Consumer loans/services
- --------------------------------------------------------------------------------
Black & Decker Corp. 3.5%
Power tools/home products manufacturer
- --------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. 3.4%
Off-patent medications
- --------------------------------------------------------------------------------
Ceridian Corp. 3.2%
Computer services
- --------------------------------------------------------------------------------
Federal-Mogul Corp. 3.1%
Bearings, transmission parts
- --------------------------------------------------------------------------------
Office Depot, Inc. 3.1%
Office supply stores
- --------------------------------------------------------------------------------
Paging Network, Inc. 2.6%
Paging services
- --------------------------------------------------------------------------------
Hasbro, Inc. 2.5%
Toy/game manufacturer
- --------------------------------------------------------------------------------
Jacor Communications, Inc. 2.5%
Radio stations/cable TV services
- --------------------------------------------------------------------------------
Top Ten Total 34.0%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 22.3%
- --------------------------------------------------------------------------------
Technology 22.1%
- --------------------------------------------------------------------------------
Communications 12.0%
- --------------------------------------------------------------------------------
Financial & Business Services 10.7%
- --------------------------------------------------------------------------------
Health Care 10.7%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94%
- --------------------------------------------------------------------------------
Cash Equivalents 6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The Target Fund posted strong results for the year ended June 30, 1998,
returning 27.5% for Class A shares, 26.5% for Class B shares and 25.6% for Class
C shares. These returns outperformed the average return of funds with the same
objective (as measured by the Lipper Mid-Cap Index), and closely tracked the
Fund's benchmark (the S&P Mid-Cap Index).
Leading the Fund's performance during the year were its consumer cyclical
holdings. The sector's success was largely due to the strong economy, as low
inflation, low interest rates and low unemployment all encouraged consumer
spending. Within this sector the Fund achieved particularly good results from
Black & Decker Corp., Lowe's Cos., Inc. Viacom, Inc., Dollar Tree Stores, Inc.
and Office Depot, Inc..
The financial sector also performed well for the Fund over the twelve-month
period, with especially good results during the first six months of 1998.
Falling interest rates and bankruptcy rates created an ideal operating
environment for banks and credit card companies, including Fund holdings
Providian Financial Corp., Capital One Financial Corp. and Dime Bancorp., Inc.
Providian, a credit card issuer, was one of the Fund's largest holdings during
this period and also one of its biggest success stories.
The Fund was also helped during the year by the performance of Federal-Mogul
Corp., an auto parts manufacturer that recently underwent a successful
restructuring. Federal-Mogul has a well diversified client base in which no one
customer comprises more than 6% of sales. This has helped to insulate the
company from negative events affecting any single customer. Overall,
Federal-Mogul's fundamentals are excellent and the Fund's manager believes the
company is well-positioned to continue its positive performance.
One sector that underperformed for the Fund was technology. Specifically, the
Fund's hardware investments, such as Lam Research and National Semiconductor,
have been hit hard this year by problems in Southeast Asia--a major portion of
their customer base. As a result, the Fund manager has reduced the portfolio's
exposure to this sector.
Looking ahead, the Fund manager currently does not anticipate many
significant changes to its strategy, instead opting to maintain its defensive
positioning. The manager will continue to closely monitor its technology
exposure, as well as remain alert to changes occurring in the energy sector.
And, as always, the manager will stay focused on its strategy of investing in
growing companies that are surprising the market by producing better than
expected results.
18 See page 35 for financial details.
<PAGE>
June 30, 1998
PIMCO Small-Cap Value Fund
OBJECTIVE
Long-term growth of capital and income.
PORTFOLIO
Primarily common stocks of companies with small-sized capitalizations and below-
average price-to-earnings ratios relative to their industry groups.
TOTAL NET ASSETS
$375 million
NUMBER OF SECURITIES IN THE PORTFOLIO
102 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Return For periods ended 6/30/98
A Shares B Shares C Shares Lipper
(INCEP. 10/1/91) (INCEP. 10/1/91) (INCEP. 10/1/91) Russell Small-Cap
Adjusted Adjusted Adjusted 2000 Index Fund Avg.
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 17.3% 10.9% 16.4% 11.4% 15.4% 16.5% 17.6%
3 years 23.3% 21.0% 22.4% 21.7% 22.4% 18.9% 19.7%
5 years 17.1% 15.8% 16.2% 16.0% 16.3% 16.0% 16.7%
Inception 17.2% 16.2% 16.3% 16.3% 16.3% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
SMALL-CAP SMALL-CAP SMALL-CAP RUSSELL 2000
VALUE VALUE VALUE INDEX
CLASS A B C
INCEPTION 10/1/91 10/1/91 10/1/91
========= ========== ========== ========== ============
<S> <C> <C> <C> <C>
09/30/91 9,450.00 10,000.00 10,000.00 10,000.00
10/31/91 9,556.05 10,106.12 10,106.12 10,264.40
11/30/91 9,335.06 9,866.14 9,866.14 9,789.36
12/31/91 10,021.71 10,585.58 10,585.58 10,572.71
01/31/92 10,701.39 11,296.75 11,296.75 11,430.16
02/29/92 11,060.00 11,668.68 11,668.68 11,763.80
03/31/92 10,961.01 11,556.80 11,556.80 11,365.71
04/30/92 10,734.12 11,310.41 11,310.41 10,966.66
05/31/92 10,740.04 11,309.32 11,309.32 11,112.52
06/30/92 10,392.85 10,936.77 10,936.77 10,590.34
07/31/92 10,706.11 11,259.33 11,259.33 10,958.46
08/31/92 10,539.55 11,077.00 11,077.00 10,648.56
09/30/92 10,641.45 11,177.29 11,177.29 10,893.79
10/31/92 10,831.82 11,370.30 11,370.30 11,237.60
11/30/92 11,597.70 12,167.25 12,167.25 12,098.18
12/31/92 11,852.45 12,426.88 12,426.88 12,519.32
01/31/93 12,373.66 12,965.24 12,965.24 12,942.72
02/28/93 12,310.27 12,891.58 12,891.58 12,644.26
03/31/93 12,623.10 13,210.90 13,210.90 13,054.44
04/30/93 12,287.26 12,851.28 12,851.28 12,695.57
05/31/93 12,491.89 13,057.04 13,057.04 13,257.10
06/30/93 12,517.67 13,075.70 13,075.70 13,339.43
07/31/93 12,557.36 13,108.84 13,108.84 13,523.64
08/31/93 12,971.97 13,533.37 13,533.37 14,107.59
09/30/93 13,087.30 13,645.35 13,645.35 14,505.71
10/31/93 13,332.31 13,892.12 13,892.12 14,879.23
11/30/93 13,088.53 13,629.57 13,629.57 14,394.47
12/31/93 13,439.05 13,986.01 13,986.01 14,886.33
01/31/94 13,938.05 14,496.32 14,496.32 15,352.71
02/28/94 13,912.73 14,461.72 14,461.72 15,296.98
03/31/94 13,286.61 13,801.58 13,801.58 14,491.29
04/30/94 13,327.59 13,835.62 13,835.62 14,577.22
05/31/94 13,005.82 13,492.73 13,492.73 14,413.23
06/30/94 12,769.01 13,238.67 13,238.67 13,926.93
07/31/94 12,964.25 13,432.66 13,432.66 14,155.89
08/31/94 13,480.64 13,959.02 13,959.02 14,944.37
09/30/94 13,146.86 13,604.78 13,604.78 14,893.71
10/31/94 12,898.28 13,338.85 13,338.85 14,833.54
11/30/94 12,594.96 13,016.85 13,016.85 14,234.12
12/31/94 12,892.34 13,315.94 13,315.94 14,615.16
01/31/95 12,958.37 13,375.53 13,375.53 14,430.57
02/28/95 13,534.44 13,962.56 13,962.56 15,031.32
03/31/95 13,610.99 14,032.64 14,032.64 15,288.95
04/30/95 13,924.22 14,347.21 14,347.21 15,628.67
05/31/95 14,257.74 14,681.72 14,681.72 15,897.33
06/30/95 14,707.61 15,136.12 15,136.12 16,722.09
07/31/95 15,434.04 15,874.18 15,874.18 17,685.28
08/31/95 15,733.27 16,171.84 16,171.84 18,051.19
09/30/95 16,032.52 16,469.42 16,469.42 18,373.58
10/31/95 15,400.58 15,809.54 15,809.54 17,551.91
11/30/95 16,030.48 16,446.33 16,446.33 18,289.27
12/31/95 16,112.43 16,519.98 16,519.98 18,771.74
01/31/96 16,032.20 16,426.99 16,426.99 18,751.47
02/29/96 16,376.19 16,769.60 16,769.60 19,335.95
03/31/96 16,870.59 17,265.09 17,265.09 19,729.44
04/30/96 17,441.30 17,838.40 17,838.40 20,784.37
05/31/96 17,998.78 18,397.28 18,397.28 21,603.48
06/30/96 17,871.60 18,255.86 18,255.86 20,716.44
07/31/96 16,883.92 17,235.19 17,235.19 18,907.07
08/31/96 17,683.46 18,040.31 18,040.31 20,004.81
09/30/96 18,218.44 18,574.96 18,574.96 20,786.60
10/31/96 18,564.19 18,915.71 18,915.71 20,466.28
11/30/96 19,789.84 20,153.03 20,153.03 21,309.49
12/31/96 20,498.31 20,861.41 20,861.41 21,868.01
01/31/97 21,165.82 21,533.33 21,533.33 22,304.93
02/28/97 21,240.34 21,593.99 21,593.99 21,764.04
03/31/97 20,434.97 20,759.34 20,759.34 20,737.00
04/30/97 20,628.96 20,956.49 20,956.49 20,794.85
05/31/97 22,404.11 22,731.86 22,731.86 23,108.28
06/30/97 23,493.03 23,839.75 23,839.75 24,098.70
07/31/97 24,701.23 25,038.67 25,038.67 25,220.01
08/31/97 25,342.43 25,676.01 25,676.01 25,797.55
09/30/97 27,206.87 27,557.85 27,542.68 27,685.93
10/31/97 26,744.68 27,057.04 27,056.88 26,470.52
11/30/97 27,042.78 27,345.26 27,345.09 26,298.46
12/31/97 27,562.97 27,844.80 27,850.51 26,758.68
01/31/98 27,092.69 27,367.40 27,357.22 26,335.90
02/28/98 28,785.80 29,054.79 29,043.99 28,284.75
03/31/98 29,898.86 30,169.48 30,158.26 29,450.08
04/30/98 29,804.56 30,041.86 30,046.61 29,612.94
05/31/98 28,440.61 28,656.69 28,646.08 28,016.81
06/30/98 27,562.73 27,749.45 27,755.10 28,075.64
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
10/1/91), adjusted for retail class fees and expenses. Past performance is not
an indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Bindley Western Industries, Inc. 1.2%
Ethical drugs wholesaler
- --------------------------------------------------------------------------------
Burlington Coat Factory 1.1%
Warehouse Corp.
Off-price apparel stores
- --------------------------------------------------------------------------------
Brown Group, Inc. 1.1%
Shoe manufacturer/retailer
- --------------------------------------------------------------------------------
Hughes Supply, Inc. 1.1%
Construction/industrial products distributor
- --------------------------------------------------------------------------------
Roadway Express, Inc. 1.0%
Less-than truckload freight service
- --------------------------------------------------------------------------------
Kelly Services, Inc. 1.0%
Temporary help services
- --------------------------------------------------------------------------------
Claire's Stores, Inc. 1.0%
Women's specialty stores
- --------------------------------------------------------------------------------
Aliant Communications, Inc. 1.0%
Telephone services
- --------------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 1.0%
Paper products
- --------------------------------------------------------------------------------
Bergen Brunswig Corp. "A" 1.0%
Drugs/healthcare products distributor
- --------------------------------------------------------------------------------
Top Ten Total 10.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 20.0%
- --------------------------------------------------------------------------------
Consumer Discretionary 14.9%
- --------------------------------------------------------------------------------
Materials & Processing 11.5%
- --------------------------------------------------------------------------------
Capital Goods 10.4%
- --------------------------------------------------------------------------------
Utilities 6.8%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92%
- --------------------------------------------------------------------------------
Cash Equivalents 8%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The Small-Cap Value Fund produced strong results for the one-year period ended
June 30, 1998, with its Class A shares returning 17.3%, its Class B shares
returning 16.4% and its Class C shares returning 15.4%. These returns are
similar to those of the Fund's benchmark, the Russell 2000 Index, for the same
period.
Small-capitalization stocks in general did not perform as well as their
large-cap counterparts this year. This can be attributed to a "flight to
quality," where nervous investors abandoned small-cap stocks (especially value
ones), in favor of more stable, liquid large-cap holdings. Amazingly, this trend
was so extreme by the last quarter that only the top 100 stocks in the S&P 500
Index saw a price gain--meaning the other 400 had a negative return for the
quarter. But despite this focus on large-caps, the Fund was able to identify
several areas of profitability.
The consumer discretionary sector was one of the Fund's largest sectors
during the year and contained several standout holdings, including Burlington
Coat Factory Warehouse Corp. and Brown Group, Inc. Both of these retail
companies benefited from a surge in consumer spending, brought on by a strong
economy and continued consumer confidence. Burlington Coat Factory Warehouse in
particular did well during this period by also instituting a new strategic
business plan to increase footage by 8-10% per year and remodel 40% of its
stores within the next three years. This business plan, coupled with the
supportive operating environment, caused the stock price to increase
substantially in the first half of 1998.
Another sector that performed well for the Fund this year was healthcare,
with holdings such as Bergen Brunswig Corp. and Bindley-Western Industries, Inc.
Bergen Brunswig saw its stock price rise after it announced a five year
agreement to supply all pharmaceutical needs to Kaiser Permanente, the nation's
largest non-profit health plan. This agreement represents an incremental
increase in new business of approximately 70% for Bergen Brunswig in the first
year alone. The company also made a number of acquisitions this year, which
added to its diversified product offerings and improved its long-term prospects.
The Fund found less support from its technology holdings this year.
Technology in general was indirectly hurt by the Asian currency crisis, which
flooded the market with lower-priced products. So, while the Fund did not have a
large technology exposure, almost all of its holdings suffered. For example,
Innovex, the leading lead wire assembler for the disk drive industry, and Cohu,
a manufacturer of semiconductor testing apparatuses, both had pristine balance
sheets with virtually no long-term debt, yet both saw severe stock price drops
as part of the broader PC industry correction.
Looking ahead, the Fund manager presently believes the portfolio's defensive
posture leaves it well-positioned for the current environment. But, the manager
is optimistic that investors will be shifting their focus back to small-cap
stocks when they recognize that these issues generally carry less exposure to
Asia and more favorable P/E ratios.
See page 36 for financial details. 19
<PAGE>
June 30, 1998
PIMCO Opportunity Fund
OBJECTIVE
Capital appreciation; no consideration given to income.
PORTFOLIO
Primarily stocks of small-capitalization companies.
TOTAL NET ASSETS
$701 million
NUMBER OF SECURITIES IN THE PORTFOLIO
49 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Columbus
Circle Investors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares C Shares Lipper
(INCEP. 2/24/84) (INCEP. 2/24/84) Russell Cap. App.
Adjusted Adjusted 2000 Index Fund Avg.
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year 13.9% 7.6% 12.0% 16.5% 22.1%
5 years 13.3% 12.0% 12.4% 16.0% 16.0%
10 years 19.0% 18.3% 18.1% 13.6% 14.2%
Inception 18.5% 18.1% 17.7% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
OPPORTUNITY OPPORTUNITY RUSSELL 2000
CLASS A C INDEX
INCEPTION 2/24/84 2/24/84
========= =========== =========== ============
<S> <C> <C> <C>
02/29/84 9,450.00 10,000.00 10,000.00
03/31/84 9,087.01 9,609.51 10,059.00
04/30/84 9,245.79 9,771.41 10,003.68
05/31/84 8,981.27 9,485.70 9,485.49
06/30/84 9,275.46 9,790.49 9,756.77
07/31/84 9,045.86 9,541.88 9,280.64
08/31/84 10,520.03 11,090.72 10,372.97
09/30/84 10,136.40 10,679.51 10,293.10
10/31/84 10,033.63 10,564.33 10,103.71
11/30/84 9,641.62 10,145.22 9,834.95
12/31/84 10,142.86 10,666.04 9,995.26
01/31/85 11,884.21 12,489.65 11,319.63
02/28/85 12,134.95 12,746.01 11,624.13
03/31/85 11,570.16 12,144.77 11,385.83
04/30/85 11,361.30 11,918.06 11,244.65
05/31/85 11,828.92 12,401.10 11,658.45
06/30/85 12,099.58 12,677.08 11,790.19
07/31/85 12,380.16 12,962.87 12,120.32
08/31/85 12,030.26 12,588.33 12,003.96
09/30/85 11,350.01 11,868.78 11,277.72
10/31/85 11,699.93 12,227.03 11,706.28
11/30/85 12,564.56 13,122.99 12,549.13
12/31/85 13,268.92 13,850.24 13,101.29
01/31/86 13,337.57 13,913.58 13,308.29
02/28/86 14,194.06 14,799.07 14,263.82
03/31/86 14,849.99 15,473.65 14,955.62
04/30/86 15,324.54 15,958.55 15,176.96
05/31/86 16,068.21 16,722.63 15,700.57
06/30/86 16,321.53 16,975.91 15,681.73
07/31/86 14,515.17 15,086.17 14,215.49
08/31/86 14,646.35 15,212.85 14,667.54
09/30/86 13,405.17 13,914.26 13,762.55
10/31/86 13,840.00 14,356.56 14,308.92
11/30/86 14,095.86 14,613.18 14,260.27
12/31/86 13,969.71 14,473.14 13,848.15
01/31/87 15,565.82 16,117.52 15,450.38
02/28/87 17,050.21 17,645.34 16,749.76
03/31/87 17,726.11 18,333.47 17,200.33
04/30/87 17,285.97 17,866.90 16,703.24
05/31/87 17,105.16 17,668.60 16,649.79
06/30/87 17,397.99 17,960.27 17,075.69
07/31/87 18,053.16 18,625.01 17,607.26
08/31/87 19,036.64 19,627.86 18,124.73
09/30/87 18,935.25 19,511.33 17,790.70
10/31/87 14,011.10 14,426.52 12,344.07
11/30/87 13,170.18 13,551.87 11,681.69
12/31/87 14,975.10 15,400.15 12,620.67
01/31/88 14,882.62 15,295.19 13,169.16
02/29/88 16,044.16 16,479.78 14,354.12
03/31/88 16,682.06 17,124.62 15,027.76
04/30/88 17,159.79 17,604.54 15,368.29
05/31/88 16,512.90 16,929.77 14,951.19
06/30/88 18,102.63 18,549.28 16,018.26
07/31/88 17,206.69 17,619.62 15,864.80
08/31/88 16,734.44 17,124.71 15,458.82
09/30/88 17,360.34 17,754.57 15,867.40
10/31/88 16,931.50 17,304.62 15,691.11
11/30/88 16,633.80 16,989.69 15,168.44
12/31/88 17,202.22 17,559.46 15,762.44
01/31/89 18,182.59 18,549.12 16,465.29
02/28/89 17,972.64 18,324.25 16,586.47
03/31/89 18,704.83 19,059.00 16,976.75
04/30/89 20,026.14 20,393.53 17,716.94
05/31/89 21,452.66 21,832.95 18,478.94
06/30/89 20,729.38 21,083.09 18,057.62
07/31/89 22,378.88 22,747.63 18,760.25
08/31/89 23,101.25 23,467.54 19,216.87
09/30/89 23,307.38 23,662.56 19,276.83
10/31/89 21,948.58 22,267.86 18,134.29
11/30/89 22,405.53 22,717.70 18,249.99
12/31/89 22,641.06 22,942.37 18,322.80
01/31/90 20,588.06 20,847.58 16,722.49
02/28/90 21,250.66 21,506.38 17,241.39
03/31/90 22,132.50 22,385.00 17,917.60
04/30/90 21,661.70 21,895.15 17,332.05
05/31/90 23,681.00 23,922.33 18,559.68
06/30/90 24,180.65 24,412.10 18,608.67
07/31/90 23,978.74 24,192.41 17,792.87
08/31/90 21,164.04 21,337.18 15,412.90
09/30/90 20,004.28 20,154.71 14,042.54
10/31/90 19,329.57 19,461.97 13,185.24
11/30/90 20,835.00 20,965.65 14,191.14
12/31/90 21,149.92 21,257.44 14,748.43
01/31/91 23,174.90 23,276.97 16,077.26
02/28/91 24,750.02 24,843.74 17,880.32
03/31/91 27,259.60 27,350.72 19,134.27
04/30/91 26,636.50 26,724.09 19,084.91
05/31/91 29,301.78 29,405.40 19,993.92
06/30/91 26,515.35 26,585.15 18,837.67
07/31/91 28,799.89 28,865.92 19,496.80
08/31/91 30,392.12 30,450.43 20,215.84
09/30/91 31,067.34 31,112.27 20,373.53
10/31/91 32,849.86 32,870.89 20,912.20
11/30/91 30,651.78 30,659.70 19,944.39
12/31/91 35,710.27 35,731.70 21,540.34
01/31/92 38,433.54 38,415.37 23,287.26
02/29/92 39,804.81 39,757.06 23,967.01
03/31/92 38,452.68 38,396.02 23,155.97
04/30/92 36,338.28 36,248.99 22,342.96
05/31/92 36,681.17 36,574.83 22,640.12
06/30/92 35,824.08 35,693.12 21,576.26
07/31/92 37,252.31 37,073.52 22,326.26
08/31/92 35,747.91 35,558.92 21,694.87
09/30/92 37,786.12 37,571.44 22,194.50
10/31/92 39,842.85 39,583.88 22,894.96
11/30/92 43,156.62 42,842.47 24,648.26
12/31/92 46,271.28 45,900.48 25,506.26
01/31/93 49,140.79 48,711.42 26,368.88
02/28/93 46,541.30 46,133.27 25,760.82
03/31/93 49,911.54 49,428.71 26,596.50
04/30/93 48,235.96 47,742.70 25,865.36
05/31/93 52,472.04 51,929.78 27,009.39
06/30/93 55,244.50 54,623.64 27,177.11
07/31/93 57,227.28 56,542.40 27,552.43
08/31/93 61,096.94 60,342.00 28,742.14
09/30/93 64,370.51 63,520.27 29,553.25
10/31/93 63,965.62 63,094.43 30,314.24
11/30/93 60,653.03 59,799.26 29,326.60
12/31/93 63,452.17 62,499.32 30,328.70
01/31/94 65,907.26 64,890.41 31,278.89
02/28/94 64,326.87 63,295.80 31,165.35
03/31/94 59,376.34 58,366.45 29,523.87
04/30/94 59,418.73 58,386.82 29,698.95
05/31/94 56,318.80 55,302.13 29,364.84
06/30/94 51,429.31 50,455.50 28,374.07
07/31/94 54,570.72 53,518.45 28,840.54
08/31/94 58,835.26 57,650.93 30,446.95
09/30/94 60,063.27 58,825.63 30,343.74
10/31/94 63,204.69 61,867.03 30,221.15
11/30/94 59,812.81 58,510.75 28,999.91
12/31/94 60,894.59 59,538.02 29,776.24
01/31/95 58,942.19 57,566.24 29,400.17
02/28/95 62,205.52 60,728.76 30,624.10
03/31/95 65,383.17 63,805.15 31,148.99
04/30/95 67,272.22 65,603.69 31,841.12
05/31/95 68,624.32 66,860.07 32,388.47
06/30/95 75,041.66 73,077.19 34,068.79
07/31/95 82,124.76 79,944.54 36,031.15
08/31/95 81,223.36 79,012.15 36,776.63
09/30/95 83,884.81 81,547.57 37,433.46
10/31/95 81,181.70 78,859.68 35,759.44
11/30/95 84,916.55 82,435.81 37,261.69
12/31/95 86,816.56 84,260.61 38,244.66
01/31/96 82,750.42 80,227.05 38,203.35
02/29/96 86,630.09 83,964.67 39,394.15
03/31/96 90,138.26 87,323.09 40,195.82
04/30/96 99,172.91 95,988.51 42,345.09
05/31/96 105,868.37 102,406.69 44,013.91
06/30/96 100,020.62 96,693.21 42,206.70
07/31/96 87,822.01 84,859.32 38,520.37
08/31/96 92,338.78 89,164.23 40,756.86
09/30/96 99,274.25 95,796.62 42,349.64
10/31/96 93,137.42 89,814.12 41,697.03
11/30/96 93,776.25 90,356.51 43,414.95
12/31/96 97,592.56 93,989.84 44,552.85
01/31/97 94,018.04 90,471.70 45,443.02
02/28/97 84,524.10 81,311.44 44,341.03
03/31/97 77,712.22 74,685.37 42,248.57
04/30/97 76,017.16 73,005.55 42,366.45
05/31/97 87,238.96 83,752.62 47,079.71
06/30/97 90,476.58 86,795.61 49,097.55
07/31/97 93,591.32 89,743.71 51,382.06
08/31/97 97,382.80 93,293.61 52,558.71
09/30/97 104,597.70 100,172.71 56,406.01
10/31/97 96,673.59 92,502.48 53,929.78
11/30/97 93,067.56 89,015.32 53,579.24
12/31/97 93,657.71 89,526.27 54,516.88
01/31/98 92,078.26 87,928.68 53,655.51
02/28/98 101,581.20 96,970.12 57,626.02
03/31/98 105,198.71 100,335.56 60,000.21
04/30/98 104,706.17 99,824.75 60,332.01
05/31/98 98,523.69 93,875.80 57,080.11
06/30/98 103,029.47 98,091.29 57,199.98
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class A shares commenced operations after the inception date shown.
Total return for the periods shown before the inception of Class A shares
reflects the performance for this Fund's oldest class of shares (Class C),
restated to reflect the appropriate operating expenses for those shares. Had
Class A share returns been restated on the bases of different sales charges, but
without regard to the lower operating expenses of Class A shares, the adjusted
total return figures for the 10-year and since inception periods would have been
lower, namely 18.1% and 17.6%, respectively. Past performance is not an
indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Veritas DGC, Inc. 5.7%
Seismic data services
- --------------------------------------------------------------------------------
Network Appliance, Inc. 3.6%
Network data storage devices
- --------------------------------------------------------------------------------
The Men's Wearhouse, Inc. 3.5%
Off-price men's apparel stores
- --------------------------------------------------------------------------------
Winstar Communications, Inc. 3.5%
Telecommunication and information services
- --------------------------------------------------------------------------------
Linens'n Things, Inc. 3.5%
Retail home accessories
- --------------------------------------------------------------------------------
BEA Systems, Inc. 3.3%
Computer software
- --------------------------------------------------------------------------------
Wind River Systems 3.3%
Software development systems
- --------------------------------------------------------------------------------
Golden State Bancorp, Inc. 3.2%
Savings bank
- --------------------------------------------------------------------------------
Windmere Durable Holdings 3.0%
Electrical appliance manufacturer
- --------------------------------------------------------------------------------
Whole Foods Market, Inc. 3.0%
Natural food supermarket
- --------------------------------------------------------------------------------
Top Ten Total 35.6%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 27.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 16.3%
- --------------------------------------------------------------------------------
Building 9.0%
- --------------------------------------------------------------------------------
Energy 8.6%
- --------------------------------------------------------------------------------
Financial & Business Services 7.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95%
- --------------------------------------------------------------------------------
Cash Equivalents 5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The PIMCO Opportunity Fund posted positive results for the year ended June 30,
1998, with returns of 13.9% for Class A shares and 12.0% for Class C shares.
While these returns miss beating the Fund's benchmark for the year, it is worth
noting that during the last six months the Fund's return was more than double
that of the Index.
The Fund's manager attributes the Fund's more recent success to strategic
moves made at the end of 1997 and the beginning of 1998. It was during this time
that the Fund began divesting itself of companies dependent on the Asian markets
for success. In reinvesting these assets, the Fund selected companies benefiting
from the strong domestic economy. As a result, the Fund increased its holdings
in the consumer discretionary sector--a sector that proved to be a top performer
for the Fund during the year.
One example of a success in the consumer discretionary sector was The Men's
Wear-house, Inc., one of the country's largest retailers of men's tailored
business attire. The Men's Wearhouse produced improving results during the year
as a result of aggressive expansion. The company expanded its product line by
offering casual clothes to meet the increasing demand for dress-down workplace
attire. In addition, the company added lower-end men's fashions through 28 value
priced clothing stores. The Men's Wearhouse also expanded by opening 37 stores,
several of which were in four new states. The net effect of these expansion
efforts was a 50% increase in the stock price in the first half of 1998.
Another winner for the Fund in the consumer discretionary sector was Linens
'n Things, Inc., a home accessories retailer. As would be expected, Linens 'n
Things, benefited from the continuing strong economy and increased consumer
spending. The company surprised some observers, however, by achieving additional
growth by taking market share from lower-end competitors such as Bradlee's and
K-Mart, and from several higher-end department stores.
One disappointment for the Fund this year was Computer Learning Centers, a
provider of computer-related education and training. The company's stock had
been rising until several minor student complaints prompted an Illinois Attorney
General's Office investigation and subsequent lawsuit. This negative publicity
caused the stock's price to drop in the second quarter of 1998. Computer
Learning Centers recently settled this lawsuit, however, and, as the company's
fundamentals remain strong, the Fund's manager believes that the stock price
could rebound.
Looking ahead, the manager of the Opportunity Fund presently intends to
maintain the Fund's current focus, avoiding companies with connections in Asia.
In pursuing continued success for the Fund, the manager remains committed to its
proven strategy of investing in small-cap companies that are surprising the
market with better than expected results.
See page 38 for financial details.
20
<PAGE>
June 30, 1998
PIMCO International Developed Fund
OBJECTIVE
Long-term growth of capital.
PORTFOLIO
Primarily international equity securities (developed markets).
TOTAL NET ASSETS
$139 million
NUMBER OF SECURITIES
IN THE
PORTFOLIO
164 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Blairlogie Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
A Shares B Shares C Shares MSCI Lipper
(INCEP.6/8/93 ) (INCEP. 6/8/93) (INCEP. 6/8/93) EAFE International
Adjusted Adjusted Adjusted Index Fund Avg.
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 15.5% 9.1% 14.3% 9.3% 13.4% 6.4% 8.2%
3 years 14.3% 12.1% 13.4% 12.6% 13.4% 11.0% 12.8%
5 years 12.6% 11.3% 11.8% 11.5% 11.8% 10.3% 12.2%
Inception 11.7% 10.5% 10.9% 10.7% 10.9% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL MSCI
DEVELOPED DEVELOPED DEVELOPED EAFE
CLASS A B C INDEX
INCEPTION 6/8/93 6/8/93 6/8/93
========= ============= ============= ============= ============
<S> <C> <C> <C> <C>
06/30/93 9,450.00 10,000.00 10,000.00 10,000.00
07/31/93 9,827.92 10,393.48 10,393.48 10,352.35
08/31/93 10,498.61 11,096.25 11,096.25 10,913.55
09/30/93 10,241.23 10,817.36 10,817.36 10,670.29
10/31/93 10,482.33 11,065.19 11,065.19 11,001.46
11/30/93 9,615.95 10,143.85 10,143.85 10,042.12
12/31/93 10,335.52 10,896.52 10,896.52 10,769.51
01/31/94 11,237.56 11,840.64 11,840.64 11,682.35
02/28/94 11,155.45 11,747.31 11,747.31 11,652.40
03/31/94 10,767.95 11,331.83 11,331.83 11,153.00
04/30/94 11,226.64 11,807.45 11,807.45 11,628.69
05/31/94 11,183.45 11,754.49 11,754.49 11,564.41
06/30/94 11,337.13 11,908.69 11,908.69 11,730.43
07/31/94 11,569.08 12,144.70 12,144.70 11,845.86
08/31/94 11,702.65 12,277.26 12,277.26 12,128.91
09/30/94 11,306.02 11,853.53 11,853.53 11,749.56
10/31/94 11,663.00 12,220.18 12,220.18 12,143.56
11/30/94 11,020.03 11,538.87 11,538.87 11,562.61
12/31/94 11,020.17 11,531.75 11,531.75 11,637.74
01/31/95 10,658.71 11,146.06 11,146.06 11,193.39
02/28/95 10,777.96 11,264.43 11,264.43 11,164.18
03/31/95 11,377.07 11,883.33 11,883.33 11,863.61
04/30/95 11,781.81 12,298.87 12,298.87 12,312.98
05/31/95 11,675.67 12,180.33 12,180.33 12,169.36
06/30/95 11,467.69 11,955.84 11,955.84 11,959.18
07/31/95 12,279.95 12,795.07 12,795.07 12,706.99
08/31/95 12,214.65 12,718.87 12,718.87 12,225.35
09/30/95 12,394.11 12,897.97 12,897.97 12,467.29
10/31/95 12,057.00 12,538.96 12,538.96 12,135.35
11/30/95 12,484.40 12,975.78 12,975.78 12,476.18
12/31/95 12,857.06 13,354.83 13,354.83 12,982.09
01/31/96 12,971.66 13,465.30 13,465.30 13,038.43
02/29/96 12,978.31 13,464.16 13,464.16 13,085.76
03/31/96 13,244.02 13,731.29 13,731.29 13,366.97
04/30/96 13,758.13 14,255.82 14,255.82 13,758.89
05/31/96 13,461.95 13,939.73 13,939.73 13,509.03
06/30/96 13,533.02 14,004.72 14,004.72 13,588.33
07/31/96 13,053.62 13,499.71 13,499.71 13,194.54
08/31/96 13,027.51 13,464.23 13,464.23 13,226.87
09/30/96 13,346.75 13,785.92 13,785.92 13,581.61
10/31/96 13,245.21 13,672.22 13,672.22 13,446.07
11/30/96 13,682.65 14,115.41 14,115.41 13,984.45
12/31/96 13,551.88 13,971.39 13,971.39 13,807.96
01/31/97 13,130.12 13,531.88 13,531.88 13,327.86
02/28/97 13,345.32 13,753.67 13,753.67 13,549.10
03/31/97 13,356.71 13,753.72 13,753.72 13,601.54
04/30/97 13,526.70 13,928.92 13,928.92 13,677.03
05/31/97 14,172.44 14,594.37 14,594.37 14,570.41
06/30/97 14,818.17 15,248.20 15,248.20 15,377.17
07/31/97 15,169.45 15,586.86 15,598.52 15,629.05
08/31/97 13,753.42 14,127.35 14,127.35 14,464.69
09/30/97 14,535.06 14,933.04 14,933.03 15,277.60
10/31/97 13,674.01 14,034.01 14,034.00 14,107.34
11/30/97 13,549.38 13,905.62 13,905.62 13,966.26
12/31/97 13,753.41 14,090.62 14,088.40 14,091.96
01/31/98 14,425.47 14,768.64 14,766.30 14,740.19
02/28/98 15,361.62 15,717.79 15,727.63 15,689.46
03/31/98 16,357.73 16,716.24 16,713.71 16,175.83
04/30/98 16,597.85 16,938.07 16,947.83 16,306.86
05/31/98 16,921.99 17,246.21 17,255.91 16,231.84
06/30/98 17,114.02 17,331.21 17,440.89 16,358.45
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
6/8/93), adjusted for retail class fees and expenses. Past performance is not an
indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top Holdings in % of Total
Selected Countries Investments
- --------------------------------------------------------------------------------
Finland/Nokia OYJ "A" 2.4%
- --------------------------------------------------------------------------------
Germany/SAP AG-Vorzug 1.7%
- --------------------------------------------------------------------------------
Netherlands/Royal Dutch Petroleum Co. 1.5%
- --------------------------------------------------------------------------------
Switzerland/Novartis AG 1.3%
- --------------------------------------------------------------------------------
Italy/ENI SpA 1.3%
- --------------------------------------------------------------------------------
Germany/Mannesmann AG 1.2%
- --------------------------------------------------------------------------------
France/Elf Aquitaine SA 1.2%
- --------------------------------------------------------------------------------
Germany/Bayer AG 1.2%
- --------------------------------------------------------------------------------
France/Lafarge SA 1.2%
- --------------------------------------------------------------------------------
Spain/Telefonica de Espana 1.1%
- --------------------------------------------------------------------------------
Top 5 Countries % of Total Investments
- --------------------------------------------------------------------------------
France 15.3%
- --------------------------------------------------------------------------------
Germany 13.2%
- --------------------------------------------------------------------------------
United Kingdom 10.9%
- --------------------------------------------------------------------------------
Japan 10.5%
- --------------------------------------------------------------------------------
Italy 8.2%
- --------------------------------------------------------------------------------
Regional Breakdown
- --------------------------------------------------------------------------------
Stock: Europe 77%
- --------------------------------------------------------------------------------
Japan 10%
- --------------------------------------------------------------------------------
Pacific/Far East 1%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 88%
- --------------------------------------------------------------------------------
Cash Equivalents 12%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The International Developed Fund posted excellent results for the twelve-month
period ended June 30, 1998, with returns of 15.5%, 14.3% and 13.4% for Class A,
B and C shares, respectively. These results significantly outperformed the 6.4%
return of the MSCI EAFE Index, the Fund's benchmark.
The Fund's year-long strategy of over-weighting continental Europe at the
expense of the United Kingdom and Asia proved to be a major contributor to this
strong 12-month performance. The Fund's success in Europe was due to a
combination of positive macro-economic forces and corporate-specific success.
Europe also offered the Fund one of the few relatively safe havens within the
present global turmoil, and as a result holds a significant portion of the
Fund's assets.
Stock-specific performance was especially strong within Europe, where the
Fund realized significant contributions from selected holdings in France, Italy
and Finland. In France, for example, the Fund was supported by results from
Banque National de Paris (BNP), a French bank. A generally strong economy and
lower interest rates drove an increase in both consumer and corporate lending,
which in turn led to better-than-expected earnings reports from many banks. BNP
was a stand-out even among these many good performers, however, thanks to a
restructuring plan aimed at increasing interest income and improving cost
efficiency.
While the Fund saw generally good performance from its Italian stocks,
returns from Italian banks were so impressive that they have begun to attract
speculative interest from other European banks intent on broadening their reach.
One particularly successful Italian bank for the Fund was Banca Commerciale
Italiana, which saw its stock price more than double during the year ended June
30, 1998 (in local currency terms).
Notably absent from the Fund's European investments was the United Kingdom.
The UK had been enjoying its own private boom for several years, but numerous
factors have converged to change the investment environment. Specifically, the
Fund's manager has become concerned over the increasingly strong British Pound
hurting domestic manufacturers dependent on exporting, and the UK's traditional
trading links with Asia depressing corporate earnings in many sectors. As a
result, the International Developed Fund has taken a very cautious approach to
investing in this region, ending the period with a UK weighting of only 11%
versus the benchmark weighting of 22%.
Troubles in the Asian markets continued to keep the Fund's manager largely
out of this region as well. A recovery in Japan is essential for all of the
Asian economies, yet the manager harbors doubts about the Japanese government's
ability to stimulate its economy out of recession. Overall, the Fund's manager
believes more economic disappointments are in the pipeline from this area, and
that it is not yet prudent to reinvest in any significant way.
Going forward, the Fund's manager currently intends to continue its
strategy of overweighting Europe and underweighting Asia and the United Kingdom.
More specifically, the Fund has begun taking profits in some of its European
bank holdings and reinvesting in more cyclical sectors.
See page 39 for financial details.
21
<PAGE>
June 30, 1998
PIMCO International Fund
OBJECTIVE
Capital appreciation; income is incidental.
PORTFOLIO
Primarily stocks of foreign (non-U.S.) companies.
TOTAL NET ASSETS
$154 million
NUMBER OF SECURITIES
IN THE
PORTFOLIO
222 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Blairlogie Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Return For periods ended 6/30/98
A Shares B Shares C Shares MSCI Lipper
(INCEP. 8/25/86) (INCEP. 8/25/86) (INCEP. 8/25/86) World International
Adjusted Adjusted Adjusted ex-USA Index Fund Avg.
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 10.0% 3.9% 9.2% 4.2% 8.2% 6.6% 8.2%
5 years 8.6% 7.4% 7.8% 7.5% 7.8% 10.5% 12.2%
10 years 8.4% 7.8% 7.6% 7.6% 7.6% 7.2% 10.2%
Inception 8.4% 7.9% 7.6% 7.6% 7.6% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL EAFE
CLASS A B C INDEX
INCEPTION 8/25/86 8/25/86 8/25/86
============================================= ============= =========
<S> <C> <C> <C> <C>
08/31/86 9,450.00 10,000.00 10,000.00 10,000.00
09/30/86 9,163.20 9,690.30 9,690.30 9,897.00
10/31/86 8,847.81 9,350.65 9,350.65 9,235.88
11/30/86 9,306.95 9,830.21 9,830.21 9,767.87
12/31/86 9,388.58 9,910.13 9,910.13 10,285.56
01/31/87 10,331.51 10,899.09 10,899.10 11,377.89
02/28/87 10,858.25 11,448.54 11,448.55 11,719.23
03/31/87 11,272.63 11,878.10 11,878.11 12,680.20
04/30/87 11,677.75 12,297.63 12,297.65 14,021.77
05/31/87 11,742.13 12,357.61 12,357.62 14,021.77
06/30/87 11,493.05 12,087.92 12,087.93 13,577.56
07/31/87 11,709.24 12,307.75 12,307.76 13,556.24
08/31/87 12,286.95 12,907.17 12,907.18 14,575.54
09/30/87 12,246.99 12,857.16 12,857.17 14,348.74
10/31/87 9,437.14 9,900.10 9,900.11 12,340.92
11/30/87 9,223.90 9,670.31 9,670.32 12,465.32
12/31/87 10,018.06 10,496.75 10,496.76 12,838.53
01/31/88 9,804.30 10,266.22 10,266.23 13,070.65
02/29/88 10,324.07 10,804.26 10,804.27 13,945.21
03/31/88 10,571.84 11,056.80 11,056.81 14,805.35
04/30/88 10,756.88 11,243.47 11,243.48 15,023.28
05/31/88 10,616.68 11,089.72 11,089.73 14,545.09
06/30/88 10,917.49 11,397.18 11,397.19 14,164.74
07/31/88 10,808.70 11,276.39 11,276.40 14,612.06
08/31/88 10,205.21 10,639.55 10,639.56 13,664.91
09/30/88 10,611.72 11,056.77 11,056.78 14,264.66
10/31/88 10,903.01 11,353.25 11,353.26 15,488.57
11/30/88 10,962.52 11,408.18 11,408.19 16,414.47
12/31/88 11,159.39 11,605.77 11,605.78 16,508.86
01/31/89 11,652.24 12,110.79 12,110.80 16,802.72
02/28/89 11,500.41 11,946.12 11,946.13 16,892.27
03/31/89 11,645.17 12,088.89 12,088.90 16,564.06
04/30/89 12,244.63 12,703.83 12,703.84 16,720.92
05/31/89 12,622.97 13,088.07 13,088.08 15,814.14
06/30/89 12,365.99 12,813.62 12,813.63 15,551.47
07/31/89 13,698.42 14,186.15 14,186.17 17,507.53
08/31/89 13,792.02 14,273.92 14,273.94 16,723.37
09/30/89 14,150.69 14,636.25 14,636.27 17,488.30
10/31/89 13,703.16 14,164.16 14,164.17 16,789.12
11/30/89 14,126.00 14,592.32 14,592.33 17,636.46
12/31/89 14,446.89 14,914.46 14,914.47 18,291.48
01/31/90 13,756.46 14,192.16 14,192.18 17,614.51
02/28/90 13,414.40 13,831.10 13,831.11 16,388.90
03/31/90 13,096.09 13,494.02 13,494.03 14,684.94
04/30/90 12,963.97 13,349.57 13,349.58 14,572.31
05/31/90 14,129.52 14,541.23 14,541.24 16,239.53
06/30/90 14,430.67 14,842.09 14,842.10 16,100.35
07/31/90 14,849.55 15,263.40 15,263.41 16,331.23
08/31/90 13,254.58 13,614.22 13,614.23 14,749.72
09/30/90 11,774.39 12,085.44 12,085.45 12,698.47
10/31/90 12,684.91 13,012.37 13,012.38 14,681.21
11/30/90 12,387.67 12,699.40 12,699.42 13,819.43
12/31/90 12,301.08 12,602.48 12,602.49 14,048.69
01/31/91 12,614.70 12,915.83 12,915.84 14,507.10
02/28/91 13,612.93 13,937.63 13,937.64 16,066.47
03/31/91 13,240.37 13,542.57 13,542.58 15,105.85
04/30/91 13,227.13 13,515.37 13,515.38 15,258.57
05/31/91 13,466.70 13,760.56 13,760.57 15,422.30
06/30/91 12,881.17 13,147.48 13,147.49 14,293.08
07/31/91 13,599.77 13,883.20 13,883.21 14,999.15
08/31/91 13,852.55 14,114.76 14,114.77 14,698.27
09/30/91 14,025.47 14,291.86 14,291.87 15,531.08
10/31/91 14,238.43 14,496.24 14,496.26 15,755.19
11/30/91 13,479.95 13,719.67 13,719.68 15,023.83
12/31/91 14,840.21 15,112.50 15,112.51 15,804.47
01/31/92 14,677.74 14,946.11 14,946.13 15,471.47
02/29/92 14,474.65 14,724.22 14,724.24 14,921.92
03/31/92 13,878.81 14,100.33 14,100.34 13,940.96
04/30/92 13,946.51 14,169.59 14,169.60 14,010.80
05/31/92 14,325.58 14,530.02 14,530.03 14,952.89
06/30/92 13,797.51 13,989.33 13,989.34 14,248.61
07/31/92 13,865.15 14,044.78 14,044.80 13,888.54
08/31/92 13,851.57 14,030.96 14,030.98 14,764.36
09/30/92 13,594.35 13,753.64 13,753.65 14,477.50
10/31/92 13,905.84 14,058.60 14,058.61 13,722.48
11/30/92 14,068.33 14,211.07 14,211.08 13,855.83
12/31/92 14,100.63 14,229.24 14,229.25 13,931.69
01/31/93 14,129.79 14,259.14 14,259.15 13,934.10
02/28/93 14,319.18 14,438.30 14,438.32 14,359.17
03/31/93 15,455.34 15,573.12 15,573.14 15,614.98
04/30/93 16,445.93 16,573.46 16,573.48 17,101.17
05/31/93 16,708.15 16,827.27 16,827.29 17,466.52
06/30/93 16,212.88 16,319.59 16,319.61 17,198.04
07/31/93 16,795.51 16,886.91 16,886.92 17,804.01
08/31/93 17,815.13 17,902.15 17,902.17 18,769.17
09/30/93 17,727.70 17,797.67 17,797.69 18,350.80
10/31/93 18,164.63 18,215.83 18,215.85 18,920.36
11/30/93 17,348.80 17,394.59 17,394.60 17,270.48
12/31/93 18,957.54 18,998.80 18,991.86 18,521.45
01/31/94 19,863.22 19,896.93 19,889.67 20,091.35
02/28/94 19,491.97 19,516.33 19,509.20 20,039.83
03/31/94 18,185.46 18,191.87 18,185.22 19,180.97
04/30/94 18,675.44 18,679.01 18,672.19 19,999.07
05/31/94 18,779.29 18,755.22 18,748.37 19,888.52
06/30/94 18,437.75 18,420.35 18,413.62 20,174.04
07/31/94 19,031.48 18,983.70 18,976.76 20,372.55
08/31/94 19,565.89 19,516.40 19,509.27 20,859.35
09/30/94 19,180.03 19,120.57 19,113.58 20,206.93
10/31/94 19,491.68 19,409.86 19,402.77 20,884.53
11/30/94 18,229.73 18,146.24 18,139.61 19,885.42
12/31/94 17,545.61 17,444.72 17,438.35 20,014.63
01/31/95 16,545.65 16,449.75 16,443.74 19,250.43
02/28/95 16,288.05 16,185.43 16,179.52 19,200.19
03/31/95 17,060.74 16,947.20 16,941.01 20,403.08
04/30/95 17,742.57 17,600.19 17,593.76 21,175.91
05/31/95 17,818.32 17,677.88 17,655.89 20,928.91
06/30/95 17,575.88 17,429.17 17,407.19 20,567.45
07/31/95 18,666.81 18,501.95 18,479.66 21,853.53
08/31/95 18,272.91 18,097.80 18,075.51 21,025.20
09/30/95 18,469.94 18,268.89 18,262.12 21,441.29
10/31/95 17,742.56 17,553.61 17,531.56 20,870.41
11/30/95 18,106.18 17,895.68 17,888.94 21,456.58
12/31/95 18,681.93 18,455.40 18,448.46 22,326.64
01/31/96 19,348.60 19,108.41 19,085.68 22,423.54
02/29/96 19,257.80 18,999.59 18,976.84 22,504.94
03/31/96 19,591.09 19,326.07 19,303.20 22,988.57
04/30/96 20,348.80 20,056.95 20,033.60 23,662.59
05/31/96 20,045.72 19,761.43 19,738.42 23,232.88
06/30/96 20,227.60 19,916.85 19,893.80 23,369.26
07/31/96 19,242.63 18,937.34 18,914.65 22,692.02
08/31/96 19,378.97 19,061.78 19,038.92 22,747.61
09/30/96 19,742.59 19,403.82 19,380.93 23,357.70
10/31/96 19,515.32 19,155.01 19,132.16 23,124.59
11/30/96 19,985.09 19,621.49 19,598.47 24,050.50
12/31/96 19,915.18 19,533.55 19,510.81 23,746.99
01/31/97 20,118.14 19,710.03 19,687.34 22,921.30
02/28/97 20,414.98 19,998.88 19,976.25 23,301.80
03/31/97 20,165.04 19,742.12 19,719.46 23,391.97
04/30/97 20,227.43 19,790.31 19,767.59 23,521.80
05/31/97 21,289.55 20,817.54 20,794.52 25,058.24
06/30/97 22,273.73 21,764.53 21,741.04 26,445.72
07/31/97 22,648.53 22,117.55 22,094.12 26,878.90
08/31/97 20,633.74 20,143.36 20,120.67 24,876.42
09/30/97 21,992.59 21,443.38 21,420.39 26,274.48
10/31/97 20,149.55 19,645.65 19,623.21 24,261.85
11/30/97 19,899.53 19,388.76 19,366.46 24,019.23
12/31/97 20,440.02 19,894.81 19,872.61 24,235.41
01/31/98 20,713.45 20,159.57 20,137.35 25,350.23
02/28/98 22,183.15 21,571.89 21,549.16 26,982.79
03/31/98 23,806.85 23,142.99 23,119.88 27,819.26
04/30/98 24,507.72 23,813.91 23,790.56 28,044.59
05/31/98 24,439.37 23,743.30 23,702.32 27,915.59
06/30/98 24,490.62 23,760.82 23,737.57 28,133.33
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class A and B shares commenced operations after the inception date
shown. Total return for the periods shown before the inception of Class A and B
shares reflects the performance for this Fund's oldest class of shares (Class
C), restated to reflect the appropriate operating expenses for those shares. Had
the Class A share returns been restated on the basis of different sales charges,
but without regard to the lower operating expenses of Class A shares, the
adjusted total return figures for the 10-year and since inception periods would
have been lower, namely 7.6% for both periods. Past performance is not an
indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top Holdings in % of Total
Selected Countries Investments
- --------------------------------------------------------------------------------
Finland/Nokia OYJ "A" 3.8%
- --------------------------------------------------------------------------------
Portugal/Portugal Telecom SA 1.7%
- --------------------------------------------------------------------------------
Hungary/Magyar Tavkozlesi Rt. 1.7%
- --------------------------------------------------------------------------------
Italy/ENI SpA 1.6%
- --------------------------------------------------------------------------------
Ireland/Allied Irish Banks PLC 1.5%
- --------------------------------------------------------------------------------
France/PSA Peugeot Citroen 1.3%
- --------------------------------------------------------------------------------
France/Elf Aquitaine SA 1.2%
- --------------------------------------------------------------------------------
Switzerland/Novartis AG 1.2%
- --------------------------------------------------------------------------------
Portugal/EDP- Electricidade de 1.2%
Portugal SA
- --------------------------------------------------------------------------------
France/VIVENDI 1.1%
- --------------------------------------------------------------------------------
Top 5 Countries % of Total Investments
- --------------------------------------------------------------------------------
France 16.4%
- --------------------------------------------------------------------------------
Italy 9.1%
- --------------------------------------------------------------------------------
Japan 8.5%
- --------------------------------------------------------------------------------
Finland 8.2%
- --------------------------------------------------------------------------------
Germany 7.9%
- --------------------------------------------------------------------------------
Regional Breakdown
- --------------------------------------------------------------------------------
Stock: Europe 77%
- --------------------------------------------------------------------------------
Latin America 10%
- --------------------------------------------------------------------------------
Japan 9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96%
- --------------------------------------------------------------------------------
Cash Equivalents 4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
Thanks to strong performance over the last six months, the International Fund
was able to reverse its disappointing early results and end the year with
returns that surpass both its benchmark and an average of funds with the same
objective (as measured by the Lipper International Fund Average). For the year
ended June 30, 1998, the Fund's Class A shares returned 10.0%, Class B shares
returned 9.2% and class C shares returned 8.2%. By contrast, the MSCI World
ex-US Index returned 6.6% and the Lipper Average returned 8.2% for the same
12-month period.
Performance attribution was positive in all three of the Fund manager's main
categories: country selection, currency impact and stock selection. Leading
these categories was country selection and the Fund's year-long strategy of
overweighting continental Europe at the expense of the United Kingdom and Asia.
In particular, the manager believes the Fund's above-average allocation to
selected European and Middle Eastern countries explains the strong relative
performance.
Europe (other than the United Kingdom) proved to be a lucrative market for
the Fund during this period. For example, the Fund has realized significant
benefits from the European recovery underway.
There were several stock-specific successes in Italy and France--mostly in
the finance sector, with banking in particular doing well. Both Italy and France
enjoyed strong domestic economies and lower interest rates during this period,
allowing banks to increase loans and report better-than-expected results. Two of
these banks warranting mention by name were Fund holdings Banca Commerciale
Italiana and Banque National de Paris.
The Fund's greatest disappointments this year occurred during the first six
months and were tied closely to investments in Asia. The combination of falling
currencies, collapsing stock markets and fleeing investors meant most of the
Fund's holdings in this area were hit hard. But the Fund was able to perform
better during the last six months by dramatically trimming back holdings in
Asia. Compared to its benchmark index, the fund took a cautionary approach to
Asian investment during this later period, choosing to bypass what some managers
were calling a "buying opportunity" in favor of protecting assets. This approach
proved well-founded as the Asian markets overall saw further deterioration. In
the last three months alone, in fact, Malaysia fell 46%, Singapore fell 33% and
Hong Kong's market dropped by 27%.
The Fund's manager will be looking for continued strength from the
developed markets in Europe going forward. The current strategy for this region
is to take advantage of rising share prices by withdrawing profits from Italy
and Finland and investing the assets in Germany, which has lagged a bit behind
its neighbors. The manager also expects the strength in these developed markets
to insulate and even promote profits from some of the emerging markets,
including Poland and Hungary. For Asia, the manager foresees more economic and
profit disappointments before a serious turnaround, so investment will remain
light.
22 See page 41 for financial details.
<PAGE>
PIMCO Emerging Markets Fund
OBJECTIVE
Long-term growth of capital.
PORTFOLIO
Primarily common stock of companies located in emerging market countries.
TOTAL NET ASSETS
$28 million
NUMBER OF SECURITIES IN THE PORTFOLIO
162 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Blairlogie Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares MSCI Lipper
(INCEP. 6/1/93) (INCEP. 6/1/93) (INCEP. 6/1/93) EMF Emg. Mkts
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year -27.4% -31.4% -27.9% -31.5% -28.6% -39.1% -31.9%
3 years -4.9% -6.7% -5.6% -6.5% -5.6% -9.3% -4.5%
5 years 1.7% 0.6% 1.0% 0.6% 1.0% 0.4% -0.7%
Inception 2.0% 0.8% 1.2% 1.1% 1.2% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EMERGING EMERGING EMERGING MSCI
MARKETS MARKETS MARKETS EMERGING MKTS
CLASS A B C FREE
INCEPTION 6/1/93 6/1/93 6/1/93 INDEX
========= ========= ========= ========= =============
<S> <C> <C> <C> <C>
05/31/93 9,450.00 10,000.00 10,000.00 10,000.00
06/30/93 9,588.68 10,140.93 10,140.93 10,296.33
07/31/93 9,878.21 10,440.64 10,440.64 10,568.49
08/31/93 10,847.52 11,458.63 11,458.63 11,460.90
09/30/93 11,051.69 11,667.24 11,667.24 11,880.00
10/31/93 11,842.69 12,494.97 12,494.97 12,945.96
11/30/93 12,726.82 13,419.97 13,419.97 13,518.84
12/31/93 14,753.17 15,548.36 15,548.36 15,753.27
01/31/94 15,695.19 16,531.41 16,531.41 16,040.08
02/28/94 15,260.86 16,064.44 16,064.44 15,754.74
03/31/94 14,075.03 14,805.99 14,805.99 14,328.99
04/30/94 13,670.51 14,371.36 14,371.36 14,042.42
05/31/94 14,328.97 15,054.36 15,054.36 14,523.04
06/30/94 13,602.86 14,282.31 14,282.31 14,122.73
07/31/94 14,368.13 15,076.63 15,076.63 15,000.73
08/31/94 15,990.03 16,768.99 16,768.99 16,862.67
09/30/94 16,510.61 17,304.74 17,304.74 17,054.29
10/31/94 16,086.33 16,849.31 16,849.31 16,746.49
11/30/94 15,302.41 16,018.02 16,018.02 15,875.56
12/31/94 13,550.68 14,174.10 14,174.10 14,600.91
01/31/95 11,742.10 12,273.23 12,273.23 13,047.50
02/28/95 11,154.46 11,651.98 11,651.98 12,712.85
03/31/95 10,976.49 11,458.62 11,458.62 12,793.40
04/30/95 11,536.09 12,035.80 12,035.80 13,367.75
05/31/95 12,054.18 12,568.60 12,568.60 14,078.79
06/30/95 12,132.02 12,642.19 12,642.19 14,121.02
07/31/95 12,332.54 12,843.05 12,843.05 14,437.37
08/31/95 12,103.45 12,596.14 12,596.14 14,096.61
09/30/95 12,027.86 12,509.69 12,509.69 14,030.46
10/31/95 11,578.08 12,033.85 12,033.85 13,494.43
11/30/95 11,286.58 11,723.54 11,723.54 13,254.25
12/31/95 11,804.20 12,253.64 12,253.64 13,842.76
01/31/96 12,789.04 13,268.26 13,268.26 14,826.94
02/29/96 12,445.16 12,903.60 12,903.60 14,591.14
03/31/96 12,574.68 13,029.70 13,029.70 14,704.89
04/30/96 12,992.46 13,454.59 13,454.59 15,293.16
05/31/96 12,957.17 13,409.52 13,409.52 15,224.32
06/30/96 13,014.61 13,460.66 13,460.66 15,318.79
07/31/96 11,920.51 12,320.53 12,320.53 14,272.60
08/31/96 12,296.77 12,701.47 12,701.47 14,638.01
09/30/96 12,446.83 12,848.61 12,848.61 14,765.43
10/31/96 11,990.62 12,369.54 12,369.54 14,371.22
11/30/96 12,202.28 12,580.26 12,580.26 14,612.62
12/31/96 12,324.16 12,697.87 12,697.87 14,675.11
01/31/97 13,219.03 13,615.48 13,615.48 15,675.89
02/28/97 13,703.64 14,114.62 14,114.62 16,346.90
03/31/97 13,384.07 13,764.23 13,764.23 15,917.06
04/30/97 13,239.78 13,604.84 13,604.84 15,945.69
05/31/97 13,734.78 14,114.63 14,114.63 16,401.65
06/30/97 14,374.08 14,751.94 14,751.94 17,280.32
07/31/97 14,363.76 14,741.28 14,741.28 17,538.08
08/31/97 12,683.09 13,010.12 13,010.12 15,306.34
09/30/97 13,353.36 13,679.27 13,679.27 15,730.57
10/31/97 11,569.46 11,852.57 11,852.57 13,149.29
11/30/97 11,445.78 11,714.53 11,714.53 12,669.64
12/31/97 12,033.52 12,309.31 12,309.31 12,974.98
01/31/98 11,177.70 11,427.77 11,427.77 11,957.87
02/28/98 11,889.21 12,160.62 12,149.99 13,206.27
03/31/98 12,580.04 12,850.93 12,851.01 13,779.31
04/30/98 12,703.74 12,967.81 12,967.89 13,628.20
05/31/98 11,249.85 11,470.29 11,470.36 11,761.14
06/30/98 10,435.23 10,541.93 10,641.99 10,527.00
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
6/11/93), adjusted for retail class fees and expenses. Past performance is not
an indication of future results.
See page 27 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top Holdings in % of Total
Selected Countries Investments
- --------------------------------------------------------------------------------
Hungary/Magyar Tavkozlesi Rt. 2.9%
- --------------------------------------------------------------------------------
Argentina/YPF Sociedad Anonima-ADR 2.5%
- --------------------------------------------------------------------------------
Mexico/Telefonos de Mexico-ADR 2.3%
- --------------------------------------------------------------------------------
Turkey/Turkiye IS Bankasi "C" 2.2%
- --------------------------------------------------------------------------------
Chile/Compania de 2.2%
Telecomunicaciones de Chile SASP-ADR
- --------------------------------------------------------------------------------
Brazil/Telecomunicacoes 2.1%
Brasileiras-ADR
- --------------------------------------------------------------------------------
Argentina/Telefonica de Argentina ADR 2.1%
- --------------------------------------------------------------------------------
Peru/Telefonica del Peru SA "B" 2.1%
- --------------------------------------------------------------------------------
Hungary/MOL Magyar Olaj-es Gazipare 2.0%
- --------------------------------------------------------------------------------
Chile/Enersis SA SP-ADR 1.9%
- --------------------------------------------------------------------------------
Top 5 Countries % of Total Investments
- --------------------------------------------------------------------------------
Israel 13.0%
- --------------------------------------------------------------------------------
Turkey 11.5%
- --------------------------------------------------------------------------------
Brazil 9.9%
- --------------------------------------------------------------------------------
Chile 9.3%
- --------------------------------------------------------------------------------
Mexico 9.1%
- --------------------------------------------------------------------------------
Regional Breakdown
- --------------------------------------------------------------------------------
Stock: Latin America 44%
- --------------------------------------------------------------------------------
Asia 29%
- --------------------------------------------------------------------------------
Europe 21%
- --------------------------------------------------------------------------------
South Africa 6%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 100%
- --------------------------------------------------------------------------------
Cash Equivalents 0%
- --------------------------------------------------------------------------------
================================================================================
PORTFOLIO INSIGHTS
================================================================================
In an extremely difficult year for emerging market countries, the Fund posted
negative absolute returns but strong relative results. For the twelve-month
period ended June 30, 1998, the Fund's Class A shares fell 27.4%, Class B shares
fell 27.9% and Class C shares fell 28.6%. In contrast, the MSCI Emerging Markets
Free Index fell more than 40%.
The collapse of the Asian markets during the last twelve months lead to a
contagious sense of panic among emerging market investors. Rapidly selling off
their holdings, these investors drove prices down even further. Despite this
grim situation, the Fund's manager was able to protect portions of the Fund's
assets through careful country selections.
The emerging markets outside of Asia presented an erratic investment
environment over the last twelve months. For example, the Fund realized solid
contributions from investments in Greece, as well as Israel and Turkey. In
Turkey, the Fund's finance-related holdings did particularly well, including
Turkiye IS Bankasi (T IS). The Turkish economy flourished this year thanks to
lower interest rates, a more stable government and the pursuit of a prudent
fiscal policy. As the country's largest bank ,T IS did especially well, building
upon the strong operating environment by expanding its liquidity and
restructuring to take advantage of market opportunities.
In contrast to these more successful European markets, the Fund saw
disappointing results from Russian holdings. The Russian market seemed to offer
promising opportunities earlier in the year, but actual 12-month market results
were poor. Hindering the Russian market during this period were constant alarm
about President Yeltsin's health, a shake-up in the government cabinet,
corruption and a widespread disaffection with capitalism.
Investments in the Asian markets were even more complicated. Financial and
political mayhem continued throughout the year. While some managers saw this
situation as a buying opportunity, the Emerging Markets Fund avoided any
significant activity in the Asian emerging markets. Recognizing that they risk
missing the inflection point when things do turn around in this region, the
Fund's manager points out that the current strategy has spared the Fund some of
the extreme volatility and losses associated with Asia this year. In addition, a
stock market recovery, when it occurs, could be a drawn-out process offering
many opportunities to profit.
Looking ahead, the Fund's manager currently anticipates a settling period.
The manager believes most investors who were looking to leave the emerging
markets arena have gone, which should provide some degree of stability. In
addition, the manager believes that self-interest and the availability of
sophisticated economic management tools will enable Asia to avoid a full-scale
depression. As a result, the manager believes the Emerging Markets Fund
continues to represent a long-term opportunity for aggressive investors to
diversify their portfolios.
See page 44 for financial details. 23
<PAGE>
June 30, 1998
PIMCO Innovation Fund
OBJECTIVE
Capital appreciation; no consideration given to income.
PORTFOLIO
Primarily technology-related stocks of companies of all sizes.
TOTAL NET ASSETS
$386 million
NUMBER OF SECURITIES IN THE PORTFOLIO
40 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Columbus
Circle Investors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
(INCEP. 12/22/94) (INCEP. 12/22/94) (INCEP. 12/22/94) S&P 500 Sc. & Tech.
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 48.1% 40.0% 47.0% 42.0% 46.0% 30.2% 22.7%
3 years 27.7% 25.3% 26.7% 26.1% 26.7% 30.2% 17.1%
Inception 32.3% 30.2% 31.2% 30.8% 31.3% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INNOVATION INNOVATION INNOVATION S&P 500
CLASS A B C INDEX
INCEPTION 12/22/94 12/22/94 12/22/94
========= ========== ========== ========== =========
<S> <C> <C> <C> <C>
12/31/94 9,450.00 10,000.00 10,000.00 10,000.00
01/31/95 9,374.21 9,909.78 9,909.78 10,259.30
02/28/95 9,970.74 10,541.01 10,541.01 10,659.10
03/31/95 10,273.77 10,851.63 10,851.63 10,973.66
04/30/95 10,718.82 11,312.53 11,312.53 11,296.83
05/31/95 10,974.45 11,573.05 11,573.05 11,748.36
06/30/95 12,186.43 12,845.58 12,845.58 12,021.28
07/31/95 13,322.68 14,037.93 14,037.93 12,419.90
08/31/95 13,635.11 14,358.66 14,348.63 12,451.08
09/30/95 13,956.96 14,689.38 14,679.21 12,976.51
10/31/95 13,786.61 14,499.04 14,498.78 12,930.19
11/30/95 14,165.30 14,889.93 14,889.66 13,497.82
12/31/95 13,733.41 14,432.75 14,422.45 13,757.79
01/31/96 13,549.34 14,227.56 14,227.61 14,226.10
02/29/96 14,208.44 14,914.82 14,914.87 14,357.98
03/31/96 14,092.17 14,781.51 14,781.56 14,496.25
04/30/96 15,594.48 16,340.64 16,340.69 14,709.92
05/31/96 16,864.02 17,664.00 17,664.06 15,089.29
06/30/96 16,175.82 16,925.43 16,925.49 15,146.78
07/31/96 13,878.80 14,525.08 14,514.88 14,477.60
08/31/96 14,721.91 15,386.64 15,386.71 14,782.93
09/30/96 16,728.19 17,479.32 17,479.40 15,614.91
10/31/96 16,611.76 17,335.57 17,335.65 16,045.57
11/30/96 17,609.99 18,371.73 18,371.82 17,258.46
12/31/96 16,974.41 17,698.92 17,699.00 16,916.57
01/31/97 17,908.19 18,656.20 18,656.29 17,973.51
02/28/97 15,883.53 16,533.44 16,533.52 18,114.43
03/31/97 14,841.62 15,441.01 15,441.09 17,370.10
04/30/97 15,077.46 15,680.22 15,680.30 18,407.10
05/31/97 16,974.42 17,636.35 17,636.43 19,527.72
06/30/97 17,131.72 17,792.41 17,782.09 20,402.57
07/31/97 19,667.46 20,414.62 20,404.24 22,026.00
08/31/97 19,195.67 19,915.04 19,904.64 20,792.10
09/30/97 20,620.74 21,371.88 21,371.77 21,930.89
10/31/97 19,293.67 19,987.82 19,987.72 21,198.39
11/30/97 19,205.06 19,883.68 19,883.58 22,179.67
12/31/97 18,506.70 19,143.81 19,132.64 22,560.49
01/31/98 19,238.11 19,885.94 19,886.02 22,810.01
02/28/98 21,599.64 22,312.00 22,301.02 24,455.07
03/31/98 22,414.60 23,142.68 23,142.95 25,707.41
04/30/98 24,034.28 24,793.47 24,793.76 25,966.03
05/31/98 22,508.48 23,209.39 23,198.58 25,519.67
06/30/98 25,371.54 25,845.35 26,134.13 26,556.28
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class B shares commenced operations after the inception date shown.
Total return for the periods shown before the inception of Class B shares
reflects the performance for this Fund's oldest class of shares, restated to
reflect the appropriate operating expenses for those shares. Past performance is
not an indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
America Online, Inc. 8.1%
Online service provider
- --------------------------------------------------------------------------------
Federal Home Loan Bank Corp. 6.9%
Residential mortgage funds provider
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 5.9%
Computer network products
- --------------------------------------------------------------------------------
Microsoft Corp. 5.3%
Computer software
- --------------------------------------------------------------------------------
Nokia Corp.-ADR 4.8%
Telecommunications sys. & equipment
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 4.7%
Telecommunication systems software
- --------------------------------------------------------------------------------
Yahoo, Inc. 4.0%
Internet navigational services
- --------------------------------------------------------------------------------
Saville Systems-ADR 3.5%
Telecommunication industry billing sys.
- --------------------------------------------------------------------------------
Ascend Communications, Inc. 3.2%
Network access products
- --------------------------------------------------------------------------------
VISX, Inc. 3.0%
Vision correction systems manufacturer
- --------------------------------------------------------------------------------
Top Ten Total 49.4%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 71.3%
- --------------------------------------------------------------------------------
Health Care 12.0%
- --------------------------------------------------------------------------------
Cash Equivalents 7.5%
- --------------------------------------------------------------------------------
Communications 5.9%
- --------------------------------------------------------------------------------
Financial & Business Services 1.6%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92%
- --------------------------------------------------------------------------------
Cash Equivalents 8%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The Innovation Fund produced outstanding results for the year ended June 30,
1998. The Fund's Class A shares returned 48.1%, while Class B shares returned
47.0% and Class C shares returned 46.0%, all of which soundly beat the S&P 500
Index's 30.2% return and the Lipper Science and Technology Fund average of 22.7%
for the same period.
The Innovation Fund began 1998 with dramatically reduced investments in
companies with Asian exposure, meaning operations in Asia or a dependence on
Asian suppliers or clients. Instead, the Fund opted to focus on
domestically-oriented technology stocks. Within this group, the Fund found
particular success through investment in on-line service providers, including
such holdings as Yahoo, Inc. and America Online, Inc. Yahoo enjoys strong brand
awareness as the leading Internet search engine. Using this visibility along
with increasing statistics on Internet users, Yahoo was able to generate new
advertisers, greatly increasing company revenues.
In the hardware sector of technology, the Fund realized positive results from
Dell Computer Corp. Dell Computer dominates the personal computer direct sales
markets. The company's success has been due in large part to its unique business
process: manufacturing computers after ordered. This process has allowed the
company to have very high inventory turnover figures, and great overhead cost
control. So, while many PC companies suffered through an industry correction
during the year, Dell Computer saw its profits and stock price soar.
The Innovation Fund also benefited over this time period from its
"non-traditional" technology holdings, such as VISX, a developer of proprietary
technologies and systems for laser vision correction. The company's share price
rose this year in response to growing demand for laser eye surgery and greater
profit margins on these systems. The Fund's manager believes the demand for
VISX's products should continue growing, and that the company is well-positioned
to dominate the market.
An area that did not perform up to expectations during this time was the
Fund's semiconductor holdings. Though the prices of most semiconductor stocks
rebounded in the first quarter of 1998, they fell in the second quarter when the
Asian currency crisis reared its head again. The good news is that the Fund was
underweighted in semiconductors throughout the first half of 1998, so the
relative performance of the Fund was not hurt by the sector's poor showing.
Looking ahead, the manager currently believes the Fund is well-positioned
to avoid any additional disruptions from the Asian situation and is poised to
benefit from the strong domestic economy. The manager is interested in expanding
the Fund's exposure in the networking area and is currently watching this sector
closely. The manager is also monitoring the inventory level in the PC industry,
looking for positive fundamentals. In general, the Fund continues to look for
innovative technology-related companies that will positively surprise the
market.
See page 46 for financial details.
24
<PAGE>
PIMCO Precious Metals Fund
OBJECTIVE
Capital appreciation; no consideration given to income.
PORTFOLIO
Primarily stocks of companies that extract, process, distribute or market
precious metals.
TOTAL NET ASSETS
$26 million
NUMBER OF SECURITIES IN THE PORTFOLIO
60 (not including short-term instruments)
MANAGER
Van Eck Associates
(an independent sub-advisor not owned by PIMCO Advisors L.P.)
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares Phil. Gold Lipper
(INCEP. 10/10/88) (INCEP. 10/10/88) (INCEP. 10/10/88) & Silver Gold Oriented
Adjusted Adjusted Adjusted Index Fund Avg.
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year -39.6% -43.0% -40.5% -43.5% -41.3% -25.0% -35.0%
3 years -22.4% -23.9% -23.1% -23.9% -23.2% -15.8% -17.6%
5 years -13.9% -14.9% -14.7% -15.0% -14.7% -9.2% -11.2%
Inception -5.9% -6.5% -6.7% -6.7% -6.7% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PRECIOUS PRECIOUS PRECIOUS PHIL. GOLD &
METALS METALS METALS SILVER INDEX
CLASS A B C
INCEPTION 10/10/88 10/10/88 10/10/88
<S> <C> <C> <C> <C>
======== ========= ========= ========= ===========
10/31/88 9,450.00 10,000.00 10,000.00 10,000.00
11/30/88 9,475.21 10,020.61 10,020.61 10,125.66
12/31/88 9,209.77 9,733.49 9,733.49 9,507.21
01/31/89 9,673.77 10,217.57 10,217.57 9,868.88
02/28/89 9,562.26 10,093.93 10,093.93 11,007.43
03/31/89 9,490.32 10,011.56 10,011.56 10,340.91
04/30/89 9,095.83 9,589.29 9,589.29 9,719.19
05/31/89 8,574.12 9,033.05 9,033.05 9,466.78
06/30/89 8,921.59 9,393.54 9,393.54 10,100.52
07/31/89 9,240.29 9,723.13 9,723.13 10,428.32
08/31/89 9,667.06 10,166.01 10,166.01 11,159.31
09/30/89 9,663.15 10,155.70 10,155.70 11,341.78
10/31/89 9,649.64 10,135.12 10,135.12 11,524.26
11/30/89 10,881.45 11,422.60 11,422.60 13,041.96
12/31/89 10,780.41 11,309.27 11,309.27 13,104.24
01/31/90 11,013.13 11,546.21 11,546.21 14,235.14
02/28/90 10,380.79 10,876.70 10,876.70 13,190.56
03/31/90 9,778.04 10,238.11 10,238.11 12,315.34
04/30/90 8,751.18 9,156.66 9,156.66 10,868.66
05/31/90 9,140.59 9,558.36 9,558.36 11,731.86
06/30/90 8,496.21 8,878.60 8,878.60 11,085.01
07/31/90 9,240.84 9,651.07 9,651.07 11,904.50
08/31/90 9,236.87 9,640.81 9,640.81 11,806.16
09/30/90 9,282.01 9,682.05 9,682.05 11,837.85
10/31/90 7,796.90 8,126.74 8,126.74 9,809.88
11/30/90 7,584.33 7,900.16 7,900.16 9,313.81
12/31/90 8,142.85 8,476.96 8,476.96 10,603.15
01/31/91 7,119.11 7,405.77 7,405.77 8,755.46
02/28/91 7,743.01 8,044.37 8,044.37 9,396.85
03/31/91 7,673.68 7,961.97 7,961.97 9,210.01
04/30/91 7,535.05 7,807.46 7,807.46 8,803.54
05/31/91 7,643.96 7,920.75 7,920.75 8,994.76
06/30/91 8,129.16 8,425.46 8,425.46 9,637.24
07/31/91 8,099.48 8,384.23 8,384.23 9,609.92
08/31/91 7,356.84 7,611.72 7,611.72 8,294.36
09/30/91 7,436.08 7,683.82 7,683.82 8,613.42
10/31/91 7,871.76 8,126.71 8,126.71 9,058.13
11/30/91 7,881.65 8,147.33 8,147.33 9,192.53
12/31/91 7,782.63 8,023.71 8,023.71 8,827.58
01/31/92 7,911.32 8,157.62 8,157.62 9,126.97
02/29/92 7,792.48 8,034.04 8,034.04 8,894.23
03/31/92 7,297.41 7,508.73 7,508.73 7,871.50
04/30/92 6,812.23 7,014.32 7,014.32 7,640.95
05/31/92 7,228.10 7,436.62 7,436.62 8,197.12
06/30/92 7,594.44 7,807.41 7,807.41 8,579.55
07/31/92 7,911.28 8,126.70 8,126.70 9,028.63
08/31/92 7,584.51 7,786.82 7,786.82 8,617.79
09/30/92 7,465.67 7,663.21 7,663.21 8,790.43
10/31/92 7,178.54 7,364.53 7,364.53 8,261.58
11/30/92 6,584.45 6,746.52 6,746.52 7,190.78
12/31/92 6,861.69 7,034.94 7,034.94 7,790.65
01/31/93 6,673.56 6,839.24 6,839.24 7,815.78
02/28/93 7,237.94 7,405.72 7,405.72 8,302.01
03/31/93 8,337.01 8,518.12 8,518.12 9,486.45
04/30/93 9,436.08 9,640.82 9,640.82 10,796.55
05/31/93 11,178.75 11,422.76 11,422.76 12,140.52
06/30/93 11,347.08 11,587.52 11,587.52 12,722.90
07/31/93 12,634.27 12,895.64 12,895.64 14,084.35
08/31/93 11,357.00 11,577.20 11,577.20 12,879.15
09/30/93 10,218.33 10,413.30 10,413.30 11,375.66
10/31/93 11,654.02 11,865.60 11,865.60 13,488.85
11/30/93 11,436.22 11,639.06 11,639.06 12,970.94
12/31/93 13,099.65 13,328.33 13,328.33 14,413.24
01/31/94 13,198.69 13,421.07 13,421.07 14,405.59
02/28/94 12,604.65 12,813.37 12,813.37 14,028.63
03/31/94 12,624.51 12,813.39 12,813.39 14,608.83
04/30/94 11,802.63 11,968.80 11,968.80 12,503.28
05/31/94 12,198.75 12,370.58 12,370.58 13,146.85
06/30/94 11,951.24 12,113.08 12,113.08 12,592.88
07/31/94 12,139.36 12,298.49 12,298.49 12,210.45
08/31/94 12,852.27 13,009.19 13,009.19 12,950.17
09/30/94 14,000.93 14,162.90 14,162.90 14,448.21
10/31/94 13,080.01 13,225.53 13,225.53 12,828.89
11/30/94 11,545.22 11,670.24 11,670.24 11,221.59
12/31/94 11,921.45 12,041.02 12,041.02 11,946.02
01/31/95 10,149.01 10,238.44 10,238.44 10,640.30
02/28/95 10,515.37 10,598.99 10,598.99 11,345.06
03/31/95 11,584.74 11,670.25 11,670.25 13,327.14
04/30/95 11,644.13 11,721.72 11,721.72 12,776.44
05/31/95 11,495.61 11,577.46 11,577.46 13,111.89
06/30/95 11,465.95 11,536.27 11,525.96 13,132.65
07/31/95 11,743.22 11,804.11 11,793.84 12,969.84
08/31/95 12,050.16 12,113.12 12,102.81 13,402.53
09/30/95 12,208.55 12,257.33 12,257.26 13,570.80
10/31/95 10,743.13 10,784.44 10,774.08 11,711.10
11/30/95 11,406.54 11,443.66 11,443.56 13,233.17
12/31/95 11,505.62 11,536.36 11,536.26 13,157.78
01/31/96 13,891.98 13,926.09 13,925.96 15,411.93
02/29/96 14,099.94 14,121.69 14,121.57 15,740.82
03/31/96 13,842.56 13,864.10 13,853.68 15,715.69
04/30/96 14,159.46 14,173.06 14,162.61 15,670.89
05/31/96 14,803.06 14,801.28 14,801.15 16,268.58
06/30/96 12,664.36 12,648.48 12,648.37 13,522.73
07/31/96 12,406.91 12,390.94 12,390.84 13,587.19
08/31/96 13,030.64 13,009.02 13,008.91 13,609.05
09/30/96 12,000.89 11,968.78 11,968.67 12,585.23
10/31/96 12,050.36 12,020.35 12,020.25 12,631.12
11/30/96 11,555.24 11,515.66 11,515.56 13,132.65
12/31/96 11,237.25 11,195.06 11,194.96 12,756.77
01/31/97 10,523.56 10,473.14 10,473.05 12,041.08
02/28/97 11,950.83 11,843.74 11,843.64 13,380.68
03/31/97 10,553.68 10,441.72 10,452.10 11,376.75
04/30/97 9,608.86 9,479.12 9,499.99 10,255.68
05/31/97 9,960.70 9,866.20 9,866.17 11,397.51
06/30/97 8,875.16 8,809.52 8,819.95 10,445.80
07/31/97 8,372.58 8,317.79 8,328.21 10,699.30
08/31/97 8,382.63 8,317.79 8,328.20 10,803.10
09/30/97 8,855.02 8,778.13 8,788.55 11,964.60
10/31/97 7,347.33 7,282.01 7,292.43 9,605.55
11/30/97 5,658.75 5,618.44 5,618.41 7,738.20
12/31/97 5,889.93 5,817.24 5,817.21 8,106.42
01/31/98 6,442.72 6,340.36 6,340.34 8,191.65
02/28/98 6,090.92 5,984.65 5,984.62 8,244.10
03/31/98 6,402.52 6,277.60 6,277.57 8,923.73
04/30/98 7,045.80 6,915.84 6,915.81 9,607.74
05/31/98 6,040.68 5,942.80 5,942.78 8,163.24
06/30/98 5,357.20 5,241.80 5,231.31 7,836.54
</TABLE>
*The adjusted returns above include the effect of paying the applicable sales
charges. Class A and B shares commenced operations after the inception date
shown. Total return for the periods shown before the inception of Class A and B
shares reflects the performance for this Fund's oldest class of shares (Class
C), restated to reflect the appropriate operating expenses for those shares. Had
Class A share returns been restated on the basis of different sales charges, but
without regard to the lower operating expenses of Class A shares, the adjusted
total return figure for the since inception period would have been lower, namely
- -6.7%. Past performance is not an indication of future results. See page 27 for
Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Stocks % of Total Investments
- --------------------------------------------------------------------------------
Anglo American Gold 6.9%
Investment Co. Limited-ADR
- --------------------------------------------------------------------------------
Homestake Mining Co. 5.8%
- --------------------------------------------------------------------------------
Getchell Gold Corp. 4.9%
- --------------------------------------------------------------------------------
Placer Dome, Inc. 4.1%
- --------------------------------------------------------------------------------
Anglo American Gold Investment 3.8%
Co. Limited
- --------------------------------------------------------------------------------
Stillwater Mining Co. 3.8%
- --------------------------------------------------------------------------------
Barrick Gold Corp. 3.6%
- --------------------------------------------------------------------------------
Newmont Mining Corp. 3.4%
- --------------------------------------------------------------------------------
Franco-Nevada Mining Corp. Limited 3.0%
- --------------------------------------------------------------------------------
Battle Mountain Gold Co. 2.9%
- --------------------------------------------------------------------------------
Top Ten Total 42.2%
- --------------------------------------------------------------------------------
Regions % of Total Investments
- --------------------------------------------------------------------------------
Stock: Canada 29%
- --------------------------------------------------------------------------------
South Africa 23%
- --------------------------------------------------------------------------------
United States 20%
- --------------------------------------------------------------------------------
Australia 8%
- --------------------------------------------------------------------------------
Other 2%
- --------------------------------------------------------------------------------
Investment Breakdown
- --------------------------------------------------------------------------------
Common Stock 82%
- --------------------------------------------------------------------------------
Cash Equivalents 18%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
Aside from a moderate recovery during the first four months of 1998, gold prices
declined steadily over the twelve-month period ended June 30, 1998, from $333.95
to $296.95 per ounce. The Precious Metals Fund's large exposure to gold mining
stocks (77% of the portfolio as of June 30, 1998), meant this price drop had a
significant effect on the portfolio. For the 12-month period, the Fund's returns
fell 39.6% for the Class A shares, 40.5% for the Class B shares, and 41.3% for
the Class C shares.
Gold prices began their decline in June, 1997. Since that time, gold has
continually been hurt by the Asian crisis, which has driven investors to seek
refuge in the U.S. dollar and the U.S. and European bond markets. In addition,
the European Central Bank delayed announcing its gold reserves in May, raising
uncertainties that further pushed the price of gold downward.
Countering disappointments in gold mining stocks were strong performances
from some of the Fund's other mining holdings. Stillwater Mining Co., for
example, was a strong performer for the Fund during the year. Stillwater Mining
is the only palladium and platinum producer in the United States. Demand for
palladium has been growing, as the metal is used in catalytic converters--a
device required in cars and trucks to reduce harmful emissions. In addition,
Russia had been a leading supplier of palladium and platinum, but has recently
decreased its output. To meet this growing need, Stillwater Mining announced
plans to triple production over the next five years and develop a second mine in
Montana.
Additional positive news for the Fund came from Homestake Mining Co.
Homestake completed its acquisition of Plutonic Resources Ltd., making Homestake
the second largest gold producer in Australia. The acquisition creates a synergy
as Homestake's underground mining expertise is combined with Plutonic's surface
mining experience, foreshadowing tremendous growth potential.
Looking ahead, the manager will be focusing the portfolio on higher quality
mining stocks that may provide stability during periods of low gold prices. Two
examples are Euro-Nevada Mining Corp. and Franco Nevada Mining Corp.--companies
involved in financing the development of mines. These companies have no debt or
operating expenses and they receive royalties from mining companies. The Fund's
manager also plans to hold large positions in South African mines. As a result
of the restructuring and merging of many companies in this region, the Fund's
manager believes these mines are financially strong and more efficient.
See page 47 for financial details. 25
<PAGE>
June 30, 1998
PIMCO Balanced Fund
OBJECTIVE
Total return consistent with prudent investment management.
PORTFOLIO
Primarily common stocks, fixed income securities and money market instruments.
TOTAL NET ASSETS
$68 million
NUMBER OF SECURITIES IN THE PORTFOLIO
176 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGERS
Cadence Capital Management, NFJ Investment Group and Pacific Investment
Management Company
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/98
<TABLE>
<CAPTION>
A Shares B Shares C Shares S&P500/ Lipper
(INCEP. 6/25/92) (INCEP. 6/25/92) (INCEP. 6/25/92) Leh. Agg. Balanced
Adjusted Adjusted Adjusted Hybrid Index Fund Avg.
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 19.4% 12.8% 18.6% 13.6% 17.6% 22.3% 17.6%
3 years 18.0% 15.8% 17.1% 16.4% 17.1% 21.3% 17.8%
5 years 13.7% 12.4% 12.9% 12.7% 12.9% 16.6% 13.9%
Inception 13.6% 12.5% 12.8% 12.8% 12.8% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
BALANCED BALANCED BALANCED LIPPER 60% S&P 500
CLASS A B C BALANCED 40% LEH. AGG.
INCEPTION 6/25/92 6/25/92 6/25/92 FUND AVG. HYBRID INDEX
========= ========= ========= ========= ========= ============
<S> <C> <C> <C> <C> <C>
06/30/92 9,450.00 10,000.00 10,000.00 10,000.00 10,000.00
07/31/92 9,811.89 10,376.54 10,376.54 10,293.60 10,326.71
08/31/92 9,789.72 10,346.53 10,346.53 10,197.66 10,241.72
09/30/92 9,946.37 10,505.77 10,505.77 10,315.14 10,362.49
10/31/92 9,974.46 10,528.66 10,528.66 10,316.07 10,328.98
11/30/92 10,143.45 10,700.61 10,700.61 10,551.48 10,540.94
12/31/92 10,283.93 10,842.05 10,842.05 10,702.58 10,685.59
01/31/93 10,361.77 10,917.08 10,917.08 10,845.67 10,821.15
02/28/93 10,483.85 11,039.43 11,039.43 10,979.62 10,985.41
03/31/93 10,576.74 11,130.17 11,130.17 11,206.23 11,142.80
04/30/93 10,436.81 10,976.21 10,976.21 11,120.51 11,012.24
05/31/93 10,559.49 11,098.22 11,098.22 11,315.45 11,194.60
06/30/93 10,614.27 11,148.81 11,148.81 11,435.39 11,295.43
07/31/93 10,563.90 11,088.89 11,088.89 11,481.59 11,293.74
08/31/93 10,873.29 11,406.52 11,406.52 11,828.57 11,630.01
09/30/93 10,820.77 11,344.49 11,344.49 11,854.00 11,589.27
10/31/93 10,935.21 11,457.20 11,457.20 11,975.86 11,750.46
11/30/93 10,820.78 11,330.18 11,330.18 11,784.00 11,643.29
12/31/93 10,895.14 11,400.96 11,400.96 11,981.74 11,752.99
01/31/94 11,068.51 11,575.11 11,575.11 12,295.66 12,056.23
02/28/94 10,869.52 11,360.35 11,360.35 12,054.30 11,776.12
03/31/94 10,495.34 10,962.01 10,962.01 11,616.24 11,351.92
04/30/94 10,571.42 11,034.67 11,034.67 11,642.15 11,402.98
05/31/94 10,619.62 11,077.93 11,077.93 11,731.67 11,514.62
06/30/94 10,450.35 10,894.58 10,894.58 11,528.02 11,335.10
07/31/94 10,732.52 11,181.81 11,181.81 11,788.43 11,648.51
08/31/94 11,010.75 11,464.63 11,464.63 12,083.38 11,940.85
09/30/94 10,777.55 11,214.63 11,214.63 11,865.39 11,695.38
10/31/94 10,898.06 11,332.99 11,332.99 11,902.30 11,848.88
11/30/94 10,662.80 11,081.40 11,081.40 11,624.85 11,579.44
12/31/94 10,748.75 11,163.50 11,163.50 11,736.57 11,714.45
01/31/95 11,019.30 11,437.40 11,437.40 11,882.45 11,989.44
02/28/95 11,334.68 11,758.09 11,758.09 12,228.71 12,383.80
03/31/95 11,500.74 11,922.95 11,922.95 12,444.91 12,633.46
04/30/95 11,708.17 12,130.38 12,130.38 12,678.25 12,927.28
05/31/95 12,121.93 12,551.33 12,551.33 13,083.96 13,437.40
06/30/95 12,299.86 12,727.93 12,727.93 13,315.81 13,664.10
07/31/95 12,469.38 12,895.14 12,895.14 13,597.30 13,923.75
08/31/95 12,594.82 13,016.67 13,016.67 13,703.36 14,011.94
09/30/95 12,925.62 13,350.45 13,350.45 14,030.60 14,421.25
10/31/95 12,966.35 13,384.00 13,384.00 13,995.10 14,465.38
11/30/95 13,354.60 13,776.48 13,776.48 14,430.07 14,933.10
12/31/95 13,592.99 14,013.91 14,013.91 14,657.20 15,189.49
01/31/96 13,851.32 14,271.09 14,271.09 14,921.76 15,540.07
02/29/96 13,727.51 14,135.19 14,135.19 14,928.92 15,518.46
03/31/96 13,727.42 14,125.93 14,125.93 14,985.20 15,564.97
04/30/96 13,795.12 14,186.81 14,186.81 15,084.49 15,667.62
05/31/96 13,982.80 14,370.84 14,370.84 15,238.70 15,897.33
06/30/96 14,104.82 14,487.26 14,487.26 15,289.02 16,019.07
07/31/96 13,712.31 14,074.89 14,074.89 14,895.48 15,611.97
08/31/96 13,792.48 14,148.15 14,148.15 15,130.50 15,799.06
09/30/96 14,292.32 14,652.28 14,652.28 15,690.19 16,442.69
10/31/96 14,641.80 15,001.17 15,001.17 16,022.98 16,860.48
11/30/96 15,467.24 15,837.78 15,837.78 16,769.66 17,740.68
12/31/96 15,316.55 15,673.58 15,673.58 16,563.39 17,463.84
01/31/97 15,796.05 16,158.67 16,158.67 17,070.23 18,139.91
02/28/97 15,810.67 16,173.64 16,173.64 17,133.39 18,243.29
03/31/97 15,409.75 15,741.85 15,754.69 16,634.81 17,712.66
04/30/97 15,821.85 16,163.18 16,160.97 17,135.52 18,453.18
05/31/97 16,469.39 16,810.34 16,823.09 17,836.36 19,197.02
06/30/97 16,906.04 17,250.46 17,245.73 18,408.91 19,804.18
07/31/97 17,988.56 18,340.87 18,335.84 19,456.37 20,963.29
08/31/97 17,602.93 17,931.86 17,926.95 18,839.61 20,187.15
09/30/97 18,321.86 18,670.80 18,669.86 19,591.31 20,969.63
10/31/97 17,993.56 18,320.91 18,319.98 19,234.74 20,671.08
11/30/97 18,292.02 18,609.92 18,608.98 19,586.74 21,283.27
12/31/97 18,581.42 18,890.56 18,904.96 19,876.62 21,588.25
01/31/98 18,630.94 18,940.98 18,938.61 20,015.76 21,842.37
02/28/98 19,357.05 19,664.32 19,661.86 20,810.38 22,780.56
03/31/98 19,956.59 20,253.70 20,248.09 21,447.18 23,512.24
04/30/98 19,906.76 20,186.11 20,180.53 21,595.16 23,703.25
05/31/98 19,840.47 20,118.59 20,113.02 21,377.05 23,548.71
06/30/98 20,185.40 20,456.84 20,451.42 21,763.98 24,202.53
</TABLE>
*The adjusted returns above include the effect of applicable sales charges.
Excluding the 1-year returns, these returns represent the blended performance of
the Fund's retail class shares (for the period from 1/20/97) and the prior
performance of the Fund's institutional class shares (for the period from
6/25/92), adjusted for retail class fees and expenses. Past performance is not
an indication of future results. See page 27 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 5 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Federal Home Loan 8.0%
Mortgage Corp. -6.50%
- --------------------------------------------------------------------------------
Long Island 3.0%
Lighting Co. -9.00%
- --------------------------------------------------------------------------------
New England Educational 2.7%
Loan Marketing -5.86%
- --------------------------------------------------------------------------------
Federal Home Loan 2.7%
Mortgage Corp. -6.50%
- --------------------------------------------------------------------------------
Government National 1.8%
Mortgage Assn. -7.38%
- --------------------------------------------------------------------------------
Top Five Total 18.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 52%
- --------------------------------------------------------------------------------
Mortgage-Backed Securities 26%
- --------------------------------------------------------------------------------
Corporate Bonds & Notes 10%
- --------------------------------------------------------------------------------
Asset Backed Securities 1%
- --------------------------------------------------------------------------------
Cash Equivalents 11%
- --------------------------------------------------------------------------------
Bond Analysis
- --------------------------------------------------------------------------------
Average Quality AA+
- --------------------------------------------------------------------------------
Duration 5.2 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The Balanced Fund built upon its solid performance during the first six months
of this period to end the year with returns of 19.4% for Class A shares, 18.6%
for Class B shares and 17.6% for Class C shares. These results allowed the Fund
to surpass the 17.6% average return of funds with the same objective (as
measured by the Lipper Balanced Fund Average).
At the end of this twelve-month period, the Fund's assets were allocated
approximately 60% to stocks and 40% to bonds. This allocation has remained
basically unchanged throughout the year, as the managers believed this split
provided shareholders with sufficient exposure to opportunities in both markets,
while maintaining the Fund's "prudent" investment style.
Among the Fund's best performing stocks this year was its number one holding,
PNC Bank Corp. PNC Bank is a financial services company that, like its
competitors, benefited from the strong domestic economy. But PNC Bank took
advantage of these positive operating conditions to move beyond banking, into
asset management, capital markets and treasury management. This shifting
business mix has broadened the company's revenue base and improved its long-term
prospects.
Another standout stock for the Fund during this period was Chrysler Corp. An
announced merger with German luxury automaker Daimler-Benz greatly improved
Chrysler's outlook for global growth. And consumer cyclicals overall did well as
there was high employment, low interest and low inflation--all conditions that
boost consumers' confidence. As a result, Chrysler saw sales of its truck and
sports-utility cars soar. In addition, management has been implementing a deep
cost-cutting program. The combined effect of these factors led to dramatically
improved earnings. In fact, second quarter 1998 earnings for Chrysler were more
than double the company's second quarter 1997 earnings.
As for the bond holdings, the Fund continued to maintain a high quality
portfolio focused on low-coupon mortgages and Treasuries. In addition, the Fund
has held to its above-average duration relative to the benchmark. This strategy
was originally employed to take advantage of predicted long-term declines in
interest rates--a forecast that proved accurate for the period overall.
Hindering the Fund's performance during this period was its exposure to the
energy sector. Energy was a major contributor to the portfolio in the early part
of 1997, with the bulk of the holdings in the drilling industry. Unfortunately,
the price of crude oil dropped significantly in the fourth quarter of 1997. At
the same time, there was a real or perceived dip in demand because of the Asian
currency crisis. As a result, the oil companies cut back on their drilling
schedules and the Fund's holdings suffered. To control the damage in this
sector, the Fund has trimmed back its energy holdings substantially.
Concerns about the ripple effect from Asia, increased stock market volatility
and overvaluations all combine to make this the ideal time to hold a more
diversified portfolio. The Fund's managers currently have no plans to make major
adjustments to the allocation or to sector investments at this time.
See page 48 for financial details.
26
<PAGE>
June 30, 1998
- --------------------------------------------------------------------------------
FOOTNOTES
- --------------------------------------------------------------------------------
A few notes and definitions are needed for a complete understanding of the
performance figures.
Past performance is no indication of future results. Investment return will
fluctuate and the value of an investor's shares will fluctuate and may be worth
more or less than original cost when redeemed. Total return measures
performance, assuming that all dividends and capital gains distributions were
reinvested.
Total return, both with and without a sales charge, has been presented. For
shareholders who have not bought or sold shares during the period quoted, the
non-adjusted figures are probably more meaningful to you than the adjusted
figures. The adjusted figures for Class A shares include the effect of paying
the maximum initial sales charge of 5.5%. The adjusted figures for Class B
shares include the effect of paying the contingent deferred sales charge (CDSC),
which declines from 5% in the first year to 0% at the beginning of the seventh
year. The adjusted figures for Class C shares include the effect of paying the
1% CDSC, which may apply to shares redeemed during the first year of ownership.
The PIMCO stock funds can invest in foreign securities and the International,
International Developed and Emerging Markets Funds invest primarily in these
securities, which can involve special risks due to foreign economic and
political developments. These risks can be more pronounced with emerging market
securities. The Opportunity and Small-Cap Value Funds generally invest in
small-cap stocks, which can be riskier than the overall stock market. The
Innovation and Precious Metals Funds concentrate their portfolios in one sector,
making them more volatile than a more diversified stock portfolio, and,
therefore, they should be considered as only part of a diversified portfolio.
Line graphs have been included so an investor can compare a Fund's historical
performance to that of an appropriate broad-based index. Each index reflects a
group of unmanaged securities, and it is not possible to invest directly in an
unmanaged index. The Standard & Poor's 500 and Standard & Poor's Mid-Cap are
indices of stocks of companies with larger and medium-sized capitalizations,
respectively. The Russell 2000 is an index of stocks of companies with small
capitalizations. The MSCI EAFE is an index of foreign stocks. The MSCI world
ex-USA Index is an index of foreign developed and emerging market stocks. The
MSCI Emerging Market Free Index is an index of emerging market stocks. The S&P
500/Lehman Aggregate Bond Hybrid Index is an index represented by 60% S&P 500
Index and 40% Lehman Aggregate Bond Index (an index containing a variety of
bonds). The Philadelphia Gold and Silver Index is an index of stocks of
companies in the gold and silver mining industry.
Lipper averages are calculated by Lipper Analytical Services, Inc., a nationally
recognized mutual fund performance evaluation firm. They are performance
averages of those funds that are tracked by Lipper, with the investment
objective noted. Lipper rankings are based on total returns, not adjusted for
sales charges.
For additional details on the PIMCO bond funds, contact your financial advisor
to receive a prospectus that contains more complete information, including
charges and expenses. Or contact PIMCO Funds Distributors LLC at 2187 Atlantic
Street, Stamford, CT 06902, 1-800-277-7337, www.pimcofunds.com. Please read the
prospectus carefully before you invest or send money.
27
<PAGE>
Schedule of Investments
Equity Income Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 96.2%
- --------------------------------------------------------------------------------
Aerospace 1.9%
BFGoodrich Co. 79,000 $ 3,920
Capital Goods 3.9%
GATX Corp. 94,200 4,133
General Signal Corp. 105,600 3,802
----------
7,935
Communications 5.7%
Bell Atlantic Corp. 86,132 3,930
US West, Inc. 83,000 3,901
Southern New England Telecommunications Corp. 56,800 3,720
----------
11,551
Consumer Discretionary 16.1%
Ford Motor Co. 87,900 5,186
VF Corp. 82,300 4,238
American Greetings Corp. "A" 81,000 4,126
Chrysler Corp. 71,260 4,017
Penny J.C., Inc. 55,000 3,977
Brunswick Corp. 159,000 3,935
Armstrong World Industries 55,000 3,706
Springs Industries, Inc. "A" 71,000 3,275
----------
32,460
Consumer Staples 9.5%
SUPERVALU, Inc. 181,000 8,032
RJR Nabisco Holdings Corp. 305,000 7,244
Anheuser Busch Cos., Inc. 82,000 3,870
----------
19,146
Energy 11.1%
Atlantic Richfield Co. 61,600 4,813
Repsol SA SP - ADR 71,000 3,905
Amoco Corp. 90,000 3,746
Occidental Petroleum Corp. 134,600 3,634
Ultramar Diamond Shamrock Corp. 112,000 3,535
Kerr McGee Corp. 48,100 2,784
----------
22,417
Financial & Business Services 16.3%
PNC Bank Corp. 138,000 7,426
Deluxe Corp. 119,700 4,287
Chase Manhattan Corp. 55,712 4,206
Union Planters Corp. 67,800 3,987
CIGNA Corp. 55,800 3,850
Bankers Trust New York Corp. 32,500 3,772
Ohio Casualty Corp. 80,500 3,562
Capstead Mortgage Corp. 196,000 1,642
----------
32,732
Health Care 6.3%
Pharmacia & Upjohn, Inc. 97,995 4,520
American Home Products Corp. 86,000 4,451
Mallinckrodt Group, Inc. 124,000 3,681
----------
12,652
Materials & Processing 9.5%
Union Carbide Corp. 80,000 4,270
Dow Chemical Co. 39,300 3,800
Westvaco Corp. 134,000 3,786
Phelps Dodge Corp. 65,000 3,717
USX-U.S. Steel Group, Inc. 109,000 3,597
----------
19,170
Technology 4.0%
Harris Corp. 90,600 4,048
International Business Machines Corp. 34,900 4,007
----------
8,055
Utilities 11.9%
Peoples Energy Corp. 110,000 4,249
DTE Energy Co. 103,000 4,159
Public Service Enterprise Group, Inc. 114,600 3,946
PP&L Resources, Inc. 173,000 3,925
NICOR, Inc. 97,000 3,892
Washington Water Power Co. 169,000 3,792
----------
23,963
----------
Total Common Stocks 194,001
(Cost $165,750) ==========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.9%
- --------------------------------------------------------------------------------
Repurchase Agreement 3.9%
State Street Bank
4.250% due 07/01/98 $ 7,859 $ 7,859
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 5.625% 11/30/98
valued at $8,020,489. Repurchase
proceeds are $7,859,928.)
----------
Total Short-Term Instruments 7,859
(Cost $7,859) ==========
Total Investments (a) 100.1% $ 201,860
(Cost $173,609)
Other Assets and Liabilities (Net) (0.1%) (153)
----------
Net Assets 100.0% $ 201,707
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 37,725
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (9,606)
----------
Unrealized appreciation-net $ 28,119
==========
28 See accompanying notes
<PAGE>
Schedule of Investments
Value Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 97.3%
- --------------------------------------------------------------------------------
Aerospace 1.4%
Northrop Grumman Corp. 32,600 $ 3,362
Capital Goods 0.9%
AGCO Corp. 105,000 2,159
Communications 5.9%
Southern New England Telecommunications Corp. 110,000 7,205
Bell Atlantic Corp. 152,000 6,935
----------
14,140
Consumer Discretionary 13.5%
Tandy Corp. 108,000 5,731
Chrysler Corp. 92,500 5,215
American Greetings Corp. "A" 100,000 5,094
Maytag Corp. 100,000 4,937
VF Corp. 91,800 4,728
Brunswick Corp. 118,200 2,925
Dillards, Inc. "A" 65,000 2,693
Tupperware Corp. 38,300 1,077
----------
32,400
Consumer Services 1.0%
Central Newspapers, Inc. "A" 33,400 2,330
Consumer Staples 11.7%
Anheuser Busch Cos., Inc. 152,500 7,196
SUPERVALU, Inc. 162,000 7,189
Whitman Corp. 220,000 5,046
RJR Nabisco Holdings Corp. 203,200 4,826
Kimberly-Clark Corp. 60,000 2,752
IBP, Inc. 55,000 997
----------
28,006
Energy 10.0%
Repsol SA SP - ADR 126,500 6,957
Ultramar Diamond Shamrock Corp. 200,000 6,312
Amoco Corp. 120,000 4,995
Kerr McGee Corp. 58,000 3,357
Atlantic Richfield Co. 16,800 1,312
Tidewater, Inc. 31,500 1,039
----------
23,972
Environmental Services 2.0%
Browning Ferris Industries, Inc. 136,300 4,736
Financial & Business Services 13.5%
Chase Manhattan Corp. 94,200 7,112
PNC Bank Corp. 125,000 6,726
Countrywide Credit Industries, Inc. 104,000 5,278
Bear Stearns Cos. 90,000 5,119
CIGNA Corp. 70,000 4,830
Loews Corp. 27,000 2,352
Union Planters Corp. 15,900 935
----------
32,352
Health Care 7.5%
Pharmacia & Upjohn, Inc. 152,510 7,035
American Home Products Corp. 91,900 4,756
Mallinckrodt Group, Inc. 160,000 4,750
Foundation Health Systems, Inc. "A" (b) 52,000 1,371
----------
17,912
Materials & Processing 8.8%
USG Corp. (b) 90,000 4,871
USX-U.S. Steel Group, Inc. 140,000 4,620
Union Carbide Corp. 85,000 4,537
Westvaco Corp. 144,600 4,085
Wellman, Inc. 134,700 3,056
----------
21,169
Technology 9.6%
Harris Corp. 160,000 7,150
International Business Machines Corp. 40,700 4,673
Storage Technology Corp. (b) 106,200 4,606
Adobe Systems, Inc. 102,400 4,346
Tektronix, Inc. 60,000 2,122
----------
22,897
Transportation 1.9%
UAL Corp. (b) 57,200 4,462
Utilities 9.6%
DTE Energy Co. 190,000 $ 7,671
NICOR, Inc. 190,000 7,624
Public Service Enterprise Group, Inc. 220,000 7,576
----------
22,871
----------
Total Common Stocks 232,768
(Cost $206,927) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.8%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 2.8%
State Street Bank
4.250% due 07/01/98 $ 6,793 6,793
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 5.875% 07/31/99
valued at $6,933,303. Repurchase
proceeds are $6,793,802.)
----------
Total Short-Term Instruments 6,793
(Cost $6,793) ==========
Total Investments (a) 100.1% $ 239,561
(Cost $213,720)
Other Assets and Liabilities (Net) (0.1%) (202)
----------
Net Assets 100.0% $ 239,359
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 33,148
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,556)
----------
Unrealized appreciation-net $ 25,592
==========
(b) Non-income producing security.
See accompanying notes 29
<PAGE>
Schedule of Investments
Renaissance Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.0%
- --------------------------------------------------------------------------------
Aerospace 1.3%
BFGoodrich Co. 177,900 $ 8,828
Building 5.0%
Lafarge Corp. 501,300 19,707
D.R. Horton, Inc. 638,600 13,331
----------
33,038
Capital Goods 5.5%
Ahmanson (H.F.) & Co. 204,300 14,505
Trinity Industries, Inc. 215,100 8,927
Kuhlman Corp. 170,000 6,726
Lear Corp. (b) 118,700 6,091
----------
36,249
Communications 8.1%
MediaOne Group, Inc. (b) 467,000 20,519
Sprint Corp. 170,300 12,006
AT&T Corp. 136,400 7,792
Citizens Utilities Co. 683,488 6,579
Glenayre Technologies, Inc. (b) 587,400 6,315
US West, Inc. 1 0
----------
53,211
Consumer Discretionary 17.0%
Sears Roebuck & Co. 471,300 28,779
Tandy Corp. 445,500 23,639
Hasbro, Inc. 496,900 19,534
Tommy Hilfiger Corp. (b) 263,300 16,456
B.J.'s Wholesale Club, Inc. (b) 363,500 14,767
Kmart Corp. (b) 434,200 8,358
----------
111,533
Consumer Services 2.6%
Waste Management, Inc. 390,500 13,668
Foodmaker, Inc. (b) 200,300 3,380
----------
17,048
Consumer Staples 2.8%
Philip Morris Cos., Inc. 472,200 18,593
Energy 5.8%
Enron Corp. 380,700 20,582
Atlantic Richfield Co. 222,800 17,406
----------
37,988
Financial & Business Services 17.9%
Equitable Cos., Inc. 312,200 23,395
NationsBank Corp. 204,600 15,652
Capital One Financial Corp. 124,100 15,412
Fremont General Corp. 275,200 14,912
Allmerica Financial Corp. 216,000 14,040
Greenpoint Financial Corp. 358,200 13,477
Travelers Group, Inc. 202,400 12,271
PMI Group, Inc. 108,600 7,968
----------
117,127
Health Care 7.4%
Integrated Health Services, Inc. 422,700 15,851
Wellpoint Health Networks, Inc. (b) 179,200 13,261
Allegiance Corp. 257,200 13,182
McKesson Corp. 80,600 6,549
----------
48,843
Materials & Processing 8.8%
Martin Marietta Materials, Inc. 409,400 18,423
Vulcan Materials Co. 141,600 15,107
E.I. Du Pont de Nemours, Inc. 170,000 12,686
Akzo Nobel NV SP - ADR 102,600 11,376
----------
57,592
Technology 7.7%
Learning Company, Inc. (b) 579,800 17,176
Flextronics International Limited 347,800 15,129
EG&G, Inc. 360,700 10,821
SCI Systems, Inc. (b) 169,700 6,385
Danka Business Systems PLC 101,600 1,126
----------
50,637
Transportation 3.1%
Atlas Air, Inc. 444,300 15,023
CNF Transportation, Inc. 119,900 5,096
----------
20,119
Utilities 1.0%
BEC Energy 164,600 $ 6,831
----------
Total Common Stocks 617,637
(Cost $554,163) ==========
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES 0.7%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Industrial 0.7%
Pier 1 Imports, Inc.
5.750% due 10/01/03 $ 2,209 4,349
----------
Total Convertible Bonds & Notes 4,349
(Cost $2,370) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 4.5%
- --------------------------------------------------------------------------------
Commercial Paper 4.5%
Federal National Mortage Association
5.750% due 07/01/98 16,000 16,000
Federal Home Loan Bank Corp
5.400% due 07/01/98 13,800 13,800
----------
Total Short-Term Instruments 29,800
(Cost $29,800) ==========
Total Investments (a) 99.2% $ 651,786
(Cost $586,333)
Written Options (c) (0.0%) (55)
(Premiums $132)
Other Assets and Liabilities (Net) 0.8% 5,293
----------
Net Assets 100.0% $ 657,024
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 78,482
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (14,992)
----------
Unrealized appreciation-net $ 63,490
==========
(b) Non-income producing security.
(c) Premiums received on written options:
Premium Value
Type Contracts (000s) (000s)
- --------------------------------------------------------------------------------
Call - OTC Tommy Hilfiger Corp. 630 $ 132 $ 55
Strike @ 65.00 Exp. 07/17/98
30 See accompanying notes
<PAGE>
Schedule of Investments
Capital Appreciation Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.6%
- --------------------------------------------------------------------------------
Building 0.7%
Centex Corp. 207,300 $ 7,825
Capital Goods 7.1%
Tyco International Limited 238,000 14,994
Textron, Inc. 209,000 14,983
Illinois Tool Works, Inc. 205,800 13,724
Johnson Controls, Inc. 235,400 13,462
United Technologies Corp. 125,600 11,618
Dana Corp. 203,300 10,877
----------
79,658
Communications 1.0%
SBC Communications, Inc. 289,500 11,580
Consumer Discretionary 13.8%
Costco Cos., Inc. (b) 340,500 21,473
TJX Cos., Inc. 822,200 19,836
Jones Apparel Group, Inc. (b) 526,200 19,239
Dayton Hudson Corp. 342,800 16,626
Harley-Davidson, Inc. 425,300 16,480
Ford Motor Co. 231,500 13,659
Black & Decker Corp. 203,800 12,432
Federated Department Stores, Inc. (b) 227,100 12,221
Chrysler Corp. 214,400 12,087
CVS Corp. 290,500 11,311
----------
155,364
Consumer Services 8.6%
Carnival Corp. `A' 522,600 20,708
Omnicom Group 407,300 20,314
New York Times Co. 199,900 15,842
Gannett, Inc. 210,000 14,923
Tribune Co. 184,600 12,703
Marriott International, Inc. `A' 366,700 11,872
----------
96,362
Consumer Staples 6.4%
Safeway, Inc. (b) 517,800 21,068
Hershey Foods Corp. 198,300 13,683
Quaker Oats Co. 237,800 13,064
Kroger Co. (b) 288,000 12,348
Albertson's, Inc. 224,100 11,611
----------
71,774
Energy 2.7%
Dresser Industries, Inc. 317,200 13,976
Transocean Offshore, Inc. 297,700 13,248
Rowan Cos., Inc. (b) 139,800 2,717
----------
29,941
Financial & Business Services 28.4%
Capital One Financial Corp. 191,800 23,819
Cognizant Corp. 346,700 21,842
American Express Co. 133,900 15,265
Southtrust Corp. 347,750 15,127
Morgan Stanley, Dean Witter, Discover and Co. 162,700 14,867
Alliance Capital Management LP 564,200 14,281
Household International, Inc. 284,600 14,159
MBNA Corp. 425,300 14,035
Associates First Capital Corp. `A' 177,937 13,679
Hartford Financial Services Group, Inc. 117,200 13,405
Lincoln National Corp. 141,300 12,911
National City Corp. 176,000 12,496
Simon DeBartolo Group, Inc. 377,000 12,253
First Union Corp. 207,200 12,069
Provident Cos., Inc. `B' 336,800 11,620
Washington Mutual, Inc. 266,700 11,585
BankAmerica Corp. 133,800 11,565
Travelers Group, Inc. 188,600 11,434
Fleet Financial Group, Inc. 136,800 11,423
PNC Bank Corp. 212,215 11,420
Banc One Corp. 195,800 10,928
Allstate Corp. 118,900 10,887
BankBoston Corp. 176,000 9,790
Nationwide Financial Services, Inc. 161,300 8,226
----------
319,086
Health Care 9.7%
Schering-Plough Corp. 179,100 16,410
HBO & Co. 449,700 15,852
Wellpoint Health Networks, Inc. (b) 200,400 14,830
Biogen, Inc. 298,600 14,631
Biomet, Inc. 436,600 14,435
Health Management Associates, Inc. `A' (b) 384,500 12,857
United Healthcare Corp. 181,200 11,506
HEALTHSOUTH Corp. (b) 331,600 8,849
----------
109,370
Materials & Processing 0.9%
Leggett & Platt, Inc. 424,530 10,613
Technology 10.1%
Cisco Systems, Inc. (b) 194,300 17,888
BMC Software, Inc. (b) 316,500 16,438
Storage Technology Corp. (b) 360,400 15,632
Xerox Corp. 145,000 14,736
Computer Associates International, Inc. 246,600 13,702
Cadence Design Systems, Inc. (b) 395,500 12,359
Dell Computer Corp. (b) 128,400 11,917
International Business Machines Corp. 91,700 10,528
----------
113,200
Transportation 4.2%
U.S. Airways Group, Inc. (b) 163,200 12,934
Continental Airlines, Inc. `B' (b) 208,000 12,662
Delta Air Lines, Inc. 89,100 11,516
FDX Corp. (b) 169,100 10,611
----------
47,723
Utilities 2.0%
Consolidated Edison, Inc. 242,000 11,147
Ameritech Corp. 247,800 11,120
----------
22,267
----------
Total Common Stocks 1,074,763
(Cost $825,076) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 6.8%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 6.8%
State Street Bank
4.250% due 07/01/98 $ 76,037 76,037
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 6.000% 08/15/99
valued at $77,560,771. Repurchase
proceeds are $76,045,977.)
----------
Total Short-Term Instruments 76,037
(Cost $76,037) ==========
Total Investments (a) 102.4% $1,150,800
(Cost $901,113)
Other Assets and Liabilities (Net) (2.4%) (27,257)
----------
Net Assets 100.0% $1,123,543
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 255,750
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,403)
----------
Unrealized appreciation-net $ 248,347
==========
(b) Non-income producing security.
See accompanying notes 31
<PAGE>
Schedule of Investments
Growth Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 97.0%
- --------------------------------------------------------------------------------
Capital Goods 2.5%
Tyco International Limited 853,000 $ 53,739
Communications 5.6%
Tele-Communications, Inc. `A' (b) 1,439,301 55,323
Nextel Communications, Inc. `A' (b) 1,603,700 39,892
Chancellor Media Corp. 484,600 24,063
----------
119,278
Consumer Discretionary 19.5%
Sears Roebuck & Co. 1,375,500 83,991
Home Depot, Inc. 675,700 56,125
CVS Corp. 1,306,000 50,852
Costco Cos., Inc. (b) 792,400 49,971
TJX Cos., Inc. 2,001,600 48,289
Avon Products, Inc. 453,700 35,162
Dayton Hudson Corp. 703,600 34,125
Ralston-Ralston Purina Group 275,400 32,170
Bed, Bath & Beyond, Inc. (b) 426,900 22,119
----------
412,804
Consumer Services 5.2%
McDonald's Corp. 613,100 42,304
New York Times Co. 502,900 39,855
Waste Management, Inc. 805,300 28,186
----------
110,345
Consumer Staples 6.7%
Safeway, Inc. (b) 1,605,900 65,340
Pepsico, Inc. 780,600 32,151
Seagram Co. Limited 594,400 24,333
Sara Lee Corp. 339,100 18,968
----------
140,792
Energy 6.0%
Enron Corp. 964,200 52,127
Mobil Corp. 650,500 49,845
Atlantic Richfield Co. 311,000 24,297
----------
126,269
Financial & Business Services 13.4%
Capital One Financial Corp. 523,600 65,024
Morgan Stanley, Dean Witter, Discover and Co. 627,000 57,292
Washington Mutual, Inc. 1,194,000 51,864
Travelers Group, Inc. 726,200 44,026
Newcort Credit Group, Inc. 868,600 42,724
Countrywide Credit Industries, Inc. 450,600 22,868
----------
283,798
Health Care 17.0%
HBO & Co. 2,691,400 94,872
Warner-Lambert Co. 1,052,700 73,031
Pfizer, Inc. 544,500 59,180
Schering-Plough Corp. 566,000 51,860
Cardinal Health, Inc. 489,000 45,844
Guidant Corp. 481,700 34,351
----------
359,138
Materials & Processing 1.7%
Fort James Corp. 782,000 34,799
Technology 18.2%
America Online, Inc. (b) 704,900 74,719
Microsoft Corp. (b) 593,900 64,364
Ascend Communications, Inc. (b) 970,500 48,100
Cisco Systems, Inc. (b) 500,900 46,114
Lucent Technologies, Inc. 464,200 38,616
Intel Corp. 435,800 32,304
Tellabs, Inc. (b) 450,200 32,246
Computer Associates International, Inc. 477,800 26,548
Compaq Computer Corp. (b) 743,600 21,100
America Online, Inc. Rights (b) 704,900 0
----------
384,111
Transportation 1.2%
Delta Air Lines, Inc. 199,300 25,760
----------
Total Common Stocks 2,050,833
(Cost $1,446,775) ==========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 0.0%
- --------------------------------------------------------------------------------
Banking & Finance 0.0%
Cabbell Financial Grantor Trust
7.188% due 12/31/98 $ 739 $ 628
----------
Total Corporate Bonds & Notes 628
(Cost $737) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.1%
- --------------------------------------------------------------------------------
Commercial Paper 5.1%
Federal Home Loan Bank Corp
5.400% due 07/01/98 92,000 92,000
Federal National Mortgage Association
5.750% due 07/01/98 14,000 14,000
----------
Total Short-Term Instruments 106,000
(Cost $106,000) ==========
Total Investments (a) 102.1% $2,157,461
(Cost $1,553,512)
Other Assets and Liabilities (Net) (2.1%) (43,621)
----------
Net Assets 100.0% $2,113,840
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 610,703
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,133)
----------
Unrealized appreciation-net $ 603,570
==========
(b) Non-income producing security.
32 See accompanying notes
<PAGE>
Schedule of Investments
Mid-Cap Growth Fund
June 30, 1998
Value
Shares (000s)
COMMON STOCKS 96.1%
Aerospace 1.1%
BFGoodrich Co. 171,000 $ 8,486
Building 1.1%
Lennar Corp. 297,100 8,764
Capital Goods 5.9%
Waters Corp. (b) 176,300 10,391
General Dynamics Corp. 183,600 8,537
Aeroquip-Vickers, Inc. 140,600 8,208
Cordant Technologies, Inc. 171,200 7,897
Kaydon Corp. 215,800 7,620
Lear Corp. (b) 84,600 4,341
----------
46,994
Communications 1.0%
Century Telephone Enterprise 178,900 8,207
Consumer Discretionary 12.4%
Borders Group, Inc. (b) 326,300 12,073
Proffitt's, Inc. (b) 240,900 9,726
Warnaco Group, Inc. `A' 227,100 9,638
Dial Corp. 363,500 9,428
HON Industries 269,100 9,149
Abercrombie & Fitch Co. `A' (b) 202,400 8,906
Liz Claiborne, Inc. 161,800 8,454
Maytag Corp. 163,800 8,088
General Nutrition Cos., Inc. (b) 252,800 7,868
Herman Miller, Inc. 307,000 7,464
Bed, Bath & Beyond, Inc. (b) 142,400 7,378
Mattel, Inc. 1 0
----------
98,172
Consumer Services 5.5%
Royal Caribbean Cruises Limited 138,400 11,003
Promus Hotel Corp. (b) 239,837 9,234
CKE Restaurants, Inc. 216,900 8,947
GTECH Holdings Corp. (b) 253,400 8,536
Darden Restaurants, Inc. 374,700 5,948
----------
43,668
Consumer Staples 7.2%
McCormick & Co. 248,000 8,858
Rexall Sundown, Inc. (b) 240,500 8,478
Richfood Holdings, Inc. 409,250 8,466
Kroger Co. (b) 195,500 8,382
Suiza Foods Corp. (b) 136,700 8,159
Interstate Bakeries Corp. 231,400 7,680
Flowers Industries, Inc. 354,700 7,249
----------
57,272
Energy 3.9%
EVI Weatherford, Inc. (b) 217,000 8,056
Diamond Offshore Drilling, Inc. 199,000 7,960
National-Oilwell, Inc. (b) 289,600 7,765
R&B Falcon Corp. (b) 319,300 7,224
----------
31,005
Financial & Business Services 25.8%
Providian Financial Corp. 141,500 11,117
Ambac, Inc. 167,500 9,799
AmSouth Bancorp 240,700 9,463
Valassis Communications, Inc. (b) 243,900 9,405
Protective Life Corp. 250,600 9,194
PaineWebber Group, Inc. 212,300 9,102
Mutual Risk Management Limited 247,030 9,001
SunAmerica, Inc. 151,350 8,693
Popular, Inc. 130,000 8,645
Finova Group, Inc. 152,500 8,635
Crestar Financial Corp. 158,100 8,626
EXEL Limited 110,700 8,614
Cullen/Frost Bankers, Inc. 155,600 8,441
Bank United Corp. 175,000 8,378
Mercury Gen Corp. 128,200 8,245
Allmerica Financial Corp. 126,800 8,242
Equity Residential Properties Trust 172,500 8,183
Equifax, Inc. 221,100 8,029
Mercantile BanCorp 152,313 7,673
Crescent Real Estate Equities Co. 219,800 7,391
Summit Bancorp 152,490 7,274
Travelers Property Casualty `A' 166,600 7,143
PMI Group, Inc. 83,600 6,134
BB&T Corp. 71,300 4,822
Life Re Corp. 53,800 4,412
----------
204,661
Health Care 9.4%
Total Renal Care Holdings 265,100 9,146
Health Management Associates, Inc. `A' (b) 268,925 8,992
Guidant Corp. 120,800 8,615
Watson Pharmaceuticals, Inc. (b) 180,000 8,404
Allegiance Corp. 158,700 8,133
Bausch & Lomb, Inc. 162,100 8,125
Trigon Healthcare, Inc. (b) 221,200 8,005
Mylan Laboratories, Inc. 260,100 7,819
DePuy, Inc. 263,100 7,433
----------
74,672
Materials & Processing 3.0%
Southdown, Inc. 131,600 9,393
Cytec Industries, Inc. (b) 166,200 7,354
Crompton & Knowles Corp. 274,300 6,909
----------
23,656
Technology 15.4%
Unisys Corp. (b) 461,100 13,026
Compuware Corp. (b) 243,900 12,469
Network Associates, Inc. (b) 248,350 11,890
Citrix Systems, Inc. (b) 152,800 10,448
Sanmina Corp. (b) 217,100 9,417
BEA Systems, Inc. (b) 408,500 9,370
Comverse Technology, Inc. (b) 179,400 9,306
Platinum Technology, Inc. (b) 315,000 8,997
Synopsys, Inc. (b) 190,900 8,734
Comdisco, Inc. 459,250 8,726
Tech Data Corp. (b) 189,600 8,129
American Power Conversion Corp. (b) 247,800 7,434
SCI Systems, Inc. (b) 120,000 4,515
----------
122,461
Transportation 2.2%
ASA Holdings, Inc. 180,600 8,962
Comair Holdings, Inc. 285,700 8,824
----------
17,786
Utilities 2.2%
El Paso Natural Gas Co. 239,700 9,169
IPALCO Enterprises, Inc. 184,400 8,194
----------
17,363
----------
Total Common Stocks 763,167
(Cost $623,443) ==========
SHORT-TERM INSTRUMENTS 5.7%
Principal
Amount
(000s)
Repurchase Agreement 5.7%
State Street Bank
4.250% due 07/01/98 $ 45,212 45,212
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 5.625% 11/30/98
valued at $46,116,557. Repurchase
proceeds are $45,217,338.)
----------
Total Short-Term Instruments 45,212
(Cost $45,212) ==========
Total Investments (a) 101.8% $ 808,379
(Cost $668,655)
Other Assets and Liabilities (Net) (1.8%) (14,501)
----------
Net Assets 100.0% $ 793,878
==========
See accompanying notes 33
<PAGE>
Schedule of Investments (Cont.)
Mid-Cap Growth Fund
June 30, 1998
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 145,339
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (5,876)
----------
Unrealized appreciation-net $ 139,463
==========
(b) Non-income producing security.
34 See accompanying notes
<PAGE>
Schedule of Investments
Target Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.7%
- --------------------------------------------------------------------------------
Building 1.1%
Centex Corp. 187,300 $ 7,070
Kaufman & Broad Home Corp. 183,000 5,810
----------
12,880
Communications 12.0%
Paging Network, Inc. (b) 2,165,100 30,311
Viacom, Inc. "B" (b) 387,500 22,572
ICG Communications, Inc. (b) 545,500 19,945
Univision Communications, Inc. (b) 516,000 19,221
Frontier Corp. 597,200 18,812
General Motors Corp. "H" (b) 385,900 18,185
General Instrument Corp. (b) 500,300 13,602
----------
142,648
Consumer Discretionary 22.4%
Black & Decker Corp. 671,600 40,968
Office Depot, Inc. 1,165,400 36,783
Hasbro, Inc. 757,100 29,763
Lowe's Cos., Inc. 702,500 28,495
Fred Meyer, Inc. (b) 654,600 27,821
Rubbermaid, Inc. 791,100 26,255
Dollar Tree Stores, Inc. 510,600 20,743
Limited, Inc. 486,100 16,102
Petsmart, Inc. 1,348,200 13,482
Cintas Corp. 232,300 11,847
Outback Steakhouse, Inc. (b) 301,300 11,751
Abercrombie & Fitch Co. "A" (b) 4,781 210
CVS Corp. 4 0
----------
264,220
Consumer Services 3.6%
Jacor Communications, Inc. (b) 502,100 29,624
Comcast Corp. Special "A" 318,100 12,913
----------
42,537
Consumer Staples 2.1%
Whitman Corp. 1,108,700 25,431
Energy 1.8%
Ocean Energy, Inc. 1,093,612 21,394
Financial & Business Services 10.8%
Providian Financial Corp. 558,300 43,861
Capital One Financial Corp. 232,000 28,812
Dime Bancorp, Inc. 814,500 24,384
Summit Bancorp 385,700 18,321
MBIA, Inc. 161,700 12,107
----------
127,485
Health Care 10.7%
Watson Pharmaceuticals, Inc. (b) 853,700 39,857
Wellpoint Health Networks, Inc. (b) 356,600 26,388
McKesson Corp. 168,400 13,683
Allegiance Corp. 264,900 13,576
Allergan, Inc. 256,900 11,914
Health Management Associates, Inc. "A" (b) 336,400 11,248
Henry Schein, Inc. 231,200 10,664
----------
127,330
Materials & Processing 1.4%
Solutia, Inc. 578,500 16,596
Miscellaneous 3.1%
Federal-Mogul Corp. 551,900 37,253
Technology 22.1%
Ceridian Corp. (b) 653,100 38,370
Intuit, Inc. (b) 470,700 28,830
Unisys Corp. (b) 980,100 27,688
BMC Software, Inc. (b) 529,000 27,475
PMC-Sierra, Inc. (b) 568,100 26,630
Sanmina Corp. (b) 568,400 24,654
Cambridge Technology Partners, Inc. (b) 376,700 20,577
Mercury Interactive Corp. (b) 333,300 14,874
Yahoo, Inc. (b) 84,900 13,372
Seagate Technology, Inc. (b) 541,900 12,904
IMS Health, Inc. (b) 212,800 12,662
Apple Computer, Inc. 325,300 9,332
Lexmark International Group, Inc. "A" (b) 77,300 4,715
American Satellite Network, Inc. Warrants 53,250 0
----------
262,083
Transportation 2.6%
Coach USA, Inc. (b) 388,000 $ 17,702
Kansas City Southern Industries, Inc. 262,300 13,017
----------
30,719
----------
Total Common Stocks 1,110,576
(Cost $916,743) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 6.4%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Commercial Paper 6.4%
Federal Home Loan Bank Corp
5.400% due 07/01/98 $ 76,500 76,500
----------
Total Short-Term Instruments 76,500
(Cost $76,500) ==========
Total Investments (a) 100.1% $1,187,076
(Cost $993,243)
Other Assets and Liabilities (Net) (0.1%) (877)
----------
Net Assets 100.0% $1,186,199
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 204,995
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (11,900)
----------
Unrealized appreciation-net $ 193,095
==========
(b) Non-income producing security.
See accompanying notes 35
<PAGE>
Schedule of Investments
Small-Cap Value Fund
June 30, 1998
Value
Shares (000s)
================================================================================
COMMON STOCKS 91.5%
================================================================================
Aerospace 0.9%
Kaman Corp. 183,000 $ 3,483
Building 3.8%
Hughes Supply, Inc. 111,000 4,065
Del Webb Corp. 145,000 3,761
Butler Manufacturing Co. 102,000 3,474
Lone Star Industries, Inc. 40,000 3,082
-------
14,382
Capital Goods 10.4%
C&D Technologies, Inc. 65,000 3,770
Tecumseh Products Co. `A' 69,000 3,644
Westinghouse Air Brake Co. 138,000 3,640
Gleason Corp. 129,000 3,628
Arvin Industries, Inc. 98,000 3,559
Cordant Technologies, Inc. 77,000 3,552
Intermet Corp. 194,000 3,516
Allied Products Corp. 165,000 3,496
MTS Systems Corp. 211,000 3,389
GenCorp, Inc. 133,000 3,358
Barnes Group, Inc. 124,000 3,356
-------
38,908
Communications 1.0%
Aliant Communications, Inc. 141,000 3,869
Consumer Discretionary 14.8%
Burlington Coat Factory Warehouse Corp. 187,000 4,208
Brown Group, Inc. 205,000 4,074
Claire's Stores, Inc. 189,000 3,875
Borg-Warner Automotive, Inc. 79,000 3,797
Bowne & Co., Inc. 83,000 3,735
Toro Co. 105,000 3,596
Enesco Group, Inc. 116,000 3,567
Fleetwood Enterprises, Inc. 88,000 3,520
Harman International Industries, Inc. 90,000 3,465
Guilford Mills, Inc. 173,000 3,460
Ennis Business Forms 296,000 3,441
Standard Products 122,000 3,431
Rival Co. 253,000 3,415
Sturm Ruger & Co., Inc. 203,000 3,400
Kimball International `B' 185,000 3,353
Garan, Inc. 36,000 977
Haverty Furniture Cos., Inc. 5,900 130
-------
55,444
Consumer Services 3.8%
Applebee's International, Inc. 168,000 3,759
Chemed Corp. 105,000 3,577
Luby's Cafeterias, Inc. 200,000 3,512
Sbarro, Inc. 129,000 3,499
-------
14,347
Consumer Staples 3.8%
Universal Corp. 98,000 3,663
Great Atlantic & Pacific Tea Co., Inc. 108,000 3,571
Nash Finch Co. 233,000 3,509
Universal Foods 152,000 3,372
-------
14,115
Energy 6.7%
Vintage Petroleum, Inc. 203,000 3,832
Snyder Oil Corp. 190,000 3,788
World Fuel Services Corp. 204,000 3,532
Offshore Logistics, Inc. (b) 197,000 3,497
Western Gas Resources, Inc. 238,000 3,481
Aquila Gas Pipeline Corp. 277,000 3,393
Mitchell Energy & Development Corp. `B' 176,000 3,388
-------
24,911
Financial & Business Services 19.9%
Kelly Services, Inc. 110,000 3,891
Excel Realty Trust, Inc. 128,000 3,688
Merrill Corp. 164,000 3,618
McGrath Rentcorp 170,000 3,591
Washington Federal, Inc. 129,000 3,564
Dain Rauscher Corp. 65,000 3,559
Orion Capital Corp. 63,000 3,520
Commercial Federal Corp. 111,000 $ 3,510
Glimcher Realty Trust 180,000 3,499
AmerUs Life Holdings, Inc. 108,000 3,497
Franchise Finance Corp. of America 134,000 3,476
TriNet Corp. Realty Trust, Inc. 102,000 3,468
First Hawaiian, Inc. 95,000 3,456
American Health Properties, Inc. 138,000 3,450
BankAtlantic Bancorp, Inc. `A' 292,000 3,449
FirstBank Puerto Rico 132,000 3,432
Selective Insurance Group 153,000 3,428
United Dominion Realty Trust 245,000 3,399
National Golf Properties, Inc. 111,800 3,361
Southwest Securities Group, Inc. 148,000 3,330
PXRE Corp. 109,000 3,270
Presidential Life Corp. 60,600 1,295
-------
74,751
Health Care 4.1%
Bindley Western Industries, Inc. 130,667 4,312
Bergen Brunswig Corp. `A' 83,000 3,849
Integrated Health Services, Inc. 96,000 3,600
Invacare Corp. 135,000 3,459
-------
15,220
Materials & Processing 11.4%
Wausau-Mosinee Paper Corp. 169,000 3,866
Cleveland-Cliffs, Inc. 68,000 3,647
Texas Industries, Inc. 68,000 3,604
AK Steel Holding Corp. 200,000 3,575
Caraustar Industries, Inc. 123,000 3,552
Mississippi Chemical Corp. 214,000 3,518
Commercial Metals Co. 114,000 3,506
Park Electrochemical Corp. 164,000 3,464
Universal Forest Products, Inc. 210,000 3,439
Ethyl Corp. 540,000 3,308
Castle (A.M.) & Co. 103,900 2,286
Zeigler Coal Holding Co. 130,500 2,235
Commonwealth Industries, Inc. 152,000 1,520
Wellman, Inc. 53,300 1,209
-------
42,729
Technology 1.1%
Pioneer Standard Electronics, Inc. 300,000 2,887
Cohu, Inc. 51,100 1,242
Innovex, Inc. 8,200 107
-------
4,236
Transportation 3.0%
Roadway Express, Inc. 207,000 3,907
USFreightways Corp. 114,000 3,744
Sea Containers Limited `A' 91,000 3,481
-------
11,132
Utilities 6.8%
Eastern Enterprises 88,000 3,773
United Illuminating Co. 72,000 3,645
Eastern Utilities Assn 138,000 3,623
Washington Gas Light Co. 135,000 3,611
Commonwealth Energy System 95,000 3,586
Public Service Co. of New Mexico 157,000 3,562
Rochester Gas & Electric Corp. 110,000 3,513
-------
25,313
-------
Total Common Stocks 342,840
-------
(Cost $335,776)
================================================================================
SHORT-TERM INSTRUMENTS 8.1%
================================================================================
Principal
Amount
(000s)
Repurchase Agreement 8.1%
State Street Bank
4.250% due 07/01/98 $ 30,156 30,156
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 5.625% 11/30/98
valued at $30,759,457. Repurchase
proceeds are $30,159,560.
-----------
Total Short-Term Instruments 30,156
-----------
(Cost $30,156)
36 See accompanying notes
<PAGE>
Value
(000s)
================================================================================
Total Investments (a) 99.6% $ 372,996
(Cost $365,932)
Other Assets and Liabilities (Net) 0.4% 1,556
-------------
Net Assets 100.0% $ 374,552
=============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 24,863
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (17,931)
-------------
Unrealized appreciation-net $ 6,932
=============
(b) Non-income producing security.
See accompanying notes 37
<PAGE>
Schedule of Investments
Opportunity Fund
June 30, 1998
Value
Shares (000s)
================================================================================
COMMON STOCKS 95.0%
================================================================================
Building 9.0%
Champion Enterprises, Inc. (b) 700,000 $ 20,475
Lone Star Industries, Inc. 225,000 17,339
U.S. Home Corp. (b) 350,000 14,437
Fleetwood Enterprises, Inc. 270,000 10,800
----------
63,051
Capital Goods 4.7%
Tower Automotive, Inc. (b) 400,000 17,150
MotivePower Industries, Inc (b) 638,900 15,653
----------
32,803
Communications 3.5%
WinStar Communications, Inc. (b) 575,000 24,689
Consumer Discretionary 16.3%
The Men's Wearhouse, Inc. (b) 750,000 24,750
Linens`n Things, Inc. (b) 800,000 24,450
Windmere Durable Holdings 600,000 21,487
Williams-Sonoma, Inc. (b) 500,000 15,906
Mohawk Industries, Inc. 500,000 15,844
Knoll, Inc. (b) 400,000 11,800
----------
114,237
Consumer Services 2.6%
SFX Entertainment, Inc. `A' (b) 225,000 10,322
Foodmaker, Inc. (b) 475,000 8,016
----------
18,338
Consumer Staples 5.3%
Whole Foods Market, Inc. (b) 350,100 21,181
Twinlab Corp. (b) 372,500 16,273
----------
37,454
Energy 8.6%
Veritas DGC, Inc. (b) 800,000 39,950
Offshore Logistics, Inc. (b) 604,200 10,724
EEX Corp. (b) 1,000,000 9,375
----------
60,049
Environmental Services 2.0%
American Disposal Services, Inc. (b) 300,000 14,063
Financial & Business Services 7.2%
Golden State Bancorp, Inc. Warrants (b) 745,800 22,188
Mail-Well, Inc. 382,600 8,298
Interim Services, Inc. (b) 200,000 6,425
Personnel Group of America, Inc. (b) 300,000 6,000
Golden State Bancorp, Inc. Litigation Warrants (b) 745,800 3,962
Rosyln Bancorp, Inc. 175,000 3,905
----------
50,778
Health Care 3.7%
IDEXX Laboratories, Inc. (b) 475,000 11,816
Concentra Managed Care, Inc. (b) 407,200 10,587
ADAC Laboratories (b) 150,000 3,375
----------
25,778
Materials & Processing 2.2%
Stone Container Corp. 750,000 11,719
Hawk Corp. `A' (b) 200,000 3,525
----------
15,244
Technology 27.7%
Network Appliance, Inc. (b) 645,900 25,150
BEA Systems, Inc. (b) 1,000,000 22,937
Wind River Systems (b) 635,000 22,781
FileNET Corp. (b) 686,800 19,831
Visio Corp. (b) 363,000 17,333
Lycos, Inc. (b) 220,000 16,582
Computer Learning Centers (b) 470,100 11,694
Gilat Satellite Networks Limited (b) 295,000 9,864
Earthlink Network, Inc. (b) 119,700 9,187
Veritas Software Corp. (b) 200,000 8,275
Berg Electronics Corp. (b) 400,000 7,825
Electronics for Imaging, Inc. (b) 300,000 6,338
Systems & Computer Technology Corp. (b) 200,000 5,400
Learning Company, Inc. (b) 150,000 4,444
Manugistics Group, Inc. (b) 175,000 4,331
Cotelligent Group, Inc. (b) 110,000 2,571
----------
194,543
Transportation 2.2%
Comair Holdings, Inc. 500,000 15,438
----------
Total Common Stocks 666,465
==========
(Cost $523,755)
================================================================================
SHORT-TERM INSTRUMENTS 4.9%
================================================================================
Principal
Amount
(000s)
Commercial Paper 4.9%
Federal Home Loan Bank Corp
5.400% due 07/01/98 $ 31,700 31,700
Federal National Mortage Association
5.750% due 07/01/98 2,300 2,300
----------
Total Short-Term Instruments 34,000
==========
(Cost $34,000)
Total Investments (a) 99.9% $ 700,465
(Cost $557,755)
Other Assets and Liabilities (Net) 0.1% 481
----------
Net Assets 100.0% $ 700,946
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 164,848
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (22,261)
----------
Unrealized appreciation-net 142,587
==========
(b) Non-income producing security.
38 See accompanying notes
<PAGE>
Schedule of Investments
International Developed Fund
June 30, 1998
Value
Shares (000s)
================================================================================
COMMON STOCKS 88.4%
================================================================================
Australia 1.0%
Westpac Banking Corp. 40,072 $ 244
National Australia Bank Limited 18,100 239
Lend Lease Corp. Limited 7,200 146
Telestra Corp. 54,600 140
Amcor Limited "A" 27,135 119
Broken Hill Property Co. 13,392 113
Comalco Limited 27,009 94
News Corp. Limited 9,863 80
Pasminco Limited 89,073 68
Tabcorp Holdings Limited 11,133 57
Leighton Holdings Limited 15,125 53
----------
1,353
Finland 5.3%
Nokia OYJ "A" 45,320 3,328
Werner Soderstrom Osakey "B" 12,500 819
Hartwall OYJ ABP 21,300 682
UPM-Kymmene Corp. 19,783 544
Neste OY 14,553 450
Okobank "A" 22,300 404
Metsa Serla "B" 41,540 401
Yit-Yhtyma OY 18,580 298
Rautaruukki OY 30,600 234
Viking Line AB 4,000 212
Rauma Group OY 400 8
----------
7,380
France 15.3%
Elf Aquitaine SA 12,203 1,711
Lafarge SA 15,736 1,623
PSA Peugeot Citroen 7,050 1,512
VIVENDI 6,700 1,427
Alcatel Alsthom 6,410 1,302
LVMH 6,450 1,288
Societe Generale 6,100 1,265
L'OREAL 2,250 1,248
AXA-UAP 11,097 1,245
Total SA 9,481 1,230
Compagnie de Saint Gobain 6,370 1,178
Pinault-Printemps-Redoute SA 1,390 1,160
Groupe Danone 4,000 1,100
Banque National de Paris 12,320 1,004
Groupe GTM 8,800 912
Valeo 6,910 705
France Telecom SA 9,740 670
Credit Commercial de France 5,250 441
Alstom (b) 9,200 302
VIVENDI Warrants (b) 2,800 5
----------
21,328
Germany 13.3%
SAP AG-Vorzug 3,435 2,331
Mannesmann AG 17,130 1,735
Bayer AG 32,041 1,650
Allianz AG 4,447 1,463
Volkswagen AG 1,418 1,361
Viag AG 1,700 1,147
Bayerische Vereinsbank AG 12,900 1,095
RWE AG 16,069 951
VEBA AG 13,650 929
Deutsche Bank 10,897 921
Daimler Benz AG 8,800 862
Muenchener Rueckversicherungs-Gesellschaft AG 1,600 792
Siemens AG 12,446 756
BASF AG 14,714 696
Metro AG 11,400 690
Commerzbank AG 14,711 562
Dresdner Bank AG 7,763 418
Allianz AG (b) 130 42
Daimler Benz AG Rights (b) 8,800 10
----------
18,411
Ireland 2.2%
Allied Irish Banks PLC 88,300 $ 1,273
CRH PLC 55,700 789
Jefferson Smurfit Group PLC 142,000 421
Kerry Group PLC 20,700 286
Irish Life PLC 30,700 282
----------
3,051
Italy 8.2%
ENI SpA 268,095 1,754
Fiat SpA 302,356 1,321
Telecom Italia Mobile SpA 211,000 1,288
Banca Commerciale Italiana 214,000 1,277
Assicuazioni Generali 36,635 1,189
Telecom Italia SpA 160,720 1,181
Edison SpA 88,000 705
Istituto Mobiliare Italiano SpA 44,000 692
Benetton Group SpA 270,400 560
Alleanza Assicurazioni 39,000 529
Instituto Nazionale delle Assicurazioni 165,000 468
Danieli & Co. 45,000 378
----------
11,342
Japan 10.5%
Nippon Telegraph & Telephone 132 1,091
NEC Corp. 117,000 1,087
Fuji Photo Film 31,000 1,076
Fanuc 31,000 1,069
Aoyama Trading Co. Limited 41,800 1,027
Fujisawa Pharmaceutical 110,000 1,026
Sumitomo Bank Limited 104,000 1,009
Kirin Brewery Co. Limited 93,000 875
Murata Manufacturing Co. 21,000 679
Toyota Motor Corp. 24,000 619
Mitsui O.S.K. Lines Limited 352,000 597
Tokio Marine & Fire Insurance Co. 56,000 574
Matsushita Electric Industrial Co. Limited 35,000 561
Mitsubishi Heavy Industries Limited 139,000 523
Tokyo Electric Power 26,700 522
Bridgestone Corp. 22,000 519
Sumitomo Trust & Banking 116,000 517
Canon, Inc. 21,000 475
Hitachi Limited 67,000 436
Ito-Yokado Co. Limited 7,000 328
----------
14,610
Netherlands 5.7%
Royal Dutch Petroleum Co. 37,007 2,048
ING Groep NV 16,611 1,086
Unilever NV 13,220 1,047
Verernigde Nederlandse Uitgeversbedrijven
Verenigd Bezit 22,664 822
Philips Electronics NV 7,284 611
Akzo Noble NV 2,272 504
Fortis Amev NV 8,554 500
ABN-AMRO Holdings 19,179 448
Koninklijke KPN NV 8,461 325
Elsevier NV 18,850 284
TNT Post Groep NV (b) 8,461 216
----------
7,891
Portugal 4.2%
Portugal Telecom SA 27,475 1,453
EDP-Electricidade de Portugal SA 33,427 775
Banco Comercial Portugues SA "R" 24,913 706
Jeronimo Martins SGPS SA 14,508 696
Cimpor-Cimentos de Portugal SGPS SA 19,032 667
Sonae Investimentor-Sociedade Gestora de
Participacoes Sociais SA 8,478 462
Banco Espirito Santo e Comercial de Lisboa SA 11,600 348
BPI-SGPS SA 8,700 280
Companhia de Seguros Mundial Confianca SA (b) 8,400 223
Brisa-Auto Estradas de Portugal SA 4,261 182
----------
5,792
Spain 5.4%
Telefonica de Espana 33,504 1,548
Banco Bilbao Vizcaya SA 22,426 1,150
Corp. Bancaria de Espana 33,368 748
Endesa SA 34,095 745
Iberdrola SA 45,082 731
See accompanying notes 39
<PAGE>
Schedule of Investments (Cont.)
International Developed Fund
June 30, 1998
Value
Shares (000s)
- -------------------------------------------------------------------------------
Gas Natural SDG SA `E' 6,980 $ 504
Banco Santander SA 18,792 481
Autopistas Concesionaria Espanola SA 28,949 448
Repsol SA 7,658 422
Gas Y Electricidad SA `2' 4,732 360
Banco Central Hispanoame 10,376 326
Autopistas Cesa Rights (b) 28,949 22
------------
7,485
Switzerland 6.4%
Novartis AG 1,071 1,779
Nestle SA 601 1,284
Roche Holding AG 122 1,196
UBS AG (b) 3,175 1,178
Credit Suisse Group 4,146 921
Clariant AG (b) 1,090 717
Kuoni Reisen AG 130 644
Holderbank Financiere Glarus AG 385 489
ABB AG 294 433
TAG Heuer International SA 3,040 288
Ciba Specialty Chemicals AG 6 1
------------
8,930
United Kingdom 10.9%
Lloyds TSB Group PLC 99,720 1,392
Zeneca Group 24,876 1,068
SmithKline Beecham PLC 82,252 1,000
Scottish & Newcastle PLC 64,877 912
Boots Co. PLC 53,260 885
Unilever PLC 80,988 869
Abbey National PLC 42,822 763
Prudential 57,131 753
Glaxo Wellcome PLC 24,865 748
Commercial Union PLC 38,034 710
British Telecommunications PLC 57,500 707
Tesco PLC 69,415 677
HSBC Holdings PLC 26,022 660
Scottish Power PLC 65,658 579
British Petroleum Co. PLC 35,603 518
Cadbury Schweppes PLC 30,000 464
National Power PLC 45,800 431
IMI PLC 67,229 416
TI Group PLC 54,000 415
Shell Transport & Trading Co. 56,737 398
Wolseley PLC 65,074 385
LASMO PLC 95,798 384
------------
15,134
------------
Total Common Stocks 122,707
------------
(Cost $95,251)
===============================================================================
SHORT-TERM INSTRUMENTS 11.8%
===============================================================================
Principal
Amount
(000s)
Time Deposit 11.8%
State Street Bank
5.250% due 07/01/98 $ 16,375 16,375
------------
Total Short-Term Instruments 16,375
============
(Cost $16,375)
Total Investments (a) 100.2% $ 139,082
(Cost $111,626)
Other Assets and Liabilities (Net) (0.2%) (331)
------------
Net Assets 100.0% $ 138,751
============
<TABLE>
<CAPTION>
Value
(000s)
- ----------------------------------------------------------------------------------------------------
<S> <C>
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost. $ 31,758
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value. (4,341)
------------
Unrealized appreciation-net $ 27,417
============
(b) Non-income producing security.
(c) Foreign cash in the amount of $476,663 has been segregated with the
custodian to cover margin requirements for the following open futures contract
at June 30, 1998:
</TABLE>
Unrealized
Type Contracts Appreciation
- --------------------------------------------------------------------------------
Osaka 300 Index 231 $ 117
(d) Foreign forward currency contracts outstanding at June 30, 1998:
Principal
Amount Unrealized
Covered Expiration Appreciation/
Type by Contract Month (Depreciation)
- --------------------------------------------------------------------------------
Buy BP 5,038 07/98 $ 1
Sell DM 39,800 07/98 (20)
Sell PE 24,321 07/98 0
---------------
$ (19)
===============
(e) Principal amount denoted in indicated currency:
BP- British Pound
DM- German Mark
PE- Portuguese Escudo
40 See accompanying notes
<PAGE>
Schedule of Investments
International Fund
June 30, 1998
Value
Shares (000s)
================================================================================
COMMON STOCKS 104.2%
================================================================================
Brazil 3.4%
Telecomunicacoes Brasileiras - ADR 10,900 $ 1,190
Centrais Electricas Brasileiras SA `B' 27,053,800 814
Companhia Vale do Rio Doce 26,300,000 534
Banco Itau SA 668,100 381
Banco Bradesco SA 41,128,800 343
Petroleo Brasileiro SA 1,841,500 342
Telecomunicacoes Brasileiras SA 3,648,200 290
Companhia Energetica de Minas Gerais 8,479,400 264
Companhia Siderurgica Nacional 8,519,300 213
Usimas Siderurgicas Minas Gerais SA PR 40,900,000 206
Souza Cruz SA 23,000,000 171
Companhia Cervejaria Brahma 270,400 168
Companhia Paulista de Forca e Luz 1,108,100 113
Aracruz Celulose SA `B' 81,500,000 91
White Martins SA 46,900,000 44
Centrais Geradoras do Sul do Brasil SA (b) 15,842,000 23
Companhia Vale do Rio Doce - Bonus Shares 27,368 0
----------
5,187
Chile 4.0%
Compania de Telecomunicaciones de Chile
SA SP - ADR 69,855 1,419
Enersis SA SP - ADR 50,100 1,224
Empresa Nacional de Electricidad SA SP - ADR 59,200 844
Banco Santander Chile SP - ADR 60,350 777
Gener SA SP - ADR 38,133 696
Compania Cervecerias Unidas SA SP - ADR 20,300 429
Quimica Minera Chile SA SP - ADR 12,200 409
Maderas Y Sinteticos SP - ADR 30,400 247
Madeco SA - ADR 20,742 183
----------
6,228
Finland 8.9%
Nokia OYJ `A' 85,500 6,278
Werner Soderstrom Osakey `B' 23,700 1,553
Hartwall OYJ ABP 47,400 1,518
UPM-Kymmene Corp. 35,650 980
Neste OY 25,250 781
Okobank `A' 43,000 779
Metsa Serla `B' 79,470 766
Yit-Yhtyma OY 45,500 729
Viking Line AB 5,750 304
Rauma Group OY 630 13
----------
13,701
France 17.7%
PSA Peugeot Citroen 10,120 2,171
Elf Aquitaine SA 14,122 1,981
VIVENDI 8,910 1,898
Alcatel Alsthom 9,130 1,854
L'OREAL 3,220 1,787
Groupe Danone 6,400 1,760
Lafarge SA 15,491 1,597
Pinault-Printemps-Redoute SA 1,890 1,578
LVMH 7,810 1,559
Total SA 11,810 1,532
Societe Generale 7,220 1,497
Compagnie de Saint Gobain 7,530 1,393
Groupe GTM 12,000 1,243
Banque National de Paris 14,920 1,216
AXA-UAP 10,214 1,146
France Telecom SA 13,040 897
Schneider SA 8,231 655
Valeo 6,360 648
Credit Commercial de France 7,150 600
Alstom (b) 11,000 361
VIVENDI Warrants (b) 2,750 5
----------
27,378
Germany 8.5%
SAP AG-Vorzug 2,490 1,690
Bayer AG 23,500 1,210
Mannesmann AG 11,750 1,190
Allianz AG 3,510 1,155
Volkswagen AG 999 959
Bayerische Vereinsbank SG 10,900 925
Viag AG 1,150 776
Deutsche Bank 8,750 740
VEBA AG 10,860 $ 739
RWE AG 10,060 595
Daimler Benz AG 5,870 575
Muenchener Rueckversicherungs-
Gesellschaft AG 1,020 505
Siemens AG 8,243 501
Metro AG 8,100 491
BASF AG 9,900 468
Commerzbank AG 8,400 321
Dresdner Bank AG 4,720 254
Allianz AG (b) 67 22
Daimler Benz AG Rights (b) 5,870 6
-------
13,122
Hungary 4.9%
Magyar Tavkozlesi Rt. 488,000 2,830
MOL Magyar Olaj-es Gazipare 70,100 1,888
OTP Bank 26,000 1,276
Richter Gedeon 11,425 918
Pick Szeged Rt. 5,400 315
Danubius Hotel (b) 10,300 207
Graboplast 4,450 113
-------
7,547
Ireland 3.8%
Allied Irish Banks PLC 174,000 2,509
CRH PLC 109,000 1,545
Jefferson Smurfit Group PLC 271,300 805
Kerry Group PLC 38,500 531
Irish Life PLC 56,600 521
-------
5,911
Israel 5.1%
ECI Telecommunications Limited 24,200 917
Bank Hapoalim Limited 301,000 910
Koor Industries Limited 7,400 854
Teva Pharmaceutical Industries Limited 20,920 751
Bezek Israeli Telecommunication Corp. Limited 199,800 638
Formula Systems Limited (b) 17,300 605
Industrial Buildings Corp. 356,000 596
Supersol Limited 179,900 592
Bank Leumi Le-Israel 269,000 536
Elite Industries Limited 13,800 451
Israel Chemicals Limited 353,000 451
Blue Square Chain Stores (b) 31,200 384
Agis Industries Limited 27,800 188
-------
7,873
Italy 9.8%
ENI SpA 402,400 2,633
Banca Commerciale Italiana 310,000 1,851
Telecom Italia SpA 227,665 1,673
Telecom Italia Mobile SpA 252,000 1,538
Fiat SpA 332,600 1,453
Assicuazioni Generali 44,480 1,444
Istituto Mobiliare Italiano SpA 63,500 998
Edison SpA 121,000 969
Alleanza Assicurazioni 62,000 841
Instituto Nazionale delle Assicurazioni 235,000 666
Benetton Group SpA 277,200 574
Danieli & Co. 61,000 512
-------
15,152
Japan 9.2%
Fuji Photo Film 36,000 1,250
Nippon Telegraph & Telephone 145 1,198
Fanuc 31,900 1,100
Sumitomo Bank Limited 113,000 1,096
Hitachi Limited 168,000 1,093
Fujisawa Pharmaceutical 103,000 961
Aoyama Trading Co. Limited 35,400 870
Kirin Brewery Co. Limited 84,000 791
Murata Manufacturing Co. 21,000 679
Tokio Marine & Fire Insurance Co. 59,000 605
Toyota Motor Corp. 23,000 593
Matsushita Electric Industrial Co. Limited 34,000 545
Canon, Inc. 24,000 543
Mitsui O.S.K. Lines Limited 313,000 531
Sumitomo Trust & Banking 101,000 450
Tokyo Electric Power 22,800 446
Bridgestone Corp. 18,000 424
See accompanying notes 41
<PAGE>
Schedule of Investments (Cont.)
International Fund
June 30, 1998
Value
Shares (000s)
NEC Corp. 45,000 $ 418
Mitsubishi Heavy Industries Limited 88,000 331
Ito-Yokado Co. Limited 7,000 328
-------
14,252
Mexico 2.3%
Telefonos de Mexico - ADR 20,770 998
Grupo Modelo SA de CV `C' 38,500 328
Cifra SA de CV `V' 180,593 272
Empresas La Moderna SA de CV (b) 39,100 228
Grupo Televisa SA SP - GDR (b) 5,900 222
Cemex SA de CV 52,839 199
Grupo Mexico SA `B' 64,800 178
Alfa SA de CV `A' 42,250 173
Grupo Carso SA de CV `A1' 40,350 167
Kimberly Clark de Mexico SA de CV `A' 47,050 167
Grupo Financiero Banamex Accival `L' (b) 91,881 149
Formento Economico Mexicano SP - ADR 4,440 140
Grupo Industrial Bimbo SA de CV `A' 57,336 116
Industrias Penoles SA 30,900 98
Desc SA de CV `B' 14,700 75
Controladora Comercial Mexicana SA de CV 67,600 56
TV Azteca SA de CV SP - ADR 4,100 44
Desc SA de CV `C' 1,567 8
Transport Maritima - ADR 750 5
-------
3,623
Netherlands 4.7%
Royal Dutch Petroleum Co. 33,370 1,847
ING Groep NV 14,585 953
Unilever NV 11,820 936
Verernigde Nederlandse Uitgeversbedrijven
Verenigd Bezit 21,180 768
Philips Electronics NV 6,740 565
Akzo Noble NV 2,440 541
Fortis Amev NV 7,830 458
ABN-AMRO Holdings 16,700 390
Koninklijke KPN NV 7,290 280
Elsevier NV 17,630 266
TNT Post Groep NV (b) 7,290 186
-------
7,190
Peru 0.9%
Telefonica del Peru SA `B' 361,700 747
Credicorp Limited 18,500 272
Cerveceria Backus Y Johnston SA `T' 269,765 138
Banco Wiese SP - ADR 18,700 64
Luz del Sur Servicios SA `B' 83,400 62
Cementos Lima SA 28,139 53
Compania de Minas Buenaventura SA `B' 4,700 31
Compania de Minas Buenaventura SA `A' 1,780 12
-------
1,379
Poland 1.5%
Elektrim Spolka Akcyjna SA 55,100 672
Bank Slaski SA W Katawicach 5,700 383
Bank Rozwoju Eksportu SA 10,700 290
BIG Bank Gdanski SA 205,600 274
Wielkopolski Bank Kredytowy SA 29,200 226
Bank Przemyslowo-Handlow SA 1,700 122
Stomil Olsztyn SA 14,500 99
Amica Wronki SA (b) 9,500 94
Polifarb-Cieszyn-Wroclaw SA 33,900 87
Debica SA 3,700 74
Agros Holding SA (b) 4,400 64
BK Rozwoj Right (b) 9,804 3
-------
2,388
Portugal 8.0%
Portugal Telecom SA 54,290 2,872
EDP-Electricidade de Portugal SA 83,800 1,944
Cimpor-Cimentos de Portugal SGPS SA 33,095 1,160
Banco Comercial Portugues SA `R' 36,618 1,038
Companhia de Seguros Mundial Confianca SA (b) 36,000 955
Sonae Investimentor-Sociedade Gestora de
Participacoes Sociais SA 17,380 947
Banco Espirito Santo e Comercial de Lisboa SA 30,145 903
BPI-SGPS SA 25,650 826
Jeronimo Martins, SGPS, SA 15,900 762
Investec-Consultoria Internacional SA (b) 13,000 597
Brisa-Auto Estradas de Portugal SA 9,800 418
-------
12,422
Switzerland 5.3%
Novartis AG 1,174 $ 1,950
Roche Holding AG 133 1,304
Nestle SA 520 1,111
UBS AG (b) 2,550 946
Credit Suisse Group 3,675 816
Clariant AG (b) 1,018 669
Holderbank Financiere Glarus AG 464 589
ABB AG 334 492
TAG Heuer International SA 2,800 265
Ciba Specialty Chemicals AG 4 1
----------
8,143
Turkey 5.6%
Turkiye IS Bankasi `C' 35,355,000 1,427
Arcelik AS 20,199,500 948
Turkiye Garanti Bankasi AS 18,370,000 845
Eregli Demir Ve Celik Fabrikalari TAS 4,369,000 681
Yapi ve Kredi Bankasi AS 25,387,570 648
Ege Biracilik Ve Malt Sanayii AS 4,345,000 514
Akbank TAS 15,682,330 506
Bagfas Bandirma Gubre Fabrikalari AS 3,270,000 503
Migros Turk TAS 504,400 492
Brisa Bridgestone Sabanci Lastik San. Be Tic AS 8,093,000 387
Haci Omer Sabanci Holding AS 6,174,000 382
Adana Cimento Sanayii `A' 8,435,530 314
Otosan Otomobil Sanayii AS 496,000 265
Aygaz AS 1,580,000 237
Turk Sise Ve Cam Fabrikalari AS 6,765,070 224
Northern Elektrik Telekomunikasyon AS (b) 813,000 217
----------
8,590
Venezuela 0.6%
Compania Anonima Nacional
Telefonos de Venezuela - ADR 31,850 796
Mavesa SA - ADR 25,350 81
----------
877
----------
Total Common Stocks 160,963
----------
(Cost $129,491)
================================================================================
SHORT-TERM INSTRUMENTS 3.8%
================================================================================
Principal
Amount
(000s)
Time Deposit 3.8%
State Street Bank
5.250% due 07/01/98 $ 5,877 5,877
---------
Total Short-Term Instruments 5,877
---------
(Cost $5,877)
Total Investments (a) 108.0% $ 166,840
(Cost $135,368)
Other Assets and Liabilities (Net) (8.0%) (12,388)
---------
Net Assets 100.0% $ 154,452
---------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost. $ 41,359
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value. (9,967)
---------
Unrealized appreciation-net $ 31,392
---------
(b) Non-income producing security.
42 See accompanying notes
<PAGE>
(c) Foreign forward currency contracts outstanding at June 30, 1998:
Principal
Amount
Covered Expiration Unrealized
Type by Contract Month Depreciation
- --------------------------------------------------------------------------------
Sell DM 21,200 07/98 $ (10)
Sell PE 74,444 07/98 (1)
---------
$ (11)
---------
(d) Principal amount denoted in indicated currency:
DM- German Mark
PE- Portuguese Escudo
See accompanying notes 43
<PAGE>
Schedule of Investments
Emerging Markets Fund
June 30, 1998
Value
Shares (000s)
================================================================================
COMMON STOCKS 97.7%
================================================================================
Argentina 8.1%
YPF Sociedad Anonima - ADR 22,650 $ 681
Telefonica de Argentina - ADR 17,133 556
Compania Naviera Perez Co. - ADR 28,912 290
Banco Frances del Rio de la Plata SA 20,720 157
Astra Cia Argentina de Petro SA 94,650 152
Banco de Galicia y Buenos Aires SA de CV 32,369 146
Siderca SA "A" 74,816 127
Inversiones Y Representaciones SA - GDR 2,306 67
Molinos Rio de La Plata SA 13,266 29
Renault Argentina 11,160 22
----------
2,227
Brazil 9.7%
Telecomunicacoes Brasileiras - ADR 5,160 563
Centrais Electricas Brasileiras SA "B" 16,126 485
Banco Itau SA 403,900 231
Telecomunicacoes Brasileiras SA 2,485,000 198
Banco Bradesco SA 23,570,907 197
Petroleo Brasileiro SA 1,051,300 195
Companhia Vale do Rio Doce 9,062 184
Companhia Energetica de Minas Gerais 5,263,445 164
Companhia Siderurgica Nacional 3,471,500 87
Usimas Siderurgicas Minas Gerais SA PR 16,319 82
Companhia Paulista de Forca e Luz 680,200 70
Aracruz Celulose SA "B" 60,600 67
White Martins SA 62,555 59
Companhia Cervejaria Brahma 55,700 35
Souza Cruz SA 4,500 33
Centrais Geradoras do Sul do Brasil SA (b) 16,125,620 23
Companhia Vale do Rio Doce - Bonus Shares 29,662 0
----------
2,673
Chile 9.0%
Compania de Telecomunicaciones de Chile
SA SP - ADR 28,551 580
Enersis SA SP - ADR 21,300 521
Empresa Nacional de Electricidad SA SP - ADR 27,350 390
Banco Santander Chile SP - ADR 19,000 245
Gener SA SP - ADR 13,228 241
Quimica Minera Chile SA SP - ADR 5,330 179
Compania Cervecerias Unidas SA SP - ADR 7,300 154
Maderas Y Sinteticos SP - ADR 14,090 114
Madeco SA - ADR 8,057 71
----------
2,495
Hungary 7.6%
Magyar Tavkozlesi Rt 135,000 783
MOL Magyar Olaj-es Gazipare 19,900 536
OTP Bank 6,100 299
Richter Gedeon 3,025 243
Danubius Hotel (b) 5,400 108
Pick Szeged Rt 1,500 88
Graboplast 1,300 33
----------
2,090
India 4.2%
India Public Sector Fund Limited 33,000 264
Hindalco Industries Limited SP - GDR 12,210 171
Videsh Sanchar Nigam Limited - ADR (b) 12,400 133
State Bank of India - GDR 6,200 73
Gujarat Ambuja - GDR 15,100 71
Bajaj Auto Limited 5,100 69
EIH Limited 11,780 63
BSES Limited - GDR 5,900 61
Tata Engineering and Locomotive Co.
Limited SP - GDR 20,624 60
Indian Rayon & Industries Limited - GDR 18,825 59
Larsen & Tourbro Limited - GDR 6,180 56
Indian Hotels Co. - GDR 6,030 48
Steel Authority of India 15,300 38
----------
1,166
Israel 12.6%
Bank Hapoalim Limited 155,900 471
Formula Systems Limited (b) 11,100 388
ECI Telecommunications Limited 9,600 364
Koor Industries Limited 3,080 356
Teva Pharmaceutical Industries Limited 8,400 301
Bezek Israeli Telecommunication Corp. Limited 83,300 266
Industrial Buildings Corp. 152,000 255
Bank Leumi Le-Israel 115,000 $ 229
Elite Industries Limited 6,600 216
Supersol Limited 63,500 209
Blue Square Chain Stores (b) 13,400 165
Israel Chemicals Limited 125,000 160
Agis Industries Limited 16,800 113
-------
3,493
Mexico 8.9%
Telefonos de Mexico - ADR 13,050 627
Cifra SA de CV "V" 150,137 226
Grupo Modelo SA de CV "C" 24,700 210
Alfa SA de CV "A" 34,100 139
Empresas La Moderna SA de CV (b) 23,100 134
Grupo Carso SA de CV "A1" 32,000 133
Grupo Televisa SA SP - GDR (b) 3,240 122
Kimberly Clark de Mexico SA de CV "A" 32,800 116
Grupo Mexico SA "B" 42,310 116
Grupo Industrial Bimbo SA de CV "A" 55,464 112
Cemex SA de CV 29,223 110
Grupo Financiero Banamex Accival "L" (b) 63,707 103
Formento Economico Mexicano SP - ADR 3,100 98
Industrias Penoles SA 30,000 95
Desc SA de CV "B" 14,200 72
TV Azteca SA de CV SP - ADR 4,000 43
-------
2,456
Peru 3.5%
Telefonica del Peru SA "B" 267,938 553
Credicorp Limited 11,516 169
Cerveceria Backus Y Johnston SA "T" 173,983 89
Luz del Sur Servicios SA "B" 37,700 28
Compania de Minas Buenaventura SA "A" 4,147 28
Ferreyros SA 18,303 25
Cementos Lima SA 12,643 24
Banco Wiese SP - ADR 6,000 21
Compania de Minas Buenaventura SA "B" 1,574 10
Southern Peru Copper Corp. "T" (b) 2,200 8
Minsur SA 3,868 8
-------
963
Poland 4.5%
Elektrim Spolka Akcyjna SA 28,131 343
Bank Slaski SA W Katawicach 2,880 193
Bank Rozwoju Eksportu SA 5,410 147
BIG Bank Gdanski SA 105,100 140
Wielkopolski Bank Kredytowy SA 14,900 115
Bank Przemyslowo-Handlow SA 900 65
Amica Wronki SA (b) 5,900 59
Stomil Olsztyn SA 7,600 52
Polifarb-Cieszyn-Wroclaw SA 17,256 45
Debica SA 2,180 44
Agros Holding SA (b) 2,300 34
BK Rozwoj Rights (b) 5,378 2
-------
1,239
Portugal 6.0%
Portugal Telecom SA 6,710 355
EDP-Electricidade de Portugal SA 10,700 248
Cimpor-Cimentos de Portugal SGPS SA 4,215 148
Banco Espirito Santo e Comercial de Lisboa SA 4,616 138
BPI-SGPS SA 4,100 132
Banco Comercial Portugues SA "R" 4,370 124
Companhia de Seguros Mundial Confianca SA (b) 4,600 122
Sonae Investimentor-Sociedade Gestora de
Participacoes Sociais SA 2,200 120
Jeronimo Martins, SGPS, SA 2,195 105
Investec-Consultoria Internacional SA (b) 2,100 96
Brisa-Auto Estradas de Portugal SA 1,300 55
-------
1,643
Russia 2.3%
Lukoil Holding SP - ADR 5,000 168
Unified Energy Systems - GDR (b) 12,250 164
Mosenergo SP - ADR 15,300 77
Rostelecom SP - ADR 5,400 72
AO Tatneft - ADR 7,500 58
Surgutneftegaz SP - ADR 12,600 51
Rao Gazprom - ADR 3,800 42
-------
632
44 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
South Africa 6.1%
De Beers Centenary AG 11,620 $ 201
Liberty Life Association of Africa 9,550 183
South African Breweries Limited 8,990 182
Rembrandt Group Limited 26,940 165
Nedcor Limited - GDR 7,210 151
Nasionale Pers Beperk Limited 18,600 120
Barlow Limited 19,170 99
Smith C.G. Limited 36,330 98
ABSA Group Limited - GDR 7,717 93
Driefontein Consolidated Limited 17,300 88
Sasol Limited 15,000 86
ABSA Group Limited 11,480 70
Metro Cash & Carry Limited 70,500 44
Woolworth - GDR (b) 5,300 42
Anglo American Platinum Corp. Limited 3,300 35
FirstRand Limited 21,400 32
-----------
1,689
Turkey 11.3%
Turkiye IS Bankasi "C" 14,577,500 588
Yapi Ve Kredi Bankasi AS 12,333,100 315
Turkiye Garanti Bankasi AS 6,669,000 307
Akbank TAS 7,828,680 253
Eregli Demir Ve Celik Fabrikalari TAS 1,469,000 229
Migros Turk TAS 225,400 220
Ege Biracilik Ve Malt Sanayii AS 1,814,000 215
Arcelik AS 4,049,500 190
Brisa Bridgestone Sabanci Lastik San. Ve Tic AS 3,727,000 178
Haci Omer Sabanci Holding AS 2,759,000 171
Adana Cimento Sanayii "A" 3,770,460 140
Aygaz AS 730,000 110
Turk Sise Ve Cam Fabrikalari AS 3,022,280 100
Northern Elektrik Telekomunikasyon AS (b) 363,000 97
-----------
3,113
Venezuela 3.9%
Compania Anonima Nacional
Telefonos de Venezuela - ADR 19,200 480
La Electricidad de Caracas 588,588 266
Banco Provincial SA 104,485 125
Corporacion Venezolana de Cementos, SACA 103,900 103
Mavesa SA - ADR 15,350 49
Siderurgica Venezolana Sivensa "A" 474,483 42
-----------
1,065
-----------
Total Common Stocks 26,944
-----------
(Cost $29,806)
Total Investments (a) 97.7% $ 26,944
(Cost $29,806)
Other Assets and Liabilities (Net) 2.3% 625
-----------
Net Assets 100.0% $ 27,569
-----------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost.
$ 4,319
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value. (7,265)
------------
Unrealized depreciation-net $ (2,946)
------------
(b) Non-income producing security.
See accompanying notes 45
<PAGE>
Schedule of Investments
Innovation Fund
June 30, 1998
Value
Shares (000s)
- -------------------------------------------------------------------------------
COMMON STOCKS 93.5%
- -------------------------------------------------------------------------------
Capital Goods 0.8%
MotivePower Industries, Inc. (b) 120,000 $ 2,940
Communications 6.0%
Nextel Communications, Inc. `A' (b) 250,000 6,219
Skytel Communications, Inc. 250,000 5,852
WinStar Communications, Inc. (b) 100,000 4,294
Clearnet Communications, Inc. `A' (b) 320,000 3,520
Com21, Inc. 150,000 3,187
----------
23,072
Consumer Discretionary 0.9%
Tefron Limited (b) 150,000 3,300
Financial & Business Services 1.7%
Outdoor Systems, Inc. (b) 230,000 6,440
Health Care 12.1%
VISX, Inc. (b) 200,000 11,900
Quintiles Transnational Corp. (b) 200,000 9,838
Sofamor Danek Group, Inc. (b) 90,000 7,791
STERIS Corp. (b) 100,000 6,359
Guidant Corp. 80,000 5,705
Theragenics Corp. (b) 200,000 5,213
----------
46,806
Technology 72.0%
America Online, Inc. (b) 300,000 31,800
Cisco Systems, Inc. (b) 250,000 23,016
Microsoft Corp. (b) 190,000 20,591
Nokia Corp. - ADR 260,000 18,866
Lucent Technologies, Inc. 219,600 18,268
Yahoo, Inc. (b) 100,000 15,750
Saville Systems - ADR (b) 270,000 13,534
Ascend Communications, Inc. (b) 250,000 12,391
CBT Group PLC SP - ADR (b) 220,000 11,770
Dell Computer Corp. (b) 120,000 11,137
Tellabs, Inc. (b) 150,000 10,744
Intel Corp. 140,000 10,377
Network Associates, Inc. (b) 195,000 9,336
Tekelec (b) 200,000 8,950
Aspect Development, Inc. (b) 110,000 8,319
CheckFree Holdings Corp. 250,000 7,359
Fore Systems, Inc. (b) 265,000 7,022
Citrix Systems, Inc. (b) 100,000 6,837
Premisys Communications, Inc. (b) 230,000 5,721
Xilinx, Inc. (b) 140,000 4,760
Compaq Computer Corp. (b) 165,000 4,682
3Com Corp. (b) 150,000 4,603
BEA Systems, Inc. (b) 200,000 4,587
Flextronics International Limited 100,000 4,350
Business Objects SA SP - ADR (b) 225,000 3,797
America Online, Inc. Rights (b) 300,000 0
----------
278,567
----------
Total Common Stocks 361,125
(Cost $204,437) ==========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 7.6%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Commercial Paper 7.6%
Federal Home Loan Bank Corp
5.400% due 07/01/98 $ 27,000 27,000
Federal National Mortgage Association
5.750% due 07/01/98 2,300 2,300
----------
Total Short-Term Instruments 29,300
(Cost $29,300) ==========
Value
(000s)
- -------------------------------------------------------------------------------
Total Investments (a) 101.1% $ 390,425
(Cost $233,737)
Written Options (c) (0.3%) (975)
(Premiums $650)
Other Assets and Liabilities (0.8%) (3,123)
----------
Net Assets 100.0% $ 386,327
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 159,448
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (2,760)
----------
Unrealized appreciation-net $ 156,688
==========
(b) Non-income producing security.
(c) Premiums received on written options:
Premium Value
Type Contracts (000s) (000s)
- -------------------------------------------------------------------------------
Call - OTC America Online, Inc. (07/98)
Strike @ 110.00 Exp. 07/17/98 1,000 $ 310 $ 300
Call - OTC Yahoo, Inc. (07/98)
Strike @ 150.00 Exp. 07/17/98 500 340 675
-----------------------
$ 650 $ 975
=======================
46 See accompanying notes
<PAGE>
Schedule of Investments
Precious Metals Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 68.7%
- --------------------------------------------------------------------------------
Australia 6.6%
Normandy Mining Limited 700,000 $ 572
Sons of Gwalia Limited "A" 120,000 297
Acacia Resources Limited (b) 250,000 266
Ranger Minerals NL (b) 104,000 231
Delta Gold NL 170,000 208
Macraes Mining Co. Limited 130,000 56
Emperor Mines Limited (b) 190,000 54
----------
1,684
Canada 24.4%
Placer Dome, Inc. 75,000 881
Barrick Gold Corp. 40,000 767
Franco-Nevada Mining Corp. Limited 32,500 645
Battle Mountain Gold Co. 105,000 623
Meridian Gold, Inc. (b) 290,000 602
Euro-Nevada Mining Corp. 41,600 568
Battle Mountain Canada Limited 50,000 293
Richmont Mines, Inc. (b) 110,000 285
Goldcorp, Inc. "A" (b) 55,000 258
Namibian Minerals Corp. (b) 95,000 217
Barrick Gold Corp. 16,700 203
Kinross Gold Corp. 60,000 202
IAMGOLD (b) 73,000 186
Cambior, Inc. 27,000 159
Romarco Minerals, Inc. (b) 45,000 58
Sutton Resources Limited 10,000 57
Royal Oak Mines, Inc. (b) 60,000 53
Rio Narcea Gold Mines Limited (b) 20,000 44
Pangea Goldfields, Inc. (b) 45,000 44
Miramar Mining Corp. - ADR 30,000 34
Minefinders Corp. Limited (b) 24,000 28
Viceroy Resources Corp. (b) 9,400 15
----------
6,222
Ghana 0.6%
Ashanti Goldfields Co. - GDR 20,000 163
South Africa 19.2%
Anglo American Gold Investment Co. Limited - ADR 74,164 1,474
Anglo American Gold Investment Co. Limited 20,708 821
Harmony Gold Mining Co. Limited (b) 116,000 472
Driefontein Consolidated Limited SP - ADR 70,000 359
Gold Fields of South Africa Limited SP - ADR 30,000 347
Western Areas Gold Mining Co. Limited 75,000 237
St. Helens Gold Mine - ADR 80,000 163
Driefontein Consolidated Limited 30,000 153
Gencor Limited 100,000 152
Gold Fields Limited - ADR (b) 33,222 141
Gold Fields of South Africa 10,000 113
Randfontein Estates Gold Mining Co.
Witwatersrand Limited 50,000 105
Randgold & Exploration Co. Limited (b) 140,000 105
Durban Roodepoort Deep Limited SP - ADR (b 41,961 90
West Rand Consolidated Mines Limited (b) 50,000 48
Harmony Gold Mining Co. Limited SP - ADR (b) 10,000 41
Durban Roodepoort Deep Options 83,922 35
Kalahari Goldridge Mining Co. Limited (b) 64,500 23
Durban Roodepoort Deep Options "B" 20,980 8
Randfontein Estates Gold Option 7,800 4
----------
4,891
United Kingdom 0.8%
Rangold Resources Limited (b) 17,000 91
Reunion Mining PLC (b) 60,000 70
Golden Star Resources Limited (b) 20,000 42
----------
203
United States 17.1%
Homestake Mining Co. 120,000 1,245
Getchell Gold Corp. (b) 70,000 1,050
Stillwater Mining Co. (b) 30,000 814
Newmont Mining Corp. 31,000 732
Newmont Gold Co. 10,000 247
Royal Gold, Inc. (b) 46,000 230
Alta Gold Co. (b) 34,000 60
----------
4,378
----------
Total Common Stocks 17,541
(Cost $27,735) ==========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 15.2%
- --------------------------------------------------------------------------------
Commercial Paper 13.3%
American Express
5.950% due 07/01/98 $ 1,700 $ 1,700
General Electric Co.
5.600% due 07/01/98 1,700 1,700
----------
3,400
Repurchase Agreement 1.9%
State Street Bank
4.250% due 07/01/98 479 479
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 5.875% 02/15/00
valued at $492,617. Repurchase
proceeds are $479,057.)
----------
Total Short-Term Instruments 3,879
(Cost $3,879) ==========
Total Investments (a) 83.9% $ 21,420
(Cost $31,614)
Other Assets and Liabilities (Net) 16.1% 4,121
----------
Net Assets 100.0% $ 25,541
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost. $ 319
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value. (11,653)
----------
Unrealized depreciation-net $ (11,334)
==========
(b) Non-income producing security.
See accompanying notes 47
<PAGE>
Schedule of Investments
Balanced Fund
June 30, 1998
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 56.4%
- --------------------------------------------------------------------------------
Aerospace 0.4%
Northrop Grumman Corp. 2,400 $ 248
Building 0.2%
Centex Corp. 3,900 147
Capital Goods 2.4%
Tyco International Limited 4,600 290
Textron, Inc. 3,900 280
Illinois Tool Works, Inc. 3,900 260
Johnson Controls, Inc. 4,500 257
United Technologies Corp. 2,400 222
Dana Corp. 3,500 187
AGCO Corp. 8,500 175
----------
1,671
Communications 2.0%
Bell Atlantic Corp. 13,400 611
Southern New England Telecommunications Corp. 8,000 524
SBC Communications, Inc. 5,300 212
----------
1,347
Consumer Discretionary 7.9%
Chrysler Corp. 10,600 598
Tandy Corp. 8,500 451
American Greetings Corp. "A" 7,800 397
Brunswick Corp. 16,000 396
Costco Cos., Inc. (b) 6,000 378
VF Corp. 6,900 355
Jones Apparel Group, Inc. (b) 9,400 344
TJX Cos., Inc. 14,200 343
Maytag Corp. 6,700 331
Dayton Hudson Corp. 6,400 310
Harley-Davidson, Inc. 7,500 291
Ford Motor Co. 4,200 248
Federated Department Stores, Inc. (b) 4,300 231
Black & Decker Corp. 3,600 220
CVS Corp. 5,100 199
Dillards, Inc. "A" 4,700 195
Tupperware Corp. 3,200 90
----------
5,377
Consumer Services 2.8%
Carnival Corp. "A" 10,400 412
Omnicom Group 6,900 344
New York Times Co. 3,600 285
Gannett, Inc. 3,400 242
Marriott International, Inc. "A" 7,300 236
Tribune Co. 3,400 234
Central Newspapers, Inc. "A" 2,700 188
----------
1,941
Consumer Staples 5.5%
Anheuser Busch Cos., Inc. 11,700 552
SUPERVALU, Inc. 12,100 537
Whitman Corp. 19,000 436
Safeway, Inc. (b) 9,300 378
RJR Nabisco Holdings Corp. 15,900 378
Kimberly-Clark Corp. 8,200 376
Hershey Foods Corp. 3,800 262
Quaker Oats Co. 4,300 236
Kroger Co. (b) 5,200 223
Albertson's, Inc. 4,100 212
IBP, Inc. 10,000 181
----------
3,771
Energy 3.6%
Repsol SA SP - ADR 10,300 567
Ultramar Diamond Shamrock Corp. 16,700 527
Amoco Corp. 9,000 375
Kerr McGee Corp. 4,700 272
Dresser Industries, Inc. 5,600 247
Transocean Offshore, Inc. 5,300 236
Atlantic Richfield Co. 1,200 94
Tidewater, Inc. 2,400 79
Rowan Cos., Inc. (b) 2,600 51
----------
2,448
Environmental Services 0.6%
Browning Ferris Industries, Inc. 11,100 386
Financial & Business Services 12.1%
PNC Bank Corp. 13,800 743
Chase Manhattan Corp. 7,700 581
Capital One Financial Corp. 3,600 447
Countrywide Credit Industries, Inc. 7,600 386
Bear Stearns Cos. 6,300 358
CIGNA Corp. 5,100 352
Cognizant Corp. 5,300 334
American Express Co. 2,600 296
Southtrust Corp. 6,500 283
Morgan Stanley, Dean Witter, Discover and Co. 3,000 274
MBNA Corp. 8,100 267
Hartford Financial Services Group, Inc. 2,300 263
Alliance Capital Management LP 10,300 261
Household International, Inc. 5,100 254
Associates First Capital Corp. "A" 3,248 250
Lincoln National Corp. 2,700 247
First Union Corp. 3,900 227
Simon DeBartolo Group, Inc. 6,700 218
Washington Mutual, Inc. 5,000 217
Travelers Group, Inc. 3,550 215
Provident Cos., Inc. "B" 6,100 210
National City Corp. 2,900 206
Fleet Financial Group, Inc. 2,400 200
BankAmerica Corp. 2,300 199
Banc One Corp. 3,500 196
Allstate Corp. 2,100 192
Loews Corp. 2,200 192
BankBoston Corp. 3,400 189
Nationwide Financial Services, Inc. 3,100 158
Union Planters Corp. 1,300 76
----------
8,291
Health Care 5.3%
Pharmacia & Upjohn, Inc. 13,700 632
American Home Products Corp. 7,700 398
Mallinckrodt Group, Inc. 12,300 365
HBO & Co. 8,200 289
Schering-Plough Corp. 3,100 284
Wellpoint Health Networks, Inc. (b) 3,700 274
Biomet, Inc. 8,200 271
Biogen, Inc. 5,500 270
Health Management Associates, Inc. "A" (b) 7,100 237
United Healthcare Corp. 3,300 210
Foundation Health Systems, Inc. "A" (b) 7,100 187
HEALTHSOUTH Corp. (b) 6,500 173
----------
3,590
Materials & Processing 3.0%
Union Carbide Corp. 8,000 427
USX-U.S. Steel Group, Inc. 11,800 389
Westvaco Corp. 13,500 381
USG Corp. (b) 7,000 379
Wellman, Inc. 13,100 297
Leggett & Platt, Inc. 7,700 193
----------
2,066
Technology 5.9%
Storage Technology Corp. (b) 16,600 720
International Business Machines Corp. 5,200 597
Harris Corp. 12,900 576
Adobe Systems, Inc. 8,500 361
BMC Software, Inc. (b) 6,000 312
Cisco Systems, Inc. (b) 3,350 308
Xerox Corp. 2,700 274
Cadence Design Systems, Inc. (b) 8,000 250
Computer Associates International, Inc. 4,300 239
Dell Computer Corp. (b) 2,400 223
Tektronix, Inc. 5,100 180
----------
4,040
Transportation 1.7%
UAL Corp. (b) 4,000 312
Continental Airlines, Inc. "B" (b) 4,000 244
U.S. Airways Group, Inc. (b) 3,000 238
Delta Air Lines, Inc. 1,600 207
FDX Corp. (b) 2,900 182
----------
1,183
48 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Utilities 3.0%
DTE Energy Co. 13,800 $ 557
Public Service Enterprise Group, Inc. 16,100 554
NICOR, Inc. 13,600 546
Consolidated Edison, Inc. 4,500 207
Ameritech Corp. 4,400 197
----------
2,061
----------
Total Common Stocks 38,567
(Cost $32,764) ==========
- --------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES 10.7%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Banking and Finance 5.2%
AT&T Capital Corp.
6.050% due 04/01/99 $ 500 500
Ford Motor Credit Corp.
5.838% due 10/15/02 1,000 1,001
New England Educational Loan Marketing
5.858% due 06/11/01 2,000 2,002
----------
3,503
Industrials 2.2%
AMR Corp.
10.000% due 02/01/01 400 437
9.430% due 05/10/01 1,000 1,085
----------
1,522
Utilities 3.3%
Long Island Lighting Co.
9.000% due 11/01/22 2,000 2,283
----------
Total Corporate Bonds and Notes 7,308
(Cost $6,912) ==========
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 29.0%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 1.9%
Federal Home Loan Mortgage Corp.
10.150% due 04/15/06 25 25
Federal National Mortgage Assn.
9.500% due 06/25/18 397 420
Independent National Mortgage Corp.
8.140% due 11/25/24 341 352
8.200% due 11/25/24 511 524
----------
1,321
Federal Home Loan Mortgage Corporation 12.5%
6.500% due 07/14/28-08/13/28 (e) 8,000 7,976
8.500% due 03/01/23 517 548
----------
8,524
Federal Housing Administration 0.9%
7.000% due 07/01/14 569 602
Federal National Mortgage Association 6.1%
7.814% due 12/01/23 (d) 346 358
8.500% due 03/01/25-01/01/08 (e) 3,644 3,800
----------
4,158
Government National Mortgage Association 6.4%
6.500% due 01/15/24-08/19/28 (e) 1,381 1,379
7.000% due 08/20/24 625 638
7.375% due 04/20/23 (d) 1,286 1,321
7.500% due 05/15/17 12 12
8.000% due 09/15/16-11/15/26 (e) 522 542
9.500% due 09/15/09-10/15/09 (e) 114 123
10.750% due 09/15/00-10/15/00 (e) 83 86
16.000% due 10/15/11-04/15/12 (e) 199 246
----------
4,347
Other Mortgage-Backed Securities 1.2%
Home Savings of America
5.890% due 05/25/27 840 820
----------
Total Mortgage-Backed Securities 19,772
(Cost $19,583) ==========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.5%
- --------------------------------------------------------------------------------
MBNA Master Credit Card Trust
5.591% due 01/15/02 $ 1,000 $ 1,002
----------
Total Asset-Backed Securities 1,002
(Cost $997) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 12.3%
- --------------------------------------------------------------------------------
Commercial Paper 7.2%
Abbott Laboratories
5.510% due 07/16/98 1,000 998
E.I. Du Pont de Nemours
5.490% due 07/10/98 1,000 999
General Electric Capital Corp.
5.510% due 07/22/98 100 100
General Motors Acceptance Corp.
5.620% due 07/15/98 200 200
IBM Credit Corp.
5.500% due 07/15/98 800 798
National Rural Utilities Cooperative
5.500% due 09/08/98 600 594
5.510% due 08/20/98 400 397
New Center Asset Trust
5.550% due 08/20/98 800 794
----------
4,880
Repurchase Agreement 4.9%
State Street Bank
4.250% due 07/01/98 3,363 3,363
(Dated 06/30/98. Collateralized by
U.S. Treasury Bond 7.875% 11/15/07
valued at $2,038,182 and U.S. Treasury
Note 7.250% 05/15/16 valued at $1,403,939.
Repurchase proceeds are $3,363,397.)
U.S. Treasury Bills (c) 0.2%
4.990% due 10/15/98 140 138
----------
Total Short-Term Instruments 8,381
(Cost $8,381) ==========
Total Investments (a) 109.9% $ 75,030
(Cost $68,637)
Other Assets and Liabilities (9.9%) (6,776)
----------
Net Assets 100.0% $ 68,254
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 7,099
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (834)
Unrealized appreciation-net $ 6,265
==========
(b) Non-income producing security.
(c) Securities with an aggregate market value of $138
have been segregated with the custodian to cover margin
requirements for the following open futures contracts at
June 30, 1998:
Unrealized
Type Contracts Appreciation
- --------------------------------------------------------------------------------
U.S. Treasury 10 Year Note 9 $ 6
U.S. Treasury 30 Year Bond 61 101
----------
$ 107
==========
(d) Variable rate security.
(e) Securities are grouped by coupon and represent
a range of maturities.
See accompanying notes 49
<PAGE>
Financial Highlights
A, B and C Classes
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Net Realized/ Dividends Dividends in
Net Asset Value Net Unrealized Total Income From Net Excess of Net
Beginning Investment Gain (Loss) on From Investment Investment Investment
of Period Income (Loss) Investments Operations Income Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Fund
Class A
06/30/98 $ 15.39 $ 0.39(a) $ 2.73(a) $ 3.12 $ (0.38) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 13.94 0.15 1.48 1.63 (0.18) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 15.37 0.26(a) 2.73(a) 2.99 (0.28) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 15.37 0.26(a) 2.74(a) 3.00 (0.27) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A
06/30/98 $ 14.80 $ 0.19(a) $ 2.46(a) $ 2.65 $ (0.18) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 13.17 0.47 1.26 1.73 (0.10) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 14.80 0.07(a) 2.46(a) 2.53 (0.07) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 13.16 0.44 1.26 1.70 (0.06) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 14.80 0.07(a) 2.46(a) 2.53 (0.07) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 13.15 0.43 1.28 1.71 (0.06) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/98 $ 17.73 $ 0.07(a) $ 4.91(a) $ 4.98 (0.08) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 16.08 0.12(a) 3.90(a) 4.02 (0.12) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.14 0.23 2.79 3.02 (0.23) (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/95 12.50 0.36 1.61 1.97 (0.33) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/94 12.88 0.34 (0.17) 0.17 (0.33) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 17.77 (0.07)(a) 4.91(a) 4.84 (0.02) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 16.12 0.03(a) 3.92(a) 3.95 (0.05) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.13 0.09 2.83 2.92 (0.11) (0.04)
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 12.55 0.11 1.55 1.66 (0.08) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 17.69 (0.07)(a) 4.88(a) 4.81 (0.01) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 16.05 0.03(a) 3.90(a) 3.93 (0.04) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.09 0.12 2.78 2.90 (0.13) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/95 12.47 0.27 1.59 1.86 (0.24) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/94 12.85 0.24 (0.16) 0.08 (0.24) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/98 $ 21.16 $ 0.07(a) $ 6.55(a) $ 6.62 $ (0.09) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 19.31 0.09 1.76 1.85 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 21.10 (0.11)(a) 6.51(a) 6.40 (0.07) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 19.31 0.01 1.78 1.79 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 21.10 (0.12)(a) 6.53(a) 6.41 (0.05) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 19.31 0.02 1.77 1.79 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
50 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Distributions Distributions
From Net in Excess of Tax Basis Net Assets
Realized Capital Net Realized Return of Total Value End
Gains Capital Gains Capital Distributions of Period
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund
Class A
06/30/98 $ (2.09) $ 0.00 $ 0.00 $ (2.47) $ 16.04
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.18) 15.39
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (2.09) 0.00 0.00 (2.37) 15.99
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.16) 15.37
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (2.09) 0.00 0.00 (2.36) 16.01
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.16) 15.37
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A
06/30/98 $ (1.63) $ 0.00 $ 0.00 $ (1.81) $ 15.64
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 (0.10) 14.80
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (1.63) 0.00 0.00 (1.70) 15.63
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 (0.06) 14.80
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (1.63) 0.00 0.00 (1.70) 15.63
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 (0.06) 14.80
- -----------------------------------------------------------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/98 $ (3.53) $ 0.00 $ 0.00 $ (3.61) $ 19.10
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.25) 0.00 0.00 (2.37) 17.73
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 (0.78) 0.00 0.00 (1.08) 16.08
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 0.00 0.00 0.00 (0.33) 14.14
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.22) 0.00 0.00 (0.55) 12.50
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (3.53) 0.00 0.00 (3.55) 19.06
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.25) 0.00 0.00 (2.30) 17.77
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 (0.78) 0.00 0.00 (0.93) 16.12
- -----------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 0.00 0.00 0.00 (0.08) 14.13
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (3.53) 0.00 0.00 (3.54) 18.96
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.25) 0.00 0.00 (2.29) 17.69
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 (0.78) 0.00 0.00 (0.94) 16.05
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 0.00 0.00 0.00 (0.24) 14.09
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.22) 0.00 0.00 (0.46) 12.47
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/98 $ (1.68) $ 0.00 $ 0.00 $ (1.77) $ 26.01
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 21.16
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (1.68) 0.00 0.00 (1.75) 25.75
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 21.10
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (1.68) 0.00 0.00 (1.73) 25.78
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 21.10
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses to Income (loss)
Net Assets End Average Net to Average Net Portfolio
Total Return of Period (000s) Assets Assets Turnover Rate
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund
Class A
06/30/98 21.35% $ 12,954 1.11% 2.39% 45%
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.77 1,756 1.13* 2.85* 45
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 20.47 15,178 1.85 1.63 45
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.45 2,561 1.87* 2.11* 45
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 20.51 23,122 1.85 1.60 45
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.42 6,624 1.87* 2.15* 45
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A
06/30/98 18.86% $ 21,742 1.11% 1.19% 77%
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 13.19 15,648 1.11* 1.71* 71
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 17.98 35,716 1.86 0.45 77
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 12.93 25,433 1.86* 0.96* 71
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 17.98 88,235 1.86 0.45 77
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 13.02 64,110 1.86* 0.97* 71
- -----------------------------------------------------------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/98 30.98% 85,562 1.26% 0.35% 192%
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 27.53 33,606 1.23* 0.95* 131
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 22.37 20,631 1.25 1.60 203
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 16.10 12,933 1.30 2.90 177
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 1.40 14,942 1.30 2.70 175
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 29.99 100,688 2.01 (0.39) 192
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 26.88 37,253 1.97* 0.20* 131
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 21.54 15,693 2.00 0.85 203
- -----------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 13.30 1,760 2.10* 2.20* 177
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 29.98 469,797 2.01 (0.37) 192
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 26.86 313,226 1.97* 0.21* 131
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 21.52 230,058 2.00 0.85 203
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 15.20 174,316 2.10 2.10 177
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 0.70 178,892 2.00 2.00 175
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/98 32.39% $ 72,803 1.10% 0.27% 75%
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 9.58 6,534 1.11* 0.59* 87
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 31.39 40,901 1.85 (0.47) 75
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 9.27 3,022 1.85* (0.26)* 87
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 31.40 71,481 1.85 (0.49) 75
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 9.27 13,093 1.86* (0.23)* 87
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 51
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Net Realized/ Dividends
Net Asset Value Net Unrealized Total Income from Net Dividends in
Beginning Investment Gain (Loss) on from Investment Investment Excess of Net
of Period Income (Loss) Investments Operations Income Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Fund
Class A
06/30/98 $ 27.03 $ (0.08)(a) $ 9.99(a) $ 9.91 $ 0.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 26.58 0.69 3.27 3.96 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 25.73 0.06 3.72 3.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 22.01 0.12 4.79 4.91 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 23.64 0.12 0.12 0.24 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 25.59 (0.28)(a) 9.35(a) 9.07 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 25.46 0.35 3.29 3.64 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 24.94 (0.07) 3.52 3.45 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
05/23/95-09/30/95 22.63 (0.03) 2.34 2.31 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 25.58 (0.28)(a) 9.35(a) 9.07 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 25.46 0.45 3.18 3.63 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 24.94 (0.12) 3.57 3.45 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 21.52 (0.04) 4.65 4.61 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 23.32 (0.04) 0.11 0.07 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/98 $ 20.24 $ 0.02(a) $ 5.11(a) $ 5.13 $ (0.04) $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 18.14 (0.04) 2.14 2.10 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 20.17 (0.16)(a) 5.09(a) 4.93 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 18.14 (0.11) 2.14 2.03 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 20.18 (0.16)(a) 5.08(a) 4.92 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 18.14 (0.10) 2.14 2.04 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Target Fund
Class A
06/30/98 16.82 $ (0.08)(a) $ 4.06(a) $ 3.98 $ 0.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 17.11 (0.04)(a) 1.82(a) 1.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 16.40 (0.05) 2.54 2.49 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 13.13 (0.02) 3.45 3.43 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 12.72 (0.04) 0.57 0.53 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 16.14 (0.19)(a) 3.84(a) 3.65 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 16.58 (0.12)(a) 1.75(a) 1.63 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 16.06 (0.09) 2.39 2.30 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 13.93 (0.05) 2.18 2.13 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 16.13 (0.19)(a) 3.85(a) 3.66 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 16.58 (0.12)(a) 1.74(a) 1.62 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/96 16.05 (0.16) 2.47 2.31 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/95 12.95 (0.12) 3.38 3.26 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/94 12.65 (0.14) 0.56 0.42 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Fund
Class A
06/30/98 $ 15.75 $ 0.23(a) $ 2.49(a) $ 2.72 $ (0.13) $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 14.02 0.10 1.63 1.73 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 15.71 0.09(a) 2.48(a) 2.57 (0.09) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 14.02 0.08 1.61 1.69 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 15.71 0.09(a) 2.49(a) 2.58 (0.09) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 14.02 0.08 1.61 1.69 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
See accompanying notes
52
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of Tax Basis Net Asset
Realized Capital Net Realized Return of Total Value End
Gains Capital Gains Capital Distributions of Period
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Fund
Class A
06/30/98 $ (4.32) $ 0.00 $ 0.00 $ (4.32) $ 32.62
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (3.51) 0.00 0.00 (3.51) 27.03
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (2.93) 0.00 0.00 (2.93) 26.58
- -------------------------------------------------------------------------------------------------------------------------
09/30/95 (1.19) 0.00 0.00 (1.19) 25.73
- -------------------------------------------------------------------------------------------------------------------------
09/30/94 (1.87) 0.00 0.00 (1.87) 22.01
- -------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (4.32) 0.00 0.00 (4.32) 30.34
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (3.51) 0.00 0.00 (3.51) 25.59
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (2.93) 0.00 0.00 (2.93) 25.46
- -------------------------------------------------------------------------------------------------------------------------
05/23/95-09/30/95 0.00 0.00 0.00 0.00 24.94
- -------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (4.32) 0.00 0.00 (4.32) 30.33
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (3.51) 0.00 0.00 (3.51) 25.58
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (2.93) 0.00 0.00 (2.93) 25.46
- -------------------------------------------------------------------------------------------------------------------------
09/30/95 (1.19) 0.00 0.00 (1.19) 24.94
- -------------------------------------------------------------------------------------------------------------------------
09/30/94 (1.87) 0.00 0.00 (1.87) 21.52
- -------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
06/30/98 $ (1.33) $ 0.00 $ 0.00 $ (1.37) $ 24.00
- -------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 0.00 20.24
- -------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (1.33) 0.00 0.00 (1.33) 23.77
- -------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 0.00 20.17
- -------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (1.33) 0.00 0.00 (1.33) 23.77
- -------------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 0.00 0.00 0.00 0.00 20.18
- -------------------------------------------------------------------------------------------------------------------------
Target Fund
Class A
06/30/98 $ (4.45) $ 0.00 $ 0.00 $ (4.45) $ 16.35
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.07) 0.00 0.00 (2.07) 16.82
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (1.78) 0.00 0.00 (1.78) 17.11
- -------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.16) 0.00 0.00 (0.16) 16.40
- -------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.12) 0.00 0.00 (0.12) 13.13
- -------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (4.45) 0.00 0.00 (4.45) 15.34
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.07) 0.00 0.00 (2.07) 16.14
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (1.78) 0.00 0.00 (1.78) 16.58
- -------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 0.00 0.00 0.00 0.00 16.06
- -------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (4.45) 0.00 0.00 (4.45) 15.34
- -------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (2.07) 0.00 0.00 (2.07) 16.13
- -------------------------------------------------------------------------------------------------------------------------
09/30/96 (1.78) 0.00 0.00 (1.78) 16.58
- -------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.16) 0.00 0.00 (0.16) 16.05
- -------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.12) 0.00 0.00 (0.12) 12.95
- -------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Fund
- -------------------------------------------------------------------------------------------------------------------------
Class A
06/30/98 $ (0.76) $ 0.00 $ 0.00 $ (0.89) $ 17.58
- -------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 15.75
- -------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (0.76) 0.00 0.00 (0.85) 17.43
- -------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 15.71
- -------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (0.76) 0.00 0.00 (0.85) 17.44
- -------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 15.71
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses to Income (loss)
Net Assets End Average Net to Average Portfolio
Total Return of Period (000s) Assets Net Assets Turnover Rate
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Fund
Class A
06/30/98 41.03% $ 180,119 1.16% (0.27)% 123%
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 15.93 147,276 1.11* 0.13* 94
- ------------------------------------------------------------------------------------------------------------------
09/30/96 16.11 151,103 1.11 0.24 104
- ------------------------------------------------------------------------------------------------------------------
09/30/95 23.70 134,819 1.10 0.50 111
- ------------------------------------------------------------------------------------------------------------------
09/30/94 1.30 107,269 1.10 0.60 115
- ------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 39.97 80,719 1.91 (1.02) 123
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 15.32 55,626 1.86* (0.62)* 94
- ------------------------------------------------------------------------------------------------------------------
09/30/96 15.22 37,256 1.86 (0.51) 104
- ------------------------------------------------------------------------------------------------------------------
05/23/95-09/30/95 10.20 7,671 1.90* (0.40)* 111
- ------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 39.99 1,853,002 1.91 (1.02) 123
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 15.27 1,514,432 1.86* (0.61)* 94
- ------------------------------------------------------------------------------------------------------------------
09/30/96 15.22 1,450,216 1.86 (0.51) 104
- ------------------------------------------------------------------------------------------------------------------
09/30/95 22.80 1,290,152 1.90 (0.20) 111
- ------------------------------------------------------------------------------------------------------------------
09/30/94 0.50 1,085,427 1.90 (0.20) 115
- ------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
06/30/98 25.71% $ 57,164 1.11% 0.07% 66%
- ------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 11.58 12,184 1.11* 0.17* 82
- ------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 24.76 84,535 1.86 (0.68) 66
- ------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 11.19 28,259 1.85* (0.58)* 82
- ------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 24.70 140,438 1.86 (0.68) 66
- ------------------------------------------------------------------------------------------------------------------
01/13/97-06/30/97 11.25 53,686 1.86* (0.58)* 82
- ------------------------------------------------------------------------------------------------------------------
Target Fund
Class A
06/30/98 27.49% $ 157,277 1.22% (0.49)% 226%
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 11.19 150,689 1.20* (0.31)* 145
- ------------------------------------------------------------------------------------------------------------------
09/30/96 16.50 156,027 1.18 (0.34) 141
- ------------------------------------------------------------------------------------------------------------------
09/30/95 26.50 121,915 1.20 (0.10) 128
- ------------------------------------------------------------------------------------------------------------------
09/30/94 4.20 90,527 1.20 (0.30) 104
- ------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 26.45 76,194 1.96 (1.24) 226
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 10.58 67,531 1.94* (1.05)* 145
- ------------------------------------------------------------------------------------------------------------------
09/30/96 15.58 49,851 1.93 (1.09) 141
- ------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 15.30 7,554 2.00* (0.90)* 128
- ------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 26.53 952,728 1.96 (1.24) 226
- ------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 10.52 969,317 1.94* (1.06)* 145
- ------------------------------------------------------------------------------------------------------------------
09/30/96 15.66 974,948 1.93 (1.09) 141
- ------------------------------------------------------------------------------------------------------------------
09/30/95 25.60 780,355 2.00 (0.90) 128
- ------------------------------------------------------------------------------------------------------------------
09/30/94 3.40 556,043 2.00 (1.10) 104
- ------------------------------------------------------------------------------------------------------------------
Small-Cap Value Fund
Class A
06/30/98 17.33% $ 75,070 1.25% 1.27% 41%
- ------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.34 6,563 1.30* 1.94* 48
- ------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 16.40 110,833 2.00 0.53 41
- ------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.05 11,077 2.04* 1.23* 48
- ------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 16.42 130,466 2.00 0.52 41
- ------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.05 20,637 2.05* 1.13* 48
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 53
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Dividends
Net Asset Net Realized/ Dividends in Excess
Value Net Unrealized Total Income from Net of Net
Beginning Investment Gain (Loss) on from Investment Investment Investment
of Period Income (Loss) Investments Operations Income Income
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opportunity Fund
Class A
06/30/98 $ 29.35 $ (0.27)(a) $ 4.19(a) $ 3.92 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 37.36 0.00 (3.10) (3.10) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 39.08 (0.11) 6.12 6.01 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 28.87 (0.11) 11.19 11.08 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 33.43 (0.17) (2.02) (2.19) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 27.38 (0.46)(a) 3.88(a) 3.42 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 35.38 (0.04) (3.05) (3.09) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 37.64 (0.35) 5.82 5.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 28.04 (0.34) 10.81 10.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 32.77 (0.38) (1.98) (2.36) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
International Developed Fund
Class A
06/30/98 $ 13.08 $ 0.18(a) $ 1.68(a) $ 1.86 $ (0.10) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.71 0.09(a) 1.28(a) 1.37 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 13.06 0.01(a) 1.71(a) 1.72 (0.06) 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.71 0.06(a) 1.29(a) 1.35 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 13.06 0.02(a) 1.71(a) 1.73 (0.06) 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.71 0.06(a) 1.29(a) 1.35 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
International Fund
Class A
06/30/98 $ 14.26 $ 0.06(a) $ 1.13(a) $ 1.19 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 13.03 0.29 1.33 1.62 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 12.19 0.07 0.77 0.84 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 12.92 0.07 (0.56) (0.49) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 12.17 0.04 0.94 0.98 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 13.56 (0.05)(a) 1.07(a) 1.02 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.48 0.16 1.31 1.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 11.75 0.00(a) 0.73(a) 0.73 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 11.30 0.00 0.45 0.45 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 13.55 (0.06)(a) 1.08(a) 1.02 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.47 0.18 1.29 1.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 11.75 (0.05) 0.77 0.72 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 12.56 (0.02) (0.55) (0.57) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 11.92 (0.06) 0.93 0.87 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund
Class A
06/30/98 $ 13.94 $ 0.03(a) $ (3.85)(a) $ (3.82) $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.82 0.09(a) 1.03(a) 1.12 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 13.89 (0.06)(a) (3.81)(a) (3.87) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.82 0.03(a) 1.04(a) 1.07 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 13.89 (0.06)(a) (3.81)(a) (3.87) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 12.82 0.04(a) 1.03(a) 1.07 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
54 See accompanying notes
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of Tax Basis Net Asset
Realized Capital Net Realized Return of Total Value End
Gains Capital Gains Capital Distributions of Period
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Opportunity Fund
Class A
06/30/98 $ (1.94) $ 0.00 $ 0.00 $ (1.94) $ 31.33
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (4.91) 0.00 0.00 (4.91) 29.35
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 (7.73) 0.00 0.00 (7.73) 37.36
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.87) 0.00 0.00 (0.87) 39.08
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 (2.26) 0.00 (0.11) (2.37) 28.87
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (1.94) 0.00 0.00 (1.94) 28.86
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (4.91) 0.00 0.00 (4.91) 27.38
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 (7.73) 0.00 0.00 (7.73) 35.38
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.87) 0.00 0.00 (0.87) 37.64
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 (2.26) 0.00 (0.11) (2.37) 28.04
- ------------------------------------------------------------------------------------------------------------------------------
International Developed Fund
Class A
06/30/98 $ (0.58) $ 0.00 $ 0.00 $ (0.68) $ 14.26
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.08
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (0.58) 0.00 0.00 (0.64) 14.14
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.06
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (0.58) 0.00 0.00 (0.64) 14.15
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.06
- ------------------------------------------------------------------------------------------------------------------------------
International Fund
Class A
06/30/98 $ (0.82) $ (0.30) $ 0.00 $ (1.12) $ 14.33
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.39) 0.00 0.00 (0.39) 14.26
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 13.03
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.24) 0.00 0.00 (0.24) 12.19
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.23) 0.00 0.00 (0.23) 12.92
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (0.82) (0.30) 0.00 (1.12) 13.46
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.39) 0.00 0.00 (0.39) 13.56
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 12.48
- ------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 0.00 0.00 0.00 0.00 11.75
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (0.82) (0.30) 0.00 (1.12) 13.45
- ------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.39) 0.00 0.00 (0.39) 13.55
- ------------------------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 12.47
- ------------------------------------------------------------------------------------------------------------------------------
09/30/95 (0.24) 0.00 0.00 (0.24) 11.75
- ------------------------------------------------------------------------------------------------------------------------------
09/30/94 (0.23) 0.00 0.00 (0.23) 12.56
- ------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund
Class A
06/30/98 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 10.12
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.94
- ------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 0.00 0.00 0.00 0.00 10.02
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.89
- ------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 0.00 0.00 0.00 0.00 10.02
- ------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 0.00 13.89
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Ratio of Net
Expenses to Investment
Net Assets End Average Net Income (loss) to Portfolio
Total Return of Period (000s) Assets Average Net Assets Turnover Rate
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Opportunity Fund
Class A
06/30/98 13.87% $200,935 1.31% (0.88)% 86%
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (8.87) 213,484 1.25* (0.12)* 69
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 18.35 134,859 1.13 (0.32) 91
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 39.70 120,830 1.20 (0.40) 102
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 (6.70) 95,261 1.10 (0.60) 78
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 13.01 500,011 2.06 (1.63) 86
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (9.40) 629,446 1.97* (0.95)* 69
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 17.47 800,250 1.88 (1.07) 91
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 38.60 715,191 1.90 (1.10) 102
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 (7.40) 553,460 1.90 (1.40) 78
- ----------------------------------------------------------------------------------------------------------------------------------
International Developed Fund
Class A
06/30/98 15.49% $ 1,061 1.57% 1.38% 60%
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.70 318 1.54* 1.74* 77
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 14.32 2,902 2.25 0.08 60
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.53 1,123 2.28* 1.08* 77
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 14.38 6,363 2.25 0.19 60
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 11.53 2,526 2.28* 1.07* 77
- ----------------------------------------------------------------------------------------------------------------------------------
International Fund
Class A
06/30/98 9.95% $ 12,510 1.48% 0.41% 60%
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.82 18,287 1.51* 0.58* 59
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 6.89 20,056 1.41 0.49 110
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 (3.70) 17,951 1.50 0.60 170
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 8.20 23,289 1.40 0.30 55
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 9.17 8,956 2.22 (0.37) 60
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.17 8,676 2.26* 0.18* 59
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 6.21 5,893 2.16 (0.26) 110
- ----------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 4.00 503 2.30* (0.10)* 170
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 9.18 132,986 2.22 (0.43) 60
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.18 168,446 2.25* (0.25)* 59
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 6.13 203,544 2.16 (0.26) 110
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 (4.50) 215,349 2.20 (0.20) 170
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 7.40 294,492 2.20 (0.50) 55
- ----------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund
Class A
06/30/98 (27.40)% $ 426 1.78% 0.25% 52%
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 8.74 214 1.89* 1.52* 74
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (27.86) 384 2.54 (0.51) 52
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 8.35 308 2.62* 0.47* 74
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (27.86) 1,169 2.54 (0.54) 52
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 8.35 1,833 2.63* 0.66* 74
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 55
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Net Asset Net Realized/ Dividends Dividends in
Value Net Unrealized Total Income from Net Excess of Net
Beginning Investment Gain (Loss) from Investment Investment Investment
of Period Income (Loss) on Investments Operations Income Income
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Innovation Fund
Class A
06/30/98 $ 17.43 $ (0.19)(a) $ 8.21(a) $ 8.02 $ 0.00 $ 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 17.26 0.07 0.36 0.43 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.74 (0.07) 2.94 2.87 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 10.00 (0.06) 4.80 4.74 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 17.10 (0.33)(a) 8.00(a) 7.67 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 17.04 (0.03) 0.35 0.32 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.66 (0.11) 2.84 2.73 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 11.81 (0.08) 2.93 2.85 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 17.09 (0.33)(a) 8.00(a) 7.67 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 17.04 (0.02) 0.33 0.31 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 14.65 (0.15) 2.89 2.74 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 10.00 (0.13) 4.78 4.65 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/98 $ 8.83 $ 0.04(a) $ (3.54)(a) $ (3.50) $ 0.00 $ 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 12.12 0.17 (3.29) (3.12) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 12.33 0.03 (0.24) (0.21) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 14.14 0.07 (1.88) (1.81) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 10.32 0.08 3.74 3.82 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 8.42 (0.01)(a) (3.40)(a) (3.41) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 11.62 0.00 (3.03) (3.03) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 11.90 (0.03) (0.25) (0.28) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
06/15/95-09/30/95 11.61 (0.01) 0.30 0.29 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 8.43 0.00(a) (3.43)(a) (3.43) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 11.62 (0.03) (2.99) (3.02) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/96 11.90 (0.07) (0.21) (0.28) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/95 13.75 (0.02) (1.83) (1.85) 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
09/30/94 10.11 (0.02) 3.66 3.64 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Fund
Class A
06/30/98 $ 11.40 $ 0.29(a) $ 1.81(a) $ 2.10 $ (0.30) $ 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 10.77 0.21 0.58 0.79 (0.16) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/98 11.39 0.20(a) 1.82(a) 2.02 (0.25) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 10.77 0.19 0.58 0.77 (0.15) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/98 11.39 0.20(a) 1.82(a) 2.02 (0.25) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 10.77 0.18 0.58 0.76 (0.14) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
(b) Ratio of expenses to average net assets excluding overdraft
expense is 1.26%.
(c) Ratio of expenses to average net assets excluding
overdraft expense is 2.06%.
(d) Ratio of expenses to average net assets
excluding overdraft expense is 2.06%.
56 See accompanying notes
<PAGE>
Financial Highlights
A, B and C Classes (Cont.)
Selected Per Share Data
for the Period Ended:
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of Tax Basis Net Asset
Realized Net Realized Return of Total Value End
Capital Gains Capital Gains Capital Distributions of Period
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Innovation Fund
Class A
06/30/98 $ (0.99) $ (0.18) $ 0.00 $ (1.17) $ 24.28
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.26) 0.00 0.00 (0.26) 17.43
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (0.35) 0.00 0.00 (0.35) 17.26
- ----------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 0.00 0.00 0.00 0.00 14.74
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (0.99) (0.18) 0.00 (1.17) 23.60
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.26) 0.00 0.00 (0.26) 17.10
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (0.35) 0.00 0.00 (0.35) 17.04
- ----------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 0.00 0.00 0.00 0.00 14.66
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (0.99) (0.18) 0.00 (1.17) 23.59
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (0.26) 0.00 0.00 (0.26) 17.09
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (0.35) 0.00 0.00 (0.35) 17.04
- ----------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 0.00 0.00 0.00 0.00 14.65
- ----------------------------------------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/98 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 5.33
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 0.00 (0.17) (0.10) (0.17) 8.83
- ----------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 12.12
- ----------------------------------------------------------------------------------------------------------------
09/30/95 0.00 0.00 0.00 0.00 12.33
- ----------------------------------------------------------------------------------------------------------------
09/30/94 0.00 0.00 0.00 0.00 14.14
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 0.00 0.00 0.00 0.00 5.01
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 0.00 (0.17) 0.00 (0.17) 8.42
- ----------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 11.62
- ----------------------------------------------------------------------------------------------------------------
06/15/95-09/30/95 0.00 0.00 0.00 0.00 11.90
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 0.00 0.00 0.00 0.00 5.00
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 0.00 (0.17) 0.00 (0.17) 8.43
- ----------------------------------------------------------------------------------------------------------------
09/30/96 0.00 0.00 0.00 0.00 11.62
- ----------------------------------------------------------------------------------------------------------------
09/30/95 0.00 0.00 0.00 0.00 11.90
- ----------------------------------------------------------------------------------------------------------------
09/30/94 0.00 0.00 0.00 0.00 13.75
- ----------------------------------------------------------------------------------------------------------------
Balanced Fund
Class A
06/30/98 $ (1.09) $ 0.00 $ 0.00 $ (1.39) $ 12.11
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.16) 11.40
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (1.09) 0.00 0.00 (1.34) 12.07
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.15) 11.39
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (1.09) 0.00 0.00 (1.34) 12.07
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 0.00 0.00 0.00 (0.14) 11.39
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses to Income (loss)
Net Assets Average Net to Average Portfolio
Total Return End of Period (000s) Assets Net Assets Turnover Rate
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Innovation Fund
Class A
- ----------------------------------------------------------------------------------------------------------------
06/30/98 48.10% $ 85,800 1.31% (0.94)% 100%
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 2.41 56,215 1.28* (0.68)* 80
- ----------------------------------------------------------------------------------------------------------------
09/30/96 19.86 50,067 1.31 (0.61) 123
- ----------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 47.40 28,239 1.40* (0.60)* 86
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 46.95 81,130 2.06 (1.69) 100
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 1.79 51,472 2.03* (1.43)* 80
- ----------------------------------------------------------------------------------------------------------------
09/30/96 18.99 33,778 2.06 (1.36) 123
- ----------------------------------------------------------------------------------------------------------------
05/22/95-09/30/95 24.10 6,509 2.30* (1.70)* 86
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 46.97 219,258 2.06 (1.69) 100
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 1.73 162,889 2.03* (1.43)* 80
- ----------------------------------------------------------------------------------------------------------------
09/30/96 19.08 137,752 2.06 (1.36) 123
- ----------------------------------------------------------------------------------------------------------------
12/22/94-09/30/95 46.50 63,952 2.20* (1.40)* 86
- ----------------------------------------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/98 (39.64)% $ 4,709 1.31%(b) 0.70% 56%
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (26.05) 4,016 1.37* 0.33* 46
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (1.70) 6,245 1.32 0.19 35
- ----------------------------------------------------------------------------------------------------------------
09/30/95 (12.80) 7,670 1.40 0.60 9
- ----------------------------------------------------------------------------------------------------------------
09/30/94 37.00 11,229 1.30 0.60 11
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 (40.50) 3,889 2.11(c) (0.07) 56
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (26.40) 4,248 2.13* (0.33)* 46
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (2.35) 2,218 2.07 (0.56) 35
- ----------------------------------------------------------------------------------------------------------------
06/15/95-09/30/95 2.50 251 2.20* (0.20)* 9
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 (40.69) 16,943 2.11(d) (0.07) 56
- ----------------------------------------------------------------------------------------------------------------
10/01/96-06/30/97 (26.31) 25,113 2.15* (0.41)* 46
- ----------------------------------------------------------------------------------------------------------------
09/30/96 (2.35) 37,609 2.07 (0.56) 35
- ----------------------------------------------------------------------------------------------------------------
09/30/95 (13.50) 42,341 2.20 (0.20) 9
- ----------------------------------------------------------------------------------------------------------------
09/30/94 36.00 62,825 2.10 (0.20) 11
- ----------------------------------------------------------------------------------------------------------------
Balanced Fund
Class A
- ----------------------------------------------------------------------------------------------------------------
06/30/98 19.40% $ 9,586 1.12% 2.47% 186%
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 7.42 366 1.15* 3.01* 199
- ----------------------------------------------------------------------------------------------------------------
Class B
06/30/98 18.59 8,977 1.86 1.71 186
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 7.15 1,124 1.90* 2.28* 199
- ----------------------------------------------------------------------------------------------------------------
Class C
06/30/98 18.59 8,469 1.86 1.71 186
- ----------------------------------------------------------------------------------------------------------------
01/20/97-06/30/97 7.12 921 1.90* 2.26* 199
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 57
<PAGE>
Statement of Assets and Liabilities
June 30, 1998
Amounts in thousands, except per share amounts
<TABLE>
<CAPTION>
Capital
Equity Renaissance Appreciation
Income Fund Value Fund Fund Fund Growth Fund
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 201,860 $ 239,561 $ 651,786 $1,150,800 $2,157,461
- -------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 1 1 357 0 420
- -------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 4,103 11,943 11,230 9,631 0
- -------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 542 133 3,789 2,496 2,095
- -------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 582 529 661 799 618
- -------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------
Other assets 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------
207,088 252,167 667,823 1,163,726 2,160,594
=========================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 5,054 $ 12,119 $ 8,489 $ 38,145 $ 25,668
- -------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 55 0 0
- -------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 160 394 912 1,190 16,911
- -------------------------------------------------------------------------------------------------------------------------
Dividends payable 9 32 360 79 1,131
- -------------------------------------------------------------------------------------------------------------------------
Accrued investment advisor's fee 75 88 310 400 829
- -------------------------------------------------------------------------------------------------------------------------
Accrued administrator's fee 48 67 206 244 663
- -------------------------------------------------------------------------------------------------------------------------
Accrued distribution and/or servicing fee 35 108 467 125 1,552
- -------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------
Other liabilities 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------
5,381 12,808 10,799 40,183 46,754
=========================================================================================================================
Net Assets $ 201,707 $ 239,359 $ 657,024 $1,123,543 $2,113,840
=========================================================================================================================
Net Assets Consist of:
Paid in capital $ 154,232 $ 193,061 $ 512,594 $ 801,861 $1,284,943
- -------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 4,754 5,621 46,534 2,964 54,147
- -------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 14,470 14,836 32,366 69,031 170,801
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 28,251 25,841 65,530 249,687 603,949
- -------------------------------------------------------------------------------------------------------------------------
$ 201,707 $ 239,359 $ 657,024 $1,123,543 $2,113,840
=========================================================================================================================
Net Assets:
Class A $ 12,954 $ 21,742 $ 85,562 $ 72,803 $ 180,119
- -------------------------------------------------------------------------------------------------------------------------
Class B 15,178 35,716 100,688 40,901 80,719
- -------------------------------------------------------------------------------------------------------------------------
Class C 23,122 88,235 469,797 71,481 1,853,002
- -------------------------------------------------------------------------------------------------------------------------
Other Classes 150,453 93,666 977 938,358 0
- -------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 807 1,390 4,474 2,799 5,522
- -------------------------------------------------------------------------------------------------------------------------
Class B 949 2,285 5,278 1,588 2,661
- -------------------------------------------------------------------------------------------------------------------------
Class C 1,445 5,646 24,758 2,773 61,093
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 16.04 $ 15.64 $ 19.10 $ 26.01 $ 32.62
- -------------------------------------------------------------------------------------------------------------------------
Class B 15.99 15.63 19.06 25.75 30.34
- -------------------------------------------------------------------------------------------------------------------------
Class C 16.01 15.63 18.96 25.78 30.33
- -------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 173,609 $ 213,720 $ 586,333 $ 901,113 $1,553,512
=========================================================================================================================
Cost of Foreign Currency Held $ 0 $ 0 $ 0 $ 0 $ 0
=========================================================================================================================
</TABLE>
* The redemption price may vary by the length of time shares are held.
58 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
International
Mid-Cap Small-Cap Opportunity Developed
Growth Fund Target Fund Value Fund Fund Fund
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 808,379 $1,187,076 $ 372,996 $ 700,465 $ 139,082
- ----------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 1,762 325 68 2,621 3,654
- ----------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 0 28,369 1,911 6,548 602
- ----------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,937 566 2,870 2,247 242
- ----------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 573 124 673 0 333
- ----------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 111
- ----------------------------------------------------------------------------------------------------------------------------
Other assets 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
812,651 1,216,460 378,518 711,881 144,024
============================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 17,385 $ 16,436 $ 2,968 $ 2,281 $ 63
- ----------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 689 11,179 455 7,373 5,052
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable 28 928 42 273 23
- ----------------------------------------------------------------------------------------------------------------------------
Accrued investment advisor's fee 280 510 179 356 68
- ----------------------------------------------------------------------------------------------------------------------------
Accrued administrator's fee 189 371 112 219 58
- ----------------------------------------------------------------------------------------------------------------------------
Accrued distribution and/or servicing fee 202 837 210 433 9
- ----------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other liabilities 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
18,773 30,261 3,966 10,935 5,273
============================================================================================================================
Net Assets $ 793,878 $1,186,199 $ 374,552 $ 700,946 $ 138,751
============================================================================================================================
Net Assets Consist of:
Paid in capital $ 613,076 $ 924,903 $ 355,089 $ 470,072 $ 110,763
- ----------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 52 37,813 6,285 0 457
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 41,026 29,650 6,114 88,164 292
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 139,724 193,833 7,064 142,710 27,239
- ----------------------------------------------------------------------------------------------------------------------------
$ 793,878 $1,186,199 $ 374,552 $ 700,946 $ 138,751
============================================================================================================================
Net Assets:
Class A $ 57,164 $ 157,277 $ 75,070 $ 200,935 $ 1,061
- ----------------------------------------------------------------------------------------------------------------------------
Class B 84,535 76,194 110,833 0 2,902
- ----------------------------------------------------------------------------------------------------------------------------
Class C 140,438 952,728 130,466 500,011 6,363
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 511,741 0 58,183 0 128,425
- ----------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 2,382 9,620 4,271 6,413 74
- ----------------------------------------------------------------------------------------------------------------------------
Class B 3,556 4,966 6,358 0 205
- ----------------------------------------------------------------------------------------------------------------------------
Class C 5,907 62,108 7,483 17,322 450
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 24.00 $ 16.35 $ 17.58 $ 31.33 $ 14.26
- ----------------------------------------------------------------------------------------------------------------------------
Class B 23.77 15.34 17.43 0.00 14.14
- ----------------------------------------------------------------------------------------------------------------------------
Class C 23.77 15.34 17.44 28.86 14.15
- ----------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 668,655 $ 993,243 $ 365,932 $ 557,755 $ 111,626
============================================================================================================================
Cost of Foreign Currency Held $ 0 $ 0 $ 0 $ 0 $ 3,907
============================================================================================================================
<CAPTION>
International Emerging Innovation Precious Balanced
Fund Markets Fund Fund Metals Fund Fund
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 166,840 $ 26,944 $ 390,425 $ 21,420 $ 75,030
- ----------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 533 203 454 2 2
- ----------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 457 82 0 137 1,068
- ----------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 186 276 4,978 5,280 2,085
- ----------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 528 117 2 3 211
- ----------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 19
- ----------------------------------------------------------------------------------------------------------------------------
Other assets 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
168,544 27,622 395,859 26,842 78,415
============================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 0 $ 0 $ 1,973 $ 0 $ 9,989
- ----------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 975 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 13,620 16 5,922 1,268 95
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable 185 3 124 0 22
- ----------------------------------------------------------------------------------------------------------------------------
Accrued investment advisor's fee 75 20 185 10 24
- ----------------------------------------------------------------------------------------------------------------------------
Accrued administrator's fee 89 12 114 8 16
- ----------------------------------------------------------------------------------------------------------------------------
Accrued distribution and/or servicing fee 123 2 239 15 15
- ----------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other liabilities 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
14,092 53 9,532 1,301 10,161
============================================================================================================================
Net Assets $ 154,452 $ 27,569 $ 386,327 $ 25,541 $ 68,254
============================================================================================================================
Net Assets Consist of:
Paid in capital $ 115,330 $ 43,696 $ 229,964 $ 44,831 $ 52,788
- ----------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income (338) (3) 0 (16) 2,578
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 8,029 (13,257) 0 (9,080) 6,388
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 31,431 (2,867) 156,363 (10,194) 6,500
- ----------------------------------------------------------------------------------------------------------------------------
$ 154,452 $ 27,569 $ 386,327 $ 25,541 $ 68,254
============================================================================================================================
Net Assets:
Class A $ 12,510 $ 426 $ 85,800 $ 4,709 $ 9,586
- ----------------------------------------------------------------------------------------------------------------------------
Class B 8,956 384 81,130 3,889 8,977
- ----------------------------------------------------------------------------------------------------------------------------
Class C 132,986 1,169 219,258 16,943 8,469
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 25,590 139 0 41,222
- ----------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 873 42 3,534 884 791
- ----------------------------------------------------------------------------------------------------------------------------
Class B 665 38 3,438 777 744
- ----------------------------------------------------------------------------------------------------------------------------
Class C 9,886 117 9,293 3,388 702
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 14.33 $ 10.12 $ 24.28 $ 5.33 $ 12.11
- ----------------------------------------------------------------------------------------------------------------------------
Class B 13.46 10.02 23.60 5.01 12.07
- ----------------------------------------------------------------------------------------------------------------------------
Class C 13.45 10.02 23.59 5.00 12.07
- ----------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 135,368 $ 29,806 $ 233,737 $ 31,614 $ 68,637
============================================================================================================================
Cost of Foreign Currency Held $ 525 $ 163 $ 0 $ 0 $ 0
============================================================================================================================
</TABLE>
See accompanying notes 59
<PAGE>
Statement of Operations
For the year ended June 30, 1998
Amounts in thousands
<TABLE>
<CAPTION>
Capital
Equity Renaissance Appreciation
Income Fund Value Fund Fund Fund Growth Fund
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 5,723 $ 4,626 $ 7,141 $ 8,511 $ 11,918
- ----------------------------------------------------------------------------------------------------------------------------------
Interest 345 253 1,054 2,397 4,588
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income 6,068 4,879 8,195 10,908 16,506
==================================================================================================================================
Expenses:
Investment advisory fees 795 951 3,010 3,628 9,330
- ----------------------------------------------------------------------------------------------------------------------------------
Administration fees 487 721 2,006 2,144 7,464
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 61 234 453 124 496
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 105 589 2,916 295 12,290
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 20 47 130 75 403
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 20 78 151 41 165
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 35 196 972 98 4,097
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 26 11 0 137 0
- ----------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 16 20 45 70 178
- ----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 0 0 1 0 14
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,565 2,847 9,684 6,612 34,437
==================================================================================================================================
Net Investment Income (loss) 4,503 2,032 (1,489) 4,296 (17,931)
===================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 23,527 29,304 123,499 89,980 358,521
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures contracts and written options 0 0 71 0 (13,902)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 4,261 3,088 3,968 125,025 313,583
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on futures
contracts and written options 0 0 77 0 (725)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities denominated in foreign currencies 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 27,788 32,392 127,615 215,005 657,477
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ 32,291 $ 34,424 $ 126,126 $ 219,301 $ 639,546
==================================================================================================================================
</TABLE>
60 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
International
Mid-Cap Small-Cap Opportunity Developed
Growth Fund Target Fund Value Fund Fund Fund
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 4,903 $ 4,297 $ 5,018 $ 541 $ 2,006
- -----------------------------------------------------------------------------------------------------------------------------------
Interest 1,951 4,384 870 2,890 541
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income 6,854 8,681 5,888 3,431 2,547
===================================================================================================================================
Expenses:
Investment advisory fees 2,622 6,607 1,395 5,172 653
- -----------------------------------------------------------------------------------------------------------------------------------
Administration fees 1,722 4,805 850 3,183 555
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 397 546 459 0 16
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 714 7,281 611 4,372 30
- -----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 73 394 92 532 3
- -----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 132 182 153 0 5
- -----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 238 2,427 204 1,457 10
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 64 0 23 0 7
- -----------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 51 120 18 81 10
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 0 22 0 11 4
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 6,013 22,384 3,805 14,808 1,293
===================================================================================================================================
Net Investment Income (loss) 841 (13,703) 2,083 (11,377) 1,254
===================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 58,714 243,263 15,567 129,588 2,149
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures contracts and written options 0 (290) 0 4,770 (294)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions 0 0 0 0 (177)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 57,682 56,862 (3,548) (18,473) 16,501
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on futures
contracts and written options 0 0 0 1,634 117
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities denominated in foreign currencies 0 0 0 0 (307)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 116,396 299,835 12,019 117,519 17,989
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ 117,237 $ 286,132 $ 14,102 $ 106,142 $ 19,243
===================================================================================================================================
<CAPTION>
International Emerging Innovation Precious Balanced
Fund Markets Fund Fund Metals Fund Fund
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 2,681 $ 684 $ 458 $ 397 $ 637
- ----------------------------------------------------------------------------------------------------------------------------------
Interest 345 108 699 171 1,780
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income 3,026 792 1,157 568 2,417
==================================================================================================================================
Expenses:
Investment advisory fees 923 349 2,029 166 300
- ----------------------------------------------------------------------------------------------------------------------------------
Administration fees 1,090 209 1,248 124 187
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 64 4 472 31 32
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 1,066 11 1,376 136 30
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 43 1 164 13 12
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 21 1 157 10 11
- ----------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 355 4 459 45 10
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 0 2 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 19 4 33 4 7
- ----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 25 12 5 17 6
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 3,606 597 5,943 546 595
==================================================================================================================================
Net Investment Income (loss) (580) 195 (4,786) 22 1,822
==================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 9,426 (2,910) 17,532 (8,069) 10,677
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures contracts and written options 0 0 606 0 356
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions (920) (134) 0 (21) 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,314 (10,780) 109,895 (3,093) (1,136)
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on futures
contracts and written options 0 0 (325) 0 90
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities denominated in foreign currencies (24) (5) 0 (1) 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 15,796 (13,829) 127,708 (11,184) 9,987
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ 15,216 $ (13,634) $ 122,922 $ (11,162) $ 11,809
==================================================================================================================================
</TABLE>
See accompanying notes 61
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in thousands Equity Income Fund Value Fund
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ 4,503 $ 3,710 $ 2,032 $ 1,702
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 23,527 20,609 29,304 13,315
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 4,261 6,318 3,088 19,593
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 32,291 30,637 34,424 34,610
==============================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (214) (15) (221) (105)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (152) (17) (145) (99)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (244) (47) (357) (247)
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (3,825) (4,580) (1,292) (1,517)
- ------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (1,062) 0 (1,819) 0
- ------------------------------------------------------------------------------------------------------------------------------
Class B (745) 0 (3,062) 0
- ------------------------------------------------------------------------------------------------------------------------------
Class C (1,348) 0 (7,703) 0
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (17,552) (14,904) (8,105) (2,344)
- ------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (25,142) (19,563) (22,704) (4,312)
==============================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 13,092 1,691 19,311 3,387
- ------------------------------------------------------------------------------------------------------------------------------
Class B 12,684 3,040 9,503 1,609
- ------------------------------------------------------------------------------------------------------------------------------
Class C 18,527 7,063 33,261 16,250
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 20,453 16,418 28,033 17,251
- ------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 11,374
- ------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 20,538
- ------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 48,923
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 1,244 13 1,885 95
- ------------------------------------------------------------------------------------------------------------------------------
Class B 825 15 2,853 86
- ------------------------------------------------------------------------------------------------------------------------------
Class C 1,506 43 7,528 225
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 20,925 18,898 9,361 3,854
- ------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (3,164) (69) (16,080) (1,972)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (961) (670) (3,736) (1,562)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (3,868) (899) (20,988) (12,509)
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (26,929) (39,204) (23,096) (10,770)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 54,334 6,339 47,835 96,779
- ------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 61,483 17,413 59,555 127,077
==============================================================================================================================
Net Assets:
Beginning of period 140,224 122,811 179,804 52,727
- ------------------------------------------------------------------------------------------------------------------------------
End of period* $ 201,707 $ 140,224 $ 239,359 $ 179,804
- ------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 4,754 $ 2,380 $ 5,621 $ 6,824
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Renaissance Fund
- ----------------------------------------------------------------------------------------------------------
Nine
Year Ended Months Ended
June 30, 1998 June 30, 1997
<S> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ (1,489) $ 664
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) 123,570 42,917
- ----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 4,045 33,883
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 126,126 77,464
==========================================================================================================
Distributions to Shareholders:
From net investment income
Class A (170) (221)
- ----------------------------------------------------------------------------------------------------------
Class B (42) (82)
- ----------------------------------------------------------------------------------------------------------
Class C (213) (670)
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (7,515) (3,107)
- ----------------------------------------------------------------------------------------------------------
Class B (8,922) (2,821)
- ----------------------------------------------------------------------------------------------------------
Class C (64,285) (32,865)
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0
- ----------------------------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
Total Distributions (81,147) (39,766)
==========================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 203,937 17,402
- ----------------------------------------------------------------------------------------------------------
Class B 57,972 21,111
- ----------------------------------------------------------------------------------------------------------
Class C 202,638 112,880
- ----------------------------------------------------------------------------------------------------------
Other Classes 887 0
- ----------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0
- ----------------------------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 7,011 200
- ----------------------------------------------------------------------------------------------------------
Class B 8,021 73
- ----------------------------------------------------------------------------------------------------------
Class C 59,208 613
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (164,942) (7,973)
- ----------------------------------------------------------------------------------------------------------
Class B (7,786) (3,265)
- ----------------------------------------------------------------------------------------------------------
Class C (138,986) (61,037)
- ----------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 227,960 80,004
- ----------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 272,939 117,702
==========================================================================================================
Net Assets:
Beginning of period 384,085 266,383
- ----------------------------------------------------------------------------------------------------------
End of period* $ 657,024 $ 384,085
- ----------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 46,534 $ 28,688
- ----------------------------------------------------------------------------------------------------------
</TABLE>
62 See accompanying notes
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in thousands Capital Appreciation Fund Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------
Nine
Year Ended Year Ended Year Ended Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ 4,296 $ 4,349 $ (17,931) $ (6,859)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 89,980 45,370 344,619 209,267
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 125,025 74,013 312,858 38,690
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 219,301 123,732 639,546 241,098
=============================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (56) 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class B (40) 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class C (81) 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes (3,653) (2,210) 0 0
- -----------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (881) 0 (22,078) (19,626)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (754) 0 (9,680) (5,682)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (2,428) 0 (241,892) (198,720)
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes (46,281) (44,170) 0 0
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (54,174) (46,380) (273,650) (224,028)
=============================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 66,636 6,440 330,680 139,954
- -----------------------------------------------------------------------------------------------------------------------------
Class B 35,779 2,819 16,100 22,425
- -----------------------------------------------------------------------------------------------------------------------------
Class C 62,600 13,152 370,235 428,074
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 395,404 168,885 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 887 0 20,743 0
- -----------------------------------------------------------------------------------------------------------------------------
Class B 737 0 8,981 3
- -----------------------------------------------------------------------------------------------------------------------------
Class C 2,440 0 226,702 4
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 39,039 36,688 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (8,606) (415) (355,128) (147,335)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (1,820) (11) (12,901) (5,108)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (13,721) (1,161) (574,802) (376,328)
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes (182,910) (90,526) 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 396,465 135,871 30,610 61,689
- -----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 561,592 213,223 396,506 78,759
=============================================================================================================================
Net Assets:
Beginning of period 561,951 348,728 1,717,334 1,638,575
- -----------------------------------------------------------------------------------------------------------------------------
End of period* $ 1,123,543 $ 561,951 $ 2,113,840 $ 1,717,334
- -----------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 2,964 $ 8,727 $ 54,147 $ 37,051
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Mid-Cap Growth Fund Target Fund
- ------------------------------------------------------------------------------------------------------------------------------
Nine
Year Ended Year Ended Year Ended Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ 841 $ 1,077 $ (13,703) $ (8,571)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 58,714 30,855 242,973 188,697
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 57,682 50,902 56,862 (60,110)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 117,237 82,834 286,132 120,016
==============================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (41) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (1,454) (606) 0 0
- ------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (1,205) 0 (35,690) (19,003)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (2,602) 0 (18,642) (6,747)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (4,570) 0 (248,454) (120,762)
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (21,860) (43,786) 0 0
- ------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (31,732) (44,392) (302,786) (146,512)
==============================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 104,053 673 1,137,516 550,283
- ------------------------------------------------------------------------------------------------------------------------------
Class B 54,506 1,840 9,446 27,085
- ------------------------------------------------------------------------------------------------------------------------------
Class C 90,916 8,401 143,022 293,453
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 351,303 72,315 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 75,422 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 1,158 0 32,770 4
- ------------------------------------------------------------------------------------------------------------------------------
Class B 2,327 0 17,256 1
- ------------------------------------------------------------------------------------------------------------------------------
Class C 4,187 0 234,139 1
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes 22,766 43,184 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (64,062) (2,743) (1,171,453) (553,973)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (7,281) (1,818) (16,188) (8,959)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (21,124) (7,250) (371,192) (274,688)
- ------------------------------------------------------------------------------------------------------------------------------
Other Classes (217,945) (72,979) 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 320,804 117,045 15,316 33,207
- ------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 406,309 155,487 (1,338) 6,711
==============================================================================================================================
Net Assets:
Beginning of period 387,569 232,082 1,187,537 1,180,826
- ------------------------------------------------------------------------------------------------------------------------------
End of period* $ 793,878 $ 387,569 $ 1,186,199 $ 1,187,537
- ------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 52 $ 513 $ 37,813 $ 72,458
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Small-Cap Value Fund
- ----------------------------------------------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ 2,083 $ 742
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) 15,567 5,616
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (3,548) 6,732
- ----------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 14,102 13,090
- ----------------------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income
Class A (226) 0
- ----------------------------------------------------------------------------------------------
Class B (310) 0
- ----------------------------------------------------------------------------------------------
Class C (410) 0
- ----------------------------------------------------------------------------------------------
Other Classes (394) (343)
- ----------------------------------------------------------------------------------------------
From net realized capital gains
Class A (1,098) 0
- ----------------------------------------------------------------------------------------------
Class B (2,248) 0
- ----------------------------------------------------------------------------------------------
Class C (2,979) 0
- ----------------------------------------------------------------------------------------------
Other Classes (2,032) (5,390)
- ----------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0
- ----------------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------
Total Distributions (9,697) (5,733)
==============================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 78,581 6,136
- ----------------------------------------------------------------------------------------------
Class B 105,195 10,821
- ----------------------------------------------------------------------------------------------
Class C 124,033 19,512
- ----------------------------------------------------------------------------------------------
Other Classes 50,928 6,922
- ----------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0
- ----------------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 1,246 0
- ----------------------------------------------------------------------------------------------
Class B 2,393 0
- ----------------------------------------------------------------------------------------------
Class C 3,224 0
- ----------------------------------------------------------------------------------------------
Other Classes 2,197 5,710
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (10,783) (78)
- ----------------------------------------------------------------------------------------------
Class B (6,886) (588)
- ----------------------------------------------------------------------------------------------
Class C (18,158) (535)
- ----------------------------------------------------------------------------------------------
Other Classes (40,655) (9,875)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 291,315 38,025
- ----------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 295,720 45,382
==============================================================================================
Net Assets:
Beginning of period 78,832 33,450
- ----------------------------------------------------------------------------------------------
End of period* $ 374,552 $ 78,832
- ----------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 6,285 $ 1,920
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 63
<PAGE>
Statement of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands Opportunity Fund International Developed Fund
-----------------------------------------------------------------------------
Nine
Year Ended Months Ended Year Ended Year Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ (11,377) $ (4,857) $ 1,254 $ 729
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 134,358 7,066 1,678 3,808
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (16,839) (90,676) 16,311 4,764
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 106,142 (88,467) 19,243 9,301
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A 0 0 (4) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 (11) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 (18) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (838) 0
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (13,050) (17,083) (23) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 (99) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (40,210) (109,891) (169) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (4,282) (4,444)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (53,260) (126,974) (5,444) (4,444)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 595,236 225,467 58,239 477
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 2,740 1,057
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 548,593 587,295 5,503 2,759
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 72,498 45,331
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 12,054 0 25 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 77 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 36,779 0 183 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 4,340 3,704
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (639,360) (114,318) (58,269) (189)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 (1,269) (15)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (748,168) (575,183) (2,383) (433)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (57,045) (33,066)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions (194,866) 123,261 24,639 19,625
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (141,984) (92,180) 38,438 24,482
====================================================================================================================================
Net Assets:
Beginning of period 842,930 935,110 100,313 75,831
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $ 700,946 $ 842,930 $ 138,751 $ 100,313
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 0 $ 0 $ 457 $ 1,129
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
64 See accompanying notes
<PAGE>
Statement of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands International Fund Emerging Markets Fund
------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
June 30, 1998 June 30, 1996 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ (580) $ (244) $ 195 $ 282
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 8,506 11,683 (3,044) 3,040
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 7,290 11,771 (10,785) 1,585
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 15,216 23,210 (13,634) 4,907
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 (310)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (1,244) (597) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (719) (203) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (11,750) (6,105) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (13,713) (6,905) 0 (310)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 283,880 126,751 2,177 214
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 7,431 2,790 694 362
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 268,540 87,308 1,394 2,021
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 24,872 13,089
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 1,179 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 643 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 10,909 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 222
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (292,362) (130,471) (1,874) (10)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (7,860) (702) (460) (73)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (314,820) (136,065) (1,562) (277)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (39,213) (45,883)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions (42,460) (50,389) (13,972) (30,335)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (40,957) (34,084) (27,606) (25,738)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of period 195,409 229,493 55,175 80,913
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $ 154,452 $ 195,409 $ 27,569 $ 55,175
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ (338) $ 2,463 $ (3) $ (69)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Amounts in thousands Innovation Fund Precious Metals Fund
------------------------------------------------------------------------------
Nine Nine
Year Ended Months Ended Year Ended Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ (4,786) $ (2,397) $ 22 $ (93)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 18,138 3,357 (8,090) 87
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 109,570 2,593 (3,094) (11,122)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 122,922 3,553 (11,162) (11,128)
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (2,994) (776) 0 (98)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (3,093) (599) 0 (36)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (9,130) (2,217) 0 (575)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A (528) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (546) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (1,611) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (17,902) (3,592) 0 (709)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 353,943 86,364 371,343 228,982
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 18,925 28,789 8,049 4,276
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 89,214 97,510 124,855 93,686
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 124 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 3,237 0 0 89
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 3,439 0 0 32
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 10,261 0 0 529
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (351,255) (80,778) (370,208) (230,377)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (13,734) (11,137) (6,475) (1,186)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (103,423) (71,730) (124,238) (96,889)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 10,731 49,018 3,326 (858)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 115,751 48,979 (7,836) (12,695)
====================================================================================================================================
Net Assets:
Beginning of period 270,576 221,597 33,377 46,072
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $ 386,327 $ 270,576 $ 25,541 $ 33,377
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 0 $ 0 $ (16) $ (17)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Amounts in thousands Balanced Fund
Year Ended Year Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ 1,822 $ 2,252
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 11,033 12,663
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (1,046) (3,065)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 11,809 11,850
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (130) (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (100) (10)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (98) (8)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (1,462) (2,191)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (495) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (247) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (285) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (5,071) (10,060)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (7,888) (12,273)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 10,035 354
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 8,086 1,113
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 7,888 969
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 5,975 10,422
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Class A 602 3
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 302 9
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 367 7
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 6,512 12,237
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
- ------------------------------------------------------------------------------------------------------------------------------------
Class A (1,454) (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (827) (44)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (943) (91)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (36,139) (43,185)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 404 (18,210)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 4,325 (18,633)
====================================================================================================================================
Net Assets:
Beginning of period 63,929 82,562
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $ 68,254 $ 63,929
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 2,578 $ 2,860
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 65
<PAGE>
Notes to Financial Statements
June 30, 1998
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust"), is registered under the
Investment Company Act of 1940, as amended, as open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty three separate investment funds (the "Funds"). The Trust may
offer up to six classes of shares: Institutional, Administrative, A, B, C and D.
Each share class has identical voting rights (except shareholders of a class
that have exclusive voting rights regarding any matter relating solely to that
class of shares). The Structured Emerging Markets and Tax-Efficient Structured
Emerging Markets Fund had not commenced operations as of June 30, 1998.
Information presented in these financial statements pertains to the A, B and C
Classes (the "Retail Classes") of the Trust. Certain detail financial
information for the Institutional, Administrative and D Classes (the "Other
Classes") is provided separately and is available upon request.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. These policies
are in conformity with generally accepted accounting principles. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
Security Valuation. Portfolio securities and other financial instruments for
which market quotations are readily available are stated at market value. Market
value is determined on the basis of last reported sales prices, or if no sales
are reported, as is the case for most securities traded over-the-counter, the
mean between representative bid and asked quotations obtained from a quotation
reporting system or from established market makers. Short-term investments
having a maturity of 60 days or less are valued at amortized cost, which
approximates market value. Certain fixed income securities for which daily
market quotations are not readily available may be valued, pursuant to
guidelines established by the Board of Trustees, with reference to fixed income
securities whose prices are more readily obtainable.
Securities Transactions and Investment Income. Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed delivery basis may be settled a month or more after the trade date.
Realized gains and losses from securities sold are recorded on the identified
cost basis.
Dividend income is recorded on the ex-dividend date, except certain dividends
from foreign securities where the ex-dividend date may have passed, are recorded
as soon as the Fund is informed of the ex-dividend date. Interest income,
adjusted for the accretion of discounts and amortization of premiums, is
recorded on the accrual basis.
Foreign Currency. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period. Fluctuations in the value of these assets and liabilities
resulting from changes in exchange rates are recorded as unrealized foreign
currency gains (losses). Realized gains (losses) and unrealized appreciation
(depreciation) on investment securities and income and expenses are translated
on the respective dates of such transactions. The effect of changes in foreign
currency exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of those
securities, but are included with the net realized and unrealized gain or loss
on investment securities.
Dividends and Distributions to Shareholders. Dividends from net investment
income, if any, are declared and paid quarterly to shareholders of record by the
Equity Income, Renaissance, Value and Balanced Funds. Dividends from net
investment income, if any, are declared and paid at least annually to
shareholders of record by the other Funds. Net long-term capital gains earned by
a Fund, if any, will be distributed no less frequently than once each year.
Income dividends and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for such items as wash sales, foreign currency transactions, net
operating losses and capital loss carryforwards. Certain amounts have been
reclassified between undistributed net investment income, accumulated
undistributed net realized gains or losses and paid in capital to more
appropriately conform financial accounting and tax characterizations of dividend
distributions.
Multiclass Operations. Each class offered by the Trust has equal rights as to
assets. Income, non-class specific expenses and realized and unrealized capital
gains and losses are allocated to each class of shares based on the relative net
assets of each class.
66
<PAGE>
Federal Income Taxes. Each Fund intends to qualify as a regulated investment
company and distribute all of its taxable income and net realized gains, if
applicable, to shareholders. Accordingly, no provision for Federal income taxes
has been made.
Foreign Taxes on Dividends. Dividend income in the statement of operations is
shown net of foreign taxes withheld on dividends from foreign securities.
Foreign taxes withheld were as follows: Equity Income Fund - $6,396; Value Fund
- - $12,048; Renaissance Fund - $40,871; Growth Fund - $13,900; Mid-Cap Growth
Fund - $6,930; Target Fund - $1,402; Small-Cap Value Fund - $3,221;
International Developed Fund - $203,465; International Fund - $412,100; Emerging
Markets Fund - $54,600; Innovation Fund - $31,650; Precious Metals Fund -
$22,651; and Balanced Fund - $4,329.
Futures and Options. Certain Funds are authorized to enter into futures
contracts and options. A Fund may use futures contracts to manage its exposure
to the markets or to movements in interest rates and currency values. The
primary risks associated with the use of futures contracts and options are
imperfect correlation between the change in market value of the securities held
by a Fund and the prices of futures contracts and options, the possibility of an
illiquid market, and the inability of the counterparty to meet the terms of the
contract. Futures contracts and purchased options are valued based upon their
quoted daily settlement prices. The premium received for a written option is
recorded as an asset with an equal liability which is marked to market based on
the option is quoted daily settlement price. Fluctuations in the value of such
instruments are recorded as unrealized appreciation (depreciation) until
terminated, at which time realized gains and losses are recognized.
Forward Currency Transactions. Certain Funds are authorized to enter into
forward foreign exchange contracts for the purpose of hedging against foreign
exchange risk arising from the Fund's investment or anticipated investment in
securities denominated in foreign currencies. A Fund may also enter into these
contracts for purposes of increasing exposure to a foreign currency or to shift
exposure to foreign currency fluctuations from one country to another. All
commitments are marked to market daily at the applicable translation rates and
any resulting unrealized gains or losses are recorded. Realized gains or losses
are recorded at the time the forward contract matures or by delivery of the
currency. Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
Repurchase Agreements. Each Fund may engage in repurchase transactions. Under
the terms of a typical repurchase agreement, the Fund takes possession of an
underlying debt obligation subject to an obligation of the seller to repurchase,
and the Fund to resell, the obligation at an agreed-upon price and time. The
market value of the collateral must be equal at all times to the total amount of
the repurchase obligations, including interest. Generally, in the event of
counterparty default, the Fund has the right to use the collateral to offset
losses incurred.
3. Fees, Expenses, and Related Party Transactions
Investment Advisory Fee. PIMCO Advisors L.P. ("PIMCO Advisors") serves as
investment advisor to the Trust, pursuant to an Investment Advisory Agreement.
PIMCO Advisors receives from the Trust a fee based on an annual percentage of
the average daily net assets of each Fund as follows: 0.50% for the Growth Fund;
0.55% for the Target and International Funds; 0.60% for the Renaissance,
Small-Cap Value, International Developed and Precious Metals Funds; 0.65% for
the Opportunity and Innovation Funds; 0.85% for the Emerging Markets Funds; and
0.45% for all other Funds. Each of the Funds also has a sub-advisor which, under
the supervision of PIMCO Advisors, directs the investments of the Fund is
assets. Other than the sub-advisor of the Precious Metals Fund, all of the sub-
advisors are affiliates of PIMCO Advisors. The advisory fees received by PIMCO
Advisors are paid in all or in part to each of the sub-advisors in accordance
with the portfolio management agreements.
Administration Fee. PIMCO Advisors provides administrative services to the Trust
for which it receives from each Fund a monthly administrative fee based on each
share class's average daily net assets. The Administration Fee for the Retail
Classes is charged at the annual rate of 0.65% for the International Developed,
International and Emerging Markets Funds; 0.45% for the Precious Metals Fund;
and 0.40% for all other Funds. The Administration Fee for the Institutional and
Administrative Classes is charged at the annual rate of 0.50% for the Emerging
Markets and International Developed Funds and 0.25% for all other Funds. The
Administration Fee for Class D is charged at the annual rate of 0.40%.
67
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1997
Distribution and Servicing Fees. PIMCO Funds Distributors LLC ("PFD"), formerly
PIMCO Funds Distribution Company, a wholly-owned subsidiary of PIMCO Advisors
L.P., serves as the distributor of the Trust's shares.
The Trust is permitted to reimburse out of the Administrative Class assets
of each Fund, in an amount up to 0.25% on an annual basis of the average daily
net assets of that class, financial intermediaries that provide services in
connection with the distribution of shares or administration of plans or
programs that use Fund shares as their funding medium. The effective rate paid
to PFD was 0.25% during the current fiscal year.
Pursuant to the Distribution and Servicing Plans adopted by the Retail and
D Classes of the Trust, the Trust compensates PFD or an affiliate with respect
to Class D for services provided and expenses incurred in connection with
assistance rendered in the sale of shares and services rendered to shareholders
and for maintenance of shareholder accounts of the Retail and D Classes. The
Trust paid PFD distribution and servicing fees at an effective rate as set forth
below (calculated as a percentage of each Fund is average daily net assets
attributable to each class):
Distribution Fee (%) Servicing Fee (%)
- ---------------------------------------------------------------------
Class A
All Funds -- 0.25
Class B
All Funds 0.75 0.25
Class C
All Funds 0.75 0.25
Class D
All Funds -- 0.25
PFD also receives the proceeds of the initial sales charges paid by the
shareholders upon the purchase of Class A shares and the contingent deferred
sales charges paid by the shareholders upon certain redemptions of Retail
Classes shares. For the period ended June 30, 1998, PFD received $6,275,942
representing commissions (sales charges) and contingent deferred sales charges.
Expenses. The Trust is also responsible for the following expenses: (i) salaries
and other compensation of any of the Trust's executive officers and employees
who are not officers, directors, stockholders or employees of PIMCO Advisors,
PIMCO, or its subsidiaries or affiliates; (ii) taxes and governmental fees;
(iii) brokerage fees and commissions and other portfolio transaction expenses;
(iv) the cost of borrowing money, including interest expenses; (v) fees and
expenses of the Trustees who are not "interested persons" of the Advisor, PIMCO,
Portfolio Managers, or the Trust, and any counsel retained exclusively for their
benefit; (vi) extraordinary expenses, including costs of litigation and
indemnification expenses; (vii) expenses such as organizational expenses, which
are capitalized in accordance with generally accepted accounting principles; and
(viii) any expenses allocated or allocable to a specific class of shares, which
include distribution and service fees payable with respect to the certain share
classes and may include certain other expenses as permitted by the Trust's
Multiple Class Plan adopted pursuant to Rule 18f-3 under the Investment Company
Act of 1940 and subject to review and approval by the Trustees. The ratio of
expenses to average net assets per share class, as disclosed in the Financial
Highlights, may differ from the annual fund operating expenses per share class
as disclosed in the Prospectus for the reasons set forth above.
Each unaffiliated Trustee receives an annual retainer of $45,000, plus
$2,000 for each Board of Trustees meeting attended, and $500 for each Audit and
Performance Committee meeting attended, plus reimbursement of related expenses.
Each Audit and Performance Committee member receives an additional annual
retainer of $1,000, the Chairman of the Audit and Performance Committees
receives an additional annual retainer of $2,000, the Chairman of the
Independent Trustees receives an additional annual retainer of $6,000, and each
Vice Chairman of the Board receives an additional annual retainer of $3,000.
These expenses are allocated to the Funds of the Trust according to their
respective net assets.
68
<PAGE>
4. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1998 were as follows (amounts in thousands):
U.S. Government/Agency All Other
- --------------------------------------------------------------------------------
Purchases Sales Purchases Sales
- --------------------------------------------------------------------------------
Equity Income Fund $ 108,839 $ 76,245
Value Fund 188,181 158,285
Renaissance Fund 1,093,485 966,292
Capital Appreciation Fund 879,186 566,842
Growth Fund 2,197,264 2,424,141
Mid-Cap Growth Fund 637,096 360,640
Target Fund 2,549,727 2,904,106
Small-Cap Value Fund 348,329 88,320
Opportunity Fund 642,025 879,877
International Developed Fund 62,862 58,330
International Fund 96,171 140,445
Emerging Markets Fund 20,179 32,657
Innovation Fund 300,097 328,301
Precious Metals Fund 13,888 18,669
Balanced Fund $ 85,657 $ 81,267 37,940 47,365
5. Federal Income Tax Matters
As of June 30, 1998, the Funds listed in the table below had remaining capital
loss carryforwards that were realized in current and prior years. Additionally,
the International, Emerging Markets, and Precious Metals Funds realized capital
losses and/or foreign currency losses during the period November 1, 1997 through
June 30, 1998, which the Funds elected to defer to the following fiscal year
pursuant to income tax regulations. The amounts are $332,309, $3,263 and
$6,320,994 respectively.
The Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforwards. (amounts in
thousands):
Capital Loss Carryforwards
- -------------------------------------------------------------------------------
Realized
Losses Expiration
- -------------------------------------------------------------------------------
Emerging Markets Fund $ 10,098 06/30/03
3,074 06/30/06
Precious Metals 1,636 06/30/06
Each Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforward.
6. Transactions in Written Call and Put Options
Transactions in written call and put options were as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Renaissance Fund Growth Fund Target Fund Opportunity Fund Innovation Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Premium Contracts Premium Contracts Premium Contracts Premium Contracts Premium Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at 06/30/97 $ 0 0 $ 3,218 4,500 $ 0 0 $ 938 5,690 $ 0 0
Sales 271 1,130 73,339 6,640,333 147 1,000 9,612 42,795 3,863 10,142
Closing Buys (139) (500) (61,095) (4,813,704) (147) (1,000) (4,558) (19,780) (2,140) (4,892)
Expirations 0 0 (13,925) (1,825,622) 0 0 (2,155) (14,408) (897) (2,996)
Exercised 0 0 (1,537) (5,507) 0 0 (3,837) (14,297) (176) (754)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at 06/30/98 $ 132 630 $ 0 0 $ 0 0 $ 0 0 $ 650 1,500
====================================================================================================================================
</TABLE>
69
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1998
7. Shares of Beneficial Interest
The Trust may issue an unlimited number of shares of beneficial interest with a
$.0001 par value. Changes in shares of beneficial interest were as follows
(shares and amounts in thousands):
<TABLE>
<CAPTION>
Equity Income Fund Value Fund
-------------------------------------- ---------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 807 $ 13,092 118 $ 1,691 1,242 $19,311 349 $ 3,387
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 788 12,684 213 3,040 613 9,503 303 1,609
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 1,154 18,527 488 7,063 2,153 33,261 1,607 16,250
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 1,260 20,453 1,146 16,419 1,789 28,033 1,317 17,251
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 843 11,374
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 1,521 20,538
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 3,624 48,923
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 81 1,244 1 13 128 1,885 7 95
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 54 825 1 15 196 2,853 6 86
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 99 1,506 3 43 517 7,528 16 225
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 1,359 20,925 1,379 18,897 637 9,361 293 3,854
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (195) (3,164) (5) (69) (1,038) (16,080) (142) (1,972)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (59) (961) (47) (670) (242) (3,736) (112) (1,562)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (238) (3,868) (60) (899) (1,356) (20,988) (913) (12,509)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes (1,659) (26,929) (2,691) (39,204) (1,483) (23,096) (803) (10,770)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share transactions 3,451 $ 54,334 546 $ 6,339 3,156 $ 47,835 7,916 $ 96,779
==================================================================================================================================
<CAPTION>
Target Fund Small-Cap Value Fund
------------------------------------------ --------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 70,981 $ 1,137,516 34,398 $ 550,283 4,385 $ 78,581 422 $ 6,136
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 601 9,446 1,754 27,085 5,902 105,195 743 10,821
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 9,280 143,022 19,148 293,453 7,001 124,033 1,351 19,512
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 2,829 50,928 485 6,922
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 2,292 32,770 0 4 71 1,246 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 1,280 17,256 0 1 137 2,393 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 17,369 234,139 0 1 185 3,224 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 125 2,197 423 5,710
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (72,612) (1,171,453) (34,558) (553,973) (602) (10,783) (5) (78)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (1,100) (16,188) (575) (8,959) (386) (6,886) (38) (588)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (24,627) (371,192) (17,874) (274,688) (1,017) (18,158) (37) (535)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (2,232) (40,655) (694) (9,875)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions 3,464 $ 15,316 2,293 $ 33,207 16,398 $ 291,315 2,650 $ 38,025
==================================================================================================================================
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Renaissance Fund Capital Appreciation Fund
--------------------------------------- ---------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 10,943 $ 203,937 1,108 $ 17,402 2,800 $ 66,636 330 $ 6,440
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 3,123 57,972 1,321 21,111 1,489 35,779 144 2,819
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 10,952 202,638 7,139 112,880 2,630 62,600 676 13,152
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 51 887 0 0 16,465 395,404 8,880 168,885
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 418 7,011 12 200 38 887 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 478 8,021 5 73 32 737 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 3,551 59,208 39 613 106 2,440 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 1,684 39,039 2,026 36,688
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (8,781) (164,942) (509) (7,973) (348) (8,606) (21) (415)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (420) (7,786) (203) (3,265) (76) (1,820) (1) (11)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (7,456) (138,986) (3,802) (61,037) (583) (13,721) (55) (1,161)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (7,652) (182,910) (4,725) (90,526)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions 12,859 $ 227,960 5,110 $ 80,004 16,585 $ 396,465 7,254 $ 135,871
==================================================================================================================================
<CAPTION>
Opportunity Fund International Developed Fund
---------------------------------------- --------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 19,485 $ 595,236 7,683 $ 225,467 4,256 $ 58,239 39 $ 477
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 206 2,740 87 1,057
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 19,302 548,593 21,251 587,295 426 5,503 228 2,759
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 5,531 72,498 3,708 45,331
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 416 12,054 0 0 2 25 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 7 77 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 1,371 36,779 0 0 16 183 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 375 4,340 318 3,704
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (20,762) (639,360) (4,019) (114,318) (4,208) (58,269) (15) (189)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 (94) (1,269) (1) (15)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (26,338) (748,168) (20,883) (575,183) (186) (2,383) (35) (433)
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (4,281) (57,045) (2,729) (33,066)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions (6,526) $(194,866) 4,032 $ 123,261 2,050 $ 24,639 1,600 $ 19,625
=================================================================================================================================
<CAPTION>
Growth Fund Mid-Cap Growth Fund
---------------------------------------- ---------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 11,481 $ 330,680 5,519 $ 139,954 4,474 $ 104,053 133 $ 673
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 588 16,100 923 22,424 2,368 54,506 277 1,840
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 13,609 370,235 17,754 428,075 3,986 90,916 792 8,401
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 15,177 351,303 3,845 72,315
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 618 11,363
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 1,223 22,472
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 2,262 41,587
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 809 20,743 0 0 51 1,158 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 375 8,981 0 3 103 2,327 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 9,474 226,702 0 4 185 4,187 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 999 22,766 2,496 43,184
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (12,217) (355,128) (5,755) (147,335) (2,744) (64,062) (149) (2,743)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (476) (12,901) (213) (5,108) (316) (7,281) (99) (1,818)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (21,186) (574,802) (15,525) (376,328) (925) (21,124) (392) (7,250)
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (9,392) (217,945) (3,806) (72,979)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions 2,457 $ 30,610 2,703 $ 61,689 13,966 $ 320,804 7,200 $ 117,045
=================================================================================================================================
<CAPTION>
International Fund Emerging Markets Fund
---------------------------------------- --------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 21,036 $ 283,880 9,707 $ 126,752 187 $ 2,177 16 $ 214
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 593 7,431 224 2,790 57 694 28 362
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 21,197 268,540 6,983 87,308 117 1,394 153 2,021
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 2,087 24,872 1,033 13,089
- ---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 99 1,179 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 57 643 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 973 10,909 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 19 222
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (21,545) (292,362) (9,963) (130,472) (160) (1,874) (1) (10)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (625) (7,860) (56) (702) (41) (460) (5) (73)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (24,720) (314,820) (10,866) (136,065) (132) (1,562) (21) (277)
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (3,358) (39,213) (3,659) (45,883)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions (2,935) $ (42,460) (3,971) $ (50,389) (1,243) $(13,972) (2,437) $(30,335)
=================================================================================================================================
</TABLE>
71
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1998
7. Shares of Beneficial Interest (Cont.)
The Trust may issue an unlimited number of shares of beneficial interest with a
$.0001 par value. Changes in shares of beneficial interest were as follows
(shares and amounts in thousands):
<TABLE>
<CAPTION>
Innovation Fund Precious Metals Fund
-------------------------------------- -----------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97 Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount Shares Amount Shares Amount
- --------------------------------------- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 17,255 $ 353,943 5,118 $ 86,364 54,468 $ 371,343 21,209 $ 228,982
- -----------------------------------------------------------------------------------------------------------------------------
Class B 945 18,925 1,700 28,789 1,291 8,049 423 4,275
- -----------------------------------------------------------------------------------------------------------------------------
Class C 4,460 89,214 5,804 97,510 20,195 124,855 8,931 93,686
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 6 124 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 174 3,237 0 0 0 0 8 89
- -----------------------------------------------------------------------------------------------------------------------------
Class B 190 3,439 0 0 0 0 3 32
- -----------------------------------------------------------------------------------------------------------------------------
Class C 566 10,261 0 0 0 0 49 530
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (17,121) (351,255) (4,792) (80,778) (54,039) (370,208) (21,276) (230,377)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (708) (13,734) (672) (11,137) (1,019) (6,475) (112) (1,186)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (5,262) (103,423) (4,360) (71,730) (19,787) (124,238) (9,238) (96,889)
- -----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 505 $ 10,731 2,798 $ 49,018 1,109 $ 3,326 (3) $ (858)
=============================================================================================================================
<CAPTION>
Balanced Fund
----------------------------------------
Year Ended 6/30/98 Year Ended 6/30/97
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class A 830 $ 10,035 32 $ 354
- --------------------------------------------------------------------------------
Class B 688 8,086 102 1,113
- --------------------------------------------------------------------------------
Class C 671 7,888 89 969
- --------------------------------------------------------------------------------
Other Classes 504 5,975 926 10,421
- --------------------------------------------------------------------------------
Shares issued in reorganization
Class A 0 0 0 0
- --------------------------------------------------------------------------------
Class B 0 0 0 0
- --------------------------------------------------------------------------------
Class C 0 0 0 0
- --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 53 602 0 3
- --------------------------------------------------------------------------------
Class B 26 302 1 9
- --------------------------------------------------------------------------------
Class C 32 367 1 7
- --------------------------------------------------------------------------------
Other Classes 567 6,512 1,158 12,237
- --------------------------------------------------------------------------------
Cost of shares redeemed
Class A (124) (1,454) 0 (4)
- --------------------------------------------------------------------------------
Class B (69) (827) (4) (44)
- --------------------------------------------------------------------------------
Class C (82) (943) (8) (90)
- --------------------------------------------------------------------------------
Other Classes (3,066) (36,139) (3,794) (43,185)
- --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 30 $ 404 (1,497) $(18,210)
================================================================================
</TABLE>
72
<PAGE>
Report of Independent Accountants
To the Trustees and Class A, B and C Shareholders of the
PIMCO Funds: Multi-Manager Series
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights of the Class A, B, and C
shares present fairly, in all material respects, the financial position of the
Equity Income Fund, Value Fund, Renaissance Fund, Capital Appreciation Fund,
Growth Fund, Mid-Cap Growth Fund, Target Fund, Small-Cap Value Fund, Opportunity
Fund, International Developed Fund, International Fund, Emerging Markets Fund,
Innovation Fund, Precious Metals Fund and Balanced Fund (hereafter referred to
as the "Funds") at June 30, 1998, the results of each of their operations for
the year then ended, the changes in each of their net assets and the financial
highlights of the Class A, B, and C shares for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 1998
73
<PAGE>
Federal Income Tax Information (unaudited)
For the benefit of corporate shareholders only, the portion of dividends paid
out of ordinary income earned during certain Funds' fiscal year ended June 30,
1998 which qualify for the corporate dividend-received deduction are as follows:
Equity Income Fund 61.03%
Value Fund 40.22%
Renaissance Fund 9.64%
Capital Appreciation Fund 55.27%
Growth Fund 20.84%
Mid-Cap Growth Fund 60.37%
Target Fund 2.81%
Small-Cap Value Fund 46.39%
Innovation Fund 3.53%
Balanced Fund 13.06%
Shareholders are advised to consult their own tax advisor with respect to the
tax consequences of their investment in the Trust. However, income received by
tax-exempt recipients need not be reported as taxable income. In January 1999,
you will be advised on IRS form 1099-DIV as to the federal tax status of the
dividends and distributions received by you in calendar year 1998. Capital gains
distributions paid for all classes of shares during the fiscal year ended June
30, 1998 were in the amounts as follows:
Per Share Per Share Per Share
Long-Term Mid-Term Short-Term
Capital Gains Capital Gains Capital Gains
- --------------------------------------------------------------------------------
Equity Income Fund $0.58649 $1.17818 $0.32500
Renaissance Fund 0.24805 0.47999 2.80609
Value Fund 0.38568 0.48842 0.75502
Capital Appreciation Fund 0.33697 0.88125 0.46474
Growth Fund 1.16504 2.44477 0.71217
Mid-Cap Growth Fund 0.42243 0.57661 0.32831
Target Fund 0.28572 1.12990 3.03914
Small-Cap Value Fund 0.26913 0.17979 0.31102
Opportunity Fund 1.78590 0.14932 0.00000
International Developed Fund 0.31639 0.13536 0.12560
International Fund 0.40302 0.24360 0.47377
Innovation Fund 0.16498 0.25888 0.74930
Balanced Fund 0.07278 0.37007 0.64224
74
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PIMCO Funds: Access to the highest standard
PIMCO Funds offers unique access to the institutional investment capabilities of
PIMCO Advisors L.P., manager of over $229 billion. PIMCO Advisors owns seven
institutional investment firms, each seeking the highest caliber performance in
a specific discipline. Six of these firms currently manage PIMCO Funds.
Together, their superior standard of expertise has attracted many prestigious
institutional clients, including 46 of the 100 largest U.S. corporations.
[ARTWORK APPEARS HERE]
. Parametric
. Blairlogie
. Pacific Investment Management
. Columbus Circle
. Cadence
. NFJ
. PIMCO Advisors L.P.
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Manager PIMCO Advisors L.P., 800 Newport Center Drive, Newport
Beach, CA 92660
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Distributor PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, CT 06902
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Custodian Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, MO 64105
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Shareholder Shareholder Services, Inc., P.O. Box 5866,
Servicing Agent and Denver, CO 80217
Transfer Agent
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Independent PricewaterhouseCoopers LLP, 1055 Broadway,
Accountant Kansas City, MO, 64105
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Legal Counsel Ropes & Gray, One International Place,
Boston, MA 02110
- --------------------------------------------------------------------------------
For Account For PIMCO Funds account information contact your
Information financial advisor, or if you receive account statements
directly from PIMCO Funds, you can also call 1-800-426-
0107. Telephone representatives are available Monday-
Friday 8:30 am to 8:00 pm Eastern Time.
- --------------------------------------------------------------------------------
This is a copy of a report by PIMCO Funds to its shareholders. Distribution of
this report to persons other than shareholders of the Trust is authorized only
when accompanied by the Trust's Prospectus. This report does not offer for sale
or solicit orders to buy any securities.
This material is authorized for use only when preceded or accompanied by a
current PIMCO Funds prospectus, which describes in greater detail the investment
policies, management fees and other matters of interest to prospective
investors. Please read the prospectus carefully before you invest or send money.
PZ004.7/98
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F U N D S U.S. POSTAGE
PAID
SMITHTOWN, NY
PERMIT NO. 700
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PIMCO Funds
Distributors LLC
2187 Atlantic Street
Stamford, CT 06902
